<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _________)*
Devon Energy Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $0.10 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
73-0311467
------------------------------------------------------------
(CUSIP Number)
Russell G. Horner, Jr.
Vice President and General Counsel
Kerr McGee Corporation
123 Robert S. Kerr Avenue
Oklahoma, Oklahoma City 73102
(405) 270-1313
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 31, 1996
------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
SCHEDULE 13D
CUSIP No. 73-0311467 Page 2 of 36 Pages
---------- --- -----
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Kerr-McGee Corporation
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ------------------------------------------------------------------
BENEFICIAL 8 SHARED VOTING POWER
LY OWNED 9,954,000
BY? ------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON ------------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
9,954,000
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,954,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
31%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION
<PAGE> 3
Page 3 of 36 Pages
Item 1. Security and Issuer.
This statement relates to the Common Stock, $0.10 par value per
share ("Shares"), of Devon Energy Corporation ("Devon"). Devon's address is 20
North Broadway, Suite 1500, Oklahoma City, Oklahoma 73102-8260.
Item 2. Identity and Background.
The name and business address of the person filing this statement is
Kerr-McGee Corporation ("Kerr-McGee"), 123 Robert S. Kerr Ave., Oklahoma City,
Oklahoma 73102. Information concerning the executive officers and directors
of Kerr-McGee is set forth on Appendix 1 to this Schedule 13D
Item 3. Source and Amount of Funds or Other Consideration.
Not applicable.
Item 4. Purpose of Transaction.
Pursuant to an Agreement and Plan of Merger dated October 17, 1996 (the
"Merger Agreement"), Devon on December 31, 1996 acquired all of Kerr-McGee's
North American onshore oil and gas exploration and production business and
properties (the "Kerr-McGee Properties") in exchange for 9,954,000 Shares (the
"Transaction"). See Item 6 for a description of the principal terms of the
Merger Agreement.
By consolidating the Kerr-McGee Properties with those of Devon, Kerr-
McGee may maintain an investment in the North American onshore oil and gas
exploration and production business without incurring the overhead and direct
expenses of those activities. These assets will become a significant portion
of Devon's operations and will receive the attention and focus of Devon's
management and employees, allowing Kerr-McGee to more fully focus its resources
on its offshore and foreign oil and gas exploration and production activities.
Kerr-McGee's management believes Kerr-McGee's shareholders can recognize
more ultimate value by combining its North American onshore business and
properties with an independent oil and gas exploration and production company
such as Devon which specializes in North American onshore operations. Devon's
growth strategy over the last eight years has resulted in growth in per share
earnings, cash flow, reserves and per share price. If this growth trend
continues, Kerr-McGee will be able to realize appreciation in its investment
through the appreciation of its Devon Common Stock.
<PAGE> 4
Page 4 of 36 Pages
Devon and Kerr-McGee have entered into a Stock Rights and Restrictions
Agreement (the "Stock Agreement") which contains provisions relating to the
voting and disposition of Shares by Kerr-McGee, membership of Devon's board of
directors, Kerr-McGee's ability to engage in business combinations with Devon
and the acquisition of additional Shares by Kerr-McGee.
Kerr-McGee Nominees to Devon's Board of Directors. Devon has agreed to
increase the number of directors constituting the full board of directors from
six to nine. The resulting three vacancies have been filled by persons
designated by Kerr-McGee (the "Kerr-McGee Designees"). Devon has agreed that
the Kerr-McGee Designees will be included in the slate of nominees recommended
by the board of directors at shareholders' meetings for the election of
directors. The number of Kerr-McGee Designees will be such that the total
percentage of Kerr-McGee Designees elected to the board of directors (assuming
the election of such designee(s)) shall approximately equal the percentage of
outstanding Devon "Voting Shares" owned by Kerr-McGee. "Voting Shares" is
defined as Common Stock and any other shares of capital stock of Devon entitled
to vote generally in the election of directors. Kerr-McGee Designees elected as
directors of Devon will be apportioned as nearly as possible among Devon's three
classes of directors. Subsequent board vacancies must be filled so that the
percentage of Kerr-McGee Designees on Devon's board of directors remains
proportionate with Kerr-McGee's percentage ownership of Devon Voting Shares.
The initial Kerr-McGee Designees are Luke R. Corbett, Tom J. McDaniel and
Lawrence H. Towell.
Kerr-McGee Approval of Devon Nominees. Kerr-McGee has agreed to vote
all of its Voting Shares for the directors nominated by the Devon board of
directors. However, if the board of directors fails to nominate the Kerr-McGee
Designees as discussed above, Kerr-McGee will not be obligated to vote its
Voting Shares for those directors nominated by the Devon board of directors.
Restrictions on Business Combinations. Kerr-McGee has agreed that,
until termination of the Stock Agreement, it will not engage in a "Business
Combination Transaction" with Devon unless the transaction has been approved by
a majority of the "Continuing Directors." "Business Combination Transaction" is
defined as a transaction to which Devon is a party, such as a merger, in which
Voting Shares are exchanged for cash, securities or other property. The
following Business Combination Transactions are permitted under the Stock
Agreement: (i) transactions in which the ownership of capital stock of Devon or
the surviving corporation after such transaction is substantially the same as
that of Devon
<PAGE> 5
Page 5 of 36 Pages
prior to such transaction, or (ii) mergers in which (a) Devon survives, (b) all
Voting Shares outstanding prior to the merger remain outstanding, (c) no person
owns a majority of Devon's fully diluted shares, and (d) the Continuing
Directors continue to represent a majority of the Devon board of directors.
"Continuing Directors" means members of Devon's board of directors immediately
prior to consummation of the Transaction, the successors recommended by such
members, or directors nominated or elected by such members to fill vacancies if
the size of the board is increased.
Restrictions on Transfer of Kerr-McGee's Voting Shares. Except as
described below, Kerr-McGee will be restricted from transferring, selling or
otherwise conveying ownership of Voting Shares without the prior written
consent of a majority of the Continuing Directors, which consent cannot be
unreasonably withheld. This restriction is intended to prevent Kerr-McGee from
transferring a significant percentage of its Voting Shares to a single third
party. Circumstances in which Kerr-McGee may transfer its Voting Shares are:
(a) In accordance with Rule 144 under the Securities Act;
(b) Pursuant to a registered public offering, Kerr-McGee may
sell its Voting Shares in a broad distribution such that not more than
14.9% of outstanding Voting Shares or 20% of such offering is sold to
one person (other than mutual or pension funds);
(c) Pursuant to a pro rata dividend or distribution on Kerr-
McGee's outstanding common stock;
(d) To Devon or its subsidiaries or to subsidiaries of Kerr-
McGee;
(e) Upon the commencement of a tender offer (i) which Devon's
Continuing Directors do not oppose; (ii) with respect to which a
majority of the Continuing Directors has resolved to cause the Rights
Plan not to apply; or (iii) by certain offerors after a court has caused
the Rights Plan to be inapplicable and the person will be permitted by
law to accept tendered shares.
Kerr-McGee's Right to Acquire Additional Shares. Except in certain
circumstances provided in the Stock Agreement Kerr-McGee is prohibited from
purchasing additional Voting Shares without the prior written consent of a
majority of Devon's Continuing Directors. Kerr-McGee will be permitted to
purchase Voting Shares or rights to acquire Voting Shares to prevent dilution
of its initial percentage (26% of fully-diluted shares) of stock ownership. In
addition, after two years from the date of the Stock Agreement, Kerr-McGee will
<PAGE> 6
Page 6 of 36 Pages
be entitled to increase its percentage ownership in Voting Shares by a maximum
of five percentage points, to a total of 31% of the fully-diluted Voting
Shares. However, subject to certain exceptions, Kerr-McGee will not be
entitled to purchase additional Voting Shares if it will have the effect of
reducing the total number of Voting Shares held by persons other than Devon,
Kerr-McGee or either of their affiliates to less than 15 million shares. These
restrictions will not apply and Kerr-McGee is permitted to make a tender offer
for Shares if a third party makes a tender offer which meets the conditions set
forth in clause (e) of the immediately preceding paragraph. This is intended
to permit Kerr-McGee the opportunity to make a competitive offer for Devon.
Termination. The Stock Agreement may be terminated in several
circumstances, including: (i) by mutual agreement of Devon and Kerr-McGee; (ii)
by either party if Kerr-McGee's beneficial ownership drops below 5% of the
total outstanding Voting Shares; (iii) by Kerr-McGee if Devon materially
breaches any provisions of the Stock Agreement; (iv) by Kerr-McGee after
approval by the Continuing Directors of certain third party proposals for
Business Combination Transactions, or engagement of an investment banker to
solicit indications of interest with respect to a Business Combination
Transaction; (v) by Kerr-McGee if a third party accumulates 15% or more of
Devon's outstanding Voting Shares, or 20% or more when the Rights Plan is not
in effect, and such person has not agreed to restrictions similar to those in
the Stock Agreement; or (vi) by Kerr-McGee if the Continuing Directors cease to
be a majority of Devon's board of directors. Once the Stock Agreement is
terminated, all of the restrictions set forth above will automatically
terminate.
Kerr-McGee intends to exercise its rights to designate three directors
of Devon. Kerr-McGee intends to continuously monitor both the performance of
Devon and Kerr-McGee's investment in Devon. Depending upon the results of
those evaluations and Kerr-McGee's strategic view of the oil and gas industry,
and of Kerr-McGee and Devon, subject to the provisions of the Stock Agreement,
Kerr-McGee may acquire additional shares or dispose of some or all of the
shares then held by it. In addition, Kerr-McGee may from time to time engage
in other transactions permitted under the Stock Agreement terms described
above.
Item 5. Interest in Securities of the Issuer.
Upon consummation of the Transaction, Kerr-McGee became the beneficial
owner of 9,954,000 Shares representing 31% of the outstanding Shares. None of
the persons named in Appendix 1 beneficially owns any Shares and neither Kerr-
<PAGE> 7
Page 7 of 36 Pages
McGee nor any of such persons has affected any transactions in Shares during
the 60 days preceding the filing of this Schedule 13D. By virtue of the
provisions of the Stock Agreement described in Item 4, Purpose of Transaction
above, Kerr-McGee may be deemed to share with Devon the voting and dispositive
power with respect to the shares held by Kerr-McGee.
Item 6. Contracts, Arrangements, Undertakings or Relationships with
Respect to Securities of the Issuer.
Merger Agreement. The Merger Agreement provides for the Kerr-McGee
Properties to be consolidated with those of Devon. This was accomplished in two
simultaneous transactions. First, Kerr-McGee North American Onshore
Corporation, a wholly-owned Oklahoma subsidiary of Kerr-McGee ("KMG-US"), was
merged with and into Devon Energy Corporation (Nevada), a wholly-owned Nevada
subsidiary of Devon ("Devon Nevada"), in exchange for 7,554,880 shares of Devon
Common Stock. KMG-US owned all of Kerr-McGee's U.S. onshore oil and gas
exploration and production business and properties. Second, Devon acquired all
of the outstanding capital stock of Kerr-McGee Canada Onshore Ltd., a
wholly-owned subsidiary of Kerr-McGee organized under the laws of Alberta,
Canada ("KMG-CN"), in exchange for 2,399,120 shares of Devon Common Stock.
KMG-CN owned all of Kerr-McGee's Canadian oil and gas exploration and production
business and properties. As a result of the Transaction, the properties and
assets of KMG-US became part of the properties and assets of Devon Nevada and
KMG-CN's properties and assets became part of the properties and assets of Devon
Energy Canada Corporation.
After the Transaction, Kerr-McGee owns 9,954,000 shares of Devon Common
Stock, or 31% of Devon's total outstanding Common Stock.
Registration Agreement. Devon and Kerr-McGee have entered into a
Registration Rights Agreement (the "Registration Agreement"). Under the
Registration Agreement, Kerr-McGee can require Devon to file up to three
registration statements with the Securities and Exchange Commission (the "SEC")
for the resale of all or a portion of Kerr-McGee's Shares. Devon is not
required to file a registration statement under certain circumstances, such as
during periods when Devon is negotiating a transaction, when full disclosure in
a registration statement of material, non-public information about such
transaction would be detrimental to the completion of the transaction. Devon
is required to pay all expenses of a registration statement filed on behalf of
Kerr-McGee, except SEC and state securities agency filing fees, printing
expenses, underwriting discounts and
<PAGE> 8
Page 8 of 36 Pages
commissions attributable to Kerr-McGee's Shares and legal fees and expenses for
Kerr-McGee.
The Registration Agreement also generally gives Kerr-McGee the right to
include Kerr-McGee's Shares in any registration statement Devon is filing on
its own behalf or on behalf of other holders of Shares in connection with an
underwritten offering.
The Registration Agreement also gives Kerr-McGee the right to issue
Kerr-McGee securities which are convertible into, or exchangeable or
exercisable for, Kerr-McGee's Shares (the "Kerr-McGee Exchangeable
Securities"). However, the time period during which the Exchangeable
Securities can be converted to Kerr-McGee's Shares cannot exceed seven years
(the "Exchange Period"). Kerr-McGee can require Devon to maintain an effective
registration statement with the SEC registering the Shares into which the Kerr-
McGee Exchangeable Securities could be converted during the Exchange Period,
but Devon is required to keep the prospectus included in the registration
statement current only during a thirty day conversion period each year.
All of Kerr-McGee's rights under the Registration Agreement are subject
to the terms of the Stock Agreement, the Securities Act, Devon's certificate of
incorporation and Bylaws and the laws of the State of Oklahoma.
Rights Plan Amendments. Each Share currently carries one "right" as
defined in Devon's Share Rights Plan. Upon the occurrence of certain events
generally associated with unsolicited takeover attempts or certain transactions
involving a change of control, the rights become exercisable. The rights allow
all Devon shareholders, except the party attempting the takeover (the
"Acquiring Person"), the right to buy additional Shares (or a special series of
voting preferred stock) at a significant discount to the market price. This
causes substantial dilution to the Acquiring Person, which effectively
encourages the Acquiring Person to negotiate with Devon's board of directors.
Kerr-McGee's acquisition of more than 15% of the outstanding Shares in the
Transaction would have caused Kerr-McGee to be deemed an Acquiring Person under
the Rights Plan, and would have triggered the exercise of the rights. However,
since the Stock Agreement limits Kerr-McGee's ability to acquire additional
Voting Shares, Devon's board of directors has amended the Rights Plan to
prevent the execution of the Merger Agreement from triggering the exercise of
the rights. The Rights Plan has been further amended to allow Kerr-McGee to
acquire Shares upon consummation of the Merger Agreement and to acquire
additional Voting Shares in accordance with the terms of the Stock Agreement.
The Rights Plan Amendments will remain in
<PAGE> 9
Page 9 of 36 Pages
effect even upon the termination of the Stock Agreement in certain
circumstances.
The principal terms of the Stock Agreement are described above under
Item 4 - Purpose of Transaction.
Item 7. Material to be Filed as Exhibits.
1. Agreement and Plan of Merger dated the 17th day of October, 1996 (the
"Merger Agreement"), among Devon Energy Corporation ("Devon"), Devon
Energy Corporation (Nevada), Kerr-McGee Corporation ("Kerr-McGee"),
Kerr North American Onshore Corporation and Kerr-McGee Canada Onshore
Ltd. (incorporated by reference to Addendum A to Devon's definitive
proxy statement (File No. 1-10067) for a special meeting of
shareholders, filed on November 6, 1996).
2. Stock Rights and Restrictions Agreement, dated as of December 31, 1996
between Devon and Kerr-McGee.
3. Registration Rights Agreement, dated December 31, 1996 by and between
Devon and Kerr-McGee.
<PAGE> 10
Page 10 of 36 Pages
SIGNATURE
After reasonable inquiry and to the best of his knowledge and
belief, the undersigned certifies that the information set forth in this
Statement on Schedule 13D is true, complete and correct.
DATED: January 6, 1997
KERR-McGEE CORPORATION
By: /s/ John C. Linehan
---------------------------------
John C. Linehan
Senior Vice President
and Chief Financial
Officer
<PAGE> 11
Page 11 of 36 Pages
APPENDIX 1
NAME, PRINCIPAL OCCUPATION AND BUSINESS
ADDRESS OF EACH DIRECTOR OF THE COMPANY
---------------------------------------
Paul M. Anderson, President and Chief
Executive Officer of PanEnergy Corp. a
provider of natural gas transportation
and related services in North America
since May 1995; P.O. Box 1642, Houston,
Texas 77251-1642
Bennett E. Bidwell, Retired; 626 Yarboro,
Bloomfield Hills, Minnesota 48304-3364
Earnest H. Clark, Jr., Chairman of the
Board and Chief Executive Officer of The
Friendship Group, an investment partnership;
3822 Calle Arian, San Clemente, CA 92672
Luke R. Corbett, President and Chief Operating
Officer of Kerr-McGee; 123 Robert S. Kerr Avenue
Oklahoma City, Oklahoma 73102;
Martin C. Jischke, President of Iowa State
University; 117 Beardshear, Ames, Iowa 50011-
2035
Robert S. Kerr, Jr., Attorney, Chairman of
Board of Kerr, Irvine, Rhodes & Ables, an
Oklahoma City law firm and President of the
Kerr Foundation, Inc.; 6301 N. Western,
Suite 130, Oklahoma City, Oklahoma 73118
Frank A. McPherson, Chairman of the Board
and Chief Executive Officer of Kerr-McGee;
123 Robert S. Kerr Avenue, Oklahoma City,
Oklahoma 73102
William C. Morris, Chairman of the Board
and President of J. & W. Seligman & Co.,
Incorporated; 100 Park Ave.,
8th Floor, New York, New York 10017
John J. Murphy, Retired; Sherry Lane Place,
5956 Sherry Lane, Suite 710, Dallas, Texas 75225
John J. Nevin, Retired; 3 Steeplechase Lane,
Northfield, Illinois 60093
<PAGE> 12
Page 12 of 36 Pages
Richard M. Rompala, President and Chief
Executive Officer of the Valspar Corporation,
a manufacturer of paints and related
coatings; 1101 South Third Street,
Minneapolis, Minnesota 55415
Farah M. Walters, President and Chief
Executive Officer of University Hospitals
of Cleveland and University Hospitals
Health Systems, Inc.; 11100 Euclid
Avenue, Cleveland, Ohio 44106
NAME, PRINCIPAL OCCUPATION AND BUSINESS
ADDRESS OF EACH EXECUTIVE OFFICER OF THE
COMPANY WHO IS NOT A DIRECTOR
-----------------------------------------
The business address of each executive
officer of Kerr-McGee is:
123 Robert S. Kerr Avenue, Oklahoma City,
Oklahoma 73102
Kenneth W. Crouch, Senior Vice President
William D. Hake, Senior Vice President
George R. Hennigan, Senior Vice President
John C. Linehan, Senior Vice President and Chief
Financial Officer
Tom J. McDaniel, Senior Vice President and
Corporate Secretary
Robert C. Scharp, Senior Vice President
Michael G Webb, Senior Vice President
Julius C. Hilburn, Vice President, Human
Resources
R. G. Horner, Jr., Vice President and
General Counsel
Deborah A. Kitchens, Vice President and Controller
John M. Rauh, Vice President and
Treasurer
Donald F. Schiesz, Vice President, Safety
and Environmental Affairs
<PAGE> 13
Page 13 of 36 Pages
Jean B. Wallace, Vice President, General
Administration
All of the foregoing officers and directors of Kerr-McGee are U.S.
citizens, except Mr. Webb who is a citizen of Canada.
None of the directors and officers listed above or Kerr-McGee has been
convicted in a criminal proceeding (excluding traffic violations and similar
misdemeanors) during the last five years. None of said persons or Kerr-McGee,
during the last five years, has been subject to a judgment, decree or similar
order or finding of violations with respect to federal or state securities laws
or activities subject thereto.
<PAGE> 1
Page 14 of 36 Pages
EXHIBIT 2
STOCK RIGHTS AND RESTRICTIONS AGREEMENT
STOCK RIGHTS AND RESTRICTIONS AGREEMENT, dated as of December 31, 1996,
between DEVON ENERGY CORPORATION, an Oklahoma corporation ("Devon"), and
KERR-McGEE CORPORATION, a Delaware corporation ("Kerr-McGee").
RECITALS:
A. As of the Effective Date (as defined below) and after giving effect to
the Closing (as defined below), Kerr-McGee will be the record and Beneficial
Owner (as defined below) of 9,954,000 Voting Shares (as defined below) (together
with any additional Voting Shares which Kerr-McGee may from time to time own of
record or Beneficially Own, the "Shares"), consisting of common stock, par value
$.10 per share, of Devon (the "Common Stock"), representing 30.9695% of the
outstanding Voting Shares and 26.1938% of the Fully Diluted Shares (as
defined below) as of the Effective Date and after giving effect to the Closing.
B. As of the Effective Date and after giving effect to the Closing, the
number of directors constituting the whole Board of Directors of Devon is nine
(9) and the following persons are the Kerr-McGee Designees (as defined below):
Luke R. Corbett, Tom J. McDaniel and Lawrence H. Towell.
C. The Boards of Directors of Devon and Kerr-McGee deem it advisable to
establish certain rights and restrictions with respect to the Shares.
ACCORDINGLY, premises considered, the parties have entered into this
Agreement.
1. DEFINITIONS. For purposes of this Agreement, the following terms have
the meanings indicated:
(a) "Acquiring Person" shall have the meaning assigned to such term in
the Rights Plan, as in effect on the date hereof.
(b) "Affiliate" shall have the meaning assigned to such term in Rule
12b-2 under the Exchange Act, as in effect on the date hereof; provided
that, for purposes of this Agreement, neither Kerr-McGee nor any Affiliate
of Kerr-McGee shall be deemed to be an Affiliate of Devon.
(c) "Applicable Percentage" shall mean, for the period from the date
hereof until the second anniversary of the date hereof, 26.1938% and,
thereafter, 31.1938%, subject, in each case, to adjustment in accordance
with Section 2.4(d)(i)(A).
(d) "Beneficially Own" shall have the meaning assigned to such term in
Rule 13d-3 under the Exchange Act, as in effect on the date hereof.
"Beneficial Owner" and "Beneficial Ownership" shall have correlative
meanings.
(e) "Business Combination Transaction" shall mean a merger,
consolidation, Share Acquisition (as defined below), recapitalization or
other transaction in which Devon is a constituent corporation or to which
Devon is a party, and pursuant to which the Voting Shares are exchanged for
cash, securities or other property, or a sale of all or substantially all
of the assets of Devon and its Subsidiaries taken as a whole; provided that
none of the following shall be deemed a Business Combination Transaction
for purposes of this Agreement: (i) a merger, consolidation, Share
Acquisition, recapitalization or other transaction in which the Beneficial
Ownership of the capital stock of Devon or the surviving corporation
<PAGE> 2
Page 15 of 36 Pages
of the transaction (or of the ultimate parent of Devon or of such surviving
corporation) immediately after the consummation of such transaction is
substantially the same as the Beneficial Ownership of the capital stock of
Devon immediately prior to the consummation of the transaction or (ii) a
merger (A) in which Devon is the surviving corporation, (B) in which all
Voting Shares immediately prior to the consummation of such merger remain
outstanding immediately after the consummation thereof, (C) as a result of
the consummation of which no Person will Beneficially Own a majority of the
Fully Diluted Shares and (D) following the consummation of which the
Continuing Directors will represent a majority of the Board of Directors of
Devon.
(f) "Closing" shall have the meaning assigned to such term in the
Merger Agreement.
(g) "Common Stock" shall have the meaning set forth in paragraph A of
this Agreement.
(h) "Continuing Director" shall mean (i) any member of the Board of
Directors of Devon, while such person is a member of such Board of
Directors, (A) who is not an Acquiring Person, or an Affiliate or Associate
(each as defined in the Rights Plan as in effect on the date hereof) of an
Acquiring Person or a representative or nominee of an Acquiring Person or
of any such Affiliate or Associate, and (B) who (1) was a member of the
Board of Directors of Devon prior to the Effective Time or (2) is
recommended or elected to the Board of Directors by a majority of the
Continuing Directors to fill a vacancy arising as a result of an increase
in the number of directors of Devon occurring after the date hereof, and
(ii) any successor of a Continuing Director, while such successor is a
member of the Board of Directors of Devon, who is not an Acquiring Person,
or an Affiliate or Associate of an Acquiring Person or a representative or
nominee of an Acquiring Person or of any such Affiliate or Associate and is
recommended or elected to succeed the Continuing Director by a majority of
the Continuing Directors. Notwithstanding anything to the contrary in this
definition, for purposes of this Agreement, the Kerr-McGee Designees shall
not be considered Continuing Directors.
(i) "Current Market Price" shall mean, as of any date of
determination, with respect to Voting Shares or any other security to be
valued hereunder (the Voting Shares and/or such other security, the
"Valuation Securities"):
(i) if the Valuation Securities are listed or admitted to trading
on a national securities exchange, the closing price on such exchange's
consolidated or composite tape reporting transactions thereon (or any
successor composite tape reporting transactions on national securities
exchanges) or, if such a composite tape shall not be in use or shall not
report transactions in the Valuation Securities, the last reported sales
price regular way on the principal national securities exchange on which
the Valuation Securities are listed or admitted to trading (which shall
be the national securities exchange on which the greatest number of
Valuation Securities has been traded during the 20 consecutive trading
days preceding the date of determination), or, if there is no
transaction on any such day in any such situation, the mean of the bid
and asked prices on such day; or
(ii) if the Valuation Securities are not listed or admitted to
trading on any such exchange, the closing price, if reported, or, if the
closing price is not reported, the average of the closing bid and asked
prices, as reported by the automated quotation system of the National
Association of Securities Dealers, Inc. or a similar source selected
from time to time by Devon for this purpose; or
(iii) if all of the prices referred to in clauses (i) and (ii) are
unavailable, including because the Valuation Securities are not traded
on a national securities exchange, an automated quotation system of the
National Association of Securities Dealers, Inc. or a similar source,
the Current Market Price shall be deemed to be the value of the
Valuation Securities as determined by agreement between Devon and
Kerr-McGee or, if Devon and Kerr-McGee are unable to agree, by an
investment banking firm of national reputation selected by Kerr-McGee
with the consent of a majority of the Continuing Directors, which
consent shall not be unreasonably withheld. Any determination of the
value of the Valuation Securities shall be made within three business
days of the date of selection of the investment banking firm. The costs
and expenses of any such investment banking firm shall be borne by
Devon.
<PAGE> 3
Page 16 of 36 Pages
(j) "Devon" shall have the meaning set forth in the first paragraph of
this Agreement.
(k) "Distribution Date" shall have the meaning assigned to such term
in the Rights Plan, as in effect on the date hereof.
(l) "Effective Date" shall have the meaning assigned to such term in
the Merger Agreement.
(m) "Equity Market Capitalization" shall mean, with respect to any
Person in connection with the commencement of an exchange offer, the amount
determined by multiplying (i) the number of outstanding "equity securities"
(as defined in Section 3 of the Exchange Act) of such Person required to be
registered pursuant to Section 12 of the Exchange Act at the time of the
determination by (ii) the Current Market Price of such equity securities at
such time of determination.
(n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, as in effect from time to time.
(o) "Exchangeable Security" shall mean a security of any type,
including but not limited to debt, equity, warrants or other rights, issued
by Kerr-McGee at any time after the second anniversary of this Agreement
and which includes or represents the right to acquire Voting Shares from
Kerr-McGee upon exchange, conversion or exercise thereof.
(p) "Fully Diluted Shares" shall mean, at any time, the sum of (i) the
Voting Shares then outstanding plus (ii) the number of Voting Shares
reserved for issuance or issuable in connection with the exercise, exchange
or conversion of employee stock options or securities of Devon then
outstanding which are exercisable or exchangeable for Voting Shares or are
convertible into Voting Shares.
(q) "Merger Agreement" shall mean the Agreement and Plan of Merger
dated October , 1996 among Devon, Devon Energy Corporation (Nevada),
Kerr-McGee, Kerr-McGee Oklahoma Corporation and Kerr-McGee Sub, Inc.
(r) "Person" shall mean any individual, firm, partnership,
association, group (as such term is defined in Section 13(d)(3) of the
Exchange Act, as in effect on the date hereof), corporation, trust,
business trust or other entity and includes any successor (by merger or
otherwise) of any such entity.
(s) "Public Offering" shall mean a firm commitment underwritten public
offering pursuant to a registration statement which has been declared
effective by the SEC under the Securities Act.
(t) "Qualified Tender Offer" shall mean a tender or exchange offer for
Voting Shares (i) that is for more than 50% of the then outstanding Voting
Shares, (ii) that is for a price per Voting Share at least 10% greater than
the average of the Current Market Prices of the Voting Shares determined
for each of the 10 consecutive trading days ending on the last full trading
day prior to the date of the public announcement of such tender or exchange
offer, (iii) the Tender Offer Statement on Schedule 14D-1 filed by the
Person making such tender or exchange offer for which discloses that such
Person has available to it, or will have available to it upon consummation
of such tender or exchange offer, the consideration to be paid or exchanged
in such tender or exchange offer for the Voting Shares tendered therein,
and (iv) in the case of an exchange offer, (A) in which the Person making
such exchange offer has, as of the date of commencement of such exchange
offer, an Equity Market Capitalization equal to or greater than the Equity
Market Capitalization of Devon, or (B) if the Equity Market Capitalization
of such Person is less than the Equity Market Capitalization of Devon,
which otherwise is a credible exchange offer.
(u) "Rights" shall mean, at any time, the rights to purchase capital
stock of Devon issued under the Rights Plan.
(v) "Rights Plan" shall mean the Rights Agreement dated as of April
17, 1995 between Devon and The First National Bank of Boston, as rights
agent, as amended, supplemented or otherwise modified from time to time,
and any successor agreement or plan to which Devon shall be a party.
<PAGE> 4
Page 17 of 36 Pages
(w) "Rule 144" shall mean Rule 144 adopted by the SEC under the
Securities Act, or any successor rule.
(x) "SEC" shall mean the Securities and Exchange Commission.
(y) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, as in effect from time to time.
(z) "Share Acquisition" shall mean a share acquisition under Section
1090.1 of the Oklahoma General Corporation Act (or any successor provision
of the Oklahoma General Corporation Act).
(aa) "Subsidiary" shall mean, with respect to any Person, any other
Person of which at least a majority of the voting power of the voting
equity securities or voting equity interest is owned, directly or
indirectly, by such Person.
(ab) "Kerr-McGee" shall have the meaning set forth in the first
paragraph hereof; provided, however, that the term "Kerr-McGee" shall
include Kerr-McGee and its Affiliates unless the context otherwise
requires.
(ac) "Kerr-McGee Designees" shall have the meaning set forth in
Section 2.3(b) hereof.
(ad) "Transfer" shall have the respective meanings set forth in
Section 2.5 hereof.
(ae) "Voting Shares" shall mean the Common Stock and any other
securities of Devon having voting power under ordinary circumstances with
respect to the election of directors of Devon.
2. SHARE RIGHTS AND RESTRICTIONS.
2.1 Limitation on Certain Business Combination Transactions. (a) Except as
otherwise permitted by this Agreement, Kerr-McGee agrees that Kerr-McGee shall
not, during the period from the date of this Agreement until its termination,
engage in any Business Combination Transaction with Devon, unless such Business
Combination Transaction shall have been approved by a majority of the Continuing
Directors.
(b) Except as otherwise permitted by this Agreement, Kerr-McGee agrees that
Kerr-McGee shall not, during the period from the date of this Agreement until
its termination, (i) request or solicit any Person (A) to make a tender or
exchange offer for Voting Shares or (B) to make a proposal for a Business
Combination Transaction, or (ii) make any proposal, written or oral, to Devon,
the Board of Directors of Devon or the shareholders of Devon with respect to a
Business Combination Transaction, a tender offer or exchange offer for Voting
Shares, or a liquidation of Devon, which proposal would be required by
applicable law to be publicly disclosed, unless, in either case referred to in
clause (i) or (ii) above, a majority of the Continuing Directors shall have
requested Kerr-McGee to take such action.
(c) In the event that Kerr-McGee shall receive any proposal from any Person
with respect to any matter referred to in Section 2.1(b), either with respect to
a proposal to be made by Kerr-McGee or such other Person, Kerr-McGee shall
immediately notify Devon thereof.
(d) In the event that Kerr-McGee shall receive any proposal from any Person
to acquire Voting Shares from Kerr-McGee which would exceed 5% of the
outstanding Voting Shares, Kerr-McGee shall immediately notify Devon; provided
that Kerr-McGee shall not be required to provide such notice if the proposal is
in connection with a Transfer permitted under Section 2.5 hereof.
2.2 [Intentionally omitted.]
2.3 Devon Board of Directors. (a) From and after the date hereof until the
termination of this Agreement, the number of directors constituting the Board of
Directors of Devon shall not be decreased to a number less than six (6), without
the prior written consent of Kerr-McGee.
(b) From and after the date hereof until the termination of this Agreement,
in connection with each election of directors of Devon, whether at an annual or
special meeting, Devon will nominate in accordance with its procedures for the
nomination of directors as provided in its by-laws and applicable law, a number
of persons designated by Kerr-McGee (all such persons who, at any time, are or
were designated by Kerr-
<PAGE> 5
Page 18 of 36 Pages
McGee for purposes of this Agreement are referred to herein as the "Kerr-McGee
Designees") such that, after giving effect to the election of such persons to
the Board of Directors of Devon, the number of Kerr-McGee Designees then serving
on the Board of Directors of Devon shall equal the product (rounded to the
nearest whole number, but, in any event, not less than one) of (i) the total
number of directors constituting the entire Board of Directors multiplied by
(ii) the lesser of (A) 36% and (B) the percentage that the aggregate number of
Voting Shares owned by Kerr-McGee (determined without regard to Shares acquired
as permitted by Section 2.4(d)(i)(B) hereof) bears to the total number of Voting
Shares then outstanding (such lesser percentage, the "Director Percentage").
(c) If at any time the Director Percentage shall decrease so that
Kerr-McGee would be entitled to designate fewer directors than are currently
serving as Kerr-McGee Designees, Kerr-McGee shall cause one or more of the
Kerr-McGee Designees serving as Devon directors to resign so that the percentage
of the board of directors consisting of Kerr-McGee Designees does not exceed the
Director Percentage. Further, upon termination of this Agreement in accordance
with its terms, Kerr-McGee shall cause all Kerr-McGee Designees then serving as
directors of Devon to resign immediately.
(d) (i) In the event that any Kerr-McGee Designee shall cease to serve as a
director for any reason (other than as set forth in Section 2.3(c)), the vacancy
resulting thereby shall be filled by the remaining directors of the Company in
accordance with its Certificate of Incorporation, by-laws and applicable law by
a new Kerr-McGee Designee and such new Kerr-McGee Designee shall thereafter
serve until the expiration of the term of the Kerr-McGee Designee replaced by
such new Kerr-McGee Designee.
(ii) If there shall exist at any time any vacancy or vacancies on the Board
of Directors of Devon as a result of any increase in the number of directors
that constitutes the entire Board of Directors of Devon, which the directors of
Devon then in office intend to fill in accordance with Devon's Certificate of
Incorporation, by-laws and applicable law, Kerr-McGee shall be entitled to
designate one or more persons as Kerr-McGee Designees to fill such vacancy or
vacancies if and to the extent necessary so that, after giving effect to the
filling of such vacancy or vacancies, the number of Kerr-McGee Designees then
serving on the Board of Directors of Devon shall equal the Director Percentage.
Devon agrees to take all actions appropriate or necessary to ensure that any
Kerr-McGee Designees designated pursuant to the preceding sentence are appointed
to the Board of Directors to fill any such vacancy or vacancies filled by the
Board of Directors of Devon as provided in the preceding sentence.
(e) Notwithstanding anything to the contrary contained herein, no
Kerr-McGee Designee may be a person who previously has been a director of Devon
and was properly removed for cause from the Board of Directors of Devon or a
person who has been convicted of a felony or a crime involving moral turpitude.
(f) The Kerr-McGee Designees will be furnished with all information that is
provided to all other directors of Devon (in their capacities as such) at the
same time as such information is furnished to such other directors (in their
capacities as such).
(g) Kerr-McGee shall cause all Kerr-McGee Designees serving as directors of
Devon to comply with the retirement policies of Devon as in effect on the date
hereof or as hereafter amended or modified from time to time by the Board of
Directors of Devon or its shareholders; provided that no such amendment or
modification shall be binding upon Kerr-McGee or the Kerr-McGee Designees unless
at least one Kerr-McGee Designee shall have voted in favor of such amendment or
modification at the meeting, or in the action in lieu of a meeting, of the Board
of Directors of Devon at or in which it is considered.
2.4 Limitation on Acquisition of Additional Shares by Kerr-McGee. (a)
Except as permitted by any of Section 2.4(b), (c) or (d), from and after the
date hereof until the termination of this Agreement, Kerr-McGee shall not
acquire Beneficial Ownership of any Voting Shares, other than the Voting Shares
Beneficially Owned by Kerr-McGee as of the Effective Time and after giving
effect to the Closing, without the prior written consent of a majority of the
Continuing Directors.
(b) Kerr-McGee may purchase Voting Shares, or securities exercisable or
exchangeable for Voting Shares or convertible into Voting Shares, in market,
private or other transactions (including without limitation brokerage
transactions involving the solicitation of seller's orders and block trades off
the American Stock
<PAGE> 6
Page 19 of 36 Pages
Exchange or any other national securities exchange on which the Voting Shares
are then listed) or in public offerings of Voting Shares (including Public
Offerings of Voting Shares); provided that, after giving effect to any such
purchase, Kerr-McGee shall not Beneficially Own more than the Applicable
Percentage of the Fully Diluted Shares; provided, further, that in no event
shall Kerr-McGee acquire Beneficial Ownership of additional Voting Shares which
would, based on the then most recent information contained in documents filed by
Devon or Kerr-McGee pursuant to Section 13(a), 13(c), 13(e), 14 or 15(d) of the
Exchange Act, reduce the number of shares of Common Stock held by Persons other
than Kerr-McGee, Devon or any Affiliate of either Kerr-McGee or Devon to less
than 15,000,000, unless such acquisition of Beneficial Ownership by Kerr-McGee
is necessary in order that, after giving effect thereto, Kerr-McGee shall
Beneficially Own 20% of the Fully Diluted Shares.
(c) Kerr-McGee may acquire Beneficial Ownership of Voting Shares without
regard to the Applicable Percentage of the Fully Diluted Shares if any Person
(other than Kerr-McGee, Devon or any Affiliate of Kerr-McGee or Devon) shall
have commenced a tender or exchange offer for Voting Shares (i) that is
recommended or approved by a majority of the Continuing Directors, (ii) with
respect to which a majority of the Continuing Directors has taken a position
contemplated by Rule 14e-2(a)(2) under the Exchange Act, (iii) with respect to
which a majority of the Continuing Directors has resolved to redeem the Rights
or has amended the Rights Plan so that the Person making such tender or exchange
offer will not become an Acquiring Person or trigger a Distribution Date, or
(iv) that is a Qualified Tender Offer and in connection with which (A) a final
and non-appealable court order has declared the Rights Plan invalid or
inapplicable, or required that the Rights issued under the Rights Plan be
redeemed, and (B) the Person making such Qualified Tender Offer will be
permitted under applicable law to accept for payment or exchange the Voting
Shares tendered in such Qualified Tender Offer.
(d) (i) Notwithstanding anything to the contrary in this Agreement,
Kerr-McGee shall not be deemed to be in violation of this Section 2.4 if its
Beneficial Ownership of Voting Shares exceeds the Applicable Percentage of the
Fully Diluted Shares as a result of (A) an acquisition by Devon or any of its
Affiliates of Voting Shares then outstanding, or securities then outstanding
exercisable or exchangeable for Voting Shares or convertible into Voting Shares,
or a recapitalization by Devon, or any other transaction or action by Devon, or
any expiration or termination of the right to exercise, exchange or convert
securities exercisable or exchangeable for Voting Shares or convertible into
Voting Shares, which, in any such case, by reducing the number of Fully Diluted
Shares, increases Kerr-McGee's Beneficial Ownership of the Fully Diluted Shares
to more than the Applicable Percentage, and, in the event of any such reduction
in the number of Fully Diluted Shares as provided in this Section 2.4(d)(i)(A),
the Applicable Percentage shall thereafter be deemed to have been increased to
the percentage of the Fully Diluted Shares Beneficially Owned by Kerr-McGee
after giving effect to such reduction, provided that, in the case of any such
increase in Kerr-McGee's Beneficial Ownership of the Fully Diluted Shares due to
an expiration or termination of the right to exercise, exchange or convert
securities exercisable or exchangeable for Voting Shares or convertible into
Voting Shares pursuant to this clause (A), Kerr-McGee shall, to the extent
permitted by Rule 144, Transfer a number of Shares (or securities of Devon
exercisable or exchangeable for or convertible into a number of Voting Shares)
as promptly as is commercially reasonable so that, following such Transfer,
Kerr-McGee shall Beneficially Own a number of Voting Shares not in excess of the
Applicable Percentage immediately prior to such reduction in the number of Fully
Diluted Shares and, following each such Transfer, the Applicable Percentage
shall be reduced to the percentage of the Fully Diluted Shares then Beneficially
Owned by Kerr-McGee, and, provided, further, that Kerr-McGee shall not be
required to Transfer Shares (or such securities) pursuant to the immediately
preceding proviso at any time when it would be required to pay any profit
realized upon such Transfer to Devon pursuant to Section 16(b) under the
Exchange Act, or (B) a transaction whereby, directly or indirectly, control of
(by merger, tender offer or otherwise), or all or substantially all of the
assets of, any Person is transferred to Kerr-McGee or any of its Subsidiaries
(an "Acquisition Transaction"), provided that, in the case of clause (B) above,
Kerr-McGee shall comply with the provisions of Section 2.4(d)(ii), except that
Kerr-McGee shall not be obligated to comply with Section 2.4(d)(ii), and any
Voting Shares the Beneficial Ownership of which is acquired by Kerr-McGee in an
Acquisition Transaction shall not be deemed to violate this Agreement, solely to
the extent that such Voting Shares were held by the other Person that is a party
to such Acquisition Transaction as part of the assets of a pension plan
maintained by such other Person
<PAGE> 7
Page 20 of 36 Pages
for the benefit of its employees and retirees, and, provided, further, that, in
the case of clause (B) above, the ownership of Voting Shares by the Person in
the Acquisition Transaction is incidental to the conduct of an active trade or
business other than investing in securities and in no event shall such Person
own more than 1,000,000 Voting Shares. For purposes hereof, "control" means the
possession, directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management policies of a Person, including
the power to direct or cause the direction of the disposition of the assets of
such Person.
(ii) (A) No later than five business days following the consummation of an
Acquisition Transaction which results in Kerr-McGee Beneficially Owning more
than the Applicable Percentage of the Fully Diluted Shares, Kerr-McGee shall
provide written notice (the "Offer Notice") to Devon offering Devon the right
(the "Purchase Right"), exercisable in whole or in part, to purchase a number of
Shares (such Shares, the "Purchase Right Shares") equal to the difference
between (1) the number of Shares minus (2) the product, rounded to the nearest
whole Voting Share, of the Applicable Percentage multiplied by the Fully Diluted
Shares, at a price per Purchase Right Share equal to the average of the Current
Market Prices of the Voting Shares determined for each of the 10 consecutive
trading days ending on the last full trading day prior to the date of the Offer
Notice (the "Purchase Price"). Devon shall have five business days from the date
of its receipt of the Offer Notice to provide written notice to Kerr-McGee of
its exercise of the Purchase Right (the "Exercise Notice"). The Exercise Notice
shall indicate the number of Purchase Right Shares with respect to which Devon
exercises the Purchase Right (such number of Purchase Right Shares, the "Sale
Shares"). If the Exercise Notice shall not have been delivered to Kerr-McGee
within five business days from the date of Devon's receipt of the Offer Notice
or if Devon shall have delivered to Kerr-McGee written notice that it is not
exercising the Purchase Right, then Devon will be deemed not to have exercised
the Purchase Right. If Devon exercises the Purchase Right by delivery to
Kerr-McGee of an Exercise Notice as provided above, then, on the fifth business
day after the receipt by Kerr-McGee of such Exercise Notice, Devon shall
purchase from Kerr-McGee, and Kerr-McGee shall sell to Devon, the Sale Shares.
At the closing of any such purchase and sale, Kerr-McGee shall deliver to Devon
a certificate or certificates representing the Sale Shares, duly endorsed for
transfer or accompanied by a stock power or powers duly executed in blank,
against delivery by Devon to Kerr-McGee of the aggregate Purchase Price for the
Sale Shares, by wire transfer in immediately available funds. Any exercise of
the Purchase Right as provided in this Section 2.4(d)(ii)(A) shall be
irrevocable and shall constitute a commitment by Devon to purchase from
Kerr-McGee, and by Kerr-McGee to sell to Devon, the Sale Shares at the Purchase
Price per Sale Share. Notwithstanding anything to the contrary contained in this
Section 2.4(d)(ii)(A), if the Current Market Price is required to be determined
pursuant to clause (iii) of the definition thereof and, on or prior to the fifth
business day after Devon's receipt of the Offer Notice, the Current Market Price
shall not have been so determined, then the time period for the delivery of the
Exercise Notice shall be extended until such time as the Current Market Price
shall have been so determined.
(B) If Devon shall not have exercised the Purchase Right in accordance with
Section 2.4(d)(ii)(A) or shall have exercised the Purchase Right in part, then,
to the extent permitted by Rule 144, Kerr-McGee shall Transfer the Purchase
Right Shares then held by it as promptly as is commercially reasonable; provided
that Kerr-McGee shall not be required to Transfer Purchase Right Shares under
this Section 2.4(d)(ii)(B) at any time when it would be required to pay any
profit realized upon such Transfer to Devon pursuant to Section 16(b) under the
Exchange Act.
2.5 Restrictions on Transfer. From and after the date hereof until the
termination of this Agreement, Kerr-McGee shall not sell, transfer or otherwise
convey (when used as a verb, "Transfer" and, any sale, transfer or other
conveyance, a "Transfer") Beneficial Ownership of any Shares (including Shares
subject to Exchangeable Securities), without the prior written consent of a
majority of the Continuing Directors, which consent shall not be unreasonably
withheld, except that, in any event, any of the following shall be permitted:
(a) a Transfer in accordance with Rule 144;
(b) a Transfer in a Public Offering or in a public offering (other
than a Public Offering) made pursuant to a registration statement which has
been declared effective by the SEC under the Securities Act (any such
Public Offering or public offering, a "Registered Transaction"); provided,
however, that, in
<PAGE> 8
Page 21 of 36 Pages
connection with any such Registered Transaction, Kerr-McGee shall obtain
from the managing underwriter of such Public Offering or from each broker
through which such public offering is made, as the case may be, a
commitment to use its reasonable best efforts to make a broad public
distribution of the Shares (including an indirect distribution of Shares as
a result of a distribution of Exchangeable Securities) to be Transferred in
such Registered Transaction. The managing underwriter or broker, as the
case may be, will be advised that, for purposes of this Agreement, a "broad
public distribution" means a distribution such that no Person is allocated
for purchase in such Registered Transaction:
(i) a number of Shares in excess of (A) 14.9% of the Voting Shares
(after giving effect to the offering of the Shares and any other
securities being offered by Devon concurrently therewith in such
Registered Offering) or (B) in the case of a Public Offering, in excess
of 20% of the number of Shares being offered in such Public Offering,
provided that, in the case of this clause (B), Shares allocated for
purchase by a mutual fund, a pension fund or an investment advisers
(which investment adviser shall be registered under the Investment
Advisers Act of 1940, as amended) for any mutual fund or pension fund
shall be disregarded;
(ii) a number or amount of Exchangeable Securities which would
represent the right to acquire in excess of 14.9% of the Voting Shares;
or
(iii) any combination of (i) and (ii) above;
(c) a Transfer to a direct or indirect Subsidiary of Kerr-McGee;
(d) a Transfer to Devon or a to a direct or indirect Subsidiary of
Devon (pursuant to a tender offer or otherwise);
(e) a Transfer pursuant to a merger, consolidation or Share
Acquisition, in which Devon is a constituent corporation;
(f) a Transfer made as a pro rata dividend or distribution to the
holders of the common stock of Kerr-McGee; or
(g) a Transfer to any Person (other than Kerr-McGee, Devon or any
Affiliate of Kerr-McGee or Devon) who shall have commenced a tender or
exchange offer for Voting Shares (i) that is recommended or approved by a
majority of the Continuing Directors, (ii) with respect to which a majority
of the Continuing Directors has taken a position contemplated by Rule
14e-2(a)(2) under the Exchange Act, (iii) with respect to which a majority
of the Continuing Directors has resolved to redeem the Rights or has
amended the Rights Plan so that the Person making such tender or exchange
offer will not become an Acquiring Person or trigger a Distribution Date,
or (iv) that is a Qualified Tender Offer and in connection with which (A) a
final and non-appealable court order has declared the Rights Plan invalid
or inapplicable, or required that the Rights issued under the Rights Plan
be redeemed, and (B) the Person making such Qualified Tender Offer will be
permitted under applicable law to accept for payment or exchange the Voting
Shares tendered in such Qualified Tender Offer.
2.6 Voting for Directors. Kerr-McGee agrees to vote all of the Shares in
favor of the Devon Board of Director's nominees for election to the Board of
Directors; provided that, in connection with any such vote, the provisions of
Section 2.3(b) shall have been complied with.
2.7 Right to Participate in Certain Issuances by Devon. (a) Devon shall
not issue any security exercisable or exchangeable for or convertible into
Voting Shares, other than employee stock options ("Devon Convertible
Securities"), whether in a public or private offering for cash, unless Devon
shall have first complied with, in the case of an issuance other than pursuant
to Public Offering, the provisions of Section 2.7(b) or, in the case of a Public
Offering, the provisions of Section 2.7(c).
(b) If Devon determines to issue any Devon Convertible Security in a public
offering or otherwise, other than in a Public Offering, then Devon shall provide
written notice of such determination to Kerr-McGee, which notice shall include
all the terms of such issuance and shall offer to Kerr-McGee the right to
purchase, at the same price and on the same terms as Devon proposes to issue
such Devon Convertible Security to others
<PAGE> 9
Page 22 of 36 Pages
(or, if Devon proposes to issue such Devon Convertible Security other than for
cash, at a cash price equal to the value of the consideration for which Devon
proposes to issue such Devon Convertible Security, such value to be determined
by agreement between Devon or Kerr-McGee, or if the parties are unable to agree,
by an investment banking firm or other asset valuation firm of national
reputation selected by Kerr-McGee with the consent of a majority of the
Continuing Directors, which consent shall not be unreasonably withheld, the cost
of which shall be borne by Devon) a number or amount of the Devon Convertible
Securities proposed to be issued that represents the right to acquire upon
exercise, exchange or conversion of such Devon Convertible Securities a number
of Voting Shares equal to the Applicable Percentage (the "Offer Notice"). If
Kerr-McGee determines to accept the offer contained in the Offer Notice,
Kerr-McGee shall deliver a written notice to Devon indicating its acceptance
within 10 days after its receipt of the Offer Notice, which notice shall
indicate whether Kerr-McGee has accepted such offer in whole or in part, and, if
accepted in part, the number or amount of Devon Convertible Securities as to
which such offer has been accepted (an "Acceptance Notice"). Any acceptance of
the offer contained in an Offer Notice by delivery of an Acceptance Notice shall
be irrevocable and shall constitute a commitment by Kerr-McGee to purchase from
Devon, and by Devon to sell to Kerr-McGee, the number or amount of Devon
Convertible Securities covered by such Acceptance Notice upon the terms
contained in the Offer Notice.
(c) If Devon determines to issue any Devon Convertible Security in a Public
Offering, then Devon shall provide written notice of such determination to
Kerr-McGee no later than the time that Devon commences the process to make such
Public Offering, which notice shall include the proposed size and other terms of
such issuance, to the extent then known, the name or names of the managing
underwriter for such Public Offering, if then known and the date when it is
proposed that such Public Offering will be made, and shall cause the
underwriters of such Public Offering to offer to Kerr-McGee the right to
purchase from the underwriters of such Public Offering, at the public offering
price set forth on the cover page of the prospectus or prospectus supplement for
such Public Offering, a number or amount of the Devon Convertible Securities
proposed to be issued that represents the right to acquire upon exercise,
exchange or conversion of such Devon Convertible Securities a number of Voting
Shares equal to the Applicable Percentage.
3. STOCK CERTIFICATES AND OTHER RESTRICTIONS.
3.1 Endorsement of Certificates. (a) All certificates representing Shares
shall, subject to Section 3.1(c), bear the following legend:
"THIS CERTIFICATE IS SUBJECT TO THE PROVISIONS OF A STOCK RIGHTS AND
RESTRICTIONS AGREEMENT BETWEEN DEVON ENERGY CORPORATION AND KERR-McGEE
CORPORATION DATED AS OF DECEMBER 31, 1996. A COPY OF SUCH AGREEMENT IS ON
FILE AT THE PRINCIPAL BUSINESS OFFICE OF DEVON ENERGY CORPORATION."
(b) All certificates representing Shares shall, subject to Section 3.1(c),
bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE CONVEYED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO RULE 144 UNDER THE ACT,
UNLESS THE COMPANY SHALL HAVE BEEN FURNISHED WITH AN OPINION OF COUNSEL,
WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR DEVON ENERGY
CORPORATION, THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED."
(c) After such time as either of the legends set forth in Sections 3.1(a)
and (b) is no longer required hereunder (including without limitation as a
result of the termination of this Agreement in accordance with its terms) or if
the securities represented by a certificate have been registered under the
Securities Act pursuant to an effective registration statement or are to be sold
pursuant to Rule 144, or if the Company shall have been furnished with an
opinion of counsel, which opinion shall be reasonably satisfactory to counsel
for Devon, that registration under the Securities Act is not required, as the
case may be, then, in any such event, upon the
<PAGE> 10
Page 23 of 36 Pages
request of Kerr-McGee, Devon shall cause such certificate or certificates to be
exchanged for a certificate or certificates that do not bear any legend.
3.2 Improper Transfer. Any attempt by Kerr-McGee or its Affiliates to
Transfer any Shares other than in accordance with this Agreement shall be null
and void and neither Devon nor any transfer agent for such securities shall be
required to give any effect to such attempted Transfer in its stock records.
4. GENERAL PROVISIONS.
4.1 Representations and Warranties. (a) Devon represents and warrants to
Kerr-McGee that (i) Devon is a corporation duly organized, validly existing and
in good standing under the laws of the State of Oklahoma and has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder, (ii) the execution and delivery of this Agreement by
Devon and the consummation by Devon of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Devon and
no other corporate proceedings on the part of Devon are necessary to authorize
this Agreement or any of the transactions contemplated hereby, and (iii) this
Agreement has been duly executed and delivered by Devon and constitutes a valid
and binding obligation of Devon, and, assuming this Agreement constitutes a
valid and binding obligation of Kerr-McGee, is enforceable against Devon in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance and similar laws affecting
creditors' rights generally from time to time and to general principles of
equity.
(b) Kerr-McGee represents and warrants to Devon that (i) Kerr-McGee is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder, (ii) the execution
and delivery of this Agreement by Kerr-McGee and the consummation by Kerr-McGee
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Kerr-McGee and no other corporate
proceedings on the part of Kerr-McGee are necessary to authorize this Agreement
or any of the transactions contemplated hereby, and (iii) this Agreement has
been duly executed and delivered by Kerr-McGee and constitutes a valid and
binding obligation of Kerr-McGee, and, assuming this Agreement constitutes a
valid and binding obligation of Devon, is enforceable against Kerr-McGee in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance and similar laws affecting
creditors' rights generally from time to time and to general principles of
equity.
4.2 Amendment and Modification; Waiver of Compliance. This Agreement may
be amended or waived only by written instrument duly executed by the parties. In
the event of the amendment or modification of this Agreement in accordance with
its terms, the Board of Directors of Devon shall adopt any amendment to the
by-laws of Devon that may be required as a result of such amendment or
modification to this Agreement, and, if required, shall propose any amendment to
the Certificate of Incorporation that may be required as a result of such
amendment or modification to this Agreement to the Devon shareholders entitled
to vote thereon at a meeting duly called and held for such purpose, and shall
recommend that the Devon shareholders vote in favor of such amendment to the
Certificate of Incorporation.
4.3 Injunctive Relief. Each of the parties hereto hereby acknowledges that
in the event of a breach by any of them of any material provision of this
Agreement, the aggrieved party may be without an adequate remedy of law. Each of
the parties therefore agrees that in the event of a breach of any material
provision of this Agreement the aggrieved party may elect to institute and
prosecute proceedings in any court of competent jurisdiction to enforce specific
performance or to enjoin the continuing breach of such provision, as well as to
obtain damages for breach of this Agreement. By seeking or obtaining any such
relief, the aggrieved party will not be precluded from seeking or obtaining any
other relief to which it may be entitled in equity or at law.
4.4 Bylaws. At all times while this Agreement shall be in effect, Devon
shall cause its Bylaws to conform to the provisions of this Agreement, including
by causing its Bylaws to be amended.
4.5 No Amendment of Rights Plan. Devon's Board of Directors shall not
adopt any Rights Plan or amend the Rights Plan as in effect on the date hereof
without the approval of a majority of the Kerr-McGee
<PAGE> 11
Page 24 of 36 Pages
Designees then on the Board of Directors of Devon, unless such Rights Plan or
amendment would not adversely affect the rights or interests of Kerr-McGee or
its Affiliates.
4.6 Limitation on Reductions of Public Float by Devon. Devon shall not
take any action, including without limitation an acquisition by Devon or any of
its Affiliates of Voting Shares then outstanding, or a recapitalization by
Devon, which would reduce the number of shares of Common Stock held by Persons
other than Kerr-McGee, Devon or any Affiliate of either Kerr-McGee or Devon to
less than 15,000,000, without the prior written consent of Kerr-McGee.
4.7 Governing Law. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of Oklahoma, without regard to the principles of conflicts of law thereof.
4.8 Termination. (a) This Agreement may be terminated:
(i) by the mutual written consent of the parties hereto;
(ii) by Kerr-McGee or Devon if Kerr-McGee shall have become the
Beneficial Owner of less than 5% of the Voting Shares;
(iii) by Kerr-McGee if any Person (other than Kerr-McGee or any
Affiliate) shall have proposed to Devon a Business Combination Transaction
and a majority of the Continuing Directors shall have approved such
proposal or shall have retained (or authorized Devon to retain) the
services of an investment banking firm and shall have instructed such
investment banking firm to solicit indications of interest with respect to
a Business Combination Transaction; provided that, if a proposal with
respect to a Business Combination Transaction referred to in this clause
(iii) shall have been terminated or withdrawn by the Person who made such
proposal and Kerr-McGee shall have withdrawn, terminated or permitted to
expire any tender or exchange offer or proposal with respect to a Business
Combination Transaction made by Kerr-McGee, then the provisions of this
Agreement shall thereafter be reinstated (without liability to any party
for any failure to have complied with the terms and provisions of this
Agreement during the period when it shall have been terminated in
accordance with this Section 4.8(a)(iii)) and this Agreement shall
thereafter continue in full force and effect in accordance with its terms.
(iv) by Kerr-McGee if (A) any Person other than Kerr-McGee or its
Affiliates shall have acquired Beneficial Ownership of 15% or more of the
Voting Shares at a time when the Rights Plan is in effect and a majority of
the Continuing Directors shall have approved such acquisition or otherwise
taken action so that such acquisition would not result in such Person
becoming an Acquiring Person, or triggering a Distribution Date, under the
Rights Plan or (B) any Person other than Kerr-McGee or its Affiliates shall
have acquired Beneficial Ownership of 20% or more of the Voting Shares at a
time when the Rights Plan is not in effect, and, in any event referred to
in clause (A) or (B) above, such Person shall not have entered into an
agreement with Devon containing restrictions and other provisions at least
as favorable to Devon as those contained in this Agreement;
(v) by Kerr-McGee if the Continuing Directors shall not constitute a
majority of the Board of Directors of Devon; or
(vi) by Kerr-McGee if Devon shall have materially breached any
provision of this Agreement and Kerr-McGee shall have delivered a written
notice of such breach to Devon; provided that, if such material breach is
reasonably susceptible of cure and Devon shall proceed diligently to cure
such material breach, then this Agreement shall not be terminated unless
such material breach shall not have been cured on or prior to the fifth day
after the delivery of written notice by Kerr-McGee to Devon that Devon has
materially breached this Agreement.
(b) Unless this Agreement shall have been earlier terminated as provided in
Section 4.8(a), this Agreement shall terminate twenty-one years from and after
the death of the last survivor of J. Larry Nichols and Luke R. Corbett.
<PAGE> 12
Page 25 of 36 Pages
4.9 Notices. All notices, requests, demands or other communications
required or permitted by this Agreement shall be in writing and effective when
received, and delivery shall be made personally or by registered or certified
mail, return receipt requested, postage prepaid, or overnight courier or
confirmed facsimile transmission, addressed as follows:
(a) If to Devon:
Devon Energy Corporation
20 North Broadway, Suite 1500
Oklahoma City, Oklahoma 73102-8260
Attention: J. Larry Nichols, President
and Chief Executive Officer
Facsimile No.: (405) 236-4258
with a copy to:
McAfee & Taft
A Professional Corporation
10th Floor, Two Leadership Square
Oklahoma City, Oklahoma 73102
Attention: Jerry A. Warren, Esq.
Facsimile No.: (405) 235-0439
(b) If to Kerr-McGee:
Kerr-McGee Corporation
Kerr-McGee Center
P.O. Box 25861
Oklahoma City, Oklahoma 73125
Attention: Russel G. Horner, Jr.
Vice President and General Counsel
Facsimile No.: (405) 270-4211
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: David B. Chapnick, Esq.
Facsimile No.: (212) 455-2502
4.10 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
4.11 Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof. This Agreement shall not
be assigned by operation of law or otherwise.
4.12 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
4.13 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
<PAGE> 13
Page 26 of 36 Pages
4.14 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
DEVON ENERGY CORPORATION
By: /s/ J. LARRY NICHOLS
--------------------------------
Name: J. Larry Nichols
Title: President and Chief Executive Officer
KERR-McGEE CORPORATION
By: /s/ LUKE R. CORBETT
--------------------------------
Name: Luke R. Corbett
Title: President and Chief Operating Officer
<PAGE> 1
Page 27 of 36 Pages
EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated December 31, 1996 by and between
Devon Energy Corporation, an Oklahoma corporation (the "Company"), and
Kerr-McGee Corporation, a Delaware corporation ("Security Holder").
W I T N E S S E T H:
WHEREAS, the Company and Security Holder have entered into an Agreement and
Plan of Merger dated as of October 17, 1996 (the "Merger Agreement") which
provides, among other things, for the execution of this Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and in the Merger Agreement the parties hereto agree as follows:
Section 1. Definitions. The terms defined in this Section, whenever used in
this Agreement, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified. Terms not defined in this Agreement,
and defined in the Merger Agreement have the meanings assigned them in the
Merger Agreement.
"Agreement" shall mean this Registration Rights Agreement.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall mean the Company's authorized Common Stock, par value
$.10 per share.
"Company" shall mean Devon Energy Corporation, an Oklahoma corporation, and
any successor corporation by merger, consolidation or otherwise and any parent
corporation resulting from the merger or consolidation of the Company with or
into a subsidiary of another corporation.
"Evergreen Registration Statement" shall mean a Registration Statement
filed pursuant to Rule 415, or any successor rule under the Securities Act,
relating to an offering on a continuous or delayed basis and which may, in lieu
of filing a post-effective amendment that (x) includes any prospectus required
by Section 10(a)(3) of the Securities Act or (y) reflects facts or events
representing a material or fundamental change in the information set forth in
the Registration Statement, be amended by the incorporation by reference of
information required to be included in (x) or (y) above contained in periodic
reports filed pursuant to Section 13 or 15 (d) of the Exchange Act in the
Registration Statement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Exchangeable Security" shall mean a security of any type, including but
not limited to debt, equity, warrants or other rights, issued by Security Holder
at any time after the second anniversary of this Agreement and which includes or
represents the right to acquire Registrable Securities from Security Holder upon
exchange, conversion or exercise thereof; provided that such security shall
confer on Security Holder the right to suspend the right of the holder of such
security to exchange, convert or exercise such security to the extent necessary
for Security Holder to comply with the terms of Section 2.D. of this Agreement;
and provided further that the right to exchange or convert into, or exercise
for, Registrable Securities shall be limited to a period of seven years
commencing upon issuance of the Exchangeable Security.
"Person" shall mean an individual, a corporation, a partnership, a trust,
an unincorporated organization or a government or any agency or political
subdivision thereof.
"Public Offering" shall mean a firm commitment underwritten public offering
pursuant to a registration statement under the Securities Act.
"Registrable Securities" shall have the meaning subscribed thereto in
Section 2.A.
<PAGE> 2
Page 28 of 36 Pages
"Registration" shall mean the registration under the Securities Act of
Registrable Securities pursuant to either Section 2.A hereof or 2.B hereof.
"Registration Statement" shall mean a registration statement filed under
the Securities Act or a similar document filed pursuant to any other statute
then in effect corresponding to the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"Security Holder" shall mean Kerr-McGee Corporation, a Delaware
corporation, its permitted assigns, or any affiliate thereof holding Common
Stock or any successor corporation to any of the foregoing by merger or
consolidation or otherwise.
Section 2. Registration Rights.
A. Required Registration. If the Company shall receive a written request
from Security Holder requesting that the Company file a Registration Statement
relating to a Public Offering of shares of Common Stock owned by Security Holder
("Registrable Securities"), the Company will as promptly as practicable prepare
and file a Registration Statement and use its best efforts to cause the
Registration Statement to become effective; subject, however, to the following
provisions:
(1) the Company shall be required to file no more than three (3)
Registration Statements on behalf of Security Holder pursuant to this
Section 2.A;
(2) the Company shall not be obligated to file a requested
Registration:
(i) in the event that the aggregate number of Registrable
Securities to be included in such requested Registration is less than
five percent (5%) of the issued and outstanding Common Stock;
(ii) from the time it gives notice to Security Holder, provided
such notice is given prior to time of receipt by Devon of Security
Holder's request to file a Registration Statement, that it is preparing
to file a Registration Statement other than for the account of Security
Holder until 60 days after the Registration Statement has been declared
effective by the SEC; provided, the Company shall use its best efforts
to cause such Registration Statement to be declared effective as
promptly as practicable; and, provided further, the obligation to file a
Registration Statement on behalf of Security Holder shall be reinstated
if the Company does not file a Registration Statement within 30 days
after giving the notice referred to above; or
(iii) for a period from the time the Company gives Security Holder
notice, provided such notice is given prior to time of receipt by Devon
of Security Holder's request to file a Registration Statement, that the
Company is conducting negotiations for a material business combination
or that there is a material development or event pending which has not
yet been publicly disclosed and as to which the Company believes
disclosure will be prejudicial to the Company until the earlier of (a)
120 days after the notice with respect to a material business
combination or 90 days after the notice with respect to a material
development or event; (b) the public announcement of the combination,
development or event referred to above; or (c) the time the Company
gives Security Holder notice that suspension of its obligation is no
longer required.
(3) a Registration Statement filed pursuant to a request of Security
Holder shall first include all Registrable Securities requested to be
included by Security Holder and, only after such inclusion, may, include
securities of the Company being sold for the account of the Company or
other security holders; provided, however, that securities to be offered on
behalf of the Company or such other security holders will be included in
such Registration Statement only to the extent that, in the reasonable
opinion of the managing underwriter for the Public Offering of Registrable
Securities on behalf of Security Holder, such inclusion will not materially
adversely affect the distribution of Registrable Securities on behalf of
Security Holder;
(4) the selection of an underwriter for a Public Offering of
Registrable Securities by Security Holder shall be subject to the approval
of the Company, which shall not be unreasonably withheld; and
<PAGE> 3
Page 29 of 36 Pages
(5) for purposes of paragraph (1) of this Subsection A, if a requested
Registration Statement is filed and the Company otherwise complies with its
obligations hereunder, but the Registration Statement is withdrawn by
Security Holder due to a delay in the offering requested by the Company,
then no requested Registration Statement shall be deemed to have been
filed.
B. Incidental/"Piggy-back" Registration. If the Company at any time
proposes to file a Registration Statement (other than a Registration Statement
filed pursuant to Subsection A of this Section) under the Securities Act
relating to a Public Offering of Common Stock to be sold for cash that would
permit the registration of Registrable Securities, it will give Security Holder
as much advance notice, in writing, as is reasonably practicable under the
circumstances, but in any event not less than 5 days, before the filing with the
Commission of such Registration Statement, which notice shall set forth the
intended method of disposition of the securities proposed to be registered. The
notice shall offer to include in such filing such amount of Registrable
Securities as Security Holder may request. If Security Holder wishes to have
Registrable Securities registered pursuant to this Subsection B, it shall advise
the Company in writing within 20 days after the date of receipt of such offer
from the Company (or such shorter period, but in any event not less than 5 days,
as the Company shall specify in its notice to Security Holder), setting forth
the amount of Registrable Securities for which Registration is requested. If the
managing underwriter of the proposed Public Offering of Common Stock by the
Company shall advise the Company in writing that, in the reasonable opinion of
the managing underwriter, the distribution of the Registrable Securities
requested by Security Holder to be included in the Registration Statement
concurrently with securities being registered for sale by the Company would
materially adversely affect the distribution of such securities by the Company,
then the Company shall so advise the Security Holder and the number of
securities that are entitled to be included in the registration and underwriting
shall be allocated first to the Company and then pro rata among the shareholders
(including Security Holder) whose shares are to be included in such Registration
Statement. If any Person does not agree to the terms of any such underwriting,
such Person shall be excluded therefrom by written notice from the Company or
the underwriter.
Any Registrable Securities excluded or withdrawn from such underwriting
shall nevertheless be included in any Registration Statement (but not the
underwriting) filed pursuant to this Subsection B during the first two years
after the date of this Agreement in an amount not to exceed 5% of the issued and
outstanding Common Stock; provided, the Registrable Securities so included may
be offered and sold only during a 90 day period commencing on the last day of
any period during which "Affiliates" (as that term is defined in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended) of the Company have agreed not to dispose of Common Stock in accordance
with the underwriting agreement.
Any obligation of the Company to effect a Registration pursuant to this
Subsection B shall be conditioned upon Security Holder entering into an
underwriting agreement with the Company and the managing underwriters of the
registered offering of the type described in paragraph (10) of Subsection C.
C. Registration Procedures. If the Company is required by the provisions of
Subsections A or B of this Section 2 to effect the Registration of any of the
Registrable Securities under the Securities Act, the Company will, as
expeditiously as possible:
(1) Prepare and file with the Commission a Registration Statement with
respect to such securities and use its best efforts to cause such
Registration Statement to become and, subject to paragraph (2) of this
Subsection C, remain effective.
(2) Keep such Registration effective, and the prospectus used in
connection therewith, current for a period of ninety (90) days or until the
Security Holder has completed the distribution described in the
Registration Statement relating thereto, whichever first occurs (the
"Selling Period"); provided, however, that (a) the Selling Period shall be
extended for a period of time equal to any period that Security Holder
refrains from selling any securities included in such registration (i)
pursuant to an agreement between Security Holder and an underwriter of
Common Stock at the request of the Company in order to facilitate the
Company's offering thereunder or (ii) pursuant to paragraph 8 of this
Subsection C and in the case of a registration which includes Registrable
Securities in accordance with
<PAGE> 4
Page 30 of 36 Pages
the penultimate paragraph in Subsection B of this Section 2, the Selling
Period shall be extended for the period contemplated thereby; provided that
Rule 415, or any successor rule under the Securities Act, permits an
offering on a continuous or delayed basis; and provided further that
applicable rules under the Securities Act governing the obligation to file
a post-effective amendment permit, in lieu of filing a post-effective
amendment that (i) includes any prospectus required by Section 10(a)(3) of
the Securities Act or (ii) reflects facts or events representing a material
or fundamental change in the information set forth in the Registration
Statement, the incorporation by reference of information required to be
included in (i) and (ii) above to be contained in periodic reports filed
pursuant to Section 13 or 15(d) of the Exchange Act in the Registration
Statement.
(3) Prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective and such prospectus current in compliance with Section
10 of the Securities Act, and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all Common
Stock covered by such Registration Statement whenever Security Holder shall
desire to sell or otherwise dispose of the same, and provide Security
Holder with copies of any correspondence with the Commission, or copies of
memoranda relating to oral communications with the Commission, with respect
to any request by the Commission for any amendment of or supplement to the
Registration Statement or the prospectus included therein or for additional
information; provided, however, that the Company shall have no obligation
under this paragraph (3) after the period required by paragraph (2) of this
Subsection C has lapsed.
(4) Furnish to Security Holder such number of copies of such
Registration Statement and of each amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
included in such Registration Statement (including each preliminary
prospectus, summary prospectus and prospectus supplement), in conformity
with the requirements of the Securities Act, and such other documents, as
Security Holder may reasonably require in order to facilitate the public
offering, sale or other disposition of the Registrable Securities owned by
Security Holder.
(5) Use its best efforts to register or qualify the Common Stock
covered by such Registration Statement under such other securities or blue
sky laws of such jurisdictions as Security Holder shall reasonably request
(excluding however any jurisdiction in which the filing would subject the
Company to additional tax liability, and any jurisdiction in which the
Company would be required to execute a general consent to service of
process in effecting such Registration or qualification which consent would
not be required but for this paragraph (5)), and do such other acts and
things as may be required to enable Security Holder to consummate the
public sale or other disposition in such jurisdictions of the Registrable
Securities owned by Security Holder.
(6) Otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least 12 months, but not more than 18 months, beginning
with the first month after the effective date of the Registration
Statement, which earnings statement shall ratify the provisions of Section
11(a) of the Securities Act.
(7) Immediately notify Security Holder at any time when a prospectus
is required to be delivered under the Securities Act within the Selling
Period referred to in paragraph (2) of this Subsection C, of the Company
becoming aware that the prospectus included in the Registration Statement,
or as such prospectus may be amended or supplemented, includes an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary in order to make the statements therein
not misleading in light of the circumstances then existing, and at the
request of Security Holder to promptly prepare and furnish to Security
Holder a number of copies of an amended or supplemental prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading in the light of the circumstances then existing. In the event
the Company shall give any such
<PAGE> 5
Page 31 of 36 Pages
notice, Security Holder shall immediately suspend use of the prospectus and
the Selling Period shall be extended by the number of days during the
period from and including the date of the giving of such notice to and
including the date when Security Holder shall have received the copies of
such supplemented or amended prospectus.
(8) In the event that, in the judgment of the Company, it is advisable
to suspend use by Security Holder of a prospectus relating to an offering
of Registrable Securities, other than a Public Offering, because the
Company is conducting negotiations for a material business combination or
due to pending material developments or events that have not yet been
publicly disclosed and as to which the Company believes public disclosure
will be prejudicial to the Company, the Company shall deliver notice in
writing to the effect of the foregoing and, upon receipt of such notice,
the Security Holder shall not use the prospectus, and the Selling Period
shall cease to run or will not commence, until such Security Holder has
received copies of the supplemented or amended prospectus provided for in
paragraph 3 of this Section C, or until it is advised in writing by the
Company that the prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed
incorporated by reference in such prospectus; provided that the duration of
such suspension shall not exceed 30 days. The Company will use its best
efforts to ensure that the use of the prospectus may be resumed, and the
Selling Period will commence, as promptly as is practicable and, in any
event, promptly after the earlier of (x) public disclosure of such material
business combination or pending material development or event sufficient to
permit an affiliate of the Company to sell Common Stock or (y) in the
judgment of the Company, public disclosure of such material business
combination or material development or event would not be prejudicial to
the Company.
(9) Use its best efforts to list such Registrable Securities on the
primary securities exchange or other trading market on which the Common
Stock is then listed, if such Registrable Securities are not already so
listed and if such listing is then permitted under the rules of such
exchange or other trading market, and to provide a transfer agent and
registrar for such Registrable Securities covered by such Registration
Statement not later than the effective date of such Registration Statement.
(10) Enter into such agreements (including an underwriting agreement
in customary form and containing customary provisions relating to legal
opinions and accountants' letters and customary representations and
warranties and customary provisions for mutual indemnification and
contribution between the Company and the underwriters for Security Holder)
and take such other actions as Security Holder may reasonably request in
order to expedite or facilitate the disposition of such Registrable
Securities.
(11) Make available for inspection by Security Holder, by any
underwriter participating in any disposition to be effected pursuant to
such Registration Statement and by any attorney, accountant or other agent
retained by Security Holder or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties
of the Company, and cause all of the Company's officers, directors and
employees to supply all information requested by Security Holder, such
underwriter, attorney, accountant or agent, as is reasonably needed in
connection with such Registration Statement.
D. Exchangeable Securities. In lieu of one of the Registration Statements
to which Security Holder is entitled pursuant to Section 2.A. hereof, after
written request from Security Holder the Company shall file one Evergreen
Registration Statement for registration of Registrable Securities deliverable by
Security Holder pursuant to the terms of an offering of Exchangeable Securities
(including the sale of the Registrable Securities by Security Holder on the
redemption or maturity of the Exchangeable Securities), and use its best efforts
to cause the Registration Statement to become effective.
The terms of the Exchangeable Securities will provide that the conversion,
exercise or exchange right may only be utilized (x) during the calendar month of
April in any year that the Exchangeable Securities are outstanding and (y)
during the 30 days ending on the maturity or redemption of the Exchangeable
Securities; provided, there shall be only one conversion, exercise or exchange
period in any calendar year.
<PAGE> 6
Page 32 of 36 Pages
E. Expenses; Limitations on Registration. All Commission and blue sky
filing fees and underwriting discounts and commissions attributable to
securities offered on behalf of Security Holder, and the fees and expenses of
separate counsel for Security Holder, incurred in connection with effecting a
Registration pursuant to this Section 2 shall be borne by Security Holder.
Printing expenses of a prospectus which includes Registrable Securities shall be
borne by the Company and each shareholder (including Security Holder) whose
shares are included in the Registration Statement in proportion to the number of
shares being offered by each. All other expenses incurred in connection with the
Registration Statement shall be borne by the Company.
It shall be a condition precedent to the obligation of the Company to take
any action pursuant to this Section 2 in respect of the Registrable Securities
which are to be registered at the request of Security Holder that Security
Holder shall furnish to the Company such information regarding the securities
held by it and the intended method of disposition thereof as the Company shall
reasonably request and as shall be required in connection with the action taken
by the Company.
F. Indemnification. (1) In the event of any Registration of any Registrable
Securities under the Securities Act pursuant to this Section 2, the Company
agrees to indemnify and hold harmless Security Holder, its directors, officers
and employees, and each other Person, if any, who controls Security Holder
within the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which Security Holder or
any such director, officer, employee or controlling Person may become subject
under the Securities Act or any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any alleged untrue statement of any material fact
contained, on the effective date thereof, in any Registration Statement under
which such securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or (ii) any alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and shall reimburse Security Holder or such director, officer, employee or
controlling Person for legal or any other expenses reasonably incurred by
Security Holder or such director, officer, employee or controlling Person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any alleged untrue statement or alleged omission
made in such Registration Statement, preliminary prospectus, prospectus, or
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by
Security Holder stating that it is specifically for use therein; and provided,
further, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission in the prospectus if such untrue statement or alleged untrue
statement or omission or alleged omission has been the subject of a notice given
to Security Holder pursuant to paragraph (7) of Subsection (C) if Security
Holder after receipt of such notice and prior to the receipt of a corrected
prospectus sold a Registrable Security to the Person asserting such loss, claim,
damage, liability or expense who purchased such Registrable Security which is
the subject thereof form Security Holder. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of
Security Holder or such director, officer, employee or participating Person or
controlling Person, and shall survive the transfer of such securities by
Security Holder.
(2) Security Holder agrees to indemnify and hold harmless the Company, its
directors, officers and employees and each other Person, if any, who controls
the Company against any losses, claims, damages or liabilities joint or several,
to which the Company or any such director, officer, or employee or any such
Person may become subject under the Securities Act or any other statute or at
common law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any alleged untrue
statement of any material fact contained, on the effective date thereof, in any
Registration Statement under which Registrable Securities were registered under
the Securities Act at the request of Security Holder, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereto,
or (ii) any alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such alleged untrue
<PAGE> 7
Page 33 of 36 Pages
statement or alleged omission was made in such Registration Statement,
preliminary prospectus, prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished to the Company through an
instrument duly executed by Security Holder specifically stating it is for use
therein, and shall reimburse the Company or such director, officer, employee or
other Person for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability or action.
(3) Promptly after receipt by an indemnified party hereunder of written
notice of the commencement of any action or proceeding involving a claim
referred to in the preceding paragraphs of this Subsection E, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action;
provided, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligation under this
Subsection E to the extent the indemnifying party is not materially prejudiced
by such failure. In case any such action is brought against an indemnified
party, the indemnified party shall permit the indemnifying party to assume the
defense of such action or proceeding, provided that counsel for the indemnifying
party, who shall conduct the defense of such action or proceeding shall be
approved by the indemnified party (whose approval shall not be unreasonably
withheld) and the indemnified party may participate in such defense at such
indemnified party's expense unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, in which event the indemnifying
party shall pay the reasonable fees and expense of separate counsel for the
indemnified party. No indemnifying party will consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation. The
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm for all indemnified parties. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent.
(4) Indemnification similar to that specified in the preceding paragraphs
of this Subsection E shall be given by the Company and Security Holder (with
such modifications as shall be appropriate) with respect to liability related to
any required registration or other qualification of Registrable Securities under
any Federal or state law or regulation of governmental authority other than the
Securities Act.
(5) If the indemnification provided for in this Subsection E is unavailable
or insufficient to hold harmless an indemnified party under paragraphs (1) or
(2) above, then the indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraphs (1) or (2) above, in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and
Security Holder on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equity considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or Security Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and Security
Holder agree that it would not be just and equitable if contributions pursuant
to this paragraph (5) were to be determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the first sentence of this paragraph (5). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this paragraph (5) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim (which shall be limited as provided in paragraph (3) above if the
indemnifying party has assumed the defense of any such action in accordance with
the provisions thereof) which is the subject of this paragraph (5).
Notwithstanding the provisions of this paragraph (5), in respect of any loss,
claim, damage or liability based upon any untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact which
relates to information other than information supplied by Security Holder,
Security Holder shall not be required to contribute any amount in excess of the
amount by which the total price at which the Registrable
<PAGE> 8
Page 34 of 36 Pages
Securities offered by it and distributed to the public were offered to the
public exceeds the amount of any damages which Security Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. Promptly after receipt by an indemnified party under this
paragraph (5) of notice of the commencement of any action against such party in
respect of which a claim for contribution may be made against an indemnifying
party under this paragraph (5), such indemnified party shall notify the
indemnifying party in writing of the commencement thereof if the notice
specified in paragraph (3) above has not been given with respect to such action;
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party under this paragraph
(5) to the extent such omission is not prejudicial.
G. Public Availability of Information. The Company shall comply with all
public information reporting requirements of the Commission, to the extent
required from time to time to enable Security Holder to sell Registrable
Securities without Registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of Security Holder, the
Company will deliver to Security Holder a written statement as to whether it has
complied with such requirements.
H. Supplying Information. The Company shall cooperate with Security Holder
in supplying such information as may be necessary for Security Holder to
complete and file any information reporting forms presently or hereafter
required by the Commission as a condition to the availability of an exemption
from the Securities Act for the sale of any Registrable Securities.
I. Specific Performance. Each party hereto acknowledges and agrees that
each other party hereto would be irreparably harmed and would have no adequate
remedy of law if any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Accordingly, it
is agreed that, in addition to any other remedies by law or in equity which may
be available, the parties hereto shall be entitled to obtain temporary and
permanent injunctive relief with respect to any breach or threatened breach of,
or otherwise obtain specific performance of the covenants and other agreements
contained in this Agreement.
Section 3. Representations and Warranties of the Company. The Company
represents and warrants to Security Holder that (a) the Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Oklahoma and has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder, (b) the execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or any of
the transactions contemplated hereby, and (c) this Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, and, assuming this Agreement constitutes a valid and
binding obligation of Security Holder is enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance and similar laws affecting
creditors, rights generally from time to time and to general principles of
equity, and except as the enforceability thereof may be limited by
considerations of public policy.
Section 4. Representations and Warranties of Security Holder. Security
Holder represents and warrants to the Company that (a) it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder, (b) the execution and delivery of
this Agreement by Security Holder and the consummation by Security Holder of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Security Holder and no other corporate
proceedings on the part of Security Holder are necessary to authorize this
Agreement or any of the transactions contemplated hereby, and (c) this Agreement
has been duly executed and delivered by Security Holder and constitutes a valid
and
<PAGE> 9
Page 35 of 36 Pages
binding obligation of Security Holder, and, assuming this Agreement constitutes
a valid and binding obligation of the Company, is enforceable against Security
Holder in accordance with its terms subject to applicable bankruptcy,
reorganization, insolvency, moratorium, fraudulent conveyance and similar laws
affecting creditors' rights generally from time to time and to general
principles of equity, and except as the enforceability thereof may be limited by
considerations of public policy.
Section 5. Stock Rights and Restrictions Agreement. This Agreement shall be
in all respects subject to the terms and conditions of the Stock Rights and
Restrictions Agreement between the parties hereto and of even date herewith.
Section 6. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or transmitted by
telex, telegram or facsimile transmission or mailed by registered or certified
mail (return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to Security Holder, to:
Kerr-McGee Corporation
P.O. Box
Oklahoma City, Oklahoma 73125
Attention: General Counsel
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: David Chapnick
Facsimile No: (212) 455-2502
(b) if to the Company, to:
Devon Energy Corporation
20 North Broadway, Suite 1500
Oklahoma City, Oklahoma 73102-8260
Attention: J. Larry Nichols, President
Facsimile No.: (405) 552-4550
with a copy to:
McAfee & Taft A Professional Corporation
10th Floor, Two Leadership Square
Oklahoma City, Oklahoma 73102-7103
Attention: Jerry A. Warren, Esq.
Facsimile No.: (405) 235-0439
Section 5. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oklahoma.
Section 6. Counterparts. This Agreement may be executed in any number of
counterparts, which together shall constitute a single agreement.
<PAGE> 10
Page 36 of 36 Pages
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their officers thereunto duly authorized.
DEVON ENERGY CORPORATION
By
/s/ J. LARRY NICHOLS
--------------------------------
J. Larry Nichols
President and Chief Executive
Officer
KERR-MCGEE CORPORATION
By /s/ LUKE R. CORBETT
--------------------------------
Luke R. Corbett, President and
Chief Operating Officer
