SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.1a-11(c) or Section 240.1a-12
Devon Energy Corporation
(Name of Registrant as Specified In Its Charter)
Marian J. Moon, Corporate Secretary
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box)
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11;*
4) Proposed maximum aggregate value of transaction:
* Set forth amount on which the filing is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Notes: We hope to mail this Proxy Statement by April 15, 1995.
Please direct comments, if any, to Jerry A. Warren, Esq., McAfee
& Taft A Professional Corporation, Two Leadership Square, Okahoma
City, OK 73102, telephone (405) 552-2224.
<PAGE>
DEVON ENERGY CORPORATION
20 North Broadway, Suite 1500
Oklahoma City, OK 73102-8260
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
The Annual Meeting of Stockholders of Devon Energy
Corporation, a Delaware Corporation ("Devon" or the "Company")
will be held in the Community Room (Mezzanine Floor), Bank of
Oklahoma, Robinson Avenue at Robert S. Kerr, Oklahoma City,
Oklahoma on June 7, 1995 at 1:00 p.m., local time, for the
following purposes:
1. To elect two directors for terms expiring in 1998;
2. To ratify the appointment of KPMG Peat Marwick LLP, the U.S.
member firm of KPMG (Klynveld Peat Marwick Goerdeler), as independent
certified public accountants of Devon for 1995;
3. To consider and act upon a proposal to approve a Plan and
Agreement of Merger and Reorganization having the effect of
reincorporating Devon, which is a Delaware corporation, as an
Oklahoma corporation; and
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Stockholders of record at the close of business on April 10,
1995, are entitled to notice of and to vote at the meeting. The
accompanying proxy statement contains information regarding the
matters to be considered at the meeting. For reasons outlined in
the attached proxy statement, the Board of Directors recommends a
vote "FOR" the matters being voted upon.
IMPORTANT
YOUR PROXY IS IMPORTANT TO ASSURE A QUORUM AT THE MEETING.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE BE SURE
THAT THE ENCLOSED PROXY IS PROPERLY COMPLETED, DATED, SIGNED AND
RETURNED WITHOUT DELAY. PLEASE USE THE ENCLOSED RETURN ENVELOPE.
IT REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS
Marian J. Moon
Corporate Secretary
Oklahoma City, Oklahoma
April ____, 1995
<PAGE>
DEVON ENERGY CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 7, 1995
THE COMPANY
Devon is an independent energy company engaged primarily in
oil and gas exploration, development and production, and in the
acquisition of producing properties. The Company owns interests
in 1,300 oil and gas properties in 12 states, with the majority
being in New Mexico, Texas, Oklahoma, Wyoming and Louisiana. At
December 31, 1994, Devon's estimated proved reserves were 347.6
billion cubic feet of natural gas, 42.2 million barrels of oil
and 5.4 million barrels of natural gas liquids, or 633.2
equivalent billion cubic feet of total proved reserves.
During 1988 Devon expanded its capital base with its first
issuance of common stock to the public and began a substantial
expansion program. Management has utilized a two-pronged growth
strategy of acquiring producing properties and engaging in
controlled exploratory and development drilling activities.
During the seven years ended December 31, 1994, Devon has drilled
406 wells, 388 of which were successful, and consummated 14
significant acquisitions. During this same period, capital costs
incurred totalled $402 million and reserve additions, including
revisions, were 476 billion cubic feet of natural gas, 52 million
barrels of oil and six million barrels of natural gas liquids.
These additions, minus production and property sales, resulted in
a twelve-fold increase in reserves during the seven-year period.
Since September 29, 1988, Devon's common stock has been
traded on the American Stock Exchange (the "AMEX") under the
symbol "DVN". The Company's mailing address is 20 North
Broadway, Suite 1500, Oklahoma City, OK 73102-8260. Its
telephone number is 405/235-3611.
All references in this proxy statement to Devon or the
Company include its predecessors and subsidiary corporations.
GENERAL INFORMATION
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Devon to be
used at the annual meeting of stockholders (the "Meeting"). The
Meeting will be held on the 7th day of June, 1995, and any
adjournment thereof. At the Meeting the shareholders will (i)
elect two directors for terms expiring in 1998; (ii) ratify the
appointment of KPMG Peat Marwick LLP as the Company's independent
public accountants and (iii) consider and vote upon a proposal to
approve a Plan and Agreement of Merger and Reorganization (the
"Reincorporation"). The Reincorporation will have the effect of
changing the Company's state of incorporation from Delaware to
Oklahoma. The shareholders will also consider and vote upon such
other business as may properly come before the Meeting or any
adjournment thereof. This proxy statement is first being sent to
the shareholders on or about April __, 1995.
<PAGE>
The Board of Directors has established April 10, 1995, as
the record date (the "Record Date") to determine stockholders
entitled to notice of and to vote at the Meeting. At the close
of business on the Record Date, 22,050,996 shares of $.10 par
value common stock of the Company ("Common Stock") were
outstanding. Each share is entitled to one vote. Devon's
officers and directors own a total of _________ shares, or ___%
of Devon Common Stock, and intend to vote all of such shares in
favor of the matters to be voted upon at the Meeting.
Each proxy which is properly signed, dated and returned to
the Company in time for the Meeting, and not revoked, will be
voted in accordance with instructions contained therein. If no
contrary instructions are given, proxies will be voted "FOR" each
matter being voted on at the Meeting. Proxies may be revoked at
any time prior to their being exercised by delivering a written
notice of revocation or a later dated proxy to the Secretary of
the Company. In addition, a stockholder present at the Meeting
may revoke his Proxy and vote in person.
The office of the Company's Secretary appoints an inspector
of election to tabulate all votes and to certify the results of
all matters voted upon at the Meeting. Election of each director
at the Meeting and approval of the appointment of the Company's
independent public accountants for 1995 will be by plurality
vote. Approval of the Reincorporation requires the affirmative
vote of a majority of the Company's outstanding Common Stock.
Thus, failure to return the enclosed proxy or to vote at the
Meeting will have the same effect as a vote against the
Reincorporation.
Neither the corporate law of the state of Delaware, the
state in which Devon is currently incorporated, nor the Company's
Certificate of Incorporation or Bylaws have any provisions
regarding the treatment of abstentions and broker non-votes. It
is the Company's policy (i) to count abstentions or broker non-
votes for purposes of determining the presence of a quorum at the
Meeting; (ii) to treat abstentions as votes not cast but to treat
them as shares represented at the Meeting for determining results
on actions requiring a majority vote; and (iii) to consider
neither abstentions nor broker non-votes in determining results
of plurality votes.
The cost of solicitation of proxies will be borne by the
Company. Proxies may be solicited by mail or personally by
directors, officers or regular employees of the Company, none of
whom will receive additional compensation therefor. The Company
has also retained Morrow & Co., Inc. to assist in solicitation of
proxies for a fee of $__________, plus reimbursement of certain
expenses. Those holding shares of the company's Common Stock of
record for the benefit of others ("Nominee Holders") are being
asked to distribute proxy soliciting materials to, and request
voting instructions from, the beneficial owners of such shares.
The Company will reimburse Nominee Holders for their reasonable
out-of-pocket expenses.
<PAGE>
PRINCIPAL SECURITY OWNERSHIP
The table below sets forth as of April 10, 1995, the names
and addresses of each person known by management to own
beneficially more than 5% of the Company's outstanding Common
Stock, the number of shares beneficially owned by each such
stockholder and the percentage of outstanding shares owned. The
table also sets forth the number and percentage of outstanding
shares of Common Stock beneficially owned by the Company's Chief
Executive Officer ("CEO"), each of the Company's directors, the
four most highly compensated executive officers other than the
CEO and by all officers and directors of the Company as a group.
Common Stock
Name and Address of Number of Percent of
Beneficial Owner Shares Class
Merrill Lynch & Co., Inc. 2,000,000 (1) 9.07%
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
Strong Capital Management, Inc. 1,399,100 (2) 6.34%
100 Heritage Reserve
Menomonee Falls, WI 53051
FMR Corp. 1,326,500 (3) 6.02%
82 Devonshire Street
Boston, Massachusetts 02109
American Express Company 1,104,500 (4) 5.01%
American Express Tower
World Financial Center
New York, New York 10285
J. Larry Nichols* 648,371 (5) 2.92%
Thomas F. Ferguson* 450,100 (6) 2.04%
Michael E. Gellert* 311,720 (7) 1.41%
John W. Nichols* 168,204 0.76%
H. R. Sanders, Jr.* 103,822 (8) 0.47%
David M. Gavrin* 76,180 (9) 0.35%
H. Allen Turner 52,285 (10) 0.24%
Darryl G. Smette 47,400 (11) 0.21%
J. Michael Lacey 42,465 (12) 0.19%
All directors and officers of Devon Energy
as a group (13 persons) 1,976,271 (13) 8.78%
* Director. The business address of each director is 20 North
Broadway, Suite 1500, Oklahoma City, Oklahoma 73102-8260.
(1) Merrill Lynch & Co., Inc. ("ML&Co."), Merrill Lynch Group,
Inc. ("ML Group") and Princeton Services, Inc. ("PSI") are
parent holding companies. Merrill Lynch Asset Management,
L.P. ("MLAM") is an investment adviser to Merrill Lynch
Growth Fund for Investment and Retirement (the "Fund"), the
beneficial owner of such shares. ML&Co., ML Group, PSI, MLAM
and the Fund disclaim beneficial ownership of such shares.
(2) Strong Capital Management, Inc. (formerly Strong/Corneliuson
Capital Management, Inc.) is an investment advisor
registered under Section 204 of the Investment Advisers Act
of 1940. Strong Capital Management Inc. has been granted
discretionary dispositive power over its clients' securities
and in some instances has voting power over such securities.
Any and all discretionary authority which has been delegated
to Strong Capital may be revoked in whole or in part at any
time.
(3) FMR Corp. is a holding corporation. A wholly-owned
subsidiary of FMR, Fidelity Management and Research Company,
beneficially owns 1,281,000 shares as a result of acting as
investment adviser to several investment companies,
including Fidelity Management Trust Company which is the
beneficial owner of 45,500 shares.
(4) American Express Company is a holding company. American
Express Financial Advisors (formerly IDS Financial
Corporation), a subsidiary of American Express Company,
beneficially owns all such shares as a result of acting as
investment adviser.
(5) Includes 42,965 shares owned of record by Mr. Nichols as
Trustee of a family trust, 78,624 shares owned by Mr.
Nichols' wife, 12,570 shares owned by Mr. Nichols as trustee
of his children's trusts as to which he exercises sole
voting and investment power, 6,200 shares owned by Mr.
Nichols' son, 6,000 shares owned by Mr. Nichols' daughter
and 168,400 shares which are deemed beneficially owned
pursuant to stock options held by Mr. Nichols.
(6) Includes 450,100 shares owned by Englewood, N.V. The
ultimate parent of Englewood, N.V., Al-Futtooh Investments
WLL, is owned equally by Sheikh Nasser Al-Sabah, Sheikha
Salwa Al-Sabah and Sheikh Hamad Al-Sabah, who each share
voting and investment power. Thomas F. Ferguson is Managing
Director of Englewood N.V. and disclaims beneficial
ownership of the shares attributable to Englewood N.V.
(7) Includes 309,149 shares owned by Windcrest Partners, a
limited partnership, in which Mr. Gellert shares investment
and voting power.
(8) Includes 95,600 shares which are deemed beneficially owned
pursuant to stock options held by Mr. Sanders.
(9) Includes 3,757 shares owned of record by Mr. Gavrin as
trustee of a family trust, 2,141 shares owned by Mr. Gavrin
as co-trustee of the Mark Sandler 1987 Trust and 8,835
shares owned by Mr. Gavrin's wife.
(10) Includes 51,300 shares which are deemed beneficially owned
pursuant to stock options held by Mr. Turner.
(11) Includes 45,100 shares which are deemed beneficially owned
pursuant to stock options held by Mr. Smette.
(12) Includes 37,300 shares which are deemed beneficially owned
pursuant to stock options held by Mr. Lacey.
(13) Includes 462,400 shares which are deemed beneficially owned
pursuant to stock options held by officers.
ELECTION OF DIRECTORS
Pursuant to provisions of the Company's Certificate of
Incorporation and Bylaws, the Board of Directors has fixed the
number of directors at six. The Company's Certificate of
Incorporation and Bylaws provide for three classes of directors
serving staggered three-year terms, with each class to be as
nearly equal in number as possible. The Board of Directors has
nominated David M. Gavrin and John W. Nichols for re-election as
directors for terms expiring at the 1998 annual meeting, and in
each case until their successors are elected and qualified.
Proxies cannot be voted for a greater number of persons than the
number of nominees named. Both nominees are presently directors
of the Company whose terms expire at the Meeting. Other
directors who are remaining on the Board will continue in office
in accordance with their previous elections until the expiration
of their terms at the 1996 or 1997 annual meeting, as the case
may be.
The Board of Directors recommends a vote "FOR" each of the
nominees for election to the Board of Directors.
It is the intention of the persons named in the Proxy to
vote Proxies "FOR" the election of the two nominees. In the
event that either of the nominees should fail to stand for
election, the persons named in the Proxy intend to vote for
substitute nominees designated by the Board of Directors, unless
the Board of Directors reduces the number of directors to be
elected.
INFORMATION ABOUT NOMINEES AND DIRECTORS
Nominees for Re-election as Directors For Terms Expiring in 1998
David M. Gavrin, age 60, a director of Devon Energy since
1979, serves as the chair of the Compensation and Stock Option
Committee. In addition to managing his personal investments, he
serves as a director of several other companies, including
Heidemij, N.V., a worldwide environmental services company; New
York Federal Savings Bank; United American Energy Corp., an
independent power producer; and, Lectorum Publishing, Inc., a
publisher and distributor of Spanish language books. In addition,
Mr. Gavrin was associated with Drexel Burnham Lambert
Incorporated, a former investment banking firm, for 14 years as
First Vice President and was a General Partner of Windcrest
Partners, an investment partnership, for 10 years.
John W. Nichols, age 80, is the founder of Devon Energy
Corporation and has been Chairman of the Board of Directors since
1969. He is a Founding Partner and Oversight General Partner of
Blackwood & Nichols Co. A Limited Partnership. Immediately after
World War II, Mr. Nichols and F. G. Blackwood began purchasing
producing oil and gas properties. In 1949, they formed the
partnership of Blackwood & Nichols Co. This partnership was the
sponsor of the first syndicated oil and gas drilling program
registered with the Securities and Exchange Commission. Blackwood
& Nichols Co. continues to operate approximately 250 wells in the
prolific Northeast Blanco Unit of the San Juan Basin in New
Mexico. John Nichols is a non-practicing Certified Public
Accountant.
Directors Whose Terms Expire in 1997
Thomas F. Ferguson, age 58, has been a director of Devon
Energy since 1982, and is the chair of the Audit Committee. He is
Managing Director of Englewood, N.V., a wholly-owned subsidiary
of Kuwaiti-based Al-Futtooh Investments WLL. His 20 year
association with the principals of Al-Futtooh has allowed him to
represent them on the board of directors of Devon and other
companies in which they invest. Those investments include hotels,
pharmaceuticals, an investment banking company and a venture
capital fund. Mr. Ferguson is a Canadian qualified Certified
General Accountant and was formerly employed by the Economist
Intelligence Unit of London as a financial consultant.
J. Larry Nichols, age 52, has been a Director of Devon
Energy since 1971. Mr. Nichols joined Devon in 1970, became Vice
President in 1971, Executive Vice President and General Counsel
in 1973, President in 1976 and Chief Executive Officer in 1980.
Mr. Nichols holds position of leadership in several industry
associations. He serves as a director of the Independent
Petroleum Association of America (IPAA) and chairs its Public
Lands Committee. He is president of the Domestic Petroleum
Council and is also a director of the Independent Petroleum
Association of New Mexico, the Oklahoma Independent Producers
Association and the National Petroleum Council. He also serves as
a director of Smedvig Tankships Limited, the National Association
of Manufacturers and the Oklahoma Nature Conservancy. Mr. Nichols
holds a geology degree from Princeton University and a law degree
from the University of Michigan. Prior to joining Devon, he
served as a law clerk to Mr. Chief Justice Earl Warren and Mr.
Justice Tom Clark of the U.S. Supreme Court. Mr. Nichols is a
member of the Oklahoma Bar Association.
Directors Whose Terms Expire in 1996
Michael E. Gellert, age 63, has been a director of Devon
Energy since 1969 and is a member of the Compensation and Stock
Option Committee. In addition to managing his personal
investments and serving as a director of Devon, Mr. Gellert
serves on the board of several other companies. These include The
Harvey Group Inc., distributors of electronic equipment; Humana
Inc., owners of managed health care facilities; Premier Parks,
Inc., an amusement parks operator; Putnam Trust Company, a
banking concern; Seacor Holdings, Inc., owners and operators of
marine equipment; and Regal Cinemas, Inc., owners and operators
of multiplex motion picture theatres. Mr. Gellert was associated
with the Drexel Burnham Lambert Group and its predecessors for 31
years, including 13 years as a director, and served in various
executive capacities for its wholly-owned subsidiary, Drexel
Burnham Lambert Incorporated.
H. R. Sanders, Jr., age 62, has been a Director and
Executive Vice President of Devon since 1981. Prior to joining
Devon, Mr. Sanders was associated with RepublicBank Dallas, N.A.
for 31 years, the last 11 of which he served its Senior Vice
President with direct responsibility for independent oil and gas
producer and mining loans. Mr. Sanders is a member of the IPAA,
Texas Independent Producers and Royalty Owners Association and a
past director of Triton Energy Corporation.
INFORMATION ABOUT EXECUTIVE OFFICERS
The positions held by the executive officers of the Company
are as follows.
J. Michael Lacey, age 49, joined Devon as Vice President -
Operations and Exploration in 1989. Prior to his employment with
Devon, Mr. Lacey served as General Manager in Tenneco Oil
Company's Mid-Continent and Rocky Mountain Divisions. He holds
both undergraduate and graduate degrees in Petroleum Engineering
from the Colorado School of Mines, is a Registered Professional
Engineer and a member of the Society of Petroleum Engineers and
the American Association of Petroleum Geologists.
Darryl G. Smette, age 47, Vice President of Marketing and
Administrative Planning since 1989, joined Devon in 1986 as
Manager of Gas Marketing. Mr. Smette's educational background
includes an undergraduate degree from Minot State College and a
masters degree from Wichita State University. His marketing
background includes 15 years as Director of Marketing for Energy
Reserves Group, Inc./BHP Petroleum (America). He is also an oil
and gas industry instructor approved by the University of Texas'
Department of Continuing Education. Mr. Smette is a member of the
Natural Gas Association of Oklahoma and the American Gas
Association.
H. Allen Turner, age 42, has, since 1982, been responsible
for Devon's investment banking activities and investor
communications as Vice President of Corporate Development. In
1981 he served as Executive Vice President of Palo Pinto/Harken
Drilling Programs. For the six prior years he was associated with
Merrill Lynch with various responsibilities including Regional
Tax Investments Manager. He is a member of the Petroleum Investor
Relations Association, and serves on the IPAA Capital Markets
Committee. He received his bachelor's degree from Duke
University.
William T. Vaughn, age 48, is Devon's Vice President of
Finance in charge of commercial banking functions, accounting,
tax and information services. Mr. Vaughn was elected in 1987 to
his present position. Prior to that he was Controller of Devon
from 1983 to 1987. Mr. Vaughn's prior experience includes serving
as Controller with Marion Corporation for two years and
employment with Arthur Young & Co. for seven years with various
duties including audit manager. He is a Certified Public
Accountant and a member of the American Institute of Certified
Public Accountants and the Oklahoma Society of Certified Public
Accountants. He is a graduate of the University of Arkansas with
a Bachelor of Science degree.
Danny J. Heatly, age 39, has been Devon's Controller since
1989. Prior to joining Devon, Mr. Heatly was associated with Peat
Marwick Main & Co. in Oklahoma City for ten years with various
duties including senior audit manager. He is a Certified Public
Accountant and a member of the American Institute of Certified
Public Accountants and the Oklahoma Society of Certified Public
Accountants. He graduated with a Bachelor of Accountancy degree
from the University of Oklahoma.
Gary L. McGee, age 45, was elected Treasurer in 1983, having
first served as Devon's Controller. Mr. McGee is a member of the
Petroleum Accounting Societies of Houston and Oklahoma City and
has been active in varied accounting functions with several
companies in the industry. He served as Vice President of Finance
with KSA Industries, Inc., a private holding company with various
interests including oil and gas exploration. Mr. McGee also held
various accounting positions with Adams Resources and Energy Co.
and Mesa Petroleum Company. He received his accounting degree
from the University of Oklahoma.
Marian J. Moon, age 44, was elected Corporate Secretary on
April 14, 1994. Ms. Moon has served Devon in various capacities
since 1984, most recently as Manager of Corporate Communications
and Analysis. She has also served as Assistant Secretary with
responsibilities including compliance with SEC and stock exchange
regulations. Prior to joining Devon, Ms. Moon was employed for
eleven years by Amarex, Inc., an Oklahoma City based oil and
natural gas production and exploration firm, where she served
most recently as Treasurer. Ms. Moon is a member of the Petroleum
Investor Relations Association and the American Society of
Corporate Secretaries. She is a graduate of Valparaiso
University.
MEETINGS AND COMMITTEES OF THE BOARD
During 1994, the Board of Directors of the Company held four
regular meetings and one special meeting. No director attended
fewer than 75% of the aggregate of (1) the total number of
meetings of the board of directors and (2) the total number of
meetings held by all committees of the board on which he served.
The Board of Directors has standing audit and compensation and
stock option committees. It does not have a standing nominating
committee.
Mr. Ferguson is the sole member of the Company's Audit
Committee. The Audit Committee meets with the Company's
independent public accountants and reviews the consolidated
financial statements of the Company on a regular basis. The
functions of the Audit Committee consist of recommending
independent accountants to the Board of Directors; approving the
nature and scope of services performed by the independent
accountants and reviewing the range of fees for such services;
conferring with the independent accountants and reviewing the
results of their audit; reviewing the Company's accounting and
financial controls; and providing assistance to the Board of
Directors with respect to the corporate and reporting practices
of the Company. The Board of Directors, as recommended by the
Audit Committee, has selected KPMG Peat Marwick LLP to serve as
the Company's independent public accountants for the fiscal year
ending December 31, 1995, subject to ratification by the
stockholders. The Audit Committee met two times during 1994.
The compensation and stock option committee, which consists
of Messrs. Gavrin (Chair) and Gellert, determines the nature and
amount of compensation of all executive officers of the Company
who are also directors and the amount and terms of stock options
granted to all employees. In addition, this committee provides
guidance to and makes recommendations to management on employee
benefit programs. The compensation and stock option committee
held two meetings in 1994.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding annual and
long-term compensation during 1992, 1993 and 1994 for the CEO and
the four most highly compensated executive officers, other than
the CEO, who were serving as executive officers of the Company on
December 31, 1994.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation<F2>
Principal Awards of All Other
Name Position Year Salary Bonus Other<F1> Options/SAR's<F3> Compensation<F4>
# Shares
<S> <C> <C> <C> <C> <C> <C> <C>
J. L. Nichols President & CEO 1994 $275,000 $200,600 -- 72,000 $3,000
1993 $250,000 $175,600 -- 40,000 $4,497
1992 $225,000 $200,600 -- 34,000 $4,364
H.R. Sanders, Jr. Executive Vice 1994 $220,000 $118,988 -- 54,000 $3,000
President 1993 $210,000 $100,600 -- 30,000 $4,497
1992 $195,000 $ 95,600 -- 19,000 $4,364
J. M. Lacey Vice President 1994 $190,000 $ 67,618 -- 36,000 $3,000
1993 $178,000 $ 55,600 -- 20,000 $4,345
1992 $168,500 $ 50,600 -- 10,000 $4,335
H. A. Turner Vice President 1994 $155,000 $ 67,019 -- 36,000 $3,000
1993 $145,000 $ 50,600 -- 20,000 $4,045
1992 $135,500 $ 45,600 -- 10,000 $4,095
D. G. Smette Vice President 1994 $155,000 $ 67,019 -- 36,000 $3,000
1993 $145,000 $ 50,600 -- 20,000 $4,045
1992 $135,500 $ 45,600 -- 10,000 $4,095
<FN>
<F1>Excludes other compensation which, in aggregate, does not
exceed the lesser of $50,000 or 10% of the total annual
salary and bonus reported for the named executive officer.
<F2>No awards of restricted stock or payments under long-term
incentive plans were made by the Company to any of the named
executives in any period covered by the table.
<F3>Two option grants were made in 1994 as a result of a change
in the timing of the grant dates from mid-year to year-end.
It is anticipated that future consideration of option grants
will be made only once per year, at year-end. See
"Compensation and Stock Option Committee Report on Executive
Compensation -- Stock Options."
<F4>These amounts represent Company matching contributions to the
Devon Energy Incentive Savings Plan.
</TABLE>
<PAGE>
Option Grants in 1994
The following table sets forth information concerning
options to purchase Common Stock granted in 1994 to the five
individuals named in the Summary Compensation Table. The material
terms of such options appear in the following table and the
footnotes thereto.
<TABLE>
<CAPTION>
Individual Grants
Percent of Total Exercise Price Grant Date
Options Options Granted Per Share<F6> Expiration Present
Name Granted to Employees in Date Value<F7>
1994
<S> <C> <C> <C> <C> <C>
J. Larry Nichols 36,000<F1> 8.3% $23.3125 06/14/2004 $370,800
36,000<F2> 8.3% $18.0625 12/07/2004 $299,520
H. R. Sanders, Jr. 27,000<F3> 6.2% $23.3125 06/14/2004 $278,100
27,000<F2> 6.2% $18.0625 12/07/2004 $224,640
J. Michael Lacey 18,000<F4> 4.1% $23.3125 06/14/2004 $185,400
18,000<F5> 4.1% $18.0625 12/07/2004 $149,760
H. Allen Turner 18,000<F4> 4.1% $23.3125 06/14/2004 $185,400
18,000<F5> 4.1% $18.0625 12/07/2004 $149,760
Darryl G. Smette 18,000<F4> 4.1% $23.3125 06/14/2004 $185,400
18,000<F5> 4.1% $18.0625 12/07/2004 $149,760
<FN>
<F1>Of these options, which were granted on June 14, 1994, 19,200
were immediately vested and exercisable. The remaining 16,800
shares vest over a four year period with 25% becoming
exercisable on June 14 of each year beginning in 1995.
<F2>The options, which were granted December 7, 1994, were
immediately vested and exercisable.
<F3>Of these options, which were granted on June 14, 1994, 14,400
were immediately vested and exercisable. The remaining 12,600
shares vest over a three year period with one-third becoming
exercisable on June 14 of each year beginning in 1995.
<F4>These options, which were granted on June 14, 1994, each vest
over a four year period with 20% of the shares becoming
exercisable on June 14 of each year beginning in 1994.
<F5>These options, which were granted on December 7, 1994, each
vest over a four year period with 20% of the shares becoming
exercisable on December 7 of each year beginning in 1994.
<F6>Exercise price is the fair market value on the date of grant,
determined by calculating the average of the high and low
prices of Common Stock, as reported by the American Stock
Exchange for the date of grant.
<F7>Based on the Binomial Option Pricing Model using the
following assumptions: volatility - 39.9%; risk-free
interest rate - 6.53% per annum for the June, 1994 grant and
7.64% per annum for the December, 1994 grant; annual dividend
yield - 0.657%; and, time of exercise - five years from grant
date. Adjustment for non-transferability resulted in a
reduction of the expected time of exercise from the 10-year
option life to five years from grant date. No adjustment was
made to the value for risk of forfeiture.
</TABLE>
Aggregated Option Exercises in 1994 and Year-End Option Values
The following table sets forth information for the five
individuals named in the Summary Compensation Table concerning
their exercise in 1994 of options to purchase Common Stock and
the unexercised options to purchase Common Stock held by the
named individuals at December 31, 1994.
<TABLE>
<CAPTION>
Number of Unexercised Option Value of Unexercised
at 12/31/94 In-the-Money Options at
12/31/94<F2>
Number of
Shares Value
Name Acquired Upon Realized<F1> Exercisable Unexercisable Exercisable Unexercisable
Exercise
<S> <C> <C> <C> <C> <C> <C>
J. Larry Nichols 35,000 $449,838 164,200 16,800 $472,500 $ --
H. R. Sanders, Jr. -- $ -- 91,400 12,600 $ 95,063 $ --
J. Michael Lacey -- $ -- 29,700 44,800 $122,363 $42,200
H. Allen Turner -- $ -- 43,700 44,800 $228,363 $42,200
Darryl G. Smette -- $ -- 37,500 44,800 $177,888 $42,200
<FN>
<F1>The value realized presented equals the aggregate amount of
the excess of the fair market value (the average of the high
and low prices of the Common Stock as reported by the
American Stock Exchange on the exercise date over the
relevant exercise price.
<F2>The value is based on the aggregate amount of the excess of
$18.25 (the closing price as reported by the American Stock
Exchange for December 31, 1994) over the relevant exercise
price for outstanding options that were exercisable and in-
the-money at year-end.
</TABLE>
Compensation Pursuant to Plans
Long-term Incentive Plans. Prior to 1993, Devon had
outstanding stock options issued to certain of its executive
officers and employees under two stock option plans adopted in
1987 and 1988 (the "1987 Plan" and the "1988 Plan"). During
1993, all remaining options outstanding under the 1987 Plan were
exercised. Also during 1993 the 1988 Plan was canceled. Options
granted under the 1988 Plan remain exercisable by the employees
owning such options, but no new options will be granted under the
1988 Plan. At December 31, 1994, 16 participants held options
granted under the 1988 Plan.
Effective June 7, 1993, Devon adopted the Devon Energy
Corporation 1993 Stock Option Plan (the "1993 Plan") and reserved
one million shares of Common Stock for issuance thereunder to key
management and professional employees.
The exercise price of incentive stock options granted under
the 1993 Plan may not be less than the estimated fair market
value of the stock at the date of grant, plus 10% if the grantee
owns or controls more than 10% of the total voting stock of Devon
prior to the grant. The exercise price of nonqualified options
granted under the 1993 Plan may not be less than 75% of the fair
market value of the stock on the date of grant. Options granted
are exercisable during a period established for each grant, which
period may not exceed 10 years from the date of grant. Under the
1993 Plan, the grantee must pay the exercise price in cash or in
Common Stock, or a combination thereof, at the time the option is
exercised. The 1993 Plan expires on April 25, 2003. As of
December 31, 1994, 19 participants held options granted under the
1993 Plan.
The Company has no other plans that provide compensation
intended to serve as incentive for performance to occur over a
period longer than one fiscal year.
Retirement Plan. Devon maintains a defined benefit
retirement plan (the "Plan") which provides benefits based upon
past and future employment service with Devon. Each eligible
employee who retires is entitled to receive an annual retirement
income, computed as a percentage of his final average
compensation, (which consists of salaries, wages, and bonuses),
and his credited years of service up to 25 years. Contributions
by employees are neither required nor permitted under the Plan
and no benefit accrues after an employee reaches age 70. All of
the executive officers except John W. Nichols participate in the
Plan.
The following table illustrates estimated annual benefits
payable upon retirement under the Plan to employees in specified
compensation and years of service classifications assuming a
normal retirement in 1995 at age 65.
<TABLE>
<CAPTION>
Years of Service
Final Average Compensation 15 20 25
<S> <C> <C> <C>
$ 50,000 $ 10,000 $ 16,400 $22,900
$100,000 $ 25,800 $ 38,800 $51,800
$150,000 $ 45,300 $ 64,800 $84,300
</TABLE>
The maximum annual compensation that can be considered is
$150,000, subject to adjustments in accordance with regulations
of the Internal Revenue Service. Accordingly, only $150,000 of
compensation for each of J. Larry Nichols, H. R. Sanders, Jr., J.
Michael Lacey, H. Allen Turner and Darryl G. Smette is considered
by the Plan. Benefits are computed based on straight-life annuity
amounts and are reduced by Social Security payments.
The following table sets forth the credited years of service
under Devon's Plan for each of the five individuals named in the
Summary Compensation Table.
Credited
Years of Service
Name of Individual (Through December 31, 1994)
J. Larry Nichols 24 years
H. R. Sanders, Jr. 14 years
J. Michael Lacey 6 years
H. Allen Turner 13 years
Darryl G. Smette 8 years
Employment Agreements
Pursuant to severance agreements, each of the five
individuals named in the Summary Compensation Table is entitled
to certain compensation ("Severance Payment") in the event that
his employment with the Company is terminated (a) within one year
of the acquisition by the Company of reserves or assets which
result in the reserves or assets of the Company increasing by at
least 20% or (b) within two years of a change in control of the
Company. "Change of control" is defined in the agreements as
being an event which results in an entity or group acquiring
either (i) 30% or more of the Company's outstanding voting
securities, or (ii) less than 30% of the outstanding voting
securities, but which a majority of the board determines has
caused a change in control. In either case the Severance Payment
would be approximately equal to two times the individual's annual
compensation.
The Company also has a severance agreement with Mr. William
T. Vaughn, Vice President of Finance, with terms identical to the
above-referenced severance agreements. The Company has no other
employment agreements with any of its executive officers.
Director Compensation
Non-management directors of Devon receive an annual retainer
of $10,000, payable quarterly, plus $500 for each Board meeting
attended. Also, directors serving as chairmen of the standing
committees of the Board of Directors receive $500 for each
committee meeting attended. Non-management directors serving as
members of these two committees receive $300 per meeting
attended. John W. Nichols, Chair of the Board, received $175,600
in 1994 as payment for his services as director and as Chair of
the Board.
<PAGE>
Compensation and Stock Option Committee Report on Executive
Compensation
The compensation and stock option committee of the Board of
Directors (the "Committee") establishes the general compensation
policies of the Company. The Committee meets in November or
December of each year to establish specific compensation levels
for the chief executive officer ("CEO") and the executive vice
president ("EVP") and to review the executive officers'
compensation generally. (The compensation for executives
officers other than the CEO and EVP is actually determined by the
CEO and EVP.)
The Committee's goal in setting executive compensation is to
motivate, reward and retain management talent who support the
Company's goals of increasing absolute and per share growth for
shareholders. This goal is carried out through awards of base
salary, annual cash bonuses and stock options.
The Committee generally believes that the total cash
compensation of its CEO, EVP and other executive officers should
be similar to the total cash compensation of similarly situated
executives of peer group public companies within the oil and gas
industry. Further, a significant portion of the complete
compensation package should be tied to the Company's success in
achieving long-term growth in earnings, cash flow, reserves and
stock price per share.
Base Salary. A competitive base salary is considered vital
to support the continuity of management and is consistent with
the long-term nature of the oil and gas business. The Committee
believes that the base salaries of the executive officers should
be similar to the base salaries of executive officers of similar
companies within the oil and gas industry. Therefore, no
performance criteria are applied to the base salary portion of
the total compensation. Performance of the Company versus its
peers is, however, given significant weight in the cash bonus and
stock option portions of total compensation.
The CEO's base salary for 1994 was based upon information
available to the Committee at its November, 1993 meeting. At
that meeting the Committee established a peer group of 13
companies to which Devon should be compared. This peer group
included companies which are similar to Devon in total revenues,
balance sheet ratios, oil and gas reserves and overall oil and
gas operations. (The industry group index in the Performance
Graph included in this Proxy Statement includes, but is not
limited to, the companies used for this compensation analysis.
In its analysis, the Committee specifically focused on those
companies that are most similar to Devon in size, financial
structure and operations, believing that the most direct
comparisons would not necessarily include all of the more than
200 companies included in the industry group index used for the
Performance Graph.)
A review of the base salaries for the highest-paid executive
at each of these peer companies revealed that the 1993 base
salary of Devon's CEO was at the low end of the range of all base
salaries in the group, and only 63% of the average base salary
for the group. As a result of this finding, the Committee
increased Devon's CEO's base salary for 1994 by 10% to improve
his base salary in relationship to the peer group.
The Committee used similar criteria to evaluate the base
salary for Devon's EVP. However, the EVP's base salary was a
somewhat higher percentage than that of the CEO in relationship
to the peer group. While the EVP's base salary was at the low
end of the range of all base salaries for the second-highest paid
executives in the peer group, it was 88% of the average base
salary. As a result of this finding the Committee increased the
EVP's base salary by 5% to keep his base salary competitive with
the group.
The Committee advised the CEO and EVP that similar criteria
should be used to evaluate the base salaries of the other
executive officers of the Company.
Cash Bonuses. The Committee believes that the officers'
cash bonuses should be tied to Devon's success in achieving
growth in comparison to those of the Company's industry peers.
Cash bonuses for calendar year 1994 were set at the December,
1994 Committee meeting. In setting the cash bonus for the CEO
for the calendar year 1994, the Committee established a peer
group of 17 oil and gas companies to which Devon should be
compared. (This peer group included ten of the 13 companies used
for the prior year comparison plus seven additional companies
that were dissimilar to Devon the prior year but now could be
considered similar to Devon in size, financial structure and
operations.)
The Committee reviewed Devon's growth of the last three
years compared with the peer group average on a number of
different measures, notably change in earnings per share, cash
flow per share, reserves per share and stock price. In all of
these categories, Devon's performance was materially superior to
the peer group's performance. As a result of this analysis, the
Committee awarded the CEO a cash bonus which would result in his
total compensation for 1994 being 95% of the average total 1993
compensation for the highest-paid executives at each of the
companies in the peer group.
The Committee used the same criteria to evaluate the cash
bonus for the EVP, awarding him a cash bonus which would result
in his total compensation for 1994 being 95% of the average total
1993 compensation for the second highest-paid executives of
companies in the peer group.
The Committee advised the CEO and EVP that similar criteria
should be used in establishing cash bonuses for the other
executive officers.
Stock Options. The Committee desires to reward long-term
strategic management practices and enhancement of shareholder
value through the award of stock options. Stock options are
granted at an option price equal to the fair market value of the
Common Stock on the grant date. The grant of these options and
the optionees holding of unexercised options and/or ownership of
exercised option shares is designed to closely align the
interests of the executive officers with those of the
shareholders. The ultimate value of the stock options will
depend on the continued success of the Company, thereby creating
a continuing incentive for executive officers to perform long
after the initial grant.
Stock options were awarded to the CEO, EVP and other
executive officers in June, 1994. Stock option grants have
historically been considered only once each year, in June.
However, the Committee wanted to begin considering stock option
grants in conjunction with the total compensation package.
Therefore a second award of options was considered and granted in
December, when other components of compensation were considered.
The Committee expects that future consideration of stock option
grants will be made only once each year, in November or December.
The award of options is based generally upon the same
criteria as that used for the award of cash bonuses; that is,
more options are awarded if the Company performs well in
relationship to its peers, and less or none are awarded if the
Company does not perform well. In addition, the Committee wants
to encourage executives to maintain ownership of Company stock
and/or unexercised options. Although there are no specific
ownership criteria used in awarding options, long-term ownership
is viewed favorably. The Committee noted that Devon's officers as
a group still retain over 60% of all options granted to them.
Even the sole option exercised by an officer in 1994 was an
option held for five years which was about to expire.
The Committee generally seeks to award no more than 1% of
the outstanding shares in any one year, and further desires to
keep the total number of shares under option less than 10% of the
total shares outstanding. As of December 31, 1994, there were
877,900 shares under option, which was 4% of the total shares
outstanding.
Policy on Deductibility of Compensation. Section 162(m) of
the Internal Revenue Code limits the tax deduction to $1 million
for compensation paid to any one executive officer, unless
certain requirements are met. The Committee presently intends
that all compensation paid to executive officers will meet the
requirements for deductibility under Section 162(m). However, the
Committee may award compensation which is not deductible under
Section 162(m) if it believes that such awards would be in the
best interest of the Company or its shareholders.
No Present Intention to Submit a Compensation Plan to the
Shareholders. The Committee has no present intention of
submitting a compensation plan to the shareholders for approval
which would result in the issuance of more than 5% of the
Company's outstanding Common Stock.
We believe that the Company has an appropriate compensation
structure which properly rewards and motivates its executive
officers to build shareholder value.
David M. Gavrin, Chair
Michael E. Gellert
Compensation Committee Interlocks
The Compensation Committee is composed of two independent,
non-employee directors, Mr. Gavrin and Mr. Gellert. These
directors have no interlocking relationships as defined by the
Securities and Exchange Commission.
<PAGE>
Performance Graph
The following performance graph compares the Company's
cumulative total stockholder return on its Common Stock for the
five-year period from December 31, 1989 to December 31, 1994,
with the cumulative total return of the Standard & Poor's 500
stock index and the Stock Index by Standard Industrial
Classification Code ("SIC Code") for Crude Petroleum and Natural
Gas. The SIC Code for Crude Petroleum and Natural Gas is 1311.
The identities of the 200+ companies included in the index will
be provided upon request.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN*
THE COMPANY, S&P 500, AND SIC CODE INDEX
FOR CRUDE PETROLEUM AND NATURAL GAS
Fiscal Year Ending
Company 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Devon Energy CP 100 85.19 65.74 111.11 153.41 136.56
Industry Index 100 86.49 90.30 85.74 102.16 107.06
Broad Market 100 96.88 126.42 136.08 149.80 151.78
Assumes $100 invested on December 31, 1989 in Devon Energy Corporation Common
Stock, S&P 500 Index and SIC Code Index for Crude Petroleum and Natural Gas.
*Total return assumes reinvestment of dividends.
</TABLE>
<PAGE>
PROPOSAL TO REINCORPORATE IN OKLAHOMA
The Board of Directors is proposing that Devon change its
state of incorporation from Delaware to Oklahoma. The reasons for
the change are to save approximately $150,000 per year in
franchise taxes while retaining corporate governance laws similar
to those of Delaware. These reasons are more fully explained
below under the caption "Purposes for the Reincorporation." The
details of the change from Delaware incorporation to Oklahoma
incorporation are set out in the Plan and Agreement of Merger and
Reorganization which is attached to this proxy statement as
Exhibit A. The Board of Directors has unanimously approved the
Reincorporation, subject to shareholder approval.
The Reincorporation will be accomplished by merging Devon
into its newly-formed Oklahoma subsidiary, Devon Oklahoma
Corporation ("Devon Oklahoma"). Devon Oklahoma will then
immediately be renamed Devon Energy Corporation and continue
conducting business as the successor to Devon. If Devon's
stockholders adopt and approve the Reincorporation, the
Reincorporation will take effect on the date on which a
certificate of merger is filed with the appropriate officers of
the States of Oklahoma and Delaware (the "Effective Date").
These filings are anticipated to be made within 48 hours after
adoption and approval of the Reincorporation at the Meeting.
The Reincorporation will not result in any change in the
number of shares owned or percentage of ownership of any
stockholder of Devon. On the Effective Date each outstanding
share of Devon Common Stock will automatically be converted into
one share of Devon Oklahoma common stock, par value $.10 per
share ("Devon Oklahoma Common Stock").
Each outstanding certificate representing shares of Devon
Common Stock will represent the same number of shares of Devon
Oklahoma Common Stock. On and after the Effective Date the Devon
Oklahoma Common Stock will be traded on the AMEX in full
substitution for the shares of Devon Common Stock under the same
stock symbol, "DVN."
IT WILL NOT BE NECESSARY FOR STOCKHOLDERS TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES FOR STOCK CERTIFICATES OF DEVON
OKLAHOMA.
Following the Reincorporation, certificates representing
previously outstanding shares of Devon Common Stock may be
delivered in effecting sales through a broker, or otherwise, of
Devon Oklahoma Common Stock. When presently outstanding
certificates are presented for transfer after the
Reincorporation, new certificates for the stock of Devon Oklahoma
will be issued. New certificates will also be issued upon the
request of any stockholders, subject to normal requirements as to
proper endorsement, signature guarantee, if required, and payment
of applicable taxes.
Approval of the Reincorporation will effect a change in the
legal domicile of the Company and certain other changes of a
legal nature, as described in this Proxy Statement.
Reincorporation of the Company will not result in any change in
the business, management, location of the principal executive
offices, assets, liabilities or stockholders' equity of the
Company. Devon Oklahoma will possess all of the assets and be
responsible for all of the liabilities of the Company. The
Reincorporation will not change the financial condition of the
Company.
Devon is currently governed, and the shareholders rights are
defined, by the laws of the state of Delaware, the Board of
Directors and officers, its certificate of incorporation, its by-
laws and its preferred stock designation. In addition, the
Company has adopted a Share Rights Plan, an Incentive Savings
Plan, the 1993 Stock Option Plan, a defined benefit retirement
plan and various other employee benefit plans. All of these
instruments will be substantially the same for Devon Oklahoma as
they were for the Company. Some of the items will be exactly the
same. Some changes will be made to the others.
Specifically, the officers and directors of Devon Oklahoma
will be the same people who currently serve as officers and
directors of the Company. The Devon Oklahoma Bylaws will be the
same as the Bylaws of Devon in all respects, as will the
preferred stock designations, the Incentive Savings Plan, the
1993 Stock Option plan, the defined retirement plan and other
employee benefits. The certificate of incorporation for Devon
Oklahoma and the Share Rights Plan for Devon Oklahoma will be
changed somewhat. Although substantially the same, the statutes
governing corporations in Oklahoma and Delaware are different in
some respects. The changes and differences are set forth below
under the caption "Principal Differences between Devon and Devon
Oklahoma."
Purposes for the Reincorporation
The Board of Directors believes that the best interests of
the Company and its stockholders will be served by changing the
Company's state of incorporation from Delaware to Oklahoma.
There are two primary factors leading to this decision:
Eliminate Delaware Franchise Taxes
The major factor in determining to reincorporate in Oklahoma
is that the $150,000 franchise tax the Company pays annually as a
Delaware corporation will be eliminated. Devon does not transact
business in Delaware and would not be required to pay Delaware
franchise taxes if it was not incorporated under the Delaware
laws. The Company currently pays Oklahoma franchise tax because
of the property its subsidiaries own and the business it conducts
in the state. No additional franchise or other taxes will be due
to the State of Oklahoma as a result of the Reincorporation.
Oklahoma Corporate Laws Similar to Delaware's
The Company was incorporated in 1988 in Delaware, rather
than in Devon's home state of Oklahoma, because the Delaware
General Corporation Law (the "Delaware Law") is generally
considered to be pro-business. In addition, as a result of there
being many Delaware corporations, there is a large body of case
law defining the Delaware Law. While the Oklahoma General
Corporation Act (the "Oklahoma Act") was intended to be very
similar to the Delaware Law, it was only adopted in 1986. At the
time of incorporation, the Company was not certain that the
Oklahoma legislature would keep the Oklahoma Act up-to-date with
the Delaware Law. The Company has now determined that the
Oklahoma Act has proven to be substantially equivalent to the
Delaware Law. Furthermore, the Oklahoma legislature has continued
to update the Oklahoma Act to correspond to the Delaware Law.
Even though the Oklahoma courts have not decided the large number
of cases as have the Delaware courts, the Delaware decisions and
interpretations would be instructional and therefore persuasive
in Oklahoma courts because of the similarity of the laws and the
perceived expertise of the Delaware judiciary. Therefore the
unique advantages of being incorporated in Delaware rather than
Oklahoma are no longer distinct.
Principal Differences between Devon and Devon Oklahoma
Principal Differences between the Oklahoma Act and the Delaware
Law
Control Share Acquisition Act. The Oklahoma legislature
enacted the Control Share Acquisition Act to discourage hostile
takeover attempts or the acquisition of a potentially controlling
ownership position without the approval of a company's board of
directors. Since there are no provisions in Delaware law
comparable to the Control Share Acquisition Act, this could
represent a change to Devon shareholders after the
Reincorporation. However, Devon's Board of Directors (i) does not
intend the Reincorporation to result in additional anti-takeover
protections, and (ii) does not believe the Control Share
Acquisition Act provides any benefits not already available by
other provisions of the Oklahoma Act which are comparable to
those in the Delaware Law, the "business combination" limitations
in the Certificate of Incorporation (discussed below) and the
Share Rights Plan (discussed below). Therefore, Devon's Board has
included a provision in the Devon Oklahoma certificate of
incorporation whereby Devon Oklahoma will be excluded from the
provisions of the Control Share Acquisition Act.
Written Shareholder Consents. The Oklahoma Act contains
provisions which require publicly-held corporations to obtain
unanimous approval for any actions taken by written shareholder
consent. This unanimous consent requirement is intended to
effectively preclude action by written shareholder consent and to
require any shareholder vote to be taken at a meeting only after
proper notice and appropriate disclosure. Since the Delaware Law
allows actions to be taken by written consent, this could
represent a change to Devon shareholders after the
Reincorporation. However, Devon currently has a provision in its
Certificate of Incorporation which prohibits voting by written
shareholder consent. Thefore, the written shareholder consent
provision of the Oklahoma Act does not represent a change in
rights for the Devon stockholders.
Principal Differences in Certificate of Incorporation
Article Tenth of the Company's Certificate of Incorporation
contains limitations on business combinations with an "interested
shareholder" or affiliates thereof. The Delaware Law and the
Oklahoma Act have provisions placing limitations on such business
combinations, the provisions of which are substantially the same
and both of which were adopted after the Company's Certificate of
Incorporation was filed. In connection with the Reincorporation,
the Certificate of Incorporation of Devon Oklahoma has been made
to conform in certain respects to the Oklahoma Act. A copy of the
Certificate of Incorporation of Devon Oklahoma is attached to
this Proxy Statement as Exhibit B.
The Oklahoma Act provides that business combinations with an
interested shareholder or affiliate can be effected if (i) prior
to the person becoming an interested shareholder the board of
directors approved either the business combination or the
transaction which resulted in such a party becoming an interested
shareholder, (ii) pursuant to the transaction which resulted in
his becoming an interested shareholder, the interested
shareholder acquired at least 85% of the outstanding voting stock
of the corporation excluding stock held by officers and directors
and certain employee stock plans, or (iii) the business
combination is approved by the board and authorized at an annual
or special meeting by the affirmative vote of at least 66 2/3% of
the outstanding voting stock not owned by the interested
shareholder. "Interested shareholder" is defined as one who is
the beneficial owner of 15% or more of the voting stock.
Devon's Certificate of Incorporation contains a provision
requiring a higher vote than is statutorily required for certain
business combinations with an interested shareholder. An
affirmative vote of the holders of at least 80% of the voting
power of the outstanding stock is required to approve such
business combination unless (i) the business combination has been
approved by three-fourths of the directors who are unaffiliated
with the interested shareholder and who were directors prior to
the time the interested shareholder became an interested
shareholder or their successors, or (ii) certain specified fair
price provisions are satisfied. Specifically, with regard to
Devon, an "interested shareholder" means (i) any person who
beneficially owns more than 10% of the voting power of the
outstanding stock; (ii) an affiliate of Devon who at any time
within the two-year period immediately prior to the date in
question owned 10% or more of the voting power of the outstanding
stock; or (iii) an assignee or successor to any shares of voting
stock that were at any time within the two-year period prior to
the date in question beneficially owned by an interested
shareholder unless such assignment or succession occurred in
connection with a public offering. This provision of Devon's
Certificate of Incorporation cannot be amended without the
affirmative vote of the holders of at least 80% of the
outstanding shares of Devon entitled to vote.
The Oklahoma Act does not allow any Certificate of
Incorporation to require a higher vote than the percentage
required by the Oklahoma Act. Accordingly, the Certificate of
Incorporation of Devon Oklahoma provides for approval of business
combinations with interested shareholders by 66 2/3% of all
voting power not attributable to shares owned by the interested
shareholder.
Devon Oklahoma's Certificate of Incorporation also has been
made to conform to the provisions of the Oklahoma Act that allow
the Board of Directors to permit, without shareholder approval, a
business combination with an interested shareholder after that
person has become an interested shareholder only if the business
combination has been proposed prior to the consummation or
abandonment of a third-party transaction and subsequent to the
earlier of the public announcement or required notice of the
third-party transaction. This provision is essentially a
"releasing mechanism" which provides that if a third-party may
consummate a business combination without super-majority
shareholder approval, the interested shareholders are released
from the super-majority requirement as well.
The definition of "business combination" in Devon Oklahoma's
Certificate of Incorporation has been revised to conform in
various respects to the definition in the Oklahoma Act. These
provisions are generally more detailed and specific than the
definition in the Company's Certificate of Incorporation, thereby
providing more certainty when construing the application of the
limitations. This allowed deletion of the provision in the
Company's Certificate of Incorporation defining the powers of the
Board of Directors to determine whether a person is an interested
shareholder and the amount of assets involved in a business
combination.
Devon Oklahoma's Certificate of Incorporation has been
revised to limit the restriction on business combinations with
interested shareholders to a period of three years from the date
a person becomes an interested shareholder. Devon's current
Certificate of Incorporation provides for an unlimited moratorium
on business combinations with interested shareholders. However,
the Board has included this change because the validity of an
unlimited moratorium may be questioned.
Finally, Devon Oklahoma's Certificate of Incorporation has
been revised to include not only current interested shareholders,
but also former interested shareholders in the three-year
business combination restriction. This change also necessitated
the addition of another provision to distinguish between
inadvertent accumulations of 15% of Devon Oklahoma's common stock
that is subsequently divested and purposeful acquisitions
resulting in a person becoming an interested shareholder.
Principal Differences in Share Rights Plans
Although the Company currently has a Share Rights Plan (the
"Current Plan"), certain modifications were made when the Share
Rights Plan of Devon Oklahoma (the "New Plan") was adopted. In
order to understand the changes, we have provided a description
of the Current Plan, followed by a description of the changes
made in adopting the New Plan. A complete copy of the Rights
Agreement is attached to this Proxy Statement as Exhibit C.
The Current Plan. The basic purpose of the Current Plan is
to protect the stockholders in the case of a takeover attempt
which, in the opinion of the Board of Directors, may not be in
the stockholders' best interest. It is designed to enhance the
Board of Directors' bargaining power versus a potential
acquiror's. It is not intended to repel all possible suitors.
It does, however, serve to slow a potential acquiror down,
allowing the Company's Board of Directors time to react and,
hopefully, either encourage the acquiror to negotiate with the
Board of Directors in establishing a fair price for the Company's
stock or allow the Company time to seek other higher offers or
alternate plans. This extra time could be critical, since on
many occasions offerors use time deadlines to force shareholder
approval of a less-than-optimum offer.
The mechanism the Current Plan uses to accomplish this goal
is to give Devon stockholders who are not affiliated with the
acquiror the right to buy securities of either Devon or, in
certain circumstances, the acquiror, at a discounted price. This
obviously dilutes the acquiror's ownership and discourages him
from launching a takeover attempt. The onerous consequences to
the acquiror once the Current Plan is activated encourage a
potential acquiror to work with Devon's Board in establishing a
fair offer so that the Current Plan will never be activated.
The Current Plan is defined by the Rights Agreement dated as
of June 29, 1988 between Devon and MTrust Corp. National
Association, as rights agent, the duties and obligations of
MTrust Corp. having been transferred to The First National Bank
of Boston effective April 19, 1994 (the "Current Rights
Agreement"). Under the Current Rights Agreement every share of
Common Stock has an attached "Right." Initially the Rights are
not exercisable, and are only tradeable and transferrable along
with the Common Stock. However, if a "Distribution Date" occurs,
the Rights will be distributed in separate certificates to each
registered holder of the Common Stock. The Rights thereafter are
exercisable and will be tradeable and transferrable separately
from the Common Stock. The Distribution Date occurs ten business
days following the earlier of:
(i) a public announcement that a person or group (an
"Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 20% or more of
Devon's outstanding Common Stock (the "Stock
Acquisition Date"); or
(ii) a tender or exchange offer has commenced that
could result in a person or group beneficially owning
30% or more of Devon's outstanding Common Stock.
Once the Distribution Date occurs, there are three separate
events which trigger three separate options for the Right
holders:
(i) Initially the exercise of each Right for $25,
subject to adjustment to prevent dilution, (the
"Purchase Price") entitles the holder to buy one one-
hundredth of a share of Series A Preferred Stock (the
"Preferred Stock"). A holder of one whole share of
Preferred Stock has the right to 100 votes on all
matters voted on by common stockholders and dividends
of 100 times any dividends paid to the holders of
Common Stock. In addition, each share of Preferred
Stock has a liquidation preference of $100, provided
that such amount is at least 100 times the amount
distributed to the holders of Common Stock on
liquidation.
(ii) If an Acquiring Person increases his beneficial
ownership to 30% of Devon's outstanding Common Stock,
then the exercise of each Right not beneficially owned
by an Acquiring Person entitles its holder to receive
Devon Common Stock having a market value of two times
the Purchase Price in lieu of receiving Preferred
Stock.
(iii) Following the Stock Acquisition Date, if
certain "Business Combinations" are consummated, then
the exercise of each Right not beneficially owned by an
Acquiring Person entitles its holder to buy common
stock or other securities of the Acquiring Person
having a value of two times the Purchase Price. A
Business Combination is a transaction in which (a)
Devon merges with or into an Acquiring Person, (b) an
Acquiring Person merges with or into Devon and all or
part of Devon's Common Stock is exchanged for capital
stock or other securities of the Acquiring Person, cash
or other property, or (c) Devon sells or otherwise
disposes of 50% or more of its assets or assets
generating 50% or more of the Company's gross revenues
or net operating income to an Acquiring Person.
Until ten business days following the Stock Acquisition
Date, Devon may redeem the Rights in whole, but not in part, at
$0.01 per Right. Under certain circumstances the decision to
redeem requires the concurrence of a majority of the directors
who were directors prior to the Stock Acquisition Date (or
successors nominated and approved by them). After the redemption
period has expired, Devon's right of redemption may be reinstated
if the beneficial ownership of an Acquiring Person is reduced to
10% or less of Devon's outstanding Common Stock. Upon proper
action of the Board of Directors, the Rights will terminate and
the holders of Rights will be entitled to receive only the $0.01
redemption price. The Rights expire as of June 28, 1998, unless
they are redeemed earlier by the Board of Directors.
Any of the provisions of the Current Rights Agreement, other
than the provisions relating to the principal economic terms of
the Rights, may be amended by the Board of Directors prior to the
Distribution Date. After the Distribution Date, the Board may
amend the Rights Agreement to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the
interests of holders of the Rights, or to shorten or lengthen any
time period under the Rights Agreement, except the time period
governing redemption of the Rights.
Changes Included in the New Plan. Purchase Price. The
Purchase Price has been increased from $25 to $75. The $25 price
established in the Current Rights Agreement in 1988 was the Board
of Director's estimation of the long-term value of a share of
Devon Common Stock at that time, based on projections of such
factors as earnings, cash flow and oil and gas reserves.
Up until the last year Devon's stockholders have been
protected by the Current Plan. However, with the closing sales
price of Devon Common Stock on the AMEX having risen over $25 on
a number of occasions since June, 1993, the Purchase Price is
clearly no longer an estimation of long-term value, making the
plan less of a deterrent against unfair offers. The Board of
Directors has re-evaluated the Company's long-term value, again
taking into consideration projections of earnings, cash flow and
oil and gas reserves. The Board has also given consideration to
the Company's growth potential, which is no doubt greater than it
was in 1988. The Board of Directors believes that the Company
now has more unrecognized assets, such as probable coal seam gas
reserves, more undeveloped and underdeveloped oil and gas leases,
a strong balance sheet, better competitive position, more
concentrated and efficient asset base and a more experienced
management team than it had in 1988. The revised Purchase Price
under the Devon Oklahoma Share Rights Plan is three to four times
the current trading price of Devon's stock, which is
approximately the same relationship as the relationship of market
price to Purchase Price established in 1988 under the Current
Plan.
Amendment to Purchase Price. Under the New Plan the Board
of Directors is authorized to amend the Purchase Price. No such
provision is included in the Current Plan. This change was made
because of the Company's present experience with the market price
of a share of Common Stock approaching the Purchase Price.
Without a provision to amend the Purchase Price, if at some time
in the future the Board of Directors determines that the Purchase
Price is too low, the Rights would have to be redeemed, at
substantial cost, and a new plan adopted.
Voting Shares. In various places in the New Plan, the term
"Voting Shares" has been substituted for "Common Stock". For
example, a person will become an Acquiring Person upon becoming
the beneficial owner of a specified percentage of the outstanding
Voting Shares, rather than a specified percentage of shares of
Common Stock. This revision was made to take into account the
possibility, not presently contemplated, that Devon Oklahoma in
the future could have outstanding class(es) of voting securities
other than Common Stock.
Percentage Ownership Triggers for Certain Events. The
definition of Distribution Date under the New Plan was changed so
that the Distribution Date will occur when an Acquiring Person
has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of Devon's outstanding Voting Shares,
rather than the 20% of Common Stock in the Current Plan.
Furthermore, the New Plan allows all holders of Rights,
except the Acquiring Person, to receive either (a) one one-
hundredth of a share of Preferred Stock or (b) Common Stock
having a value of two times the Purchase Price once the
Distribution Date Occurs. The Current Plan allows only option
(a) above to be exercised after the Distribution Date, and makes
such option available to all holders of Rights. It is only when
the Acquiring Person has acquired, or obtained the right to
acquire, 30% or more of Devon's Common Stock that option (b)
above can be exercised under the Current Plan. It is also at the
30% threshold that the Acquiring Person is barred from exercising
his Rights.
The Board of Directors has determined that there should be
no period during which an Acquiring Person could exercise Rights,
and that when Rights become exercisable, the holders should have
the choice at all times of receiving either Common Stock or
Preferred Stock. These changes also simplify the New Plan and to
make it consistent with other plans that have been recently
adopted by other companies.
Right Holders' Options after Certain Business Combinations.
Although the wording of these provisions in the New Plan has been
substantially changed from the wording in the Current Plan, the
effect of the changes has not been substantial. The New Plan
still provides that if certain Business Combinations occur, the
Rights entitle the holder to receive, upon exercise, common stock
of the acquiring company instead of Common Stock of Devon
Oklahoma. The wording revisions have been made for clarification
only. Additional provisions are added to prevent Business
Combinations and asset sales unless the surviving company
adequately protects Devon Oklahoma stockholders, including
assurance that any securities received from such surviving
company are securities of the ultimate parent entity and are
freely transferable.
Expiration Date. The expiration date of the New Plan was
changed from June 29, 1998 to _________, 2005, ten years from the
date of the formation of Devon Oklahoma.
Possible Disadvantages of the Reincorporation Proposal
The Oklahoma Act is relatively new and does not have the
defining body of case law that exists in Delaware. Delaware
corporations are often guided by the extensive body of court
decisions interpreting Delaware's corporate law and the Delaware
Chancery Court is a specialized court of original jurisdiction
which adjudicates corporate disputes. Because of Delaware's
prominence as a state of incorporation for many major publicly
held corporations, the legislature in Delaware has demonstrated
an ability and willingness to act quickly and effectively to
meeting changing business needs. There is no assurance that the
Oklahoma Legislature will continue to conform the Oklahoma Act to
future changes in the Delaware Law, and it is likely that the
Oklahoma courts will not be as efficient or adept as the Delaware
courts in interpreting the Oklahoma Act because of the few number
of disputes and the absence of a specialized corporate court.
However, as noted, the Oklahoma courts are likely to view
Delaware judicial decisions as highly persuasive, due to the
similar or identical statutory provisions of the two states.
Further, the Board of Directors of the Company believes that
these potential disadvantages are outweighed by the possibility
that Oklahoma courts represent a more convenient (and possibly
more favorable) forum for litigating corporate disputes than the
Delaware courts. The Oklahoma Legislature has responded to the
needs of corporations organized under the laws of Oklahoma
through numerous amendments to the Oklahoma Act since its
enactment, by amending the Oklahoma Act to conform to changes
made to the Delaware Law.
Tax Consequences
The Company has received an opinion from its counsel, McAfee
& Taft A Professional Corporation, to the effect that the
proposed Reincorporation will be a tax-free reorganization under
the Internal Revenue Law of 1986, as amended. Accordingly, (i)
no gain or loss will be recognized for federal income tax
purposes by the stockholders of the Company as a result of the
Reincorporation and (ii) the basis and holding period for the
stock of Devon Oklahoma received by the stockholders of the
Company will be the same as the basis and holding period of the
stock of the Company exchanged therefor. The Reincorporation
will have no federal income tax effect on the Company. State,
local or foreign income tax consequences to stockholders may vary
from the federal tax consequences described above, and
stockholders should consult their own tax advisors as to the
effect of the Reincorporation under applicable state, local or
federal income tax laws.
Accounting Consequences
The Reincorporation will not result in any financial
accounting consequences. The existing assets and liabilities of
the Company will continue to be reported at their historical
amounts on the books of Devon Oklahoma
Regulatory Approvals
There are no regulatory approvals required in connection
with the Reincorporation.
Abandonment
Notwithstanding a favorable vote of the stockholders, the
Company reserves the right by action of the Board of Directors to
abandon the proposed Reincorporation prior to the Effective Date
of the Reincorporation if it determines that such abandonment is
in the best interests of the Company. The Board of Directors
knows of no circumstances which might prompt abandonment.
Vote Required
Pursuant to the Delaware Law, the affirmative vote of the
holders of a majority of the outstanding shares of the Company's
Common Stock is required for approval of the Reincorporation and
the merger which will effectuate the Reincorporation. A vote of
approval of the Reincorporation will constitute specific approval
of all other transactions and proceedings relating to the
Reincorporation, including the assumption by Devon Oklahoma of
the Company's Option Plan, the New Plan and all other employee
benefit plans and agreements, and the obligations of the Company
under such plans and agreements, and the provisions in Devon
Oklahoma's Certificate of Incorporation which differ from those
in the Company's Certificate of Incorporation.
No Appraisal Rights
Under applicable provisions of the Delaware Law, there are
no dissenting stockholder appraisal rights available in
connection with the Reincorporation.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE
REINCORPORATION AND THE MERGER WHICH WILL EFFECTUATE THE PROPOSED
REINCORPORATION. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF THE REINCORPORATION.
<PAGE>
CERTAIN TRANSACTIONS
In 1986, H. R. Sanders, Jr., Executive Vice President and a
director of Devon, executed a non-interest bearing note in favor
of Devon in the principal amount of $125,000, to evidence his
borrowings from Devon. This note, which was executed as part of
Mr. Sanders' employment agreement with Devon, assisted Mr.
Sanders with his move to Oklahoma City. The employment agreement
was entered into on February 8, 1981 and expired December 31,
1987. The note, which is due on demand, is secured by a first
mortgage on Mr. Sanders' personal residence. As of December 31,
1994, the outstanding balance of the note was $119,000.
INDEPENDENT PUBLIC ACCOUNTANTS
Subject to ratification by the stockholders, the Board of
Directors of the Company has selected KPMG Peat Marwick LLP as
the Company's independent public accountants for fiscal year
1995. That firm has served as the Company's auditors since 1981.
The Board of Directors recommends a vote "FOR" the
ratification of the appointment of KPMG Peat Marwick LLP.
Representatives of KPMG Peat Marwick LLP are expected to be
present at the Meeting. They will have the opportunity to make a
statement if they so desire and are expected to be available to
respond to appropriate questions.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder desiring to present a proposal for action at
the 1996 Annual Meeting of Stockholders of the Company must
present the proposal to the Secretary of the Company not later
than January 5, 1996. Only those proposals that comply with the
requirements of Rule 14a-8 promulgated under the Securities
Exchange Act of 1934 will be included in the Company's proxy
statement for the 1996 Annual Meeting. No stockholder proposals
were received by the Company for inclusion in this proxy
statement.
OTHER MATTERS
The Board of Directors of the Company knows of no other
matter to come before the Meeting other than that set forth
herein and in the accompanying Notice of Annual Meeting of
Stockholders. However, if any other matters should properly come
before the Meeting, it is the intention of the persons named in
the accompanying Proxy to vote such Proxies as they deem
advisable in accordance with their best judgment.
Your cooperation in giving this matter your immediate
attention and in returning your Proxy promptly will be
appreciation.
BY ORDER OF THE BOARD OF DIRECTORS
Marian J. Moon
Corporate Secretary
April __, 1995
<PAGE>
EXHIBIT A
PLAN AND AGREEMENT OF MERGER AND REORGANIZATION
Plan and Agreement of Merger and Reorganization (the
"Plan") dated as of March __, 1995 by and between Devon Energy
Corporation, a Delaware corporation ("Devon"), and Devon Oklahoma
Corporation, an Oklahoma corporation ("Devon Oklahoma"), herein
sometimes referred to as the "Surviving Corporation", Devon and
Devon Oklahoma being sometimes hereinafter collectively referred
to as the "Constituent Corporations".
W I T N E S S E T H :
WHEREAS, Devon Oklahoma is a corporation organized and
existing under and by virtue of the laws of the State of Oklahoma
and having an authorized capitalization of (i) 120 million shares
of Common Stock, 22,050,996 shares of which are currently issued
and outstanding, and (ii) 3 million shares of Preferred Stock, of
which no shares are currently issued and outstanding. All
outstanding shares of Devon Oklahoma Common Stock have been duly
authorized and validly issued, and are fully paid and non-
assessable. All outstanding shares are held of record and
beneficially by Devon; and
WHEREAS, Devon is a corporation organized and existing
under and by virtue of the laws of the State of Delaware and
having an authorized capitalization of (i) 120 million shares of
Common Stock, 22,049,065 shares of which are currently issued and
outstanding, and (ii) 3 million shares of Preferred Stock, of
which no shares are currently issued and outstanding. All
outstanding shares of Devon Common Stock have been duly
authorized and validly issued, and are fully paid and non-
assessable; and
WHEREAS, the respective Boards of Directors of each of
the Constituent Corporations deem it advisable and in the best
interest of each such corporation and their respective
Shareholders that Devon be merged with and into Devon Oklahoma in
the manner contemplated herein and have adopted resolutions
approving this Plan and have recommended that the merger of Devon
with and into Devon Oklahoma (the "Merger") be approved and that
this Plan be approved and adopted by the Shareholders of the
Constituent Corporations; and
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements herein contained and subject
to the conditions herein set forth and for the purpose of stating
the terms and conditions of the Merger, the mode of carrying the
same into effect, the manner and basis of converting the shares
of Devon Common Stock and other such details and provisions as
are deemed desirable, the parties hereto have agreed and do
hereby agree, subject to the terms and conditions hereinafter set
forth, as follows:
ARTICLE I
The Constituent Corporations shall be merged into a
single corporation by Devon merging into and with Devon Oklahoma,
the Surviving Corporation, which shall survive the Merger,
pursuant to the provisions of the Oklahoma General Corporation
Act and the Delaware General Corporation Law. Upon such Merger,
the separate existence of Devon shall cease, and the Surviving
Corporation shall become the owner, without transfer, of all
rights and property of the Constituent Corporations, and shall be
subject to all the liabilities of the Constituent Corporations in
the same manner as if the Surviving Corporation had itself
incurred them, all as provided by the Oklahoma General
Corporation Act.
ARTICLE II
On the Effective Date of the Merger, which shall be 5:00
p.m., CST, on the date Certificates of Merger are filed with the
Oklahoma and Delaware Secretaries of State (the "Effective Date
of the Merger"), the Certificate of Incorporation of Devon
Oklahoma, as currently in effect, shall be the Certificate of
Incorporation of the Surviving Corporation, except that the name
of the Surviving Corporation shall be changed to Devon Energy
Corporation.
On the Effective Date of the Merger, the bylaws of Devon
Oklahoma, as in effect on the Effective Date of the Merger, shall
become the bylaws of the Surviving Corporation. Subsequent to
the Effective Date of the Merger, such bylaws shall be the bylaws
of the Surviving Corporation until they shall thereafter be duly
amended.
On the Effective Date of the Merger, the directors and
officers of Devon shall become the directors and officers of
Devon Oklahoma until their successors are duly elected and
qualified.
ARTICLE III
On the Effective Date of the Merger:
(a) Each share of Devon Common Stock issued and outstanding
immediately prior to the Effective Date of the Merger, by virtue
of the Merger and without any action on the part of the holder
thereof, shall be converted into one share of Devon Oklahoma
Common Stock.
(b) Each outstanding share of Devon Oklahoma held by Devon
shall be cancelled and no payment shall be made in respect
thereof.
ARTICLE IV
This Plan shall be submitted to the Shareholders of the
Constituent Corporations for approval in the manner provided by
applicable Oklahoma and Delaware law. After approval by the vote
of the holders representing not less than a majority of the
issued and outstanding shares of the respective Constituent
Corporations entitled to vote on the Merger, a Certificate of
Merger containing this Plan shall be filed in the Office of the
Secretary of State of the States of Oklahoma and Delaware.
ARTICLE V
For the convenience of the parties hereto and to
facilitate the filing and recording of this Plan, any number of
counterparts hereof may be executed, and each such counterpart
shall be deemed to be an original instrument.
IN WITNESS WHEREOF, each of the parties hereto has
caused this Plan to be executed by its respective duly authorized
officers as of the day and year first written above.
DEVON ENERGY CORPORATION, a
Delaware corporation
By:
J. Larry Nichols, President
ATTEST:
Marian J. Moon, Secretary
DEVON OKLAHOMA CORPORATION, an
Oklahoma corporation
By:
J. Larry Nichols, President
ATTEST:
Marian J. Moon, Secretary
<PAGE>
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
DEVON OKLAHOMA CORPORATION
FIRST. The name of the corporation is:
DEVON OKLAHOMA CORPORATION
SECOND. The address, including the street, number,
city and county, of the corporation's registered office in this
state is 735 First National Building, Oklahoma City, Oklahoma
73102; the name of the corporation's registered agent at such
address is The Corporation Company.
THIRD. The nature of the business and the purpose of
the corporation shall be any and all lawful acts or activities
for which a corporation may be organized under the general
corporation law of Oklahoma.
FOURTH. The total number of shares of capital stock
which the corporation shall have authority to issue is
123,000,000 shares, consisting of 3,000,000 shares of Preferred
Stock, par value $1.00 per share, and 120,000,000 shares of
Common stock, par value $.10 per share. The preferences,
qualifications, limitations, restrictions and the special or
relative rights in respect of the shares of each class are as
follows:
DIVISION A
EXPRESS TERMS OF THE PREFERRED STOCK
Section 1. The Preferred Stock may be issued
from time to time in one or more series. All shares of
Preferred Stock shall be of equal rank and shall be identical,
except in respect of the matters that may be fixed and determined
by the board of directors as hereinafter provided, and each share
of each series shall be identical with all other shares of such
series, except as to the date from which dividends are
cumulative. The board of directors hereby is authorized to
cause such shares to be issued in one or more series and with
respect to each such series prior to the issuance thereof to fix
and determine the designation, powers, preferences and rights of
the shares of each such series and the qualifications,
limitations or restrictions thereof.
The authority of the board with respect to each series
shall include but not be limited to, determination of the
following:
(a) The designation of the series, which may be by
distinguishing number, letter or title.
(b) The number of shares of the series, which number
the board of directors may (except where otherwise provided in
the creation of the series) increase or decrease (but not below
the number of shares thereof then outstanding).
(c) The annual dividend rate or amount of the series,
if any, and whether dividends shall be cumulative or
non-cumulative.
(d) The dates at which dividends, if declared, shall
be payable, and the dates from which dividends shall be
cumulative, if at all, and the relative rights of priority, if
any, of payment of dividends on shares of that series.
(e) The redemption rights, if any, for shares of the
series and the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable,
and the amount per share payable in case of redemption, which
amount may vary with different conditions and at different
redemption dates.
(f) The voting rights of such shares, if any, and the
terms of and limitations on such voting rights.
(g) The terms and amount of any sinking fund provided
for the purpose of redemption or purchase of shares of the
series.
(h) The amounts payable on shares of the series and
rights with respect to such shares in the event of any voluntary
or involuntary liquidation, dissolution or winding up of the
affairs of the corporation, and the relative rights of priority,
if any, of payment of shares of that series.
(i) Whether the shares of the series shall be
convertible into shares of any other class or classes of
securities or of any other series of the same or any other class
or classes of stock, or any other security, of the corporation or
any other corporation, and, if so, the conversion price or
prices, any adjustments thereof, and all other terms and
conditions upon which such conversion may be made.
(j) Restrictions, if any, on the issuance of shares of
the same series or of any other class or series.
DIVISION B
EXPRESS TERMS OF THE COMMON STOCK
The Common Stock shall be subject to the express terms
of the Preferred Stock and any series thereof. Each share of
Common Stock shall be equal to every other share of Common Stock.
The holders of shares of Common Stock shall be entitled to one
vote for each share of such stock upon all matters presented to
the stockholders.
FIFTH. The name and address of the incorporator is
as follows:
Name Mailing Address
Jerry A. Warren Tenth Floor
Leadership Square
Oklahoma City, Oklahoma 73102
SIXTH. The number of directors which shall
constitute the whole board shall not be less than three nor more
than fifteen, and shall be determined by resolution adopted by a
vote of two-thirds (2/3) of the entire board, or at an annual
meeting of stockholders by the affirmative vote of sixty-six and
two-thirds percent (66 2/3%) of the outstanding stock entitled to
vote. No reduction in number shall have the effect of removing
any director prior to the expiration of his term. The provisions
of this Article shall not be altered, amended or repealed except
by the affirmative vote of the holders of at least sixty-six and
two-thirds percent (66 2/3%) of the outstanding stock entitled to
vote thereon.
SEVENTH. For the management of the business and for
the conduct of the affairs of the corporation, and in further
definition, limitation and regulation of the powers of the
corporation, its directors and its stockholders or any class
thereof, as the case may be, it is further provided that:
(a) No election of directors need be by written
ballot.
(b) Except as otherwise provided herein, the power to
adopt, amend or repeal the bylaws is conferred on the board of
directors.
EIGHTH. The corporation elects that the Control Share
Acquisition Act as set forth in the Oklahoma General Corporation
Act Section 1090.1 shall not apply to the corporation.
NINTH. No director of the corporation shall be
personally liable to the corporation or its stockholders for
damages for breach of fiduciary duty as a director, except for
personal liability:
(a) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law;
(b) under Section 53 of the Oklahoma General
Corporation Act;
(c) for any breach of the director's duty of loyalty
to the corporation or its stockholders; or
(d) for any transaction from which the director
derived an improper personal benefit.
TENTH. No action required to be taken or which may
be taken at any annual or special meeting of shareholders of the
corporation may be taken without a meeting, and the power of
shareholders to consent in writing without a meeting to the
taking of any action is specifically denied.
ELEVENTH.
(a) Notwithstanding any other provisions of Title 18
of the Oklahoma Statutes, the corporation shall not engage in any
business combination with any current or former interested
shareholder for a period of three (3) years following the date
that such person became an interested shareholder, unless:
(i) prior to the date on which a person becomes an
interested shareholder, the board of directors of the corporation
approved either the business combination or the transaction which
resulted in the person becoming an interested shareholder;
(ii) upon consummation of the transaction which
resulted in the person becoming an interested shareholder, the
interested shareholder owned of record or beneficially capital
stock having at least eighty-five percent (85%) of all voting
power of the corporation at the time the transaction commenced,
excluding for purposes of determining such voting power the votes
attributable to those shares owned of record or beneficially by:
a. persons who are directors and also officers,
and
b. employee stock plans in which employee
participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a
tender or exchange offer; or
(iii) on or subsequent to such date, the
business combination is approved by the continuing board of
directors and authorized at an annual or special meeting of
shareholders, and not by written consent, by the affirmative vote
of at least sixty-six and two-thirds percent (66 2/3%) of all
voting power which is not attributable to shares owned of record
or beneficially by the interested shareholder.
(b) The restrictions contained in this section shall
not apply if:
(i) the business combination is proposed prior to
the consummation of the business transaction and subsequent to
the earlier of the public announcement or the notice required
hereunder of, a proposed transaction which:
a. constitutes one of the transactions
described in subparagraph (ii) of this paragraph,
b. is with or by a person who either was not an
interested shareholder during the previous three (3) years or who
became an interested shareholder with the approval of the
corporation's board of directors, and
c. is approved or not opposed by a majority of
the members of the board of directors then in office, but not
less than one, who were directors prior to any person becoming an
interested shareholder during the previous three (3) years or
were recommended for election or elected to succeed such
directors by a majority of such directors;
(ii) the proposed transactions referred to in
subparagraph (i) of this paragraph are limited to:
a. a share acquisition pursuant to Section
1090.1 of Title 18 of the Oklahoma Statutes, or a merger or
consolidation of the corporation, except for a merger in respect
of which pursuant to subsection F of Section 1081 of Title 18 of
the Oklahoma Statutes, no vote of the shareholders of the
corporation is required, or
b. a sale, lease, exchange, mortgage, pledge,
transfer or other disposition, in one trans- action or a series
of transactions, whether as part of a dissolution or otherwise,
of assets of the corporation or of any direct or indirect
majority-owned subsidiary of the corporation, other than to any
direct or indirect wholly-owned subsidiary or to the corporation,
having an aggregate market value equal to fifty percent (50%) or
more of either the aggregate market value of all the assets of
the corporation determined on a consolidated basis or the
aggregate market value of all the outstanding stock of the
corporation, or
c. a proposed tender or exchange offer for
outstanding stock of the corporation which represents fifty
percent (50%) or more of all voting power of the corporation, or
(iii) a person becomes an interested shareholder
inadvertently and:
a. as soon as practicable divests sufficient
shares so that the person ceases to be an interested shareholder,
and
b. would not, at any time within the three (3)
year period immediately prior to a business combination between
the corporation and such person, have been an interested
shareholder but for the inadvertent acquisition.
The corporation shall give not less than twenty (20) days notice
to all interested shareholders prior to the consummation of any
of the transactions described in divisions (i) or (ii) of this
subparagraph.
(c) As used in this section only:
(i) "affiliate" means a person that directly, or
indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, another person;
(ii) "all voting power" means the aggregate number of
votes which the holders of all classes of capital stock of the
corporation would be entitled to cast in an election of directors
generally;
(iii) "associate", when used to indicate a
relationship with any person, means:
a. any corporation or organization of which
such person is a director, officer or partner or is, of record or
beneficially, the owner of outstanding stock of the corporation
having twenty percent (20%) or more of all voting power of the
corporation,
b. any trust or other estate in which such
person has at least a twenty percent (20%) beneficial interest or
as to which such person serves as trustee or in a similar
fiduciary capacity, and
c. any relative or spouse of such person, or
any relative of such spouse, who has the same residence of such
person;
(iv) "beneficial ownership" shall have the meaning
ascribed to such term by Rule 13d-3 under the Securities Exchange
Act of 1934, 15 U.S.C. Section 78a et seq., as amended, except
that a person shall be deemed to be the owner or beneficial owner
of securities of which he has the right to acquire ownership
either immediately or only after the passage of any time or the
giving of notice or both; provided, however, that a person shall
not be deemed the owner or beneficial owner of any stock if:
a. the agreement, arrangement or understanding
to vote such stock arises solely from a revocable proxy or
consent given in response to a proxy or consent solicitation made
to more than ten persons, or
b. the stock is tendered pursuant to a tender
or exchange offer made by such person or any of such person's
affiliates or associates, until such tendered stock is accepted
for purchase or exchange;
(v) "business combination", when used in reference
to any corporation and any interested shareholder of such
corporation, means:
a. any merger or consolidation of the
corporation or any direct or indirect majority-owned subsidiary
of the corporation with:
(1) the interested shareholder, or
(2) any other corporation if the merger or
consolidation is caused by the interested shareholder and as a
result of such merger or consolidation subsection (a) of this
section is not applicable to the surviving corporation,
b. any sale, lease, exchange, mortgage, pledge,
transfer or other disposition, in one transaction or a series of
transactions, except as proportionately as a shareholder of such
corporation, to or with the interested shareholder, whether as
part of a dissolution or otherwise, of assets of the corporation
or of any direct or indirect majority-owned subsidiary of the
corporation which assets have an aggregate market value equal to
ten percent (10%) or more of either the aggregate market value of
all the assets of the corporation determined on a consolidated
basis or the aggregate market value of all the outstanding stock
of the corporation,
c. any transaction which results in the
issuance or transfer by the corporation or by any direct or
indirect majority-owned subsidiary of the corporation of any
stock of the corporation or of such subsidiary to the interested
shareholder, except:
(1) pursuant to the exercise, exchange or
conversion of securities exercisable for, exchangeable for or
convertible into stock of such corporation or any such subsidiary
which securities were outstanding prior to the time that the
interested shareholder became such,
(2) pursuant to a dividend or distribution
paid or made, or the exercise, exchange or conversion of
securities exercisable for, exchangeable for or convertible into
stock of such corporation or any such subsidiary which security
is distributed, pro rata to all holders of a class or series of
stock of such corporation subsequent to the time the interested
shareholder became such, or
(3) pursuant to an exchange offer by the
corporation to purchase stock made on the same terms to all
holders of said stock; provided, however, that in no case under
divisions (2) and (3) of this subparagraph shall there be an
increase in the interested shareholder's proportionate share of
the stock of any class or series of the corporation or of all
voting power of the corporation,
d. any transaction involving the corporation or
any direct or indirect majority-owned subsidiary of the
corporation which has the effect, directly or indirectly, of
increasing the proportionate share of the stock of any class or
series, or securities convertible into the stock of any class or
series, or all voting power, of the corporation or of any such
subsidiary which is owned by the interested shareholder, except
as a result of immaterial changes due to fractional share
adjustments or as a result of any purchase or redemption of any
shares of stock not caused, directly or indirectly, by the
interested shareholder,
e. any receipt by the interested shareholder of
the benefit, directly or indirectly, except proportionately as a
shareholder of such corporation, of any loans, advances,
guarantees, pledges, or other financial benefits, other than
those expressly permitted in subparagraphs a. through d. of this
paragraph, provided by or through the corporation or any direct
or indirect majority-owned subsidiary, or
f. any share acquisition pursuant to Section
1090.1 of Title 18 of the Oklahoma Statutes;
(vi) "control", including the terms "controlling",
"controlled by" and "under common control with", means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a person,
whether through the ownership of voting stock, by contract, or
otherwise. A person who owns, of record or beneficially,
outstanding stock of the corporation having twenty percent (20%)
or more of all voting power of the corporation shall be presumed
to have control of such corporation, in the absence of proof by a
preponderance of the evidence to the contrary. Notwithstanding
the foregoing, a presumption of control shall not apply where
such person holds stock, in good faith and not for the purpose of
circumventing this section, as an agent, bank, broker, nominee,
custodian or trustee for one or more owners who do not
individually or as a group have control of such corporation;
(vii) "group" means two or more persons who agree to
act together for the purpose of acquiring, holding, voting or
disposing of securities of the corporation;
(viii)a. "interested shareholder" means:
1) any person, other than the corporation
and any direct or indirect majority-owned subsidiary of the
corporation, that:
(a) owns of record or beneficially
outstanding stock of the corporation having fifteen percent (15%)
or more of all voting power of the corporation, or
(b) is an affiliate or associate of the
corporation and owned of record or beneficially outstanding stock
of the corporation having fifteen percent (15%) or more of all
voting power of the corporation at any time within the three-year
period immediately prior to the date on which it is sought to be
determined whether such person is an interested shareholder, and
(2) the affiliates and associates of such
person;
b. the term "interested shareholder" shall not
include any person whose ownership of shares in excess of the
fifteen percent (15%) limitation set forth herein is the result
of action taken solely by the corporation, provided that such
person shall be an interested shareholder if thereafter he
acquires additional shares of voting stock of the corporation,
except as a result of further corporate action not caused,
directly or indirectly, by such person;
c. for the purpose of determining whether a
person is an interested shareholder, the stock of the corporation
deemed to be outstanding shall include stock owned of record or
beneficially by such person, but shall not include any other
unissued stock of such corporation which may be issuable pursuant
to any agreement, arrangement or understanding, or upon exercise
of conversion rights, warrants or options, or otherwise;
(ix) "person" means any individual, corporation,
partnership, unincorporated association, any other entity, any
group and any member of a group.
TWELFTH. The board of directors shall be divided into
three classes as nearly equal in number as possible with the term
of office of one class expiring each year. Of the directors
chosen at the first stockholders' meeting, the term of office of
those of the first class shall expire at the first annual meeting
after their election; the term of office of those of the second
class shall expire at the second annual meeting after their
election; and the term of office of those of the third class
shall expire at the third annual meeting after their election.
At each annual meeting held after such classification and
election, directors shall be chosen for a full term of three
years to succeed those whose terms expire. When the number of
directors is changed any newly created directorship or any
decrease in directorship shall be so apportioned among the
classes as to make all classes as nearly equal in number as
possible. When the number of directors is increased by the board
of directors, there shall be no classification of the additional
directors until the next annual meeting of stockholders.
Subject to the rights, if any, of the holders of
Preferred Stock to elect directors, vacancies and newly created
directorships resulting from any increase in the authorized
number of directors shall be filled by a majority of the
directors then in office, though less than a quorum, or by a sole
remaining director. The directors so chosen shall hold office
until the next annual election of the class for which each such
director has been chosen and until his successor is duly elected
and qualified, or until his earlier resignation or removal. No
decrease in the number of directors constituting the Board of
Directors shall shorten the term of an incumbent director.
THIRTEENTH.
(a) The corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason
of the fact that he is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of
the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture or other
enterprise against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit
or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest
of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct
was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent shall not of itself create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interest of the corporation and with respect to any
criminal action or proceeding had reasonable cause to believe
that his conduct was unlawful.
(b) The corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit, if he acted in good
faith and in a manner he reasonably believed to be in or not
opposed to the best interest of the corporation; except that no
indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the
court in which such action or suit was brought shall determine,
upon application, that despite the adjudication of liability, but
in the view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper.
(c) Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount if it
shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized herein.
(d) The corporation may purchase (upon resolution duly
adopted by the board of directors) and maintain insurance on
behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the
power to indemnify him against such liability.
(e) To the extent that a director, officer, employee or
agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred
to herein or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(f) Every such person shall be entitled, without demand
by him upon the corporation or any action by the corporation, to
enforce his right to such indemnity in an action at law against
the corporation. The right of indemnification and advancement of
expenses hereinabove provided shall not be deemed exclusive of
any rights to which any such person may now or hereafter be
otherwise entitled and specifically, without limiting the
generality of the foregoing, shall not be deemed exclusive of any
rights pursuant to statute or otherwise, of any such person in
any such action, suit or proceeding to have assessed or allowed
in his favor against the corporation or otherwise, his costs and
expenses incurred therein or in connection therewith or any part
thereof.
FOURTEENTH. The provisions of this Article and
Articles NINTH through THIRTEENTH of this Certificate of
Incorporation shall not be altered, amended or repealed except by
the affirmative vote of the holders of at least 80% of the
outstanding shares of the corporation entitled to vote thereon.
I, the undersigned, for the purpose of forming a
corporation under the laws of the State of Oklahoma, do make,
file and record this Certificate, and do certify that the facts
herein stated are true, and I have accordingly hereunto set my
hand this ____ day of ______________, 1995.
_________________________________
<PAGE>
EXHIBIT C
=================================================================
DEVON OKLAHOMA CORPORATION
and
THE FIRST NATIONAL BANK
OF BOSTON (MASSACHUSETTS)
Rights Agent
RIGHTS AGREEMENT
Dated as of _______, 1995
================================================================-
<PAGE>
INDEX
Page
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 8
Section 3. Issue of Right Certificates 8
Section 4. Form of Right Certificates 10
Section 5. Countersignature and Registration 11
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or
Stolen Right Certificates 12
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights 13
Section 8. Cancellation and Destruction of Right
Certificates 14
Section 9. Reservation and Availability
of Preferred Shares 15
Section 10. Preferred Share Record Date 16
Section 11. Adjustment of Purchase Price,
Number of Shares or Number
of Rights 16
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares 24
Section 13. Consolidation, Merger or Certain
Other Transactions 25
Section 14. Fractional Rights and Fractional
Shares 28
Section 15. Rights of Action 30
<PAGE>
Section 16. Agreement of Right Holders 30
Section 17. Right Certificate Holder Not Deemed
a Stockholder 31
Section 18. Concerning the Rights Agent 32
Section 19. Merger or Consolidation or Change of
Name of Rights Agent 32
Section 20. Duties of Rights Agent 33
Section 21. Change of Rights Agent 35
Section 22. Issuance of New Right Certificates 36
Section 23. Redemption and Termination 37
Section 24. Notice of Certain Events 38
Section 25. Notices 39
Section 26. Supplements and Amendments 40
Section 27. Successors 41
Section 28. Determinations and Actions by the
Board of Directors, etc. 41
Section 29. Benefits of This Agreement 41
Section 30. Severability 42
Section 31. Governing Law 42
Section 32. Counterparts 42
Section 33. Descriptive Headings 42
<PAGE>
Signatures 43
Exhibit A Form of Certificate of Designations
of Series A Junior Participating
Preferred Stock
Exhibit B Form of Right Certificate
<PAGE>
RIGHTS AGREEMENT
This Agreement, dated as of ____________, 1995 between
Devon Oklahoma Corporation, an Oklahoma corporation (the
"Company"), and THE FIRST NATIONAL BANK OF BOSTON (MASSACHUSETTS)
(the "Rights Agent"),
W I T N E S S E T H :
WHEREAS, on _________, 1995 the Board of Directors of
the Company authorized and declared a dividend of one preferred
share purchase right (hereafter referred to as a "Right") for
each share of Common Stock, $.10 par value per share, of the
Company outstanding on _______, 1995 herein referred to as the
"Record Date," other than shares of such Common Stock held in the
Company's treasury on such date, and has authorized the issuance
of one Right in respect of each share of Common Stock of the
Company issued between the Record Date (whether originally issued
or issued from the Company's treasury) and the Distribution Date
(as such term is defined in Section 3 hereof), each Right
representing the right to purchase one one-hundredth of a
Preferred Share (as hereinafter defined) upon the terms and
subject to the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby agree
as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated.
(a) "Acquiring Person" shall mean any Person who
or which, together with all Affiliates and Associates of such
Person, shall hereafter become the Beneficial Owner of 15% or
more of the Voting Shares of the Company then outstanding, but
shall not include the Company, any Subsidiary of the Company or
any employee benefit plan of the Company or any Subsidiary of the
Company, or any Person or entity organized, appointed or
established by the Company or a Subsidiary of the Company for or
pursuant to the terms of any employee benefit plan; provided, a
Person who or which does no more than (i) become an Affiliate or
Associate of a Person who or which (together with all Affiliates
or Associates) is now a Beneficial Owner of 15% or more of the
Voting Shares now outstanding, and/or (ii) become, by operation
of clause (ii) or clause (iii) of Section 1(c), the Beneficial
Owner of shares beneficially owned by a Person who or which
(together with all Affiliates or Associates) is now a Beneficial
Owner of 15% or more of the Voting Shares now outstanding, is not
an Acquiring Person. Further, no Person shall become an
Acquiring Person solely as the result of a reduction in the
number of Voting Shares outstanding due to an acquisition of
Voting Shares by the Company which increases the proportionate
number of such Voting Shares Beneficially Owned by such Person to
15% or more unless and until that Person shall purchase or
otherwise become (as a result of actions by such Person or its
Affiliates or Associates) the Beneficial Owner of any additional
Voting Shares of the Company.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as in effect on the
date hereof.
(c) A Person shall be deemed the "Beneficial
Owner" of, and shall be deemed to "Beneficially Own," any securi
ties:
(i) which such Person or any of such Per
son's Affiliates or Associates Beneficially Owns
pursuant to Rule 13d-3 or 13d-5 under the Exchange Act,
directly or indirectly;
(ii) which such Person or any of such Per
son's Affiliates or Associates has (A) the right to
acquire (whether such right is exercisable immediately
or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than
customary agreements with and between underwriters and
selling group members with respect to a bona fide
public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to Beneficially Own,
securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Benefi
cial Owner of, or to Beneficially Own, any security if
the agreement, arrangement or understanding to vote
such security (1) arises solely from a revocable proxy
or consent given to such Person in response to a public
proxy solicitation made pursuant to, and in accordance
with, the applicable rules and regulations of the
Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act any comparable or
successor report; or
(iii) which are Beneficially Owned, directly
or indirectly, by any other Person with which such
Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters
and selling group members with respect to a bona fide
public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent
contemplated by the proviso to Section l(c)(ii)(B)) or
disposing of any securities of the Company.
(d) "Book Value", when used with reference to
Common Shares issued by any Person, shall mean the amount of
equity of such Person applicable to each Common Share, determined
(i) in accordance with generally accepted accounting principles
in effect on the date as of which such Book Value is to be
determined, (ii) using all the consolidated assets and all the
consolidated liabilities of such Person on the date as of which
such Book Value is to be determined, except that no value shall
be included in such assets for goodwill arising from consummation
of a business combination, and (iii) after giving effect to (A)
the exercise of all rights, options and warrants to purchase such
Common Shares (other than the Rights), and the conversion of all
securities convertible into such Common Shares, at an exercise or
conversion price, per Common Share, which is less than such Book
Value before giving effect to such exercise or conversion
(whether or not exercisability or convertibility is conditioned
upon occurrence of a future event), (B) all dividends and other
distributions on the capital stock of such Person declared prior
to the date as of which such Book Value is to be determined and
to be paid or made after such date, and (C) any other agreement,
arrangement or understanding (written or oral), or transaction or
other action prior to the date as of which such Book Value is to
be determined which would have the effect of thereafter reducing
such Book Value.
(e) "Business Combination" shall have the meaning
set forth in Section 13(a) hereof.
(f) "Business Day" shall mean any day other than
a Saturday, Sunday, or a day on which national banking associa
tions in the States of Oklahoma or Massachusetts are authorized
or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall
mean 5:00 P.M., Boston, Massachusetts time, on such date;
provided, however, that if such date is not a Business Day it
shall mean 5:00 P.M., Boston, Massachusetts time, on the next
succeeding Business Day.
(h) "Common Shares", when used with reference to
the Company prior to a Business Combination, shall mean the
shares of Common Stock of the Company or any other shares of
capital stock of the Company into which the Common Stock shall be
reclassified or changed. "Common Shares", when used with
reference to any Person, other than the Company prior to a
Business Combination, shall mean shares of capital stock of such
Person (if such Person is a corporation) of any class or series,
or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which do
not limit (as a maximum amount and not merely in proportional
terms) the amount of dividends or income payable or distributable
on such class or series or the amount of assets distributable on
such class or series upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not
provide that such class or series is subject to redemption at the
option of such Person, or any shares of capital stock or units of
equity interests into which the foregoing shall be reclassified
or changed; provided, however, that, if at any time there shall
be more than one such class or series of capital stock or equity
interests of such Person, "Common Shares" of such Person shall
include all such classes and series substantially in the
proportion of the total amount of equity such shares or other
units of each such class or series outstanding at such time
represent.
(i) "Common Stock" shall mean the Common Stock,
$.10 par value, of the Company, except that "Common Stock" when
used with reference to any Person other than the Company shall
mean the capital stock of such Person with the greatest voting
power, or the equity securities or other equity interest having
power to control or direct the management, of such Person;
provided, if such other Person is a Subsidiary, then "Common
Stock" shall mean the capital stock of the Person which ulti
mately controls such Person which is a Subsidiary with the
greatest voting power, or the equity securities or other equity
interest having power to control or direct the management of such
ultimately controlling Person.
(j) "Continuing Director" shall mean any member
of the Board of Directors of the Company, while such person is a
member of the Board, 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 who was a member of the Board prior to the Stock
Acquisition Date, and any successor of a Continuing Director,
while such successor is a member of the Board, 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 Continu
ing Directors.
(k) "Distribution Date" shall have the meaning
defined in Section 3 hereof.
(l) "Final Expiration Date" shall have the
meaning set forth in Section 7 hereof.
(m) "Major Part", when used with reference to the
assets of the Company and its Subsidiaries as of any date, shall
mean assets (i) having a fair market value aggregating 50% or
more of the total fair market value of all the assets of the
Company and its Subsidiaries (taken as a whole) as of the date in
question, (ii) accounting for 50% or more of the total value (net
of depreciation and amortization) of all the assets of the
Company and its Subsidiaries (taken as a whole) as would be shown
on a consolidated or combined balance sheet of the Company and
its Subsidiaries as of the date in question, prepared in
accordance with generally accepted accounting principles then in
effect, or (iii) accounting for 50% or more of the total amount
of earnings, before interest, taxes, depreciation and
amortization, or revenues of the Company and its Subsidiaries
(taken as a whole) as would be shown on, or derived from, a
consolidated or combined statement of income of the Company and
its Subsidiaries for the period of 12 months ending on the last
day of the Company's monthly accounting period next preceding the
date in question, prepared in accordance with generally accepted
accounting principles then in effect.
(n) "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 of
this Agreement), corporation, trust, business trust or other
entity and shall include any successor (by merger or otherwise)
of such entity.
(o) "Preferred Shares" shall mean shares of
Series A Junior Participating Preferred Stock, par value $1.00
per share, of the Company having the rights and preferences set
forth in the form of Certificate of Designations attached to this
Agreement as Exhibit A.
(p) "Principal Party" shall mean the Surviving
Person in a Business Combination; provided, however, that, if
such Surviving Person is a direct or indirect Subsidiary of any
other Person, "Principal Party" shall mean the Person which is
the ultimate parent of such Surviving Person and which is not
itself a Subsidiary of another Person. In the event ultimate
control of such Surviving Person is shared by two or more
Persons, "Principal Party" shall mean that Person that is
immediately controlled by such two or more Persons.
(q) "Purchase Price" shall have the meaning
defined in Section 4 hereof.
(r) "Redemption Date" shall have the meaning set
forth in Section 7 hereof.
(s) "Registered Common Shares" shall mean Common
Shares which are, as of the date of consummation of a Business
Combination, and have continuously been for the 12 months
immediately preceding such date, registered under Section 12 of
the Exchange Act.
(t) "Stock Acquisition Date" shall mean the first
date of public announcement (which, for purposes of this defini
tion, shall include, without limitation, a report filed pursuant
to Section 13(d) under the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such,
whether or not the term "Acquiring Person" is used in such
announcement.
(u) "Subsidiary" shall mean any corporation or
other entity of which (1) securities or other ownership interests
having ordinary voting power, in the absence of contingencies, to
elect a majority of the board of directors or other persons
performing similar functions, or (2) a majority of the equity
interests, are at the time directly or indirectly owned by
another corporation or other entity which is not a natural
person.
(v) "Surviving Person" shall mean (1) the Person
which is the continuing or surviving Person in a consolidation or
merger specified in Section 13(a)(i) or 13(a)(ii) or (2) the
Person to which the Major Part of the assets of the Company and
its Subsidiaries is sold, leased, exchanged or otherwise
transferred or disposed of in a transaction specified in Section
13(a)(iii); provided, however, that if the Major Part of the
assets of the Company and its Subsidiaries is sold, leased,
exchanged or otherwise transferred or disposed of in one or more
related transactions specified in Section 13(a)(iii) to more than
one Person, the "Surviving Person" in such case shall mean the
Person that acquired assets of the Company and/or its
Subsidiaries with the greatest fair market value in such
transaction or transactions.
(w) "Transfer" shall mean to sell, exchange,
lease, pledge, mortgage, hypothecate, grant a security interest
or otherwise directly or indirectly transfer, voluntarily or
involuntarily, whether by grant or operation of law, and includ
ing, without limitation of the foregoing, to exchange securities
for other securities, or for cash or other property, by reason of
any merger, consolidation or other corporate reorganization.
(x) "Voting Shares" shall mean (i) for purposes
of determining the number of outstanding Voting Shares of the
Company, the Common Shares of the Company and any other shares of
capital stock of the Company entitled to vote generally in the
election of directors; and (ii) for purposes of determining the
number or percentage of Voting Shares Beneficially Owned by any
Person, all of the following shares Beneficially Owned by such
Person: (x) the number of votes represented by the Common Shares
of the Company and (y) the number of votes represented by the
shares of any other capital stock of the Company entitled to vote
generally in the election of directors.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company
and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders
of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it
may deem necessary or desirable and determine the respective
duties of the Rights Agent and any Co-Rights Agent.
Section 3. Issue of Right Certificates.
(a) One Right shall be associated with each share
of Common Stock outstanding on the Record Date, each additional
share of Common Stock that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date and each additional
share of Common Stock issued to anyone other than an Acquiring
Person, or an Affiliate or Associate thereof, after the
Distribution Date but prior to the earlier of the Redemption Date
or the Final Expiration Date, subject to the adjustments
enumerated in Section 11.
(b) Until the earlier of (i) the close of busi
ness on the tenth day (or such later date as is determined by
unanimous vote of the Continuing Directors and publicly
announced) after the Stock Acquisition Date (provided, however
that if prior to the date which would otherwise be the
Distribution Date, as defined below, the Acquiring Person whose
becoming such shall have caused the Stock Acquisition Date to
occur, shall cease to be an Acquiring Person as indicated in a
public announcement or public filing by such Person, and upon the
unanimous vote of the Continuing Directors, then for purposes of
this Section 3(a), the Stock Acquisition Date shall be deemed not
to have occurred), or (ii) the close of business on the tenth day
after the date that a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company, or any person or entity organized, appointed or es
tablished by the Company for or pursuant to the terms of any such
plan) is first published or sent or given within the meaning of
Rule 14e-2(a) of the General Rules and Regulations under the
Exchange Act, if upon consummation thereof, such Person would be
the Beneficial Owner of 15% or more of the Voting Shares then
outstanding (the earlier of (i) and (ii) being herein referred to
as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (c) of this Section 3) by
the certificates for the Common Stock registered in the names of
the holders of the Common Stock (which certificates for Common
Stock shall be deemed also to be certificates for Rights) and not
by separate certificates, (y) the Rights will be transferable
only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company), and (z) the
surrender for transfer of the certificates for Common Stock shall
also constitute the transfer of the Rights associated with the
Common Stock. The Company shall give the Rights Agent prior
written notice of the Distribution Date and the circumstances
giving rise thereto. As soon as practicable after the Distribu
tion Date, the Rights Agent will send by first-class, insured,
postage prepaid mail, to each such record holder of the Common
Stock as of the close of business on the Distribution Date, at
the address of such holder shown on the records of the Company,
one or more right certificates, in substantially the form of Ex
hibit B hereto (the "Right Certificates"), evidencing one Right
for each share of Common Stock so held, subject to adjustment as
provided herein. As of and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
Notwithstanding the foregoing, if any tender or exchange offer
referred to in clause (ii) of this Section 3(b) expires, is
cancelled, terminated or otherwise withdrawn prior to the date
which would otherwise be the Distribution Date, such offer shall
be deemed, for purposes of this Section 3(b) never to have been
made.
(c) Certificates for the Common Stock issued
after the Record Date but prior to the earlier of the Distribu
tion Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to
them the following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights
Agreement between Devon Oklahoma Corporation and The
First National Bank of Boston (Massachusetts) dated as
of _______, 1995 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive
offices of Devon Oklahoma Corporation. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights may be redeemed, may expire, or may be
evidenced by separate certificates and no longer be
evidenced by this certificate. Devon Oklahoma
Corporation will mail to the holder of this certificate
a copy of the Rights Agreement as in effect on the date
of mailing, without charge, after receipt of a written
request therefor. Under certain circumstances set forth
in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person
or any Affiliate or Associate thereof (as such terms
are defined in the Rights Agreement), whether currently
held by or on behalf of such Person or by any
subsequent holder, may become null and void.
Notwithstanding this paragraph (c), the omission of a legend
shall not affect the enforceability of this Rights Agreement or
the rights of any holder of Rights. The presence of a legend
after the Distribution Date shall not imply that any Rights are
associated with the certificate other than that represented by
the Rights Certificate distributed with respect thereof. In the
event that the Company purchases or acquires any Common Stock
after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Stock shall be deemed
cancelled and retired so that the Company shall not be entitled
to exercise any Rights associated with the shares of Common Stock
which are no longer outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of
election to purchase Preferred Shares and of assignment to be
printed on the reverse thereof) when, as and if issued, shall be
substantially the same as Exhibit B hereto and may have such
marks of identification or designation and such legends, sum
maries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any appli
cable law, rule or regulation or with any rule or regulation of
any stock exchange on which the Rights may from time to time be
listed. Subject to the provisions of Section 22 hereof, the
Right Certificates, whenever distributed, shall be dated as of
the Record Date (or in the case of Rights issued with respect to
Common Stock issued by the Company after the Record Date, as of
the date of issuance of such Common Stock), shall note the date
of issuance on their face and shall entitle the holders thereof
to purchase such number of one one-hundredths of a Preferred
Share as shall be set forth therein at the price per one
one-hundredth of a Preferred Share set forth thereon (the
"Purchase Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its President
or any Vice President, either manually or by facsimile signature,
and shall be attested by the Secretary or an Assistant Secretary
of the Company, either manually or by facsimile signature. The
Right Certificates shall be countersigned (manually or by
facsimile signature in a manner satisfactory to the Company) by
the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company whose manual
or facsimile signature is affixed to the Right Certificates shall
cease to be such officer of the Company before countersignature
by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by
the Rights Agent, issued and delivered with the same force and
effect as though the person who signed such Right Certificates
had not ceased to be such officer of the Company. Any Right
Certificate may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign
such Right Certificate, although at the date of the execution of
this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights
Agent will keep or cause to be kept, at one of its offices, books
for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates
and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates.
(a) Subject to the provisions of Sections 11(a)
and 14 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on
the Redemption Date or the Final Expiration Date (as such terms
are defined in Section 7(a) hereof), any Right Certificate or
Right Certificates may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one
one-hundredths of a Preferred Share as the Right Certificate or
Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request
in writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the principal office of the Rights
Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Right Certificate
until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse
side of such Right Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request. Thereupon the Rights
Agent, subject to Sections 11(a) and 14 hereof, shall countersign
and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right
Certificates.
(b) Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Right Certificate, and, in
case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation
of the Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered owner in lieu
of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Subject to Section 11(a), the registered
holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part
at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at the
principal office of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one one-
hundredth of a Preferred Share as to which the Rights are exer
cised, at or prior to the close of business on the earlier of (i)
_______, 2005 (the "Final Expiration Date"), or (ii) the date on
which the Rights are redeemed as provided in Section 23 (the
"Redemption Date").
(b) The Purchase Price for each one one-hundredth
of a Preferred Share pursuant to the exercise of a Right shall
initially be $75, shall be subject to adjustment from time to
time as provided in Sections 11 and 13 hereof, or amendment as
provided in Section 26, and shall be payable in lawful money of
the United States of America in accordance with paragraph (c)
below.
(c) Upon receipt of a Right Certificate repre
senting exercisable Rights, with the form of election to purchase
and the certificate duly executed, accompanied by payment of the
Purchase Price for shares to be purchased and an amount equal to
any applicable transfer tax required to be paid by the holder of
the Rights pursuant hereto in cash, or by check or money order
payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Shares (or make available, if the Rights Agent is
the transfer agent for such shares) certificates for the number
of Preferred Shares to be purchased and the Company hereby
irrevocably authorizes and directs such transfer agent to comply
with all such requests, or (B) if the Company shall have elected
to deposit the total number of Preferred Shares issuable upon the
exercise of the Rights hereunder with a depositary agent, requi
sition from the depositary agent depositary receipts representing
such number of one one-hundredths of a Preferred Share as are to
be purchased (in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company hereby directs
the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to
be paid in lieu of issuance of fractional shares in accordance
with Section 14 hereof, (iii) after receipt of such certificates
or depositary receipts, cause the same to be delivered to the
registered holder, or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may
be designated by such holder and (iv) when appropriate, after re
ceipt deliver such cash in lieu of fractional shares to or upon
the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be countersigned by the
Rights Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i)
properly completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the
Right Certificate surrendered for such exercise and (ii) provided
such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof
as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise, transfer, split up, combination or exchange shall,
if surrendered to the Company or to any of its agents, be de
livered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled
by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Right Certificates
to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred
Shares.
(a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and
unissued Preferred Shares or its authorized and issued Preferred
Shares held in its treasury, the number of Preferred Shares that
will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all
Preferred Shares delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly authorized
and issued and fully paid and nonassessable shares.
(c) The Company further covenants and agrees that
it will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any
Preferred Shares upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be
payable in respect of any transfer involved in the transfer or
delivery of Right Certificates or the issuance or delivery of
certificates or depositary receipts for the Preferred Shares in a
name other than that of the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to
issue or deliver any certificates or depositary receipts for
Preferred Shares upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that
no such tax is due.
Section 10. Preferred Share Record Date. Each Person
(other than the Company) in whose name any certificate for
Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the
Preferred Shares represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evi
dencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment
is a date upon which the Preferred Shares transfer books of the
Company are closed, such Person shall be deemed to have become
the record holder of such shares on, and such certificate shall
be dated, the next succeeding Business Day on which the Preferred
Shares transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a holder of
Preferred Shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any rights af
forded to stockholders of the Company and shall not be entitled
to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights. The Purchase Price, the number and
kind of shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any
time after the date of this Agreement (A) declare a dividend on
the Preferred Shares payable in Preferred Shares, (B) subdivide
the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D)
issue any shares of its capital stock in a reclassification of
the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is
the continuing corporation), except as otherwise provided in this
Section II(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and
kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right ex
ercised after such time shall be entitled to receive, upon
payment of the Purchase Price then in effect, the aggregate
number and kind of shares of capital stock which, if such Right
had been exercised immediately prior to such date and at a time
when the Preferred Shares transfer books of the Company were
open, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right.
(ii) Upon a Person becoming an Acquiring
Person, each holder of a Right, except as provided below, shall
thereafter have a right to receive, upon exercise thereof at a
price equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a
Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of Common
Shares of the Company as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the then number of
one one-hundredths of a Preferred Share for which a Right is then
exercisable and dividing that product by (B) 50% of the then
current per share market price of the Company's Common Shares
(determined pursuant to Section 11(d)) on the date such Person
became an Acquiring Person.
(iii) Notwithstanding anything in this Rights
Agreement to the contrary, any Rights that are at any time
Beneficially Owned by (a) an Acquiring Person (or any Associate
or Affiliate of such Acquiring Person) or (b) a transferee of an
Acquiring Person or of any Associate or Affiliate of such
Acquiring Person who receives Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or
to any Person with whom such Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the
Company determines has a primary purpose or effect of avoidance
of Section 11(a) hereof shall be null and void and any such
holder shall have no right to exercise such Rights under any
provision of this Agreement. No Right Certificate shall be
intentionally issued pursuant to Section 3 that represents Rights
Beneficially Owned by an Acquiring Person or any Associate or
Affiliate thereof and no Right Certificate shall be intentionally
issued at any time upon the transfer of any Rights to an
Acquiring Person or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate. Any
Right Certificate delivered to the Rights Agent for transfer to
such an Acquiring Person, Associate or Affiliate shall be
cancelled.
(iv) In the event that there shall not be
sufficient Common Shares issued but not outstanding or authorized
but unissued to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Company
shall take all such action as may be necessary to authorize
additional Common Shares for issuance upon exercise of the
Rights. In the event the Company shall, after good faith effort,
be unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be
issuable upon exercise of a Right, a number of Preferred Shares
or fraction thereof such that the current per share market price
of one Preferred Share multiplied by such number or fraction is
equal to the current per share market price of one Common Share
as of the date of issuance of such Preferred Shares or fraction
thereof.
(b) In the event the Company shall fix a record
date for the issuance of rights, options or warrants to all
holders of Preferred Shares entitling them (for a period expiring
within 45 calendar days after such record date) to subscribe for
or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred
Shares at a price per Preferred Share (or having a conversion
price per share, if a security convertible into Preferred Shares
or equivalent preferred shares) less than the current market
price per share of Preferred Shares (as defined in Section 11(d))
on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such date by a fraction, the
numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number
of additional Preferred Shares and/or equivalent preferred shares
to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convert
ible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. In the event
such subscription price may be paid in a consideration part or
all of which shall be in a form other than cash, the value of
such consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent. Preferred
Shares owned by or held for the account of the Company shall not
be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted again to be
the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In the event the Company shall fix a record
date for the making of a distribution to all holders of the
Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular periodic cash
dividend or a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to in
Section 11(b)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction,
the numerator of which shall be the then current per share market
price (as defined in Section 11(d)) of the Preferred Shares on
such record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights
or warrants applicable to one Preferred Share and the denominator
of which shall be such current per share market price of the
Preferred Shares; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. Such
adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall be adjusted again to be the
Purchase Price which would have then been in effect if such
record date had not been fixed.
(d) For the purpose of any computation hereunder,
the "current per share market price" of any security (a "Secur
ity" for the purpose of this Section 11(d)) on any date shall be
deemed to be the average of the daily closing prices per share of
such Security for the 20 consecutive Trading Days (as hereinafter
defined) immediately prior to such date; provided, however, that
in the event that the current per share market price of the
Security is determined during a period following the announcement
by the issuer of such Security of (A) a dividend or distribution
on such Security payable in shares of such Security or securities
convertible into such shares or (B) any subdivision, combination
or reclassification of such Security and prior to the expiration
of 20 Trading Days after the ex-dividend date for such dividend
or distribution, or the record date for such subdivision, com
bination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such
Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the American Stock Exchange or, if the
Security is not listed or admitted to trading on the American
Stock Exchange, as reported in the principal consolidated trans
action reporting system with respect to securities listed on the
principal national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed
or admitted to trading on any national securities exchange, the
average of the high bid and low asked prices in the over-the-
counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or
such other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the
Board of Directors of the Company. If the Preferred Shares are
not publicly traded, the current per share market price of the
Preferred Shares shall be deemed to be the current per share
market price of the Common Shares (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof) multiplied by 100. If neither
the Preferred Shares nor the Common Shares are publicly traded,
the current per share market price shall be deemed the fair value
thereof on such date as determined in good faith by the Board of
Directors of the Company. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Busi
ness Day.
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in such price; provided, however, that
any adjustments which by reason of this Section II(e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest
one-millionth of a Preferred Share or one ten-thousandth of any
other share or security as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by
this Section 11 shall be made no later than the earlier of (i)
three years from the date of the transaction which mandates such
adjustment or (ii) the expiration of the Rights.
(f) In the event that at any time, as a result of
an adjustment made pursuant to Section 11(a) or Section 13, the
holder of any Right shall be entitled to receive upon exercise of
such Right any shares of capital stock of the Company other than
Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price
thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares contained in
Sections 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10 and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of shares of one one-hundredths of a Preferred
Share purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
Section 11(b) and (c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Preferred Share (calculated to the
nearest one one-millionth of a Preferred Share) obtained by (i)
multiplying (x) the number of one one-hundredths of a Preferred
Share covered by a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of
Rights, in substitution for any adjustment in the number of one
one-hundredths of a Preferred Share purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment
of the number of Rights shall be exercisable for the number of
one one-hundredths of a Preferred Share for which such Right was
exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of
its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day there
after, but, if the Right Certificates have been issued, shall be
at least 10 days later than the date of the public announcement.
If Right Certificates have been issued upon each adjustment of
the number of Rights pursuant to this Section 11(i) the Company
shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14, the additional
Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior
to the date of adjustment, and upon surrender thereof, if re
quired by the Company, new Right Certificates evidencing all the
Rights to which such holders shall be entitled after such adjust
ment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in
the Purchase Price or the number of one one-hundredths of a
Preferred Share issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number of one one-hun
dredths of a Preferred Share which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-hundredth of
the then par value, if any, of the Preferred Shares issuable upon
exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid
and nonassessable Preferred Shares at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made effec
tive as of a record date for a specified event, the Company may
elect to defer until the occurrence of such event the issuing to
the holder of any Right exercised after such record date of the
Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the
Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill
or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjust
ments expressly required by this Section 11, as and to the extent
that the Board of Directors of the Company shall determine in its
sole discretion to be advisable in order that any consolidation
or subdivision of the Preferred Shares, issuance wholly for cash
of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which
by their terms are convertible into or exchangeable for Preferred
Shares, dividends on Preferred Shares payable in Preferred Shares
or issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company to
the holders of its Preferred Shares, shall not be taxable to such
stockholders.
(n) In the event that at any time after the date
of this Agreement and prior to the Distribution Date, the Company
shall (i) declare or pay any dividend on the Common Stock payable
in Common Stock or (ii) effect a subdivision, combination or
consolidation of the shares of Common Stock (by reclassification
or otherwise than by payment of dividends in Common Stock) into a
greater or lesser number of shares of Common Stock, then in any
such case (A) the number of one one-hundredths of a Preferred
Share purchasable after such event upon proper exercise of each
Right shall be determined by multiplying the number of one one-
hundredths of a Preferred Share so purchasable immediately prior
to such event by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately before such
event and the denominator of which is the number of shares of
Common Stock outstanding immediately after such event, and (B)
each share of Common Stock outstanding immediately after such
event shall have issued with respect to it that number of Rights
which each share of Common Stock outstanding immediately prior to
such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively
whenever such a dividend is declared or paid or such a subdivi
sion, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Sections 11 and 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment, and a brief statement
of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Common
Stock or the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right in accor
dance with Section 25. The Rights Agent shall be fully protected
in relying on any adjustment therein contained. Any adjustment to
be made pursuant to Sections 11 and 13 of this Agreement shall be
effective as of the date of the event giving rise to such
adjustment.
Section 13. Consolidation, Merger or Certain Other
Transactions.
(a) In the event that, following a Stock
Acquisition Date, directly or indirectly, any transactions
specified in the following clause (i), (ii) or (iii) of this
Section 13 (each such transaction being a "Business Combination")
shall be consummated:
(i) the Company shall consolidate with, or
merge with and into, any Acquiring Person or any Affiliate or
Associate of an Acquiring Person;
(ii) any Acquiring Person or any Affiliate or
Associate of an Acquiring Person shall merge with and into the
Company and, in connection with such merger, all or part of the
Common Shares shall be changed into or exchanged for capital
stock or other securities of the Company or of any Acquiring
Person or Affiliate or Associate of an Acquiring Person or cash
or any other property; or
(iii) the Company shall sell, lease, exchange
or otherwise transfer or dispose of (or one or more of its
Subsidiaries shall sell, lease, exchange or otherwise transfer or
dispose of), in one or more transactions, the Major Part of the
assets of the Company and its Subsidiaries (taken as a whole) to
any Acquiring Person or any Affiliate or Associate of an
Acquiring Person,
then, in each such case, proper provision shall be made so that
each holder of a Right, except as provided herein, shall
thereafter have the right to receive, upon the exercise thereof
for the Purchase Price in accordance with the terms of this
Rights Agreement, the securities specified below (or, at such
holder's option, the securities specified in Section 7(a)):
(A) If the Principal Party in such Business
Combination has Registered Common Shares outstanding, each Right
shall thereafter represent the right to receive, upon the
exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, such number of Registered Common
Shares of such Principal Party, free and clear of all liens,
encumbrances or other adverse claims, as shall have an aggregate
Market Value equal to the result obtained by multiplying the
Purchase Price by two;
(B) If the Principal Party involved in such
Business Combination does not have Registered Common Shares
outstanding, each Right shall thereafter represent the right to
receive, upon the exercise thereof for the Purchase Price, in
accordance with the terms of this Rights Agreement, at the
election of the holder of such Right at the time of the exercise
thereof, any of:
(1) such number of Common Shares of the
Surviving Person in such Business Combination as shall have an
aggregate Book Value immediately after giving effect to such
Business Combination equal to the result obtained by multiplying
the Purchase Price by two;
(2) such number of Common Shares of the
Principal Party in such Business Combination (if the Principal
Party is not also the Surviving Person in such Business
Combination) as shall have an aggregate Book Value immediately
after giving effect to such Business Combination equal to the
result obtained by multiplying the Purchase Price by two; or
(3) if the Principal Party in such Business
Combination is an Affiliate of one or more Persons which has
Registered Common Shares outstanding, such number of Registered
Common Shares of whichever of such Affiliates of the Principal
Party has Registered Common Shares with the greatest aggregate
Market Value on the date of consummation of such Business
Combination as shall have an aggregate Market Value on the date
of such Business Combination equal to the result obtained by
multiplying the Purchase Price by two.
(b) The Company shall not consummate any Business
Combination unless each issuer of Common Shares for which Rights
may be exercised, as set forth in this Section 13, shall have
sufficient authorized Common Shares that have not been issued or
reserved for issuance (and which shall, when issued upon exercise
thereof in accordance with this Rights Agreement, be validly
issued, fully paid and nonassessable and free of preemptive
rights, rights of first refusal or any other restrictions or
limitations on the transfer or ownership thereof) to permit the
exercise in full of the Rights in accordance with this Section 13
and unless prior thereto:
(i) a registration statement under the
Securities Act of 1933 (the "Securities Act") on an appropriate
form, with respect to the Rights and the Common Shares of such
issuer purchasable upon exercise of the Rights, shall be
effective under the Securities Act; and
(ii) the Company and each such issuer shall
have:
(A) executed and delivered to the
Rights Agent a supplemental agreement providing for the
assumption by such issuer of the obligations set forth in this
Section 13 (including the obligation of such issuer to issue
Common Shares upon the exercise of Rights in accordance with the
terms set forth in Sections 13(a) and 13(c)) and further
providing that such issuer, at its own expense, will use its best
efforts to:
(1) cause a registration statement
under the Securities Act on an appropriate form, with respect to
the Rights and the Common Shares of such issuer purchasable upon
exercise of the Rights, to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until
the Expiration Date;
(2) qualify or register the Rights
and the Common Shares of such issuer purchasable upon exercise of
the Rights under the blue sky or securities laws of such
jurisdictions as may be necessary or appropriate; and
(3) List the Rights and the Common
Shares of such issuer purchasable upon exercise of the Rights on
each national securities exchange on which the Common Shares were
listed prior to the consummation of the Business Combination or,
if the Common Shares were not listed on a national securities
exchange prior to the consummation of the Business Combination,
on a national securities exchange;
(B) furnished to the Rights Agent a
written opinion of independent counsel stating that such
supplemental agreement is a valid, binding and enforceable
agreement of such issuer; and
(C) filed with the Rights Agent a
certificate of a nationally recognized firm of independent
accountants setting forth the number of Common Shares of such
issuer which may be purchased upon the exercise of each Right
after the consummation of such Business Combination.
(c) After consummation of any Business
Combination and subject to the provisions of Section 13(b), (i)
each issuer of Common Shares for which Rights may be exercised as
set forth in this Section 13 shall be liable for, and shall
assume, by virtue of such Business Combination, all the
obligations and duties of the Company pursuant to this Rights
Agreement, (ii) the term "Company" shall thereafter be deemed to
refer to such issuer, (iii) each such issuer shall take such
steps in connection with such consummation as may be necessary to
assure that the provisions hereof (including the provisions of
Section 7(a) and 13 shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights, and (iv) the number
of Common Shares of each such issuer thereafter receivable upon
exercise of any Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable
to the provisions of this Agreement and the provisions hereof
with respect to the Preferred Shares shall apply, as nearly as
reasonably may be, on like terms to any such Common Shares.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Rights with
regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this
Section 14(a), the current market value of a whole Right shall be
the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported on the principal
consolidated transaction reporting system with respect to secur
ities listed or admitted to trading on the American Stock Ex
change or, if the Rights are not listed or admitted to trading on
the American Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price, or, if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors
of the Company. If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors
of the Company shall be used.
(b) The Company shall not be required to issue
fractions of Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share)
upon exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions which
are integral multiples of one one-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of
one one-hundredth of a Preferred Share may, at the election of
the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that
the holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that
are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For purposes of this
Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined
pursuant to the second sentence of Section 11(d) hereof) for the
Trading Day immediately prior to the date of such exercise.
Section 15. Rights of Action. All rights of action in
respect of this Agreement, excepting the rights of action given
to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of Common
Stock in respect to which Rights have been issued); and any
registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Stock), without the consent of
the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Stock), may,
in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and will be entitled to specific
performance of the obligations hereunder, and injunctive relief
against actual or threatened violations of, the obligations of
any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder
of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) Prior to the Distribution Date, the Rights
will be transferable only in connection with the transfer of
Common Stock;
(b) After the Distribution Date, the Right
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office of the Rights
Agent designated for such purpose, duly endorsed or accompanied
by a proper instrument of transfer;
(c) The Company and the Rights Agent may deem and
treat the person in whose name the Right Certificate (or, prior
to the Distribution Date, the associated Common Stock certifi
cate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of owner
ship or writing on the Right Certificates or the associated Com
mon Stock Certificate made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to
the contrary; and
(d) Notwithstanding anything in this Agreement to
the contrary, neither the Company nor the Rights Agent shall have
any liability to any holder of a Right or other Person as a re
sult of its inability to perform any of its obligations under
this Agreement by reason of any preliminary or permanent injunc
tion or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company
must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the Preferred Shares or any other securi
ties of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold con
sent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Sec
tion 24), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the pro
visions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay promptly to the
Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or
expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and
expenses of defending against any claim of liability, and
including any loss, liability or expense incurred through the
Rights Agent's negligence (other than gross negligence).
(b) The Rights Agent shall be protected and shall
incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration
of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Stock or for other
securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed
and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name
of Rights Agent.
(a) Any corporation into which the Rights Agent
or any successor Rights Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties here
to, provided that such corporation would be eligible for appoint
ment as a successor Rights Agent under the provisions of Section
21 hereof. In case, at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certifi
cates shall not have been countersigned, any successor Rights
Agent may countersign such Right Certificates either in the name
of the predecessor Rights Agent or in the name of the successor
Rights Agent; and in all such cases such Right Certificates shall
have the full force provided in the Right Certificates and in
this Agreement.
(b) In case at any time the name of the Rights
Agent shall be changed and at such time any of the Right
Certificates shall have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at
that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and
in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their ac
ceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal
counsel (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization
and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation,
the identity of any Acquiring Person and the determination of
"current per share market price") be proved or established by the
Company prior to taking or suffering any action hereunder, such
fact or matter (unless other evidence in respect thereof be here
in specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of
the Board, the President or any Vice President and by the Trea
surer or any Assistant Treasurer or the Secretary or any Assis
tant Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certifi
cate.
(c) The Rights Agent shall be liable hereunder
only for its own gross negligence, bad faith or willful miscon
duct.
(d) The Rights Agent shall not be liable for or
by reason of any of the statements of fact or recitals contained
in this Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any
adjustment required under the provisions of Sections 11 or 13 or
responsible for the manner, method or amount of any such adjust
ment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise
of Rights evidenced by Right Certificates after actual notice of
any such adjustment); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or
reservation of any Preferred Shares or shares of Common Stock to
be issued pursuant to this Agreement or any Right Certificate or
as to whether any Preferred Shares or shares of Common Stock
will, when issued, be validly authorized and issued, fully paid
and nonassessable or as to the value of the Preferred Shares or
shares of Common Stock or any Rights Certificate.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance
of its duties hereunder from the Chairman of the Board, the
President of the Company or any Vice President, and to apply to
such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any shareholder, direc
tor, officer or employee of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were
not the Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common
Stock or Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after
such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by
the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the
United States or any state thereof, which is authorized under
such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $50,000,000, or
(b) an Affiliate controlled by, and whose obligations are guar
anteed by, a corporation described in clause (a) of this sen
tence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without fur
ther act or deed; but the predecessor Rights Agent shall deliver
and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Stock, and
mail a notice thereof in writing to the registered holders of the
Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect
the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares of stock or other securities or property purchasable under
the Right Certificates made in accordance with the provisions of
this Agreement.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its
option, at any time prior to the close of business on the tenth
day following the Stock Acquisition Date, redeem all but not less
than all of the then outstanding Rights at a redemption price of
$.01 per Right, as such amount may be appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being
hereafter referred to as the "Redemption Price"); provided,
however, if the Board of Directors of the Company authorizes
redemption of the Rights in either of the circumstances set forth
in clauses (i) and (ii) next below, then there must be Continuing
Directors then in office and such authorization shall require the
concurrence of a majority of such Continuing Directors: (i) such
authorization occurs on or after the time a Person becomes an
Acquiring Person, or (ii) such authorization occurs on or after
the date of a change (resulting from a proxy or consent
solicitation) in a majority of the directors in office at the
commencement of such solicitation if any Person who is a
participant in such solicitation has stated (or, if upon the
commencement of such solicitation, a majority of the Board of
Directors of the Company has determined in good faith) that such
Person (or any of its Affiliates or Associates) intends to take,
or may consider taking, any action which would result in such
Person becoming an Acquiring Person or which would cause any
event described in Section 11(a) or Section 13 hereof to occur
unless, concurrent with such solicitation, such Person (or one or
more of its Affiliates or Associates) is making a cash tender
offer pursuant to a Schedule 14D-1 (or any successor form) filed
with the Securities and Exchange Commission for all outstanding
shares of Common Stock not beneficially owned by such Person (or
by its Affiliates or Associates); provided further, however, that
if, following the occurrence of a Stock Acquisition Date and
following the expiration of the right of redemption hereunder but
prior to the occurrence of any of the events described in Sec
tions 11(a) or 13 hereof, (1) a Person who is an Acquiring Person
shall have transferred or otherwise disposed of a number of
shares of Common Stock in one transaction or series of transac
tions, not directly or indirectly involving the Company or any of
its Subsidiaries, such that such Person is thereafter a Benefi
cial Owner of 10% or less of the outstanding shares of Common
Stock, and (2) there are no other Persons, immediately following
the occurrence of the event described in clause (i), who are
Acquiring Persons, then the right of redemption shall be rein
stated and thereafter be subject to the provisions of this
Section 23. Notwithstanding the foregoing, the Company, at its
option, may pay the Redemption Price either in cash or shares of
Common Stock or other securities of the Company deemed by the
Board of Directors, in the exercise of its sole discretion, to be
at least equivalent in value to the Redemption Price. The
redemption of the Rights may be made effective at such time, on
such basis and with such conditions as the Board of Directors in
its sole discretion may establish.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights,
evidence of which shall have been filed with the Rights Agent and
without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter
of the holders of Rights shall be to receive the Redemption Price
for each Right so held. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the Company
shall give written notice of such redemption to the Rights Agent
and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last address as it
appears upon the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the Transfer
Agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will
state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights
at any time in any manner other than that specifically set forth
in this Section 23, and other than in connection with the pur
chase of Common Stock prior to the Distribution Date.
Section 24. Notice of Certain Events. In case the
Company shall propose (a) to pay any dividend payable in stock of
any class to the holders of its Preferred Shares or to make any
other distribution to the holders of its Preferred Shares (other
than a regular periodic cash dividend), or (b) to offer to the
holders of its Preferred Shares rights or warrants to subscribe
for or to purchase any additional Preferred Shares or shares of
stock of any class or any other securities, rights or options, or
(c) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of out
standing Preferred Shares), or (d) to effect any consolidation or
merger into or with, or to effect any sale or other Transfer (or
to permit one or more of its Subsidiaries to effect any sale or
other Transfer), in one or more transactions, of the Major Part
of the assets Company and its Subsidiaries (taken as a whole) to,
any other Person, or (e) to effect the liquidation, dissolution
or winding up of the Company, or (f) to declare or pay any
dividend on the Common Stock payable in Common Stock or to effect
a subdivision, combination or consolidation of the Common Stock
(by reclassification or otherwise than by payment of dividends in
Common Stock), then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 25
hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, or
distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, Transfer,
liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the Common Stock
and/or Preferred Shares, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered
by clause (a) or (b) above at least 20 days prior to the record
date for determining holders of the Preferred Shares for purposes
of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the
Common Stock and/or Preferred Shares, whichever shall be the
earlier.
Section 25. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the
holder of any Right to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the
Rights Agent) as follows:
Devon Oklahoma Corporation
1500 Mid-America Tower
Oklahoma City, Oklahoma 73102
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company
or by the holder of any Right Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:
The First National Bank of Boston (Massachusetts)
______________________
______________________
Attention:
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Right shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. Supplements and Amendments. Prior to the
Distribution Date, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Dis
tribution Date, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without
the approval of any holders of Right Certificates in order (i) to
cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time
period hereunder (which lengthening or shortening, following the
first occurrence of an event set forth in clauses (i) and (ii) of
the first proviso to Section 23 (a) hereof, shall be effective
only if there are Continuing Directors and shall require the
concurrence of a majority of such Continuing Directors), or (iv)
to change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable and which shall
not adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, this Agreement may
not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the
Rights may be redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such lengthening
is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 26, the Rights Agent
shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall
be deemed coincident with the interests of the holder of Common
Stock.
Section 27. Successors. All the covenants and provi
sions of this Agreement by or for the benefit of the Company or
the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calcula
tion of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) as in
effect on the date hereof of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company
(and, where specifically provided for herein, the Continuing
Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or the Company, or as may be
necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) inter
pret the provisions of this Agreement, and (ii) make all deter
minations deemed necessary or advisable for the administration of
this Agreement (including a determination to redeem or not redeem
the Rights or to amend the Agreement). All such actions, cal
culations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board (and, where
specifically provided for herein, by the Continuing Directors) in
good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Right Certificates
and all other parties, and (y) not subject the Board or the
Continuing Directors to any liability to the holders of the
Rights.
Section 29. Benefits of This Agreement. Nothing in
this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Stock) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock).
Section 30. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agree
ment to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid,
void or unenforceable and a majority of the Continuing Directors
of the Company determines in its good faith judgment that sever
ing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the close of business on the tenth day
following the date of such determination by the Continuing
Directors.
Section 31. Governing Law. This Agreement and each
Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Oklahoma and for all
purposes shall be governed by and construed in accordance with
the laws of such State applicable to contracts to be made and
performed entirely within such state.
Section 32. Counterparts. This Agreement may be
executed in any number of counterparts and each of such counter
parts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same
instrument.
Section 33. Descriptive Headings. Descriptive head
ings of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first
above written.
DEVON OKLAHOMA CORPORATION
By ______________________________
ATTEST: President
__________________________
Secretary
THE FIRST NATIONAL BANK OF
BOSTON (MASSACHUSETTS)
By ______________________________
ATTEST: Vice President
___________________________
Secretary
<PAGE>
EXHIBIT D
DEVON ENERGY CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Devon Energy Corporation, a
Delaware corporation, hereby nominates and appoints John W.
Nichols and J. Larry Nichols, or either of them, with full power
of substitution, as true and lawful agents and proxies to
represent the undersigned and vote all shares of stock of Devon
Energy Corporation owned by the undersigned in all matters coming
before the Annual Meeting of Stockholders (or any adjournment
thereof) of Devon Energy Corporation to be held in the Community
Room (Mezzanine Floor), Bank of Oklahoma on Wednesday, June 7,
1995, at 1:00 p.m., local time. The Board of Directors recommends
a vote "FOR" the matters set forth on the reverse side.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
X Please mark votes as in this example.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
SPECIFIED BELOW BY THE STOCKHOLDER. TO THE EXTENT CONTRARY
SPECIFICATIONS ARE NOT GIVEN, THIS PROXY WILL BE VOTED "FOR" THE
NOMINEES LISTED IN ITEM 1 AND "FOR" ITEMS 2 AND 3.
1. ELECTION OF DIRECTORS
Nominees: David M. Gavrin and John W. Nichols
FOR WITHHELD
______ ___________ ______________________________________________
You may withhold your vote for a particular
nominee by marking this box and naming the
nominee for which your vote is being withheld.
2. RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF DEVON ENERGY CORPORATION FOR
1995.
FOR AGAINST ABSTAIN
________ ________ ________
3. APPROVE THE PLAN AND AGREEMENT OF MERGER AND REORGANIZATION
HAVING THE EFFECT OF REINCORPORATING DEVON ENERGY CORPORATION, A
DELAWARE CORPORATION, AS AN OKLAHOMA CORPORATION.
FOR AGAINST ABSTAIN
________ _________ _________
4. OTHER MATTERS:
In their discretion, to vote with respect to any other
matters that may come before the meting or any adjournment
thereof, including matters incident to its conduct.
I RESERVE THE RIGHT TO REVOKE THE PROXY AT ANY TIME BEFORE THE
EXERCISE THEREOF.
Please sign exactly as your name appears at left, indicating your
official position or representative capacity, if applicable. If
shares are held jointly, each owner should sign.
Signature: ________________________________ Date _______
Signature: ________________________________ Date_______
