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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.1a-11(c) or 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.
[X] 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: $125.00
2) Form, Schedule or Registration Statement No.:
Preliminary Proxy Statement - Schedule 14A
3) Filing Party: Registrant
4) Date Filed: March 8, 1995
Notes:
<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 Executive Conference Room "A" (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 (i)
reincorporating Devon, which is a Delaware corporation, as an
Oklahoma corporation and (ii) making certain other changes
related to the reincorporation as described in the accompanying
Proxy Statement; 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 18, 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 18, 1995.
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 1,513,871 shares, or 6.8%
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 $5,500, 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.
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. Early in his career Mr. Nichols began purchasing producing
oil and gas properties and has since been involved in many
creative and successful oil and gas ventures. He is a Founding
Partner and Oversight General Partner of Blackwood & Nichols Co.
A Limited Partnership. 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. He is the father of J.
Larry Nichols.
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. He is the son of John W.
Nichols.
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 as 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 with Energy Reserves Group, Inc./BHP
Petroleum (Americas), Inc., having served most recently as
Director of Marketing. 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.
<PAGE>
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation<F2>
Principal Awards of All Other
Name Position Year Salary Bonus Other<F1> Options/SAR's<F3> Compensation<F4>
<S> <C> <C> <C> <C> <C> <C> <C>
# Shares
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 President 1994 $230,710<F5> $118,988 -- 54,000 $3,000
1993 $220,710<F5> $100,600 -- 30,000 $4,497
1992 $205,710<F5> $ 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.
<F5>Includes $10,710 of interest imputed at the fair market rate of 9% on a non-
interest bearing note payable to Devon in the amount of $119,000 executed by
Mr. Sanders and secured by a first mortgage on his home.
</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.
<PAGE>
<TABLE>
<CAPTION>
Individual Grants
Percent of Total Exercise Grant Date
Options Options Granted Price Expiration Present
Name Granted to Employees in Per Share<F6> 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>
<PAGE>
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.
<PAGE>
<TABLE>
<CAPTION>
Number of Unexercised Options at 12/31/94 Value of Unexercised
In-the-Money Options at 12/31/94<F2>
Number of
Shares Acquired Value
Name Upon Exercise Realized<F1> Exercisable Unexercisable Exercisable Unexercisable
<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>
<PAGE>
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.
Years of Service
Final Average
Compensation 15 20 25
$ 50,000 $10,000 $16,400 $22,900
$100,000 $25,800 $38,800 $51,800
$150,000 $45,300 $64,800 $84,300
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.
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.
This second award was based on 1994 results and was made
independently of the first award, which was based on 1993
results. 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.
As to Compensation to As to Compensation to Executive Officers
the CEO and EVP other than the CEO and EVP
David M. Gavrin, Chair J. Larry Nichols
Michael E. Gellert H. R. Sanders, Jr.
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.
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.
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
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.
<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. The
Board of Directors is not aware of any divergence of interest
between management and the shareholders in general concerning the
proposal. See paragraph "Principal Security Ownership." There
are two primary factors leading to the decision to reincorporate
in Oklahoma:
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. Devon's Board of
Directors has no current plans or proposals for additional anti-
takeover measures.
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. Therefore, 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 (which are
the same as the Delaware Law) that allow the Board of Directors
to permit, without super-majority 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 (i.e., only majority
approval is required under those circumstances where there are
two or more suitors). For example, if a third party commences a
tender offer for outstanding stock representing 50% or more of
the outstanding voting power, an interested shareholder would be
permitted to consummate a merger with Devon Oklahoma without
super-majority shareholder approval, i.e., with only majority
approval. There is no similar provision in Devon's Certificate of
Incorporation,but the provisions of Delaware Law (which are same
as the Oklahoma Act) would apply to Devon.
The definition of "business combination" in Devon Oklahoma's
Certificate of Incorporation has been revised to conform to the
definition in the Oklahoma Act. The definitions in the Oklahoma
Act, and Devon Oklahoma's Certificate of Incorporation are more
detailed and specific than the definition in the Company's
current Certificate of Incorporation, thereby providing more
certainty when construing the application of the limitations. The
material differences in the definitions are that a "business
combination" is (i) a sale of 10% or more of the market value of
Devon Oklahoma's assets (rather than assets of Devon having a
fair market value of $1,000,000 or more), (ii) the issuance of
any Devon Oklahoma stock to the interested shareholder (rather
than the issuance of Devon shares having $1,000,000 or more fair
market value), (iii) the receipt of any benefit by an interested
shareholder not expressly allowed by the Certificate of
Incorporation (a provision that does not appear in Devon's
current Certificate), and (iv) a share acquisition (the
acquisition of one company's stock in exchange for stock of
another corporation after majority shareholder approval by the
first company) pursuant to Section 1091.1 of the Oklahoma Act (a
provision that does not appear in Devon's current Certificate).
These changes 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 prevents a person from
becoming an interested shareholder, selling enough shares to no
longer be an interested shareholder and then entering into a
Business Combination with Devon Oklahoma. 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 describing the New Plan 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 transferable 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 transferable 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). These circumstances
occur after a person becomes an Acquiring Person or after a
change in a majority of the directors resulting from a proxy
solicitation by a person who has stated an intention to become an
Acquiring Person. After the redemption period has expired,
assuming the Rights have not been exercised, 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. There is no limit on the time during which the
right of redemption can be reinstated. 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. The substitution was made wherever the
percentage of voting rights and not the percentage of equity was
at issue.
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 (i) a person has
acquired, or obtained the right to acquire, beneficial ownership
of 15% or more of Devon's outstanding Voting Shares (an
"Acquiring Person"), rather than the 20% of Common Stock in the
Current Plan, or (ii) a tender or exchange offer is commenced for
15% or more of Devon's Voting Shares, rather than the 30% of
Common Stock in the Current Plan.
Furthermore, the New Plan allows all holders of Rights,
except an Acquiring Person, to receive either (a) after the
Distribution Date, one one-hundredth of a share of Preferred
Stock or (b) after a person becomes an Acquiring Person, Common
Stock having a value of two times the Purchase Price. The
Current Plan allows option (a) above to be exercised after the
Distribution Date by all holders of Rights, including an
Acquiring Person. 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. Under the New Plan, upon a person becoming an
Acquiring Person, both options (a) and (b) are available. It is
also at the 30% threshold that the Acquiring Person is barred
from exercising his Rights under the Current Plan, whereas an
Acquiring Person can never exercise Rights under the New Plan.
The purpose of both the Current Plan and the New Plan is to
use the threat of dilution in order to deter non-negotiated
takeover attempts. None of the changes in the New Plan alter that
purpose. However, the Board of Directors has determined that if
an Acquiring Person is allowed to exercise Rights, that person
can avoid a portion of the dilution that is intended. The effect
of the changes regarding percentage ownership triggers in the New
Plan is to reduce or eliminate the opportunities for an Acquiring
Person to exercise Rights. 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, at one-half price, 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. That is, assurances were included that any
securities received from such surviving company are securities of
the ultimate parent entity, are unencumbered by liens or adverse
claims and are freely transferable.
Expiration Date. The expiration date of the New Plan was
changed from June 29, 1998 to April 16, 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 are advised to consult their own tax advisors as to
the effect of the Reincorporation under applicable state, local
or foreign income tax laws with respect to their own particular
circumstances.
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.
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, was made on terms
favorable to him to induce him to 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 18, 1995
<PAGE>
EXHIBIT A
PLAN AND AGREEMENT OF MERGER AND REORGANIZATION
Plan and Agreement of Merger and Reorganization (the
"Plan") dated as of April 13, 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: /s/ J. Larry Nichols
J. Larry Nichols, President
ATTEST:
/s/ Marian J. Moon
Marian J. Moon, Secretary
DEVON OKLAHOMA CORPORATION, an
Oklahoma corporation
By: /s/ J. Larry Nichols
J. Larry Nichols, President
ATTEST:
/s/ Marian J. Moon
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 Sections 1145 through 1155 of
Title 18 of the Oklahoma Statutes shall not apply to the
corporation. Furthermore, the corporation elects not to be
governed by Section 1090.3 of Title 18 of the Oklahoma Statutes.
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 transaction 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 13th day of April, 1995.
/s/ Jerry A. Warren
Jerry A. Warren
"INCORPORATOR"
<PAGE>
EXHIBIT C
==================================================================
DEVON OKLAHOMA CORPORATION
and
THE FIRST NATIONAL BANK
OF BOSTON (MASSACHUSETTS)
Rights Agent
RIGHTS AGREEMENT
Dated as of April 17, 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
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
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 April 17, 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 April 13, 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 April 13, 1995 herein referred to as the "Record
Date," other than shares of such Common Stock held in the Com-
pany'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 represent
ing 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 securities:
(i) which such Person or any of
such Person'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 Person'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 Beneficial 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 or 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 associations
in the States of Oklahoma or Massachusetts are authorized or obli-
gated 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 ultimately 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 business
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 Distribution
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 April 17, 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. 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, summaries 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 applicable 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 secur-
ities purchasable upon the exercise of each Right and the Pur-
chase 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 counter-
signature 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)
April 16, 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 representing
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 11(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 exercised
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 divid-
ing 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 Direc-
tors 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 11(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-hundredths
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 first 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 misconduct.
(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, director,
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 circum-
stances set forth in clauses (i) and (ii) next below, then there
must be Continuing Directors then in office and such authoriza-
tion 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 Sections 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 transactions, not directly or indirectly involving the Company
or any of its Subsidiaries, such that such Person is thereafter a
Beneficial 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
reinstated 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 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
20 N. Broadway, Suite 1500
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)
Shareholder Services, Mail Stop: 45-02-16
P. O. Box 1865
Boston, Massachusetts 02105-1865
Attention: Madalyn M. Bronske
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 provisions
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 counterparts 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 headings
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 /s/ J. Larry Nichols
President
ATTEST:
/s/ Marian J. Moon
Secretary
THE FIRST NATIONAL BANK OF BOSTON
(MASSACHUSETTS)
By /s/ Colleen H. Shea
Administration Manager
ATTEST:
/s/ Madalyn M. Bronske
Madalyn M. Bronske
<PAGE>
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 3. APPROVE THE PLAN
AND AGREEMENT OF MERGER AND
Nominees: David M. Gavrin and REORGANIZATION HAVING THE
John W. Nichols EFFECT OF REINCORPORATING
DEVON ENERGY CORPORATION, A
FOR WITHHELD DELAWARE CORPORATION, AS AN
OKLAHOMA CORPORATION.
________ ______________
FOR AGAINST ABSTAIN
_________________________
You may withhold your vote for ______ _______ ______
a particular nominee by
marking this box and naming
the nominee for which your
vote is being withheld. 4. OTHER MATTERS:
2. RATIFY THE APPOINTMENT OF In their discretion, to
KPMG PEAT MARWICK LLP AS THE vote with respect to any other
INDEPENDENT PUBLIC ACCOUNTANTS matters that may come before
OF DEVON ENERGY CORPORATION the meting or any adjournment
FOR 1995. thereof, including matters
incident to its conduct.
FOR AGAINST ABSTAIN
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_______
