<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 1996
REGISTRATION NO. 333-00815
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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DEVON ENERGY CORPORATION
DEVON FINANCING TRUST
(Exact name of registrant as specified in its charter)
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<TABLE>
<S> <C>
OKLAHOMA 73-1474008
DELAWARE 73-6294711
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
</TABLE>
20 NORTH BROADWAY, SUITE 1500
OKLAHOMA CITY, OKLAHOMA 73102-8260
(405) 235-3611
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
<TABLE>
<S> <C>
Copy to:
J. LARRY NICHOLS JERRY A. WARREN, ESQ.
PRESIDENT AND CHIEF EXECUTIVE OFFICER MCAFEE & TAFT A PROFESSIONAL CORPORATION
DEVON ENERGY CORPORATION TWO LEADERSHIP SQUARE, 10TH FL.
20 NORTH BROADWAY, SUITE 1500 211 N. ROBINSON
OKLAHOMA CITY, OKLAHOMA 73102-8260 OKLAHOMA CITY, OK 72102
(405) 235-3611 (405) 235-9621
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
</TABLE>
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
reinvestment plans, please check the following box: /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, please check the following box and list the Securities
Act Registration Statement Number of the earlier effective Registration
Statement for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE PRICE REGISTRATION FEE(1)
<S> <C> <C> <C> <C>
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Convertible Preferred Securities of Devon
Financing Trust............................. 2,990,000 $52.00(2)(3) $155,480,000(2)(3) $53,614
6 1/2% Convertible Junior Subordinated
Debentures of Devon Energy Corporation...... (4) -- -- --
Common Stock of Devon Energy Corporation(5)... (6) -- -- --
Preferred Securities Guarantee................ (7) -- -- --
Total......................................... 2,990,000 100% 155,480,000 53,614
</TABLE>
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(1) $25,862 of the registration fee was paid with the initial filing of this
Registration Statement.
(2) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(c) of the Securities Act.
(3) Exclusive of accrued interest and distributions, if any.
(4) $149.5 million in aggregate principal amount of 6 1/2% Convertible Junior
Subordinated Debentures of Devon Energy Corporation were issued and sold to
Devon Financing Trust in connection with the issuance by the Trust of its
6 1/2% Convertible Preferred Securities. The Convertible Junior Subordinated
Debentures may be distributed, under certain circumstances, to holders of
the Convertible Preferred Securities for no additional consideration.
(5) Includes the Company's preferred stock purchase rights (the "Rights"). Prior
to the occurrence of certain events, the Rights will not be exercisable or
evidenced separately from Devon Common Stock. No additional consideration
will be received for the Rights.
(6) Such indeterminable number of shares of Devon Common Stock as may be
issuable upon conversion of the Convertible Preferred Securities registered
hereunder, including such shares as may be issued pursuant to anti-dilution
adjustments. No separate consideration will be received for the Devon Common
Stock.
(7) No separate consideration will be received for the Preferred Securities
Guarantee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES
MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED AUGUST 12, 1996
2,990,000 TRUST CONVERTIBLE PREFERRED SECURITIES
DEVON FINANCING TRUST
6 1/2% TRUST CONVERTIBLE PREFERRED SECURITIES
(Liquidation Amount $50 Per Convertible Preferred Security)
Guaranteed to the Extent Set Forth Herein by
DEVON ENERGY CORPORATION
------------------------
The Convertible Preferred Securities offered hereby represent preferred
undivided beneficial interests in the assets of Devon Financing Trust, a
statutory business trust formed under the laws of the State of Delaware ("Devon
Financing Trust" or the "Trust"). The Convertible Preferred Securities were
issued and sold (the "Original Offering") on July 3, 1996 (the "Original
Offering Date") to the Initial Purchaser (as defined herein) and were
simultaneously sold by the Initial Purchaser in transactions exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), in the United States to persons reasonably believed by the
Initial Purchaser of the Convertible Preferred Securities to be "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act), to
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act) and outside the United States to non-U.S. persons
in off-shore transactions in reliance on Regulation S under the Securities Act.
Devon Energy Corporation, an Oklahoma corporation ("Devon" or the "Company"),
directly or indirectly owns all the common securities (the "Common Securities"
and, together with the Convertible Preferred Securities, the "Trust Securities")
representing undivided beneficial interests in the assets of Devon Financing
Trust. Devon Financing Trust exists for the sole purpose of issuing the Trust
Securities and investing the proceeds of the sale thereof in 6 1/2% Convertible
Junior Subordinated Debentures (the "Convertible Debentures") of Devon in an
aggregate principal amount equal to the aggregate liquidation amount of Trust
Securities. The Convertible Debentures are unsecured, subordinated obligations
of Devon as described herein. Upon an event of default under the Declaration (as
defined herein), the holders of Convertible Preferred Securities will have a
preference over the holders of the Common Securities with respect to payments in
respect of distributions and payments upon redemption, liquidation and
otherwise.
The Convertible Preferred Securities, the Convertible Debentures, the Devon
Common Stock issuable upon conversion thereof and the associated Guarantee (as
defined below) (collectively, the "Offered Securities") may be offered and sold
from time to time by the holders named herein or in an accompanying supplement
to this Prospectus (the "Prospectus Supplement") or by their transferees,
pledgees, donees or successors pursuant to this Prospectus. The Offered
Securities may be sold by the Selling Holders (as defined herein) from time to
time directly to purchasers or through agents, underwriters or dealers. See
"Plan of Distribution." If required, the names of any such agents or
underwriters involved in the sale of the Offered Securities and the applicable
agent's commission, dealer's purchase price or underwriter's discount, if any,
will be set forth in a Prospectus Supplement. The Selling Holders will receive
all of the net proceeds from the sale of the Offered Securities and will pay all
underwriting discounts and selling commissions, if any, applicable to any such
sale. The Company is responsible for payment of certain other expenses incident
to the offer and sale of the Offered Securities. The Selling Holders and any
broker/dealers, agents or underwriters which participate in the distribution of
the Offered Securities may be deemed to be "underwriters" within the meaning of
the Securities Act, and any commission received by them and any profit on the
resale of the Offered Securities purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution" for description of indemnification arrangements.
------------------------
Holders of the Convertible Preferred Securities are entitled to receive
cumulative cash distributions at an annual rate of 6 1/2% of the liquidation
amount of $50 per Convertible Preferred Security, accruing from the first date
that any Convertible Preferred Securities were issued and payable quarterly in
arrears on March 15, June 15, September 15 and December 15 of each year,
commencing September 15, 1996 ("distributions"). The payment of distributions
out of monies held by Devon Financing Trust and payments on liquidation of Devon
Financing Trust or the redemption of Convertible Preferred Securities, as set
forth below, are guaranteed by Devon (the "Guarantee") to the extent described
herein. The Guarantee covers payments of distributions and other payments on the
Convertible Preferred Securities only if and to the extent that Devon Financing
Trust has funds available therefor, which will not be the case unless Devon has
made corresponding payments of interest or principal or other payments on the
Convertible Debentures held by Devon Financing Trust. The Guarantee, when taken
together with Devon's obligations under the Convertible Debentures and the
Indenture (as defined herein) and its obligations under the Declaration,
including its liabilities to pay costs, expenses, debts and obligations of Devon
Financing Trust (other than with respect to the Trust Securities), provide a
full and unconditional guarantee of amounts due on the Convertible Preferred
Securities. See "Risk Factors -- Limitations of the Guarantee."
(continued on next page)
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SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR CERTAIN INFORMATION RELEVANT
TO AN INVESTMENT IN THE CONVERTIBLE PREFERRED SECURITIES.
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APPLICATION WILL BE MADE TO LIST THE COMMON STOCK REGISTERED PURSUANT
HERETO ON THE AMERICAN STOCK EXCHANGE
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1996
<PAGE> 3
(continued from previous page)
The obligations of Devon under the Guarantee are subordinate and junior in
right of payment to all other liabilities of Devon and pari passu with the most
senior preferred stock issued, from time to time, if any, by Devon. The
obligations of Devon under the Convertible Debentures are subordinate and junior
in right of payment to all present and future Senior Indebtedness (as defined
herein) of Devon. The credit agreements (the "Credit Agreements") of Devon's
wholly-owned operating subsidiary, Devon Energy Corporation (Nevada) ("Devon
Nevada"), provide Devon with credit facilities aggregating $260 million. Devon's
guarantee of such indebtedness constitutes Senior Indebtedness of Devon. As of
August 9, 1996, Devon had on a consolidated basis available borrowing capacity
under the Credit Agreements of $260 million.
The Convertible Debentures purchased by the Trust on the Offering Date may
be distributed pro rata to holders of the Trust Securities in connection with
the dissolution of the Trust, upon the occurrence of certain events.
Each Convertible Preferred Security is convertible in the manner described
herein at the option of the holder, at any time beginning 90 days following the
first date that any Convertible Preferred Securities were issued and prior to
the Conversion Expiration Date (as defined herein), into shares of common stock,
par value $0.10 per share, of Devon ("Devon Common Stock"), at the rate of
1.6393 shares of Devon Common Stock for each Convertible Preferred Security
(equivalent to a conversion price of $30.50 per share of Devon Common Stock),
subject to adjustment in certain circumstances. See "Description of Convertible
Preferred Securities -- Conversion Rights."
The distribution rate and the distribution payment date and other payment
dates for the Convertible Preferred Securities correspond to the interest rate
and interest payment date and other payment dates of the Convertible Debentures,
which are the sole assets of the Trust. As a result, if principal and interest
are not paid on the Convertible Debentures, no amounts will be paid on the
Convertible Preferred Securities.
So long as Devon shall not be in default in the payment of interest on the
Convertible Debentures, Devon has the right to defer payments of interest on the
Convertible Debentures by extending the interest payment period on the
Convertible Debentures at any time for up to 20 consecutive quarters (each, an
"Extension Period"). If interest payments are so deferred, distributions will
continue to accumulate with interest thereon (to the extent permitted by
applicable law) at the distribution rate, compounded quarterly. During any
Extension Period, holders of Convertible Preferred Securities will be required
to include deferred interest income in their gross income for United States
federal income tax purposes in advance of receipt of the cash distributions with
respect to such deferred interest payments. There could be multiple Extension
Periods of varying lengths throughout the term of the Convertible Debentures.
See "Description of the Convertible Debentures -- Option to Extend Interest
Payment Period," "Risk Factors -- Delay of Interest Payments" and "United States
Federal Income Taxation -- Potential Extension of Interest Payment Period and
Original Issue Discount."
The Convertible Debentures are redeemable by Devon, in whole or in part,
from time to time, on or after June 18, 1999, at the prices set forth herein
(the "Redemption Price"), plus accrued and unpaid interest thereon to the date
fixed for redemption (the "Redemption Date"). In addition, in certain
circumstances upon the occurrence of a Special Event (as defined herein) the
Convertible Debentures may be redeemed by Devon at 100% of the principal amount
thereof plus accrued and unpaid interest thereon. If Devon redeems the
Convertible Debentures, the Trust must redeem Convertible Preferred Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Convertible Debentures so redeemed. See "Description of the Convertible
Preferred Securities -- Mandatory Redemption." The outstanding Convertible
Preferred Securities will be redeemed when the Convertible Debentures mature on
June 15, 2026.
2
<PAGE> 4
(continued from previous page)
Upon the occurrence of a Special Event arising from a change in law or a
change in legal interpretation, unless the Convertible Debentures are redeemed
in the limited circumstances described herein, the Trust may be dissolved (with
the consent of Devon), with the result that the Convertible Debentures would be
distributed to the holders of the Convertible Preferred Securities, on a pro
rata basis, in lieu of any cash distribution. If Devon declines to consent to
such dissolution and distribution, Devon may incur an obligation to pay
additional interest. See "Description of the Convertible Preferred
Securities -- Special Event Distribution; Tax Event Redemption" and "Description
of the Convertible Debentures -- Additional Interest."
In the event of the involuntary dissolution, winding up or termination of
the Trust, the holders of the Convertible Preferred Securities will be entitled
to receive for each Convertible Preferred Security a liquidation amount of $50
plus accrued and unpaid distributions thereon (including interest thereon) to
the date of payment, unless, in connection with such dissolution, the
Convertible Debentures are distributed to the holders of the Convertible
Preferred Securities. See "Description of the Convertible Preferred
Securities -- Liquidation Distribution Upon Dissolution."
3
<PAGE> 5
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the offices of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as the following regional offices of the
Commission: Northwestern Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, IL 60661; and 7 World Trade Center, Suite 1300, New York, NY 10048.
Copies of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates
or from the Commission's Web site which contains reports, proxy and information
statements and other information regarding registrants that file electronically
(Devon is an electronic filer) at http://www.sec.gov. The Company's common stock
is listed for trading on the American Stock Exchange and as such, such reports,
proxy statements and other information concerning the Company may also be
inspected at the office of the American Stock Exchange, 86 Trinity Place, New
York, NY 10006.
Devon has filed with the Commission a Registration Statement on Form S-3
(herein together with all amendments and exhibits thereto, called the
"Registration Statement") under the Securities Act with respect to the
securities offered by this Prospectus. This Prospectus does not contain all of
the information set forth or incorporated by reference in the Registration
Statement and the exhibits and schedules relating thereto, certain portions of
which have been omitted as permitted by the Rules and Regulations of the
Commission. For further information with respect to Devon and the securities
offered by this Prospectus, reference is made to the Registration Statement and
the exhibits filed or incorporated as a part thereof, which are on file at the
offices of the Commission and may be obtained upon payment of the fee prescribed
by the Commission, or may be examined without charge at the offices of the
Commission or on the Commission's Web site. Statements contained in this
Prospectus as to the contents of any documents referred to are not necessarily
complete, and in each such instance, are qualified in all respects by reference
to the applicable documents filed with the Commission.
No separate financial statements of the Trust have been included herein.
The Company does not consider that such financial statements would be material
to holders of Convertible Preferred Securities because (i) all of the voting
securities of the Trust will be owned, directly or indirectly, by the Company, a
reporting company under the Exchange Act, (ii) the Trust has no independent
operations and exists for the sole purpose of issuing securities representing
undivided beneficial interests in the assets of the Trust and investing the
proceeds thereof in the Convertible Debentures issued by the Company and (iii)
the Company's obligations described herein under the Declaration, the Guarantee,
the Convertible Debentures and the Indenture, taken together, constitute a full
and unconditional guarantee of payments due on the Convertible Preferred
Securities. See "Description of the Convertible Debentures" and "Description of
the Guarantee."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
(a) The Company's Proxy Statement for its 1996 Annual Meeting of
Stockholders;
(b) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
(c) The Company's Quarterly Reports on Form 10-Q for each of the quarters
ended March 31, 1996 and June 30, 1996;
(d) The Company's Current Report on Form 8-K dated December 18, 1995; and
(e) The Company's Registration Statement on Form 8-B filed on June 7, 1995.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Convertible Preferred
4
<PAGE> 6
Securities shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the request of such person, a copy of any or all
of the foregoing documents incorporated herein by reference, other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference into such documents). Requests for such documents should be directed
to Corporate Secretary, Devon Energy Corporation, 20 North Broadway, Suite 1500,
Oklahoma City, OK 73102-8260.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the matters discussed under the caption "Risk Factors" and
elsewhere in this Prospectus or in the information incorporated by reference
herein may constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act") and as such
may involve known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of Devon to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Some of the factors that may cause
such material differences are set forth herein under the caption "Risk Factors."
CERTAIN DEFINITIONS
As used in this document:
"Bbl" means barrel of oil.
"Bcf" means billion cubic feet of natural gas.
"Boe" means barrels of oil equivalent (converting natural gas at the rate
of 6 Mcf per Boe).
"Btu" means British Thermal Unit, a measure of heating value. The heating
value of an Mcf of natural gas is roughly equal to one million Btu.
"MBbls" means thousand barrels of oil.
"MBoe" means thousand barrels of oil equivalent.
"Mcf" means thousand cubic feet of natural gas.
"MMBbls" means million barrels of oil.
"MMBoe" means million barrels of oil equivalent.
"MMBtu" means million Btu.
"MMcf" means million cubic feet of natural gas.
"NGLs" means natural gas liquids.
"Oil" includes crude oil and condensate.
5
<PAGE> 7
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by the detailed information appearing elsewhere in the Prospectus
or incorporated by reference herein.
THE COMPANY
GENERAL
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 900 oil and gas properties in 10
states. The majority of these properties are highly concentrated in five
operating areas: the Permian Basin in southeast New Mexico and west Texas; the
San Juan Basin in northwest New Mexico; the Rocky Mountain region in Wyoming;
the Mid-Continent region in Oklahoma and the Texas Panhandle; and the Gulf Coast
region of Louisiana. At December 31, 1995, Devon's estimated proved reserves
were 114.6 MMBoe, which are balanced between oil and NGLs (47%) and natural gas
(53%). The present value of pre-tax future net revenues discounted at 10% per
annum ("10% Present Value") of such reserves was $534.2 million. Devon ranks in
the top 20% of public energy companies in the United States, measured by oil and
gas reserves.
STRATEGY
Devon's primary objective is to build production, cash flow and earnings
per share by: (1) purchasing producing oil and gas properties, (2) exploring for
new oil and gas reserves and (3) optimizing production from existing oil and gas
properties.
During 1988, Devon expanded its capital base with its first issuance of
common stock to the public and began a substantial expansion program. Devon has
used a two-pronged strategy of acquiring producing properties and drilling to
develop new reserves. During the eight years ended December 31, 1995, Devon
consummated 15 significant acquisitions and drilled 605 new wells, 581 of which
were producers, resulting in reserve additions of 159.1 MMBoe. Capital costs
incurred to complete these activities totalled $535.0 million, for a finding and
development cost of $3.36 per Boe. Reserve additions and adjustments, minus
production and property sales, resulted in reserves increasing by a factor of
fourteen during the eight-year period.
The Company's objective, however, is to increase value per share, not
simply to increase total assets. Reserves have grown from 1.31 Boe per share at
year-end 1987 to 5.18 Boe per share at year-end 1995. During this same
eight-year period, net debt (long-term debt minus working capital) has remained
relatively low, never exceeding $1.33 per Boe, and only $1.17 per Boe at
year-end 1995.
The oil and gas industry is characterized by highly volatile product
prices. Devon's management believes that by (a) keeping debt levels low, (b)
concentrating its properties in a few core areas to achieve economies of scale,
(c) acquiring and developing high profit margin properties and (d) continually
disposing of high-cost, marginal and non-strategic properties, the Company can
maintain profitability, even during periods of low oil and/or gas prices. In
addition, the Company remains financially flexible to take advantage of
opportunities for acquisitions.
6
<PAGE> 8
THE OFFERING
The Issuer....................... Devon Energy Corporation, an Oklahoma
corporation, and Devon Financing Trust, a
Delaware business trust. The sole assets of
the Trust consist of the 6 1/2% Convertible
Junior Subordinated Debentures of Devon.
Securities Offered............... 2,990,000 6 1/2% Trust Convertible
Preferred Securities, 6 1/2% Convertible
Junior Subordinated Debentures, Devon
Common Stock issuable upon conversion, and
the associated Guarantee.
Selling Holders.................. The Convertible Preferred Securities were
originally issued by the Trust and sold by
the Initial Purchaser in transactions
exempt from registration under the
Securities Act to persons reasonably
believed to be "qualified institutional
buyers," "accredited investors," or
non-U.S. Persons in off-shore transactions.
These purchasers or their transferees,
pledgees, donees, or successors may from
time to time offer and sell, pursuant to
this Prospectus, the Offered Securities.
See "Selling Holders."
Distributions.................... Distributions on the Convertible Preferred
Securities began to accrue from July 3,
1996, the first date of issuance of any
Convertible Preferred Securities, and are
payable at the annual rate of 6 1/2% of the
liquidation amount of $50 per Convertible
Preferred Security. Subject to the
distribution deferral provisions described
below, distributions will be payable
quarterly in arrears on each March 15, June
15, September 15 and December 15,
commencing September 15, 1996. Because
distributions on the Convertible Preferred
Securities constitute interest for United
States federal income tax purposes,
corporate holders thereof will not be
entitled to a dividends-received deduction.
Distribution Deferral
Provisions....................... The ability of the Trust to pay
distributions on the Convertible Preferred
Securities is solely dependent on the
receipt of interest payments from Devon on
the Convertible Debentures. Devon has the
right at any time, and from time to time,
to defer the interest payments due on the
Convertible Debentures for successive
Extension Periods not exceeding 20
consecutive quarters each. During an
Extension Period, quarterly distributions
on the Convertible Preferred Securities
will be deferred by the Trust (but will
continue to accumulate quarterly and will
accrue interest) until the end of such
Extension Period. If a deferral of an
interest payment occurs, the holders of the
Convertible Preferred Securities will
continue to accrue income for United States
federal income tax purposes in advance of
any corresponding cash distribution. See
"Risk Factors -- Delay of Interest
Payments," "United States Federal Income
Taxation -- Potential Extension of Interest
Payment Period and Original Issue
Discount," "Description of the Convertible
Preferred Securities -- Distributions" and
"Description of the Convertible
Debentures -- Option to Extend Interest
Payment Period."
Rights Upon Deferral of
Distribution..................... During any period in which interest
payments on the Convertible Debentures are
deferred, interest will accrue on the
Convertible Debentures and quarterly
distributions will continue to accumulate
with interest thereon at the distribution
7
<PAGE> 9
rate, compounded quarterly. Devon has
agreed, among other things, not to declare
or pay any dividends on its capital stock
during any Extension Period. See "Risk
Factors -- Delay of Interest Payments" and
"Description of the Convertible
Debentures -- Option to Extend Interest
Payment Period."
Conversion into Devon Common
Stock............................ Each Convertible Preferred Security is
convertible at any time beginning 90 days
following July 3, 1996, the first date that
any Convertible Preferred Securities were
issued, and prior to the close of business
on the Business Day prior to the maturity
date of the Convertible Debentures (or, in
the case of Convertible Preferred
Securities called for redemption, prior to
the close of business on the Business Day
prior to the Redemption Date) at the option
of the holder into shares of Devon Common
Stock, at the rate of 1.6393 shares of
Devon Common Stock for each Convertible
Preferred Security, subject to adjustment
in certain circumstances. See "Description
of the Convertible Preferred
Securities -- Conversion Rights."
Liquidation Preference........... In the event of any liquidation of the
Trust, holders will be entitled to receive
$50 per Convertible Preferred Security plus
an amount equal to any accrued and unpaid
distributions thereon to the date of
payment, unless Convertible Debentures are
distributed to such holders. See
"Description of the Convertible Preferred
Securities -- Liquidation Distribution upon
Dissolution."
Redemption....................... The Convertible Debentures will be
redeemable for cash, at the option of the
Company, in whole or in part, from time to
time on or after June 18, 1999, at the
prices specified herein. Upon any
redemption of the Convertible Debentures,
the Convertible Preferred Securities will
be redeemed at the Redemption Price plus
accrued and unpaid distributions thereon.
The Convertible Preferred Securities will
not have a stated maturity date, although
they will be subject to mandatory
redemption upon the repayment of the
Convertible Debentures at their stated
maturity (June 15, 2026), upon
acceleration, earlier redemption or
otherwise. See "Description of the
Convertible Preferred Securities --
Mandatory Redemption" and "Description of
the Convertible Debentures -- Redemption at
the Option of Devon."
Guarantee........................ Devon has irrevocably and unconditionally
guaranteed, to the extent set forth herein,
the payment in full of (i) distributions on
the Convertible Preferred Securities to the
extent the Trust has funds available
therefor, (ii) the amount payable upon
redemption of the Convertible Preferred
Securities to the extent the Trust has
funds available therefor and (iii)
generally, the liquidation preference of
the Convertible Preferred Securities to the
extent the Trust has assets available for
distribution to holders of Convertible
Preferred Securities. The Guarantee is
unsecured, subordinate and junior to all
other liabilities of Devon and will rank
pari passu in right of payments with the
most senior preferred stock issued, from
time to time, if any, by Devon.
Voting Rights.................... Generally, holders of the Convertible
Preferred Securities will not have any
voting rights. However, if an Indenture
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Event of Default (as defined herein) occurs
and is continuing, the holders of 25% of
the aggregate liquidation amount of the
Convertible Preferred Securities may direct
the Institutional Trustee (as defined
herein) to declare the principal of and
interest on the Convertible Debentures
immediately due and payable. If (i) the
Institutional Trustee fails to enforce its
rights under the Convertible Debentures or
(ii) Devon defaults under the Guarantee
with respect to the Convertible Preferred
Securities, a record holder of the
Convertible Preferred Securities may
institute a legal proceeding directly
against Devon to enforce the Institutional
Trustee's rights without first instituting
any legal proceeding against the
Institutional Trustee. See "Description of
the Convertible Preferred
Securities -- Voting Rights."
Special Event Distribution; Tax
Event Redemption................. Upon the occurrence of a Special Event (as
defined herein), Devon may cause the Trust
to be dissolved and cause the Convertible
Debentures to be distributed to the holders
of the Convertible Preferred Securities. In
the case of a Tax Event (as defined
herein), Devon may elect to cause the
Convertible Preferred Securities to remain
outstanding and pay Additional Interest (as
defined herein), if any, on the Convertible
Debentures. In certain circumstances upon
the occurrence of a Tax Event, the
Convertible Debentures may be redeemed by
Devon at 100% of the principal amount
thereof plus accrued and unpaid interest
thereon. See "Description of the
Convertible Preferred Securities -- Special
Event Distribution; Tax Event Redemption."
Convertible Junior Subordinated
Debentures of Devon.............. The Convertible Debentures will mature on
June 15, 2026, and bear interest at the
rate of 6 1/2% per annum, payable quarterly
in arrears. The Convertible Debentures will
have provisions with respect to interest,
optional redemption and conversion into
Devon Common Stock and certain other terms
substantially similar or analogous to those
of the Convertible Preferred Securities.
See "Description of the Convertible
Debentures" and "Risk
Factors -- Subordinate Ranking of
Obligations Under the Guarantee and
Convertible Debentures."
Form, Denomination and
Registration..................... Convertible Preferred Securities may be
represented by a single, permanent global
security in fully registered form deposited
with the trustee and custodian for, and
registered in the name of a nominee of, DTC
(as defined herein) or purchasers may
receive definitive certificates for their
securities.
Use of Proceeds.................. The Selling Holders will receive all of the
proceeds from the sale of the Offered
Securities. Neither Devon nor the Trust
will receive any proceeds from the sale of
the Offered Securities.
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<PAGE> 11
RISK FACTORS
Prospective purchasers of Convertible Preferred Securities should carefully
review the information contained elsewhere in this Prospectus and should
particularly consider the following matters. Certain statements set forth below
under this caption constitute "forward-looking statements" within the meaning of
the Reform Act. See "Special Note Regarding Forward-Looking Statements" on page
5 for additional factors relating to such statements.
MARKET CONDITIONS AND VOLATILITY OF OIL AND GAS PRICES
The revenues generated by Devon are highly dependent upon the prices of oil
and gas. The currently volatile energy market makes it difficult to estimate
future prices for oil and natural gas. Since January, 1990 Texas Gulf Coast
natural gas index prices have fluctuated between a high of $2.61 per MMBtu in
May, 1993 and a low of $0.98 per MMBtu in February, 1992. During the same
period, posted prices for West Texas Intermediate crude oil fluctuated between a
high of $33.61 per Bbl in October, 1990 and a low of $12.86 per Bbl in December,
1993.
When oil or natural gas prices become unacceptably low, the Company may
elect to curtail production in various areas. For example, during July and
August 1991, and during February and March 1992, the Company curtailed
production from one of its largest properties, the Northeast Blanco Unit in
northwest New Mexico. While Devon does not anticipate curtailing production in
the near future, it is possible for this to occur from time to time. Extended or
wide-spread curtailment of production as a result of low prices could have a
material adverse impact on the revenues of the Company.
Extended periods of low prices for either oil or gas could also affect the
Company's ability or willingness to continue or complete its planned drilling
program. A delay or cancellation of future drilling and development projects
may, in turn, result in downward adjustments to estimated reserves and/or future
net revenues.
During 1995 approximately 36% of Devon's total production was San Juan
Basin coal seam gas, and coal seam gas revenues from the San Juan Basin were 25%
of Devon's total revenues. Because such a significant portion of Devon's total
production and revenue is produced from this one basin, Devon benefits or
suffers disproportionately when events occur or factors exist that are specific
to this one region. Region-specific factors include transportation and
processing costs, availability of transportation capacity and natural gas supply
and demand in the areas where the gas is sold.
Two region-specific factors currently affect coal seam gas produced from
the San Juan Basin. First, this gas has a high carbon dioxide content and must
be transported to a plant to have the carbon dioxide removed before it is sold.
As a result, the net wellhead price received for this gas is substantially less
than the price received for gas from other areas. This is a permanent
circumstance that will always lower the price of coal seam gas produced in the
San Juan Basin.
Second, due to pipeline availability, the primary market for gas production
from the San Juan Basin is California. Both demand for natural gas in California
and the supply of gas available from the San Juan Basin directly affect the
price offered for San Juan Basin gas. If demand is high in California in
relationship to demand in other parts of the country, then the price for San
Juan Basin gas at the mainline is generally higher than gas that can only be
delivered to other parts of the country, such as gas delivered to the Texas Gulf
Coast. Conversely, if demand is low in California, then the price for San Juan
Basin gas will generally be lower than gas that can be sold to other markets.
For example, for the years ended December 31, 1992, 1993 and 1994, San Juan
Basin mainline gas prices averaged $0.04 less, $0.14 less and $0.14 less,
respectively, than the average Texas Gulf Coast mainline prices. During most of
1995, demand for natural gas in California was weak and the supply of gas from
the San Juan Basin was increasing, causing San Juan Basin gas to sell at a
larger discount to gas that could be delivered to higher demand areas of the
United States. For 1995, San Juan Basin mainline gas prices averaged $0.36 less
than the average Texas Gulf Coast gas price. Through May, 1996 California demand
has remained weak and San Juan Basin gas supply has again increased causing San
Juan Basin mainline prices to average $0.84 per MMBtu less than average Texas
Gulf Coast gas prices. Future
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<PAGE> 12
differentials will depend upon market conditions which are, in turn, dependent
upon weather conditions, economic factors, the availability of gas and gas
substitutes and other factors over which Devon has no control.
UNCERTAINTY IN ESTIMATED RESERVES AND FUTURE NET REVENUES
Estimates of Devon's proved reserves and future net revenues included and
incorporated by reference herein are based on engineering reports prepared by
LaRoche & Associates, independent petroleum engineers ("LaRoche"), and Devon's
internal staff of engineers. There are numerous uncertainties inherent in
estimating quantities and values of proved gas and oil reserves and in
projecting future rates of production and net revenues and the timing of
development expenditures, including uncertainties relating to reservoir
engineering, pricing and both operating and regulatory constraints. In addition
certain events, including production, purchases and sales of properties, results
of further drilling and changes in planned drilling and development could result
in increases or decreases of estimated proved reserve quantities or estimates of
future net revenues. The estimates of future net revenues included and
incorporated by reference herein reflect oil and gas prices as of the date of
the relevant reserve report. However, there can be no assurance that the prices
used to estimate future net revenue will be realized. Accordingly, reserve
estimates are often different from the quantities of natural gas and oil
ultimately recovered. Any downward adjustment in its reserves could adversely
affect Devon's future prospects and the market value of its securities.
BUSINESS RISKS
Devon's prospects for growth and profitability depend upon its ability to
replace present reserves and production through exploration, development and
acquisitions. Without successful acquisition and/or drilling ventures, Devon's
proved reserves will decline as oil and gas are produced. There can be no
assurance that Devon's exploration, development and acquisition activities will
result in significant additional reserves or that Devon will continue to be able
to drill, complete and operate productive wells at acceptable costs. Devon's
operations are also subject to various risks and uncertainties relating to
producing and selling oil and gas. Drilling may be curtailed, delayed or
canceled as a result of many factors, including title problems, inability to
obtain required drilling permits, weather conditions, shortages of experienced
labor, shortages of or delays in delivery of equipment, as well as the financial
instability of well operators, major working interest owners and well servicing
companies. The availability of a ready market for oil and gas depends on
numerous factors beyond Devon's control, including the demand for and supply of
oil and gas, the proximity of natural gas reserves to pipelines, the capacity of
such pipelines, fluctuation in seasonal demand and the effects of inclement
weather and government regulation. New gas wells may be shut in for lack of a
market until a gas pipeline or gathering system with available capacity is
extended into that area.
OPERATING HAZARDS AND UNINSURED RISKS
Devon is subject to all risks normally incident to the exploration for and
production of oil and gas, including, but not limited to, unintentional releases
and discharges of oil, gas, brine or well fluids into the environment, fires,
pollution and other environmental risks. Any of these could result in damage or
destruction of oil and gas wells, formations or production facilities or cause
damage or injury to property and persons. Various federal, state and local laws
and regulations covering the discharge of materials into the environment, or
otherwise relating to the protection of the environment or human health, may
affect the operations of Devon and could subject the Company to production
curtailments and/or additional expenses, including capital expenditures, for
compliance or liability for noncompliance. Although Devon carries insurance
which it believes is in accordance with customary industry practices, it is not
fully insured against all risks. The occurrence of an event not fully covered by
insurance could have a material adverse effect on the financial condition and
operations of Devon.
GOVERNMENTAL REGULATION
The oil and gas business is regulated by certain federal, state and local
laws and regulations relating to the development, production, marketing and
transmission of oil and gas, as well as environmental and safety matters. There
is no assurance that laws and regulations enacted in the future or changes to
existing laws and
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<PAGE> 13
regulations will not increase the cost of compliance or otherwise adversely
affect Devon's exploration for and production and marketing of oil and natural
gas. Regulatory authorities in the various states have authority to limit the
production from the Company's properties.
FINANCIAL REPORTING IMPACT OF OIL AND GAS ACCOUNTING
Devon follows the full cost method of accounting for its oil and gas
properties. Under such method, the net book value of such properties, less
related deferred income taxes, may not exceed a calculated "ceiling." The
ceiling is the estimated after-tax future net revenues from proved oil and gas
properties, discounted at 10% per year. In calculating future net revenues,
prices and costs in effect at the time of the calculation are held constant
indefinitely, except for changes which are fixed and determinable by existing
contracts. The net book value is compared to the ceiling on a quarterly and
yearly basis. The excess, if any, of the net book value above the ceiling is
required to be written off as an expense.
Under the Commission's full cost accounting rules, any expense recorded as
a result of the full cost ceiling calculation may not be reversed even though
higher oil and gas prices may increase the ceiling applicable to future periods.
There is no assurance that future price decreases will not result in reductions
in the carrying value of Devon's oil and gas properties.
COMPETITION
The oil and gas business is highly competitive. Devon encounters
competition by major integrated and independent oil and gas companies in
acquiring properties, contracting for drilling equipment and securing trained
personnel. Intense competition occurs with respect to marketing, particularly of
natural gas. Many competitors have resources that substantially exceed those of
Devon.
SUBORDINATE RANKING OF OBLIGATIONS UNDER THE GUARANTEE AND CONVERTIBLE
DEBENTURES
Devon's obligations under the Guarantee are subordinate and junior in right
of payment to all liabilities of Devon and pari passu in right of payment with
the most senior preferred stock issued, from time to time, if any, by Devon. The
obligations of Devon under the Convertible Debentures are subordinate and junior
in right of payment to all present and future Senior Indebtedness (as defined
herein) of Devon. No payment of principal (including redemption payments, if
any), premium, if any, or interest on the Convertible Debentures may be made if
(i) any Senior Indebtedness of Devon is not paid when due and any applicable
grace period with respect to such default has ended with such default not having
been cured or waived or ceasing to exist or (ii) the maturity of any Senior
Indebtedness has been accelerated because of a default. Devon also may not make
any payment upon or in respect of the Convertible Debentures if (i) a default in
the payment of the principal of, premium, if any, interest or other obligations
in respect of Senior Indebtedness occurs and is continuing beyond any applicable
period of grace or (ii) any non-payment default occurs and is continuing with
respect to the Credit Agreements that permits the lenders to accelerate the
maturity of the loans made thereunder and the Debt Trustee (as defined herein)
receives a notice of such default (a "Payment Blockage Notice") from Devon or
other person permitted to give such notice under the Indenture. Payments on the
Convertible Debentures may and shall be resumed (a) in case of a payment
default, upon the date on which such default is cured or waived and (b) in case
of a nonpayment default, the earlier of the date on which such nonpayment
default is cured or waived or 179 days after the date on which the applicable
Payment Blockage Notice is received. No new period of payment blockage may be
commenced pursuant to a Payment Blockage Notice unless and until (i) 365 days
have elapsed since the initial effectiveness of the immediately prior Payment
Blockage Notice and (ii) all scheduled payments of principal, premium, if any,
and interest on the Convertible Debentures that have come due have been paid in
full in cash. No nonpayment default that existed or was continuing on the date
of delivery of any Payment Blockage Notice to the Trustee shall be, or be made,
the basis for a subsequent Payment Blockage Notice. There are no terms in the
Convertible Preferred Securities, the Convertible Debentures or the Guarantee
that limit Devon's ability to incur additional indebtedness, including
indebtedness that ranks senior to the Convertible Debentures and the Guarantee,
or to grant security interests to secure outstanding or new indebtedness. As of
August 9, 1996,
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<PAGE> 14
Devon had available borrowing capacity under its credit facilities of $260
million. See "Description of the Guarantee -- Status of the Guarantee" and
"Description of the Convertible Debentures -- Subordination."
LIMITATIONS OF THE GUARANTEE
The Guarantee Trustee (as defined herein) holds the Guarantee for the
benefit of the holders of the Convertible Preferred Securities. Under the
Guarantee, Devon guarantees payments to the holders of the Convertible Preferred
Securities to the extent of the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid distributions on the Convertible Preferred
Securities to the date of the payment to the extent the Trust has funds
available therefor or (b) the amount of assets of the Trust remaining available
for distribution to holders of the Convertible Preferred Securities in
liquidation of the Trust. Because the Guarantee is limited by the amount of the
funds in the Trust, if Devon were to default on its obligation to pay amounts
payable on the Convertible Debentures, the Trust would lack available funds for
the payment of distributions or amounts payable on redemption of the Convertible
Preferred Securities or otherwise, and, in such event, holders of the
Convertible Preferred Securities would not be able to rely upon the Guarantee
for payment of such amounts. Instead, holders of the Convertible Preferred
Securities would rely on the enforcement (1) by the Institutional Trustee of its
rights as registered holder of the Convertible Debentures against Devon pursuant
to the terms of the Convertible Debentures or (2) by such holder of its right of
Direct Action against Devon as described below to enforce payments on the
Convertible Debentures. See "Description of the Guarantee -- Events of Default."
The Declaration (as defined herein) provides that each holder of Convertible
Preferred Securities, by acceptance thereof, agrees to the provisions of the
Guarantee, including the subordination provisions thereof, and the Indenture.
LIMITATION OF ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CONVERTIBLE PREFERRED
SECURITIES.
If (i) Devon Financing Trust fails to pay distributions in full on the
Convertible Preferred Securities (other than pursuant to a deferral) or (ii) a
Declaration Event of Default (as defined herein) occurs and is continuing, then
the holders of Convertible Preferred Securities would rely on the enforcement by
the Institutional Trustee of its rights as a holder of the Convertible
Debentures against Devon. In addition, the holders of a majority in liquidation
amount of the Convertible Preferred Securities will have the right to direct the
time, method, and place of conducting any proceeding for any remedy available to
the Institutional Trustee or to direct the exercise of any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee to exercise the remedies available to
it as a holder of the Convertible Debentures. If the Institutional Trustee fails
to enforce its rights under the Convertible Debentures, a holder of Convertible
Preferred Securities may institute a legal proceeding directly against Devon to
enforce the Institutional Trustee's rights under the Convertible Debentures
without first instituting any legal proceeding against the Institutional Trustee
or any other person or entity. Notwithstanding the foregoing, if a Declaration
Event of Default has occurred and is continuing and such event is attributable
to the failure of Devon to pay interest or principal on the Convertible
Debentures on the date such interest or principal is otherwise payable (or in
the case of redemption, on the redemption date), then a holder of Convertible
Preferred Securities may directly institute a proceeding for enforcement of
payment to such holder of the principal of or interest on the Convertible
Debentures having a principal amount equal to the aggregate liquidation amount
of the Convertible Preferred Securities of such holder (a "Direct Action") on or
after the respective due date specified in the Convertible Debentures. In
connection with such Direct Action, Devon will be subrogated to the rights of
such holders of Convertible Preferred Securities under the Declaration to the
extent of any payment made by Devon to such holder of Convertible Preferred
Securities in such Direct Action. The holders of Convertible Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of Convertible Debentures. See "Description of the Convertible
Preferred Securities -- Declaration Events of Default."
DELAY OF INTEREST PAYMENTS
So long as Devon shall not be in default in the payment of interest on the
Convertible Debentures, Devon has the right under the Indenture to defer
payments of interest on the Convertible Debentures by extending
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the interest payment period at any time, and from time to time, on the
Convertible Debentures. As a consequence of such an extension, quarterly
distributions on the Convertible Preferred Securities would be deferred by the
Trust during any such Extension Period. Prior to the termination of any such
Extension Period, Devon may further extend such Extension Period; provided, that
such Extension Period, together with all such previous and further extensions
thereof, may not exceed 20 consecutive quarters or extend beyond the maturity of
the Convertible Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, Devon may commence a new Extension Period,
subject to the above requirements. See "Description of the Convertible Preferred
Securities -- Distributions" and "Description of the Convertible
Debentures -- Option to Extend Interest Payment Period."
Should Devon exercise its right to defer payments of interest by extending
the interest payment period, each holder of Convertible Preferred Securities
will continue to accrue income (as original issue discount ("OID")) in respect
of the deferred and compounded interest allocable to its Convertible Preferred
Securities for United States federal income tax purposes, which will be
allocated but not distributed, to holders of record of Convertible Preferred
Securities. As a result, each such holder of Convertible Preferred Securities
will recognize income for United States federal income tax purposes in advance
of the receipt of cash and will not receive the cash from Devon Financing Trust
related to such income if such holder disposes of its Convertible Preferred
Securities prior to the record date for the date on which distributions of such
amounts are made. Devon has no current intention of exercising its right to
defer payments of interest by extending the interest payment period of the
Convertible Debentures. However, should Devon determine to exercise such right
in the future, the market price of the Convertible Preferred Securities is
likely to be materially adversely affected. A holder that disposes of its
Convertible Preferred Securities during an Extension Period, therefore, might
not receive the same return on its investment as a holder that continues to hold
its Convertible Preferred Securities. In addition, as a result of the existence
of Devon's right to defer interest payments, the market price of the Convertible
Preferred Securities (which represent an undivided beneficial interest in the
Convertible Debentures) may be more volatile than other OID securities that do
not have such interest deferral rights. See "United States Federal Income
Taxation -- Potential Extension of Interest Payment Period and Original Issue
Discount."
ADVERSE CONSEQUENCES OF PROPOSED TAX LEGISLATION
On March 19, 1996, as a part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that, among other things, would treat as equity for United States
federal income tax purposes instruments with a maximum term of more than 20
years which are not shown as indebtedness on the consolidated balance sheet of
the issuer.
On March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr.
and House Ways and Means Committee Chairman Bill Archer issued a joint statement
(the "Joint Statement") indicating their intent that certain legislative
proposals initiated by the Clinton Administration, including the Proposed
Legislation, if adopted by either of the tax-writing committees of Congress,
would have an effective date that is no earlier than the date of "appropriate
Congressional action." Based upon the Joint Statement, it is anticipated that if
the Proposed Legislation were enacted, such legislation would not apply to the
Convertible Debentures if they are issued prior to the date of any "appropriate
Congressional actions." There can be no assurances that any proposed legislation
enacted after the date hereof will not otherwise adversely affect the tax
treatment of the Convertible Debentures. If legislation is enacted that
adversely affects the tax treatment of the Convertible Debentures, such
legislation could result in the distribution of the Convertible Debentures to
holders of the Convertible Preferred Securities or, in certain circumstances,
the redemption of such securities by the Company and the distribution of the
resulting cash in redemption of the Convertible Preferred Securities. See
"Description of the Convertible Preferred Securities -- Special Event
Distribution; Tax Event Redemption."
SPECIAL EVENT DISTRIBUTION; TAX EVENT REDEMPTION
Upon the occurrence of a Special Event (as defined herein), Devon Financing
Trust could be dissolved (with the consent of Devon), except in the limited
circumstance described below, with the result that the
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<PAGE> 16
Convertible Debentures would be distributed to the holders of the Trust
Securities in connection with the liquidation of the Trust. In certain
circumstances, Devon would have the right to redeem the Convertible Debentures,
in whole or in part, in lieu of a distribution of the Convertible Debentures by
the Trust, in which event the Trust would redeem the Trust Securities on a pro
rata basis to the same extent as the Convertible Debentures are redeemed by
Devon. See "Description of the Convertible Preferred Securities -- Special Event
Distribution; Tax Event Redemption."
Under current United States federal income tax law, a distribution of
Convertible Debentures upon the dissolution of Devon Financing Trust would not
be a taxable event to holders of the Convertible Preferred Securities. Upon
occurrence of a Special Event, however, a dissolution of Devon Financing Trust
in which holders of the Convertible Preferred Securities receive cash would be a
taxable event to such holders. See "United States Federal Income
Taxation -- Receipt of Convertible Debentures or Cash Upon Liquidation of the
Trust."
There can be no assurance as to the market prices for the Convertible
Preferred Securities or the Convertible Debentures that may be distributed in
exchange for Convertible Preferred Securities if a dissolution or liquidation of
the Trust were to occur. Accordingly, the Convertible Preferred Securities that
an investor may purchase, whether pursuant to the offer made hereby or in the
secondary market, or the Convertible Debentures that a holder of Convertible
Preferred Securities may receive on dissolution and liquidation of the Trust,
may trade at a discount to the price that the investor paid to purchase the
Convertible Preferred Securities offered hereby. Because holders of Convertible
Preferred Securities may receive Convertible Debentures upon the occurrence of a
Special Event, prospective purchasers of Convertible Preferred Securities are
also making an investment decision with regard to the Convertible Debentures and
should carefully review all the information regarding the Convertible Debentures
contained herein. See "Description of the Convertible Preferred
Securities -- Special Event Distribution; Tax Event Redemption" and "Description
of the Convertible Debentures -- General."
ABSENCE OF VOTING RIGHTS
Generally, holders of the Convertible Preferred Securities do not have any
voting rights with respect to Devon's governance, nor are they entitled to vote
to appoint, remove or replace, or to increase or decrease the number of, DFT
Trustees (as defined herein), which voting rights are vested exclusively in the
holder of the Common Securities. See "Description of the Convertible Preferred
Securities -- Voting Rights."
TRADING PRICE
The Convertible Preferred Securities may trade at a price that does not
fully reflect the value of accrued but unpaid interest with respect to the
underlying Convertible Debentures. A holder who disposes of Convertible
Preferred Securities between record dates for payments of distributions thereon
will be required to include accrued but unpaid interest on the Convertible
Debentures through the date of disposition in income as ordinary income (i.e.,
OID), and to add such amount to the adjusted tax basis in the holder's pro rata
share of the underlying Convertible Debentures deemed disposed of. To the extent
the selling price is less than the holder's adjusted tax basis (which will
include, in the form of OID, all accrued but unpaid interest), a holder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes. See "United States Federal Income Taxation -- Potential Extension of
Interest Payment Period and Original Issue Discount" and "-- Sales of
Convertible Preferred Securities."
ABSENCE OF PUBLIC MARKET FOR THE CONVERTIBLE PREFERRED SECURITIES ON RESALE
Although the Initial Purchaser currently makes a market in the Convertible
Preferred Securities, it is not obligated to do so and may discontinue such
market making at any time without notice. In addition, such market making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act. Accordingly, there can be no assurance that any market for the
Convertible Preferred Securities will develop or, if one does develop, that it
will be maintained. If an active market for the Convertible Preferred Securities
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fails to be sustained, the trading price of such Convertible Preferred
Securities could be materially adversely affected.
CERTAIN ANTI-TAKEOVER EFFECTS
Certain provisions of the Company's Certificate of Incorporation and
By-laws may inhibit changes in control of the Company not approved by the
Company's Board of Directors. These provisions include (i) a classified Board of
Directors, (ii) a prohibition on stockholder action through written consents and
(iii) the authority of the Board to issue without stockholder approval preferred
stock with such terms as the Board may determine. The Company will also be
afforded the protections of the Company's Certificate of Incorporation and the
Oklahoma General Corporation Act, which limit business combinations with a
shareholder who is the beneficial owner of 15% or more of the Devon Common Stock
in certain circumstances. In addition, the Company has adopted a share rights
plan which has certain anti-takeover effects. The rights plan will cause
substantial dilution to a person or group that attempts to acquire the Company
in a manner which causes the rights to become exercisable. See "Description of
Capital Stock."
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust is treated as a subsidiary of
Devon and, accordingly, the accounts of the Trust will be included in the
consolidated financial statements of Devon. The Convertible Preferred Securities
will be presented as a separate line item in the consolidated balance sheet of
Devon entitled "Company-obligated mandatorily redeemable convertible preferred
securities of Devon Financing Trust holding solely 6 1/2% convertible junior
subordinated debentures of Devon," and appropriate disclosures about the
Convertible Preferred Securities, the Guarantee and the Convertible Debentures
will be included in the notes to the Company's consolidated financial
statements. For financial reporting purposes, Devon will record distributions
payable on the Convertible Preferred Securities as a charge to earnings in
Devon's consolidated statement of operations.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges (a) for each of the five years ended December 31, 1995
and for the three months ended March 31, 1996 on an historical basis and (b) for
the year ended December 31, 1995 and the three months ended March 31, 1996 as
adjusted for the Original Offering.
<TABLE>
<CAPTION>
THREE
MONTHS
YEAR ENDED DECEMBER 31, ENDED
---------------------------------------- MARCH 31,
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges
Actual(1).................................... -- 7.97 8.24 4.80 4.54 4.85
As Adjusted(2)............................... 3.09 4.55
</TABLE>
- ---------------
(1) For purposes of calculating the ratio of earnings to fixed charges, (i)
earnings consist of earnings before income taxes and cumulative effect of
accounting change, plus fixed charges; and (ii) fixed charges consist of
interest expense incurred, amortization of debt expense relating to any
indebtedness, and one-third of rental expense estimated to be attributable
to interest. Fixed charges were in excess of earnings in 1991 in the amount
of $21.1 million. This was caused by the $25 million non-cash reduction in
the carrying value of oil and gas properties in 1991.
(2) The "as adjusted" ratios are calculated using adjusted amounts of earnings
and fixed charges under the assumption that the proceeds from the Original
Offering were applied toward Devon's long-term debt outstanding at the
beginning of the periods shown. The adjusted amounts of fixed charges are
calculated using the annual distribution rate of 6 1/2% on the Convertible
Preferred Securities.
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<PAGE> 18
DEVON FINANCING TRUST
Devon Financing Trust is a statutory business trust formed under Delaware
law pursuant to (i) the Declaration of Trust, dated as of June 26, 1996, as
amended by the Amended and Restated Declaration of Trust dated as of July 3,
1996 (the "Declaration") executed by Devon, as sponsor (the "Sponsor"), and the
trustees of Devon Financing Trust (the "DFT Trustees") and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware on
June 26, 1996. Devon owns, directly or indirectly, all of the Common Securities
of the Trust, which have an aggregate liquidation amount equal to 3% of the
total capital of Devon Financing Trust. Devon Financing Trust exists for the
exclusive purposes of (i) issuing the Trust Securities representing undivided
beneficial interests in the assets of the Trust, (ii) investing the gross
proceeds of the Trust Securities in the Convertible Debentures and (iii)
engaging in only those other activities necessary or incidental thereto.
Pursuant to the Declaration, the number of DFT Trustees is currently five.
Three of the DFT Trustees (the "Regular Trustees") are persons who are employees
or officers of or who are affiliated with Devon. The fourth trustee is a
financial institution that maintains its principal place of business in the
state of Delaware (the "Delaware Trustee"). The fifth Trustee (the
"Institutional Trustee") is a financial institution that is unaffiliated with
Devon and will serve as institutional trustee under the Declaration and as
indenture trustee for the purposes of compliance with the provisions of the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Bank of
New York, a New York banking corporation, currently serves as the Institutional
Trustee and will continue to serve as the Institutional Trustee until removed or
replaced by the holder of the Common Securities. The Bank of New York acts as
trustee (the "Guarantee Trustee") under the Guarantee and as Debt Trustee (as
defined herein) under the Indenture. The Bank of New York (Delaware), an
affiliate of the Institutional Trustee, currently acts as Delaware Trustee. See
"Description of the Convertible Preferred Securities -- Voting Rights."
The Institutional Trustee holds title to the Convertible Debentures for the
benefit of the holders of the Trust Securities, and the Institutional Trustee
has the power to exercise all rights, powers and privileges under the Indenture
as the holder of the Convertible Debentures. In addition, the Institutional
Trustee maintains exclusive control of a segregated non-interest bearing bank
account (the "Property Account") to hold all payments made in respect of the
Convertible Debentures for the benefit of the holders of the Trust Securities.
The Institutional Trustee makes payments of distributions and payments on
liquidation, redemption and otherwise to the holders of the Trust Securities out
of funds from the Property Account. The Guarantee Trustee holds the Guarantee
for the benefit of the holders of the Convertible Preferred Securities. Devon,
as the direct or indirect holder of all the Common Securities, has the right to
appoint, remove or replace any DFT Trustee and to increase or decrease the
number of DFT Trustees. Devon pays all fees and expenses related to Devon
Financing Trust and the offering of the Trust Securities. See "Description of
the Convertible Debentures -- Miscellaneous."
The rights of the holders of the Convertible Preferred Securities,
including economic rights, rights to information and voting rights, are set
forth in the Declaration and the Delaware Business Trust Act (the "Trust Act").
The Declaration, the Indenture and the Guarantee also incorporate by reference
the terms of the Trust Indenture Act. The Declaration, the Indenture and the
Guarantee will be qualified under the Trust Indenture Act.
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<PAGE> 19
DESCRIPTION OF THE CONVERTIBLE PREFERRED SECURITIES
The Convertible Preferred Securities were issued pursuant to the terms of
the Declaration. The Declaration incorporates by reference terms of the Trust
Indenture Act. The Declaration will be qualified under the Trust Indenture Act.
The Institutional Trustee, The Bank of New York, acts as indenture trustee for
the Convertible Preferred Securities under the Declaration for purposes of
compliance with the provisions of the Trust Indenture Act. The terms of the
Convertible Preferred Securities include those stated in the Declaration and
those made part of the Declaration by the Trust Indenture Act. The following
summary of the material terms and provisions of the Convertible Preferred
Securities is subject to, and qualified in its entirety by reference to, the
Declaration, the Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorized the Regular Trustees to issue, on behalf of the
Trust, the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust. All of the Common Securities are owned, directly or
indirectly, by Devon. The Common Securities rank pari passu, and payments will
be made thereon on a pro rata basis, with the Convertible Preferred Securities,
except that upon the occurrence and during the continuance of a Declaration
Event of Default, the rights of the holders of the Common Securities to receive
payment of periodic distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Convertible
Preferred Securities. The Declaration does not permit the issuance by the Trust
of any securities other than the Trust Securities or the incurrence of any
indebtedness by the Trust. Pursuant to the Declaration, the Institutional
Trustee holds the Convertible Debentures purchased by the Trust for the benefit
of the holders of the Trust Securities. The payment of distributions out of
money held by the Trust, and payments upon redemption of the Convertible
Preferred Securities or liquidation of the Trust, are guaranteed by Devon to the
extent described under "Description of the Guarantee." The Guarantee is held by
The Bank of New York, the Guarantee Trustee, for the benefit of the holders of
the Convertible Preferred Securities. The Guarantee does not cover payment of
distributions when the Trust does not have sufficient available funds to pay
such distributions. In such event, the remedy of a holder of Convertible
Preferred Securities is to vote to direct the Institutional Trustee to enforce
the Institutional Trustee's rights under the Convertible Debentures or, in
certain limited circumstances, to take Direct Action. See "-- Voting Rights" and
"-- Declaration Events of Default."
DISTRIBUTIONS
Distributions on the Convertible Preferred Securities are fixed at a rate
per annum of 6 1/2% of the stated liquidation amount of $50 per Convertible
Preferred Security. Distributions in arrears for more than one quarter will
accrue interest thereon at the distribution rate, compounded quarterly. The term
"distribution" as used herein includes any such interest payable unless
otherwise stated. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
Distributions on the Convertible Preferred Securities will be cumulative,
will accrue from the first date that any Convertible Preferred Securities are
issued, and will be payable quarterly in arrears on March 15, June 15, September
15 and December 15 of each year, commencing September 15, 1996, when, as and if
available for payment. Distributions will be made by the Institutional Trustee,
except as otherwise described below.
So long as Devon shall not be in default in the payment of interest on the
Convertible Debentures, Devon has the right under the Indenture to defer
payments of interest on the Convertible Debentures by extending the interest
payment period from time to time on the Convertible Debentures, which, if
exercised, would defer quarterly distributions on the Convertible Preferred
Securities (though such distributions would continue to accumulate with interest
thereon at the distribution rate, compounded quarterly, since interest would
continue to accrue on the Convertible Debentures) during any such Extension
Period. Such right to extend the interest payment period for the Convertible
Debentures is limited to a period not exceeding 20 consecutive quarters and such
period may not extend beyond the maturity of the Convertible Debentures. In the
event that Devon exercises this right, then (a) Devon shall not declare or pay
dividends on, make distributions with respect to,
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<PAGE> 20
or redeem, purchase or acquire, or make a liquidation payment with respect to,
any of its capital stock (other than (i) purchases or acquisitions of shares of
Devon Common Stock in connection with the satisfaction by Devon of its
obligations under any employee benefit plans, (ii) as a result of a
reclassification of Devon capital stock or the exchange or conversion of one
class or series of Devon's capital stock for another class or series of Devon
capital stock or (iii) the purchase of fractional interests in shares of Devon's
capital stock pursuant to the conversion or exchange provisions of such Devon
capital stock or the security being converted or exchanged for Devon capital
stock,) (b) Devon shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by Devon
that rank pari passu with or junior to the Convertible Debentures and (c) Devon
shall not make any guarantee payments with respect to the foregoing (other than
pursuant to the Guarantee). Prior to the termination of any such Extension
Period, Devon may further extend the interest payment period; provided, that
such Extension Period, together with all such previous and further extensions,
may not exceed 20 consecutive quarters or extend beyond the maturity of the
Convertible Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, Devon may commence a new Extension Period,
subject to the above requirements. See "Description of the Convertible
Debentures -- Interest" and "-- Option to Extend Interest Payment Period." If
distributions are deferred, the deferred distributions and accrued interest
thereon shall be paid to holders of record of the Convertible Preferred
Securities as they appear on the books and records of the Trust on the record
date next following the termination of such deferral period.
Distributions on the Convertible Preferred Securities must be paid on the
dates payable to the extent that the Trust has funds available for the payment
of such distributions. The Trust's funds available for distribution to the
holders of the Convertible Preferred Securities will be limited to payments
received from Devon on the Convertible Debentures. See "Description of the
Convertible Debentures." The payment of distributions out of monies held by the
Trust is guaranteed by Devon to the extent set forth under "Description of the
Guarantee."
Distributions on the Convertible Preferred Securities will be payable to
the holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which will be fifteen days prior to the relevant payment
dates. Such distributions will be paid through the Institutional Trustee who
will hold amounts received in respect of the Convertible Debentures for the
benefit of the holders of the Trust Securities. Subject to any applicable laws
and regulations and the provisions of the Declaration, each such payment will be
made as described under "-- Form, Denomination and Registration" below. In the
event that any date on which distributions are to be made on the Convertible
Preferred Securities is not a Business Day, then payment of the distributions
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such record date. A "Business Day"
shall mean any day other than Saturday, Sunday or any other day on which banking
institutions in New York City are permitted or required by any applicable law to
close.
CONVERSION RIGHTS
General. The Convertible Preferred Securities are convertible at any time
beginning 90 days following July 3, 1996 through the close of business on the
Business Day prior to the maturity date of the Convertible Debentures (or, in
the case of Convertible Preferred Securities called for redemption, prior to the
close of business on the Business Day prior to the Redemption Date) (the
"Conversion Expiration Date"), at the option of the holders thereof and in the
manner described below, into shares of Devon Common Stock at an initial
conversion rate of 1.6393 shares of Devon Common Stock for each Convertible
Preferred Security (equivalent to a conversion price of $30.50 per share of
Devon Common Stock), subject to adjustment as described under "-- Conversion
Price Adjustments -- General" below.
The terms of the Convertible Preferred Securities provide that a holder of
a Convertible Preferred Security wishing to exercise its conversion right shall
surrender such Convertible Preferred Security, together with an irrevocable
conversion notice, to the Institutional Trustee, as conversion agent (the
"Conversion Agent") which shall, on behalf of such holder, exchange such
Convertible Preferred Security for a portion of
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<PAGE> 21
the Convertible Debentures and immediately convert an equivalent amount of
Convertible Debentures into Devon Common Stock. Holders may obtain copies of the
required form of the conversion notice from the Conversion Agent. Additional
procedures for converting book-entry Convertible Preferred Securities into
shares of Devon Common Stock are described below under "-- Form, Denomination
and Registration."
Accrued distributions will not be paid on the Convertible Preferred
Securities that are converted, provided, however, that if any Convertible
Preferred Security is converted on or after a record date for payment of
distributions thereon, the distributions payable on the related payment date
with respect to such Convertible Preferred Security shall be distributed to the
holder, despite such conversion; provided further, that if a Redemption Date
falls between such record date and the related distribution payment date, the
amount of such payment shall include distributions accrued to, but excluding,
such Redemption Date. Except as provided in the immediately preceding sentence,
neither the Trust nor Devon shall make any payment, allowance or adjustment for
accumulated and unpaid distributions, whether or not in arrears, on converted
Convertible Preferred Securities. Devon will make no payment or allowance for
distributions on the shares of Devon Common Stock issued upon such conversion,
except to the extent that such shares of Devon Common Stock are held of record
on the record date for any such distributions.
No fractional shares of Devon Common Stock will be issued as a result of
conversion, but in lieu thereof such fractional interest will be paid by Devon
in cash based on the current market price of Devon Common Stock on the date such
Convertible Preferred Securities are surrendered for conversion.
Conversion Price Adjustments -- General. The initial conversion price of
$30.50 per share of Devon Common Stock is subject to adjustment (under formulae
set forth in the Indenture) in certain events, including (i) the issuance of
shares of Devon Common Stock as a dividend or a distribution with respect to
Devon Common Stock, (ii) certain subdivisions and combinations of Devon Common
Stock, (iii) the issuance to all holders of Devon Common Stock of certain rights
or warrants entitling them to subscribe for or purchase shares of Devon Common
Stock, (iv) the distribution to all holders of Devon Common Stock of shares of
capital stock (other than Devon Common Stock) or evidences of indebtedness of
Devon or of assets (including securities, but excluding those rights, warrants,
dividends and distributions referred to above or paid in cash), (v)
distributions consisting of cash, excluding any quarterly cash dividend on Devon
Common Stock to the extent that the aggregate cash dividend per share of Devon
Common Stock in any quarter does not exceed the greater of (x) the amount per
share of Devon Common Stock of the next preceding quarterly dividend on Devon
Common Stock to the extent that such preceding quarterly dividend did not
require an adjustment of the conversion rate pursuant to this clause (v) (as
adjusted to reflect subdivisions or combinations of Devon Common Stock), and (y)
3.75% of the average of the daily Closing Prices (as defined in the Indenture)
of Devon Common Stock during the ten consecutive Trading Days (as defined in the
Indenture) immediately prior to the date of declaration of such dividend, and
excluding any dividend or distribution in connection with the liquidation,
dissolution or winding-up of Devon, (vi) payment to holders of Devon Common
Stock in respect of a tender or exchange offer by Devon or any subsidiary for
Devon Common Stock to the extent that the cash and value of any other
consideration included in such payment per share of Devon Common Stock exceeds
the Current Market Price (as defined in the Indenture) per share of Common Stock
on the Trading Day next succeeding the last date on which tenders or exchanges
may be made pursuant to such tender or exchange offer; and (vii) payment in
respect of a tender offer or exchange offer by a person other than Devon or any
subsidiary of Devon in which, as of the closing date of the offer, the Board of
Directors is not recommending rejection of the offer. If an adjustment is
required to be made as set forth in clause (v) above as a result of a
distribution that is a quarterly dividend, such adjustment would be based upon
the amount by which such distribution exceeds the amount of the quarterly cash
dividend permitted to be excluded pursuant to such clause (v). If an adjustment
is required to be made based upon the full amount of the distribution that is
not a quarterly dividend, such adjustment would be based upon the full amount of
the distribution. The adjustment referred to in clause (vii) above will only be
made (A) if the tender offer or exchange offer is for an amount that increases
that person's ownership of Devon Common Stock to more than 25% of the total
shares of Devon Common Stock outstanding and (B) if the cash and value of any
other consideration included in such payment per share of Devon Common Stock
exceeds the Current Market Price per share of Devon Common Stock on the Business
Day next succeeding the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer. The adjustment referred to in clause
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<PAGE> 22
(vii) above will not be made, however, if, as of the closing of the offer, the
offering documents with respect to such offer disclose a plan or an intention to
cause Devon to engage in a consolidation or merger of Devon or a sale of all or
substantially all of Devon's assets. The Convertible Debentures provide for
corresponding anti-dilution adjustments.
Devon from time to time may to the extent permitted by law reduce the
conversion price of the Convertible Debentures (and thus the conversion price of
the Convertible Preferred Securities) by any amount for any period of at least
20 days, in which case Devon shall give at least 15 days' notice of such
reduction, if the Devon Board of Directors has made a determination that such
reduction would be in the best interests of Devon, which determination shall be
conclusive. Devon may, at its option, make such reductions in the conversion
price, in addition to those set forth above, as the Devon Board of Directors
deems advisable to avoid or diminish any income tax to holders of Devon Common
Stock resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. See "United
States Federal Income Taxation -- Adjustment of Conversion Price."
No adjustment in the conversion price will be required unless such
adjustment would require a change of at least one percent (1%) in the conversion
price then in effect; provided, however, that any adjustment that would not be
required to be made shall be carried forward and taken into account in any
subsequent adjustment. If any action would require adjustment of the conversion
price pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value to the holder of the Convertible Preferred
Securities. Except as stated above, the conversion price will not be adjusted
for the issuance of Devon Common Stock or any securities convertible into or
exchangeable for Devon Common Stock or carrying the right to purchase any of the
foregoing.
Conversion Price Adjustments -- Merger, Consolidation or Sale of Assets of
Devon. If any transaction shall occur (including without limitation (i) any
recapitalization or reclassification of shares of Devon Common Stock (other than
a change in par value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination of Devon Common
Stock), (ii) any consolidation or merger of Devon with or into another person or
any merger of another person into Devon (other than a merger that does not
result in a reclassification, conversion, exchange or cancellation of Devon
Common Stock), (iii) any sale or transfer of all or substantially all of the
assets of Devon, or (iv) any compulsory share exchange) pursuant to which either
shares of Devon Common Stock shall be converted into the right to receive other
securities, cash or other property, or, in the case of a sale or transfer of all
or substantially all of the assets of Devon, the holders of Devon Common Stock
shall be entitled to receive other securities, cash or other property, then
appropriate provision shall be made so that the holder of each Convertible
Preferred Security then outstanding shall have the right thereafter to convert
such Convertible Preferred Security only into:
(x) in the case of any such transaction that does not constitute a
Common Stock Fundamental Change (as defined below) and subject to funds
being legally available for such purpose under applicable law at the time
of such conversion, the kind and amount of the securities, cash or other
property that would have been receivable upon such recapitalization,
reclassification, consolidation, merger, sale, transfer or share exchange
by a holder of the number of shares of Devon Common Stock issuable upon
conversion of such Convertible Preferred Security immediately prior to such
recapitalization, reclassification, consolidation, merger, sale, transfer
or share exchange, after giving effect, in the case of any Non-Stock
Fundamental Change (as defined below), to any adjustment in the conversion
price in accordance with clause (i) of the following paragraph, and
(y) in the case of any such transaction that constitutes a Common
Stock Fundamental Change, common stock of the kind received by holders of
Devon Common Stock as a result of such Common Stock Fundamental Change in
an amount determined in accordance with clause (ii) of the following
paragraph.
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<PAGE> 23
The company formed by such consolidation or resulting from such merger or that
acquires assets or that acquires Devon's shares, as the case may be, shall make
provisions in its certificate or articles of incorporation or other constituent
document to establish such right. Such certificate or articles of incorporation
or other constituent document shall provide for adjustments that, for events
subsequent to the effective date of such certificate or articles of
incorporation or other constituent documents, shall be as nearly equivalent as
may be practicable to the relevant adjustments provided for in the preceding
paragraphs and in this paragraph.
Notwithstanding any other provision in the preceding paragraphs to the
contrary, if any Fundamental Change (as defined below) occurs, then the
conversion price in effect will be adjusted immediately after such Fundamental
Change as follows:
(i) in the case of a Non-Stock Fundamental Change, the conversion
price of the Convertible Preferred Securities immediately following such
Non-Stock Fundamental Change shall be the lower of (A) the conversion price
in effect immediately prior to such Non-Stock Fundamental Change, but after
giving effect to any other prior adjustments effected pursuant to the
preceding paragraphs, and (B) the product of (1) the greater of the
Applicable Price (as defined below) and the then applicable Reference
Market Price (as defined below) and (2) a fraction, the numerator of which
is $50 and the denominator of which is (x) the amount of the redemption
price for one Convertible Preferred Security if the redemption date were
the date of such Non-Stock Fundamental Change (or, for the twelve-month
periods commencing June 15, 1996, June 15, 1997 and June 15, 1998, the
product of 106.50%, 105.85% and 105.20%, respectively, times $50) plus (y)
any then-accrued and unpaid distributions on one Convertible Preferred
Security; and
(ii) in the case of a Common Stock Fundamental Change, the conversion
price of Convertible Preferred Securities immediately following such Common
Stock Fundamental Change shall be the conversion price in effect
immediately prior to such Common Stock Fundamental Change, but after giving
effect to any other prior adjustments effected pursuant to the preceding
paragraphs, multiplied by a fraction, the numerator of which is the
Purchaser Stock Price (as defined below) and the denominator of which is
the Applicable Price; provided, however, that in the event of a Common
Stock Fundamental Change in which (A) 100% of the value of the
consideration received by a holder of Devon Common Stock is common stock of
the successor, acquiror or other third party (and cash, if any, paid with
respect to any fractional interests in such common stock resulting from
such Common Stock Fundamental Change) and (B) all of the Devon Common Stock
shall have been exchanged for, converted into or acquired for, common stock
of the successor, acquiror or other third party (and any cash with respect
to fractional interests), the conversion price of the Convertible Preferred
Securities immediately following such Common Stock Fundamental Change shall
be the conversion price in effect immediately prior to such Common Stock
Fundamental Change multiplied by a fraction, the numerator of which is one
(1) and the denominator of which is the number of shares of common stock of
the successor, acquiror or other third party received by a holder of one
share of Devon Common Stock as a result of such Common Stock Fundamental
Change.
Depending upon whether a Fundamental Change is a Non-Stock Fundamental
Change or a Common Stock Fundamental Change, a holder may receive significantly
different consideration upon conversion. In the event of a Non-Stock Fundamental
Change, the holder has the right to convert Convertible Preferred Securities
into the kind and amount of the shares of stock and other securities or property
or assets (including cash), except as otherwise provided above, as is determined
by the number of shares of Devon Common Stock receivable upon conversion at the
conversion price as adjusted in accordance with clause (i) of the preceding
paragraph. However, in the event of a Common Stock Fundamental Change in which
less than 100% of the value of the consideration received by a holder of Devon
Common Stock is common stock of the successor, acquiror or other third party, a
holder of a Convertible Preferred Security who converts such share following the
Common Stock Fundamental Change will receive consideration in the form of such
common stock only, whereas a holder who converted such share prior to the Common
Stock Fundamental Change would have received consideration in the form of such
common stock as well as any other securities or assets (which may
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<PAGE> 24
include cash) issuable upon conversion of such Convertible Preferred Security
immediately prior to such Common Stock Fundamental Change.
The term "Applicable Price" means (i) in the event of a Non-Stock
Fundamental Change in which the holders of Devon Common Stock receive only cash,
the amount of cash received by a holder of one share of Devon Common Stock and
(ii) in the event of any other Fundamental Change, the average of the daily
Closing Price (as defined in the Indenture) for one share of Devon Common Stock
during the 10 Trading Days immediately prior to the record date for the
determination of the holders of Devon Common Stock entitled to receive cash,
securities, property or other assets in connection with such Fundamental Change
or, if there is no such record date, prior to the date upon which the holders of
Devon Common Stock shall have the right to receive such cash, securities,
property or other assets, but the adjustment shall be based upon the
consideration that the holders of Devon Common Stock received in the transaction
or event as a result of which more than 50% of the Devon Common Stock shall have
been exchanged for, converted into or acquired for, or shall constitute solely
the right to receive, such cash, securities, property or other assets.
The term "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of Devon) of the consideration received by holders of Devon Common
Stock consists of common stock that, for the 10 Trading Days immediately prior
to such Fundamental Change, has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on The Nasdaq National Market; provided, however, that a Fundamental
Change shall not be a Common Stock Fundamental Change unless either (i) Devon
continues to exist after the occurrence of such Fundamental Change and the
outstanding Convertible Preferred Securities continue to exist as outstanding
Convertible Preferred Securities, or (ii) not later than the occurrence of such
Fundamental Change, the outstanding Convertible Preferred Securities are
converted into or exchanged for shares of convertible preferred stock or
debentures of a corporation succeeding to the business of Devon, which
convertible preferred stock has powers, preferences and relative, participating,
optional or other rights, and qualifications, limitations and restrictions
substantially similar to those of the Convertible Preferred Securities and which
debentures have terms substantially similar to those of the Convertible
Debentures.
The term "Fundamental Change" means the occurrence of any transaction or
event or series of transactions or events pursuant to which all or substantially
all of the Devon Common Stock shall be exchanged for, converted into, acquired
for or shall constitute solely the right to receive cash, securities, property
or other assets (whether by means of an exchange offer, liquidation, tender
offer, consolidation, merger, combination, reclassification, recapitalization or
otherwise); provided, however, in the case of any such series of transactions or
events, for purposes of adjustment of the conversion price, such Fundamental
Change shall be deemed to have occurred when substantially all of the Devon
Common Stock shall have been exchange for, converted into or acquired for, or
shall constitute solely the right to receive, such cash, securities, property or
other assets.
The term "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the daily Closing Price for one share of the
common stock received by holders of Devon Common Stock (determined as provided
in the Declaration) in such Common Stock Fundamental Change during the 10
Trading Days immediately prior to the date fixed for the determination of the
holders of Devon Common Stock entitled to receive such common stock or, if there
is no such date, prior to the date upon which the holders of Devon Common Stock
shall have the right to receive such common stock.
The term "Reference Market Price" shall initially mean $16.50 (which is an
amount equal to 66 2/3% of the reported last sale price for Devon Common Stock
on the American Stock Exchange on June 26, 1996) and, in the event of any
adjustment to the conversion price other than as a result of a Fundamental
Change, the Reference Market Price shall also be adjusted so that the ratio of
the Reference Market Price to the conversion price after giving effect to any
such adjustment shall always be the same as the ratio of the initial Reference
Market Price to the initial conversion price of $30.50 per share.
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<PAGE> 25
MANDATORY REDEMPTION
The Convertible Debentures will mature on June 15, 2026, and may be
redeemed, in whole or in part, at any time on or after June 18, 1999, or at any
time in certain circumstances upon the occurrence of a Special Event (as defined
below). Upon the repayment of the Convertible Debentures, whether at maturity or
upon redemption, the proceeds from such repayment or payment shall
simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Convertible
Debentures so repaid or redeemed at the appropriate Redemption Price (expressed
as percentages of the principal amount of the Convertible Debentures) set forth
below, together with accrued and unpaid interest on the Convertible Debentures
to, but excluding, the redemption date, if redeemed during the 12-month period
beginning June 15 of the applicable year; provided, that holders of Trust
Securities shall be given not less than 30 nor more than 60 days notice of such
redemption. See "Description of the Convertible Debentures -- Redemption at the
Option of Devon." In the event that fewer than all of the outstanding
Convertible Preferred Securities are to be redeemed, the Convertible Preferred
Securities will be redeemed pro rata as described under "-- Form, Denomination
and Registration" below.
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
1999................................................................. 104.55%
2000................................................................. 103.90
2001................................................................. 103.25
2002................................................................. 102.60
2003................................................................. 101.95
2004................................................................. 101.30
2005................................................................. 100.65
2006 and thereafter.................................................. 100.00
</TABLE>
SPECIAL EVENT DISTRIBUTION; TAX EVENT REDEMPTION
"Tax Event" means that the Regular Trustees shall have received an opinion
of independent tax counsel experienced in such matters (a "Dissolution Tax
Opinion") to the effect that as a result of (a) any amendment to, clarification
of, or change (including any announced prospective change) in the laws, or any
regulations thereunder, of the United States or any political subdivision or
taxing authority thereof or therein, (b) any judicial decision, official
administrative pronouncement, ruling, regulatory procedure, notice or
announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action"), or (c) any amendment to,
clarification of, or change in the official position or the interpretation of
such Administrative Action or judicial decision that differs from the
theretofore generally accepted position, in each case, by any legislative body,
court, governmental authority or regulatory body, irrespective of the manner in
which such amendment, clarification or change is made known, which amendment,
clarification, or change is effective or such pronouncement or decision is
announced, in each case, on or after the date of this Prospectus, there is the
creation by such change in tax law of more than an insubstantial risk that (i)
the Trust is or will be subject to United States federal income tax with respect
to income accrued or received on the Convertible Debentures, (ii) the Trust is,
or will be subject to more than a de minimis amount of taxes, duties or other
governmental charges, or (iii) interest paid in cash by Devon to the Trust on
the Convertible Debentures is not, or will not be, deductible, in whole or in
part, by Devon for United States federal income tax purposes. Notwithstanding
the foregoing, a Tax Event shall not include any change in tax law that requires
Devon for United States federal income tax purposes to defer taking a deduction
for any original issue discount ("OID") that accrues with respect to the
Convertible Debentures until the interest payment related to such OID is paid by
the Company in cash; provided, that such change in tax law does not create more
than an insubstantial risk that Devon will be prevented from taking a deduction
for OID accruing with respect to the Convertible Debentures at a date that is no
later than the date the interest payment related to such OID is actually paid by
Devon in cash.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of independent counsel experienced in such matters to the
effect that, as a result of the occurrence of a change in
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<PAGE> 26
law or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority on or after the date of this Prospectus (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "1940 Act").
If, at any time, a Tax Event or an Investment Company Event (each, a
"Special Event") shall occur and be continuing, the Trust may with the consent
of Devon, except in the limited circumstances described below, be dissolved with
the result that Convertible Debentures with an aggregate principal amount equal
to the aggregate stated liquidation amount of, with an interest rate identical
to the distribution rate of, and accrued and unpaid interest equal to accrued
and unpaid distributions on, the Trust Securities, would be distributed to the
holders of the Trust Securities in liquidation of such holders' interest in the
Trust on a pro rata basis within 90 days following the occurrence of the Special
Event; provided, that such dissolution and distribution shall be conditioned on
(i) the Regular Trustees' receipt of an opinion of independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may rely
on published revenue rulings of the Internal Revenue Service, to the effect that
the holders of the Trust Securities will not recognize any gain or loss for
United States federal income tax purposes as a result of such dissolution and
distribution of Convertible Debentures, (ii) Devon or the Trust being unable to
avoid such Tax Event within such 90 day period by taking some ministerial action
or pursuing some other reasonable measure that will have no adverse effect on
the Trust, Devon or the holders of the Trust Securities and (iii) Devon's prior
written consent to such dissolution and distribution. If Devon declines to
consent to the dissolution and distribution, Devon may incur an obligation to
pay Additional Interest. See "Description of the Convertible
Debentures -- Additional Interest." Furthermore, if after receipt of a
Dissolution Tax Opinion by the Regular Trustees (i) Devon has received an
opinion (a "Redemption Tax Opinion") of nationally recognized independent tax
counsel experienced in such matters that, as a result of a Tax Event, there is
more than an insubstantial risk that Devon would be precluded from deducting the
interest on the Convertible Debentures for United States federal income tax
purposes even after the Convertible Debentures were distributed to the holders
of Trust Securities in liquidation of such holders' interests in the Trust as
described above, or (ii) the Regular Trustees shall have been informed by such
tax counsel that it cannot deliver a No Recognition Opinion to the Trust, Devon
shall have the right, upon not less than 30 nor more than 60 days notice, to
redeem the Convertible Debentures, in whole or in part, at 100% of the principal
amount thereof plus accrued and unpaid interest thereon for cash within 90 days
following the occurrence of such Tax Event. Following such redemption, Trust
Securities with an aggregate liquidation amount equal to the aggregate principal
amount of the Convertible Debentures so redeemed shall be redeemed by the Trust
at the liquidation amount thereof plus accrued and unpaid distributions thereon
to the redemption date on a pro rata basis; provided, however, that if at the
time there is available to Devon or the Trust the opportunity to eliminate,
within such 90 day period, the Tax Event by taking some ministerial action, such
as filing a form or making an election or pursuing some other similar reasonable
measure that will have no adverse effect on the Trust, Devon or the holders of
the Trust Securities, Devon or the Trust will pursue such measure in lieu of
redemption.
After the date for any distribution of Convertible Debentures upon
dissolution of the Trust, (i) the Trust Securities will no longer be deemed to
be outstanding, (ii) certificates representing Trust Securities will be deemed
to represent Convertible Debentures having an aggregate principal amount equal
to the aggregate stated liquidation amount of, with an interest rate identical
to the distribution rate of, and accrued and unpaid interest (including Compound
Interest) equal to accrued and unpaid distributions on such Trust Securities
until such certificates are presented to Devon or its agent for transfer or
reissuance.
Devon is a holding company whose operations are conducted through direct
and indirect wholly-owned subsidiaries, and the ability of Devon to redeem the
Convertible Debentures and, therefore, of the Trust to redeem the Convertible
Preferred Securities will be dependent on Devon's subsidiaries' ability to pay
dividends to Devon in sufficient amounts.
There can be no assurance as to the market price for the Convertible
Debentures which may be distributed in exchange for Trust Securities if a
dissolution and liquidation of the Trust were to occur.
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<PAGE> 27
Accordingly, the Convertible Debentures that the investor may subsequently
receive on dissolution and liquidation of the Trust may trade at a discount to
the price of the Trust Securities exchanged.
REDEMPTION PROCEDURES FOR REDEMPTION BY THE TRUST
The Trust may not redeem fewer than all of the outstanding Convertible
Preferred Securities unless all accrued and unpaid distributions have been paid
on all Convertible Preferred Securities for all quarterly distribution periods
terminating on or prior to the date of redemption.
In the event of any redemption in part, the Trust shall not be required to
(i) issue, register the transfer of or exchange any Convertible Preferred
Securities during a period beginning at the opening of business 15 days before
any selection for redemption of Convertible Preferred Securities and ending at
the close of business on the earliest date in which the relevant notice of
redemption is deemed to have been given to all holders of Convertible Preferred
Securities to be so redeemed or (ii) register the transfer of or exchange any
Convertible Preferred Securities so selected for redemption, in whole or in
part, except for the unredeemed portion of any Convertible Preferred Securities
being redeemed in part.
If the Trust gives a notice of redemption in respect of Convertible
Preferred Securities (which notice will be irrevocable), then, by 12:00 noon,
New York City time, on the redemption date, provided that Devon has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related
redemption of the Convertible Debentures, the Trust will irrevocably deposit
with the Depositary funds sufficient to pay the amount payable on redemption of
all book-entry certificates and will give the Depositary irrevocable
instructions and authority to pay such amount in respect of Convertible
Preferred Securities represented by the Global Certificates (as defined herein)
and will irrevocably deposit with the paying agent for the Convertible Preferred
Securities funds sufficient to pay such amount in respect of any certificated
Convertible Preferred Securities and will give such paying agent irrevocable
instructions and authority to pay such amount to the holders of certificated
Convertible Preferred Securities upon surrender of their certificates. If notice
of redemption shall have been given and funds deposited as required, then,
immediately prior to the close of business on the redemption date, distributions
will cease to accrue and all rights of holders of such Convertible Preferred
Securities so called for redemption will cease, except the right of the holders
of such Convertible Preferred Securities to receive the Redemption Price plus
accrued and unpaid distributions on the convertible Preferred Securities to be
redeemed, but without interest on such Redemption Price. In the event that any
date fixed for redemption of Convertible Preferred Securities is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (without any interest or other
payment in respect of any such delay) except that, if such Business Day falls in
the next calendar year, such payment will be made on the immediately preceding
Business Day. In the event that payment of the Redemption Price in respect of
Convertible Preferred Securities is improperly withheld or refused and not paid
either by the Trust, or by Devon pursuant to the Guarantee, distributions on
such Convertible Preferred Securities will continue to accrue at the then
applicable rate from the original redemption date to the date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
In the event that fewer than all of the outstanding Convertible Preferred
Securities are to be redeemed, the Convertible Preferred Securities will be
redeemed pro rata.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), Devon or its subsidiaries may at any
time, and from time to time, purchase outstanding Convertible Preferred
Securities by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Liquidation"), the then holders
of the Convertible Preferred Securities will be entitled to receive out of the
assets of the Trust, after satisfaction of liabilities to creditors,
distributions in an amount equal to the aggregate of the stated liquidation
amount of $50 per Convertible Preferred Security plus accrued and unpaid
distributions thereon to the date of payment (the "Liquidation Distribution"),
unless, in
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<PAGE> 28
connection with such Liquidation, Convertible Debentures in an aggregate stated
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the distribution rate of, and accrued and unpaid
interest equal to accrued and unpaid distributions on, the Convertible Preferred
Securities have been distributed on a pro rata basis to the holders of the
Convertible Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Convertible Preferred Securities shall be paid on a pro rata basis.
The holders of the Common Securities will be entitled to receive distributions
upon any such dissolution pro rata with the holders of the Convertible Preferred
Securities, except that if a Declaration Event of Default has occurred and is
continuing, the Convertible Preferred Securities shall have a preference over
the Common Securities with regard to such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on June 25,
2036, the expiration of the term of the Trust, (ii) upon the bankruptcy of Devon
or the holder of the Common Securities, (iii) upon the filing of a certificate
of dissolution or its equivalent with respect to the holder of the Common
Securities or Devon, the filing of a certificate of cancellation with respect to
the Trust after obtaining the consent of the holders of at least a majority in
liquidation amount of the Trust Securities affected thereby voting together as a
single class to file such certificate of cancellation, or the revocation of the
charter of the holder of the Common Securities or Devon and the expiration of 90
days after the date of revocation without a reinstatement thereof, (iv) upon the
distribution of Convertible Debentures upon the occurrence of a Special Event,
(v) upon the entry of a decree of a judicial dissolution of the holder of the
Common Securities, Devon or the Trust, (vi) upon the redemption of all the Trust
Securities or (vii) upon the distribution of Devon Common Stock to all holders
of Convertible Preferred Securities upon conversion of all outstanding
Convertible Preferred Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); provided, that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Convertible Preferred
Securities have been cured, waived or otherwise eliminated. Until such
Declaration Events of Default with respect to the Convertible Preferred
Securities have been so cured, waived, or otherwise eliminated, the
Institutional Trustee will be deemed to be acting solely on behalf of the
holders of the Convertible Preferred Securities and only the holders of the
Convertible Preferred Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration, and therefore the
Indenture.
If the Institutional Trustee fails to enforce its rights under the
Convertible Debentures any holder of Convertible Preferred Securities may
institute a legal proceeding against Devon to enforce the Institutional
Trustee's rights under the Convertible Debentures. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of Devon to pay interest or principal
on the Convertible Debentures on the date such interest or principal is
otherwise payable (or in the case of redemption, the redemption date), then a
holder of Convertible Preferred Securities may institute a Direct Action for
payment on or after the respective due date specified in the Convertible
Debentures. In connection with such Direct Action, Devon will be subrogated to
the rights of such holders of Convertible Preferred Securities under the
Declaration to the extent of any payment made by Devon to such holder of
Convertible Preferred Securities in such Direct Action. The holders of
Convertible Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Convertible Debentures.
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee as the sole holder of the Convertible Debentures will have the right
under the Indenture to declare the principal of and interest on the Convertible
Debentures to be immediately due and payable. Devon and the Trust are each
required to file annually with the Institutional Trustee an officer's
certificate as to its compliance with all conditions and covenants under the
Declaration.
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<PAGE> 29
VOTING RIGHTS
Except as described herein, under the Trust Act and under the Trust
Indenture Act, and as otherwise required by law and the Declaration, the holders
of the Convertible Preferred Securities have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of the next
paragraph, the holders of a majority in aggregate liquidation amount of the
Convertible Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee, or direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the
Institutional Trustee, as holder of the Convertible Debentures, to (i) exercise
the remedies available under the Indenture with respect to the Convertible
Debentures, (ii) waive any past Indenture Event of Default that is waivable
under the Indenture, (iii) exercise any right to rescind or annul a declaration
that the principal of all the Convertible Debentures shall be due and payable or
(iv) consent to any amendment, modification or termination of the Indenture or
the Convertible Debentures where such consent shall be required; provided,
however, that if an Indenture Event of Default has occurred and is continuing
then, the holders of 25% of the aggregate liquidation amount of the Convertible
Preferred Securities may direct the Institutional Trustee to declare the
principal of and interest on the Convertible Debentures immediately due and
payable; provided, further, that, where a consent or action under the Indenture
would require the consent or action of holders of more than a majority in
principal amount of the Convertible Debentures (a "Super-Majority") affected
thereby, only the holders of at least such Super-Majority in aggregate
liquidation amount of the Convertible Preferred Securities may direct the
Institutional Trustee to give such consent or take such action.
The Institutional Trustee shall notify all holders of the Convertible
Preferred Securities of any notice of default received from the Debt Trustee
with respect to the Convertible Debentures. Such notice shall state that such
Indenture Event of Default also constitutes a Declaration Event of Default.
Except with respect to directing the time, method and place of conducting a
proceeding for a remedy, the Institutional Trustee shall not take any of the
actions described in clauses (i), (ii) or (iii) above unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that, as a result
of such action, the Trust will not be classified as other than a grantor trust
for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Convertible Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the holders of the Trust Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a majority
in liquidation amount of the Trust Securities voting together as a single class;
provided, however, that where a consent under the Indenture would require the
consent of a Super-Majority, the Institutional Trustee may only give such
consent at the direction of the holders of at least the proportion in
liquidation amount of the Trust Securities which the relevant Super-Majority
represents of the aggregate principal amount of the Convertible Debentures
outstanding. The Institutional Trustee shall be under no obligation to take any
such action in accordance with the directions of the holders of the Trust
Securities unless the Institutional Trustee has obtained an opinion of
independent tax counsel experienced in such matters to the effect that for the
purposes of United States federal income tax the Trust will not be classified as
other than a grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Convertible Preferred
Securities may be given at a separate meeting of holders of Convertible
Preferred Securities convened for such purpose, at a meeting of all of the
holders of Trust Securities or pursuant to written consent. The Regular Trustees
will cause a notice of any meeting at which holders of Convertible Preferred
Securities are entitled to vote, or of any matter upon which action by written
consent of such holders is to be taken, to be mailed to each holder of record of
Convertible Preferred Securities. Each such notice will include a statement
setting forth the following information: (i) the date of such meeting or the
date by which such action is to be taken; (ii) a description of any resolution
proposed for adoption at such meeting on which such holders are entitled to vote
or of such
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<PAGE> 30
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the holders of
Convertible Preferred Securities will be required for the Trust to redeem and
cancel Convertible Preferred Securities or distribute Convertible Debentures in
accordance with the Declaration.
Notwithstanding that holders of Convertible Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Convertible Preferred Securities that are owned at such time by Devon or
any entity directly controlling or controlled by, or under direct or indirect
common control with, Devon, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Convertible
Preferred Securities were not outstanding.
The procedures by which holders of Convertible Preferred Securities may
exercise their voting rights are described below. See "-- Form, Denomination and
Registration."
Holders of the Convertible Preferred Securities have no rights to appoint
or remove the Regular Trustees, who may be appointed, removed or replaced solely
by Devon as the indirect or direct holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee), provided
that, if any proposed amendment provides for, or the Regular Trustees otherwise
propose to effect, (i) any action that would adversely affect the powers,
preferences or special rights of the Trust Securities, whether by way of
amendment to the Declaration or otherwise or (ii) the dissolution, winding-up or
termination of the Trust other than pursuant to the terms of the Declaration,
then the holders of the Trust Securities voting together as a single class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a least a majority in
liquidation amount of the Trust Securities affected thereby; provided that, if
any amendment or proposal referred to in clause (i) above would adversely affect
only the Convertible Preferred Securities or the Common Securities, then only
the affected class will be entitled to vote on such amendment or proposal and
such amendment or proposal shall not be effective except with the approval of a
majority in liquidation amount of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee or (iii) cause the Trust to be deemed an "investment
company" that is required to be registered under the 1940 Act.
PROPOSED TAX LEGISLATION
On March 19, 1996, as a part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed the Proposed Legislation that, among
other things, would treat as equity for United States federal income tax
purposes instruments with a maximum term of more than 20 years which are not
shown as indebtedness on the consolidated balance sheet of the issuer. The
Proposed Legislation, in its current proposed form, would appear to be
applicable to the Convertible Preferred Securities.
On March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr.
and House Ways and Means Committee Chairman Bill Archer issued the Joint
Statement indicating their intent that certain legislative proposals initiated
by the Clinton Administration, including the Proposed Legislation, if adopted by
either of the tax-writing committees of Congress, would have an effective date
no earlier than the date of "appropriate Congressional actions." Based upon the
Joint Statement, it is anticipated that if the Proposed Legislation were
enacted, such legislation would not apply to the Convertible Debentures if they
are issued prior to the date of any "appropriate Congressional action." There
can be no assurance that any proposed legislation enacted after the date hereof
will not otherwise adversely affect the tax treatment of the Convertible
Debentures.
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<PAGE> 31
If legislation is enacted which adversely affects the tax treatment of the
Convertible Debentures, such legislation could result in the distribution of the
Convertible Debentures to holders of the Convertible Preferred Securities or, in
certain circumstances, the redemption of such securities by the Company and the
distribution of the resulting cash in redemption of the Convertible Preferred
Securities. See "Description of the Convertible Preferred Securities -- Special
Event Distribution; Tax Redemption."
MERGERS, CONSOLIDATIONS OR AMALGAMATION
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body, except as
described below. The Trust may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by a Trust organized as such
under the laws of any State; provided, that (i) such successor entity either (x)
expressly assumes all of the obligations of the Trust under the Trust Securities
or (y) substitutes for the Convertible Preferred Securities other securities
have substantially the same terms as the Trust Securities (the "Successor
Securities"), so long as the Successor Securities rank the same as the Trust
Securities rank with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) Devon expressly acknowledges a trustee of such
successor entity possessing the same powers and duties as the Institutional
Trustee as the holder of the Convertible Debentures, (iii) such merger,
consolidation, amalgamation or replacement does not cause the Convertible
Preferred Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization, (iv) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (v) such successor entity
has a purpose identical to that of the Trust, (vi) prior to such merger,
consolidation, amalgamation or replacement, Devon has received an opinion of
independent counsel to the Trust experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect (other
than with respect to any dilution of the holders' interest in the new entity),
(B) following such merger, consolidation, amalgamation or replacement, neither
the Trust nor such successor entity will be required to register as an
investment company under the 1940 Act and (C) following such merger,
consolidation, amalgamation or replacement, the Trust (or such successor entity)
will continue to be classified as a grantor trust for United States federal
income tax purposes and (vii) Devon guarantees the obligations of such successor
entity under the Successor Securities at least to the extent provided by the
Guarantee and the Common Securities Guarantee. Notwithstanding the foregoing,
the Trust shall not, except with the consent of holders of 100% in liquidation
amount of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it, if such consolidation,
amalgamation, merger or replacement would cause the Trust or the successor
entity to be classified as other than a grantor trust for United States federal
income tax purposes.
REGISTRATION RIGHTS
Devon and the Trust (together, the "Registrants") entered into a
registration rights agreement with the Initial Purchaser (the "Registration
Rights Agreement") pursuant to which the Registrants, at Devon's expense, would,
for the benefit of the holders, (i) file with the Commission the Shelf
Registration Statement covering resale of the Registrable Securities within 90
days after the latest date of original issuance of the Convertible Preferred
Securities, (ii) use their best efforts to cause the Shelf Registration
Statement to become effective promptly and (iii) use their best efforts to keep
the Shelf Registration Statement effective until the earlier of (a) the sale
pursuant to the Shelf Registration Statement or Rule 144 under the Securities
Act of all the Registrable Securities and (b) the expiration of the holding
period applicable to sales of Registrable Securities under Rule 144(k) under the
Securities Act, or any successor provision. The Registrants will be permitted to
suspend the use of the prospectus which is a part of the Shelf Registration
Statement for a period not to exceed 30 days in any three month period or two
periods not to exceed an aggregate of 60 days in any 12-month period under
certain circumstances relating to pending corporate
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<PAGE> 32
developments, public filings with the Commission and similar events. Devon
agreed to pay liquidated damages to holders of Registrable Securities who have
requested to sell pursuant to the Shelf Registration Statement if the Shelf
Registration Statement is not timely filed or if the prospectus is unavailable
for periods in excess of those permitted above until such time as the Shelf
Registration Statement is filed or the prospectus is again made available, as
the case may be. The Company has further agreed, if such failure to file or
unavailability continues for an additional thirty-day period, to pay liquidated
damages to all holders of Registrable Securities, whether or not any such holder
has requested to sell pursuant to the Shelf Registration Statement, until such
time as the Shelf Registration Statement is filed or the prospectus is again
made available, as the case may be. A holder who sells Registrable Securities
pursuant to the Shelf Registration Statement generally will be required to be
named as a selling stockholder in the related prospectus, deliver a prospectus
to purchasers and be bound by those provisions of the Registration Rights
Agreement that are applicable to such holder (including indemnification
provisions).
Devon agreed in the Registration Rights Agreement to use its best efforts
to cause the Devon Common Stock issuable upon conversion of the Convertible
Securities to be listed on the American Stock Exchange (or such other national
securities exchange on which the Devon Common Stock may be listed at such time)
upon effectiveness of the Shelf Registration Statement.
The summary herein of certain provisions of the Registration Rights
Agreement is subject to, and is qualified in its entirety by reference to, all
the provisions of the Registration Rights Agreement, a copy of which is
available upon request to Devon or the Initial Purchaser.
FORM, DENOMINATION AND REGISTRATION
Convertible Preferred Securities were issued in fully registered form,
without coupons.
Global Convertible Preferred Securities; Book-Entry Form.
Holders of Convertible Preferred Securities registered hereunder may take
physical delivery of the securities in definitive form or the securities may be
evidenced by a global Convertible Preferred Security (the "Global Security")
which will be deposited with, or on behalf of, The Depository Trust Company, New
York, New York ("DTC") and registered in the name of Cede & Co. ("Cede"), as
DTC's nominee.
Distributions on the Global Security will be made to Cede, the nominee for
DTC, as the registered owner of the Global Security by wire transfer of
immediately available funds. None of Devon, the Trust or any Trustee will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
DTC's practice is to credit Participants' accounts on the relevant payment
date with payments in amounts proportionate to their respective beneficial
interests in the Convertible Preferred Securities represented by the Global
Security as shown on the records of DTC (adjusted as necessary so that such
payments are made with respect to whole Convertible Preferred Securities only),
unless DTC has reason to believe that it will not receive payment on such
payment date. Payments by Participants to owners of beneficial interests in
Convertible Preferred Securities represented by the Global Security held through
such Participants will be the responsibility of such Participants, as is now the
case with securities held for the accounts of customers registered in "street
name."
Beneficial holders of Convertible Preferred Securities who desire to
convert them into Underlying Common Stock should contact their brokers or other
Participants or Indirect Participants to obtain information on procedures,
including proper forms and cut-off times, for submitting such request. Because
DTC can only act on behalf of Participants, who in turn act on behalf of
Indirect Participants, the ability of a person having a beneficial interest in
the Convertible Preferred Securities represented by the Global Security to
pledge such interest to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of such interest, may be affected
by the lack of a physical certificate evidencing such interest.
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None of Devon, the Trust or any Trustee (or any registrar, paying agent or
conversion agent) will have any responsibility for the performance by DTC or
their Participants or indirect participants of their respective obligations
under the rules and procedures governing their operations. DTC has advised Devon
and the Trust that it will take any action permitted to be taken by a holder of
Convertible Preferred Securities (including, without limitation, the
presentation of Convertible Preferred Securities for conversion) only at the
direction of one or more Participants to whose account with DTC interests in the
Global Security are credited.
DTC has advised Devon and the Trust as follows: DTC is a limited purpose
trust company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entry
changes to accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations such as the Initial Purchaser. Certain of such
Participants (or their representatives), together with other entities, own DTC.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through, or maintain a custodial
relationship with a Participant, either directly or indirectly.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the Global Security.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and Indirect Participants to beneficial
owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements that may be in effect from time to time. Redemption
notices shall be sent to Cede & Co. If less than all of the Convertible
Preferred Securities are being redeemed, DTC will reduce the amount of the
interest of each Participant in such Convertible Preferred Securities in
accordance with its procedures.
Although voting with respect to the Convertible Preferred Securities is
limited, in those cases where a vote is required, neither DTC nor Cede will
itself consent or vote with respect to Convertible Preferred Securities. Under
its usual procedures, DTC would mail an Omnibus Proxy to the Trust as soon as
possible after the record date. The Omnibus Proxy assigns Cede consenting or
voting rights to those Participants to whose accounts the Convertible Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy). Devon and the Trust believe that the arrangements among DTC,
the Participants and Indirect Participants, and beneficial owners will enable
the beneficial owners to exercise rights equivalent in substance to the rights
that can be directly exercised by a holder of a beneficial interest in the
Trust.
DTC may discontinue providing its services as securities depositary with
respect to the Convertible Preferred Securities at any time by giving reasonable
notice to the Trust. Under such circumstances, in the event that a successor
securities depositary is not obtained, certificates for the Convertible
Preferred Securities are required to be printed and delivered. Additionally, the
Regular Trustees (with the consent of Devon) may decide to discontinue use of
the system of book-entry transfers through DTC (or any successor depositary)
with respect to the Convertible Preferred Securities. In that event,
certificates for the Convertible Preferred Securities will be printed and
delivered.
Holders of Convertible Preferred Securities evidenced by the Global
Security may request that any beneficial interest in the Convertible Preferred
Securities be exchanged for certificated securities in definitive form pursuant
to the requirements of DTC for such an exchange.
Holders may request that any certificated Convertible Preferred Securities
they hold in definitive registered form be exchanged for interests in the
applicable Global Security. Certificated Convertible Preferred Securities may be
issued in exchange for Convertible Preferred Securities represented by a Global
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Security if a depositary is unwilling or unable to continue as a depositary for
the Global Security as set forth above.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities and after the curing of any defaults that may
have occurred, has undertaken to perform only such duties as are specifically
set forth in the Declaration and, after default, shall exercise the same degree
of care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Institutional Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration at the
request of any holder of Convertible Preferred Securities, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The holders of Convertible Preferred Securities
will not be required to offer such indemnity in the event such holders, by
exercising their voting rights, direct the Institutional Trustee to take any
action it is empowered to take under the Declaration following a Declaration
Event of Default. The Institutional Trustee also serves as trustee under the
Guarantee and the Indenture.
Conversion Agent, Paying Agent, Registrar and Transfer Agent.
The Institutional Trustee acts as Registrar, Transfer Agent, Conversion
Agent and Paying Agent for the Convertible Preferred Securities.
Registration of transfers of Convertible Preferred Securities will be
effected without charge by or on behalf of the Trust, but upon payment (with the
giving of such indemnity as the Trust or Devon may require) in respect of any
tax or other government charges that may be imposed in relation to it.
The Trust is not be required to register or cause to be registered the
transfer of Convertible Preferred Securities after such Convertible Preferred
Securities have been called for redemption.
GOVERNING LAW
The Declaration and the Convertible Preferred Securities are governed by,
and construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an "investment
company" under the 1940 Act or characterized as other than a grantor trust for
United States federal income tax purposes. Devon is authorized and directed to
conduct its affairs so that the Convertible Debentures will be treated as
indebtedness of Devon for United States federal income tax purposes. In this
connection, Devon and the Regular Trustees are authorized to take any action,
not inconsistent with applicable law, the certificate of trust of the Trust or
the certificate of incorporation of Devon, that each of Devon and the Regular
Trustees determine in their discretion to be necessary or desirable to achieve
such end, as long as such action does not adversely affect the interests of the
holders of the Convertible Preferred Securities or vary the terms thereof.
Holders of the Convertible Preferred Securities have no preemptive rights.
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DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee which
was executed and delivered by Devon for the benefit of the holders from time to
time of Convertible Preferred Securities. The summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the Guarantee. The Guarantee incorporates by
reference the terms of the Trust Indenture Act. The Guarantee will be qualified
under the Trust Indenture Act. The Bank of New York, as the Guarantee Trustee,
holds the Guarantee for the benefit of the holders of the Convertible Preferred
Securities.
GENERAL
Pursuant to and to the extent set forth in the Guarantee, Devon has agreed
to pay in full to the holders of the Convertible Preferred Securities (except to
the extent paid by the Trust), as and when due, regardless of any defense, right
of set off or counterclaim which the Trust may have or assert, the following
payments (the "Guarantee Payments"), without duplication: (i) any accrued and
unpaid distributions that are required to be paid on the Convertible Preferred
Securities to the extent the Trust has funds available therefor, (ii) the
Redemption Price plus accrued and unpaid distributions, with respect to any
Convertible Preferred Securities called for redemption by the Trust, to the
extent the Trust has funds available therefor and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of Convertible Debentures to the holders of
Convertible Preferred Securities or the redemption of all the Convertible
Preferred Securities), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on the Convertible Preferred Securities
to the date of payment to the extent the Trust has funds available therefor and
(b) the amount of assets of the Trust remaining available for distribution to
holders of Preferred Securities upon the liquidation of the Trust. The holders
of a majority in liquidation amount of the Preferred Securities have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee or to direct the exercise of any trust or
power conferred upon the Guarantee Trustee under the Guarantee. Any holder of
Convertible Preferred Securities may directly institute a legal proceeding
against Devon to enforce the obligations of the Guarantor under the Guarantee
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity. If Devon were to default on its
obligation to pay amounts payable on the Convertible Debentures, the Trust would
lack available funds for the payment of distributions or amounts payable on
redemption of the Convertible Preferred Securities or otherwise, and in such
event holders of the Convertible Preferred Securities would not be able to rely
upon the Guarantee for payment of such amounts. Instead, a holder of the
Convertible Preferred Securities would be required to rely on the enforcement
(1) by the Institutional Trustee of its rights, as registered holder of the
Convertible Debentures, against Devon pursuant to the terms of the Convertible
Debentures or (2) by such holder of Convertible Preferred Securities of its
right against Devon to enforce payments on Convertible Debentures. See
"Description of the Convertible Debentures." The Declaration provides that each
holder of Convertible Preferred Securities, by acceptance thereof, agrees to the
provisions of the Guarantee, including the subordination provisions thereof, and
the Indenture.
The Guarantee does not apply to any payment of distributions or Redemption
Price, or to payments upon the dissolution, winding-up or termination of the
Trust, except to the extent the Trust shall have funds available therefor. If
Devon does not make interest payments on the Convertible Debentures, the Trust
will not pay distributions on the Convertible Preferred Securities and will not
have funds available therefor. See "Description of the Convertible Debentures."
The Guarantee, when taken together with Devon's obligations under the
Convertible Debentures, the Indenture and the Declaration, including its
obligations to pay costs, expenses, debts and liabilities of the Trust (other
than with respect to the Trust Securities) provides a full and unconditional
guarantee on a subordinated basis by Devon of payments due on the Convertible
Preferred Securities.
Devon also agreed separately to irrevocably and unconditionally guarantee
the obligations of the Trust with respect to the Common Securities (the "Common
Securities Guarantee") to the same extent as the Guarantee, except that upon the
occurrence and during the continuation of a Declaration Event of Default,
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holders of Convertible Preferred Securities shall have priority over holders of
Common Securities with respect to distributions and payments on liquidation,
redemption or otherwise.
CERTAIN COVENANTS OF DEVON
In the Guarantee, Devon has covenanted that, so long as any Convertible
Preferred Securities remain outstanding, if (i) the Company has exercised its
option to defer interest payments on the Convertible Debentures by extending the
interest payment period and such extension shall be continuing, (ii) the Company
shall be in default with respect to its payment or other obligations under the
Guarantee or (iii) there shall have occurred and be continuing any event that,
with the giving of notice would constitute a Declaration Event of Default, then
the Company (a) shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock (other than (i) purchases or acquisitions
of shares of Devon Common Stock in connection with the satisfaction by Devon of
its obligations under any employee benefit plans, (ii) as a result of a
reclassification of Devon's capital stock or the exchange or conversion of one
class or series of Devon's capital stock for another class or series of Devon's
capital stock or, (iii) the purchase of fractional interests in shares of
Devon's capital stock pursuant to the conversion or exchange provisions of such
capital stock of Devon or the security being converted or exchanged for capital
stock of Devon) or make any guarantee payments with respect to the foregoing and
(b) shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities (including guarantees) of the
Company that rank pari passu with or junior to the Convertible Debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of Convertible Preferred Securities (in which case no vote
will be required), the Guarantee may be amended only with the prior approval of
the holders of at least a majority in liquidation amount of all the outstanding
Convertible Preferred Securities. The manner of obtaining any such approval of
holders of the Convertible Preferred Securities will be as set forth under
"Description of the Convertible Preferred Securities -- Voting Rights." All
guarantees and agreements contained in the Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of Devon and shall inure to the
benefit of the holders of the Convertible Preferred Securities then outstanding.
Except in connection with any permitted merger or consolidation of Devon with or
into another entity or any permitted sale, transfer or lease of Devon's assets
to another entity as described under "Description of the Convertible
Debentures -- Certain Covenants," the Company may not assign its rights or
delegate its obligations under the Guarantee without the prior approval of the
holders of at least a majority of the aggregate stated liquidation amount of the
Convertible Preferred Securities then outstanding.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate as to each holder of Convertible Preferred
Securities upon (i) full payment of the Redemption Price and accrued and unpaid
distributions with respect to all Convertible Preferred Securities, (ii) upon
distribution of the Convertible Debentures held by the Trust to the holders of
the Convertible Preferred Securities, (iii) upon liquidation of the Trust or
(iv) upon the distribution of Company Common Stock to such holder in respect of
the conversion of such holder's Convertible Securities into Devon Common Stock
and will terminate completely upon full payment of the amounts payable in
accordance with the Declaration.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon (a) the failure of
Devon to perform any of its payment or other obligations thereunder or (b) if
applicable, the failure by Devon to deliver Devon Common Stock upon an
appropriate election by the holder or holders of Convertible Preferred
Securities to convert the Convertible Preferred Securities into shares of the
Devon Common Stock.
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The holders of a majority in liquidation amount of Convertible Preferred
Securities relating to the Guarantee have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any trust or
power conferred upon the Guarantee Trustee under the Convertible Preferred
Securities. If the Guarantee Trustee fails to enforce the Guarantee, any holder
of Convertible Preferred Securities relating to such Guarantee may institute a
legal proceeding directly against Devon to enforce the Guarantee Trustee's
rights under the Guarantee, without first instituting a legal proceeding against
the Trust, the Guarantee Trustee or any other person or entity. Notwithstanding
the foregoing, if Devon has failed to make a guarantee payment, a holder of
Convertible Preferred Securities may directly institute a proceeding against
Devon for enforcement of the Guarantee for such payment. Devon waives any right
or remedy to require that any action be brought first against the Trust or any
other person or entity before proceeding directly against Devon.
STATUS OF THE GUARANTEE
The Guarantee constitutes an unsecured obligation of Devon and ranks (i)
subordinate and junior in right of payment to all other liabilities of Devon,
(ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by Devon and with any guarantee now or hereafter entered into
by Devon in respect of any preferred or preference stock of any affiliate of
Devon, and (iii) senior to Devon Common Stock. The terms of the Convertible
Preferred Securities provide that each holder of Convertible Preferred
Securities issued by the Trust by acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee relating thereto.
The Guarantee constitutes a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the guarantee without instituting a
legal proceeding against any other person or entity).
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, has undertaken to perform only such duties as are specifically
set forth in the Guarantee and, after default with respect to the Guarantee,
shall exercise the same degree of care as a prudent man would exercise in the
conduct of his own affairs. Subject to such provision, the Guarantee Trustee is
under no obligation to exercise any of the powers vested in it by the Guarantee
at the request of any holder of Convertible Preferred Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
GOVERNING LAW
The Guarantee is governed by, and construed in accordance with, the laws of
the State of New York.
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DESCRIPTION OF THE CONVERTIBLE DEBENTURES
Set forth below is a description of the specific terms of the Convertible
Debentures in which the Trust invested the proceeds from the issuance and sale
of the Trust Securities. The following description does not purport to be
complete and is subject to, and is qualified in its entirety by reference to the
Indenture, dated as of July 3, 1996, as supplemented by the First Supplemental
Indenture dated as of July 3, 1996 (together, the "Indenture"), between Devon
and The Bank of New York, as Trustee (the "Debt Trustee"), a copy of which may
be obtained from Devon upon request. Certain capitalized terms used herein are
defined in the Indenture.
The Indenture will be qualified under the Trust Indenture Act.
Under certain circumstances involving the dissolution of the Trust
following the occurrence of a Special Event, Convertible Debentures may be
distributed to the holders of the Trust Securities in liquidation of the Trust.
See "Description of the Convertible Preferred Securities -- Special Event
Distribution; Tax Event Redemption."
GENERAL
The Convertible Debentures were issued as unsecured debt under the
Indenture. The Convertible Debentures were limited in aggregate principal amount
to approximately $154.1 million, such amount being the sum of the aggregate
stated liquidation of the Convertible Preferred Securities and the capital
contributed by Devon in exchange for the Common Securities (the "Devon Payment")
($149.5 million principal amount of such Convertible Debentures which relate to
the aggregated stated liquidation of the Convertible Preferred Securities are
being registered hereby).
The Convertible Debentures are not subject to a sinking fund provision. The
entire principal amount of the Convertible Debentures will mature and become due
and payable, together with any accrued and unpaid interest thereon including
compound interest and Additional Interest (as defined herein), if any, on June
15, 2026.
If Convertible Debentures are distributed to holders of Convertible
Preferred Securities in liquidation of such holders' interests in the Trust,
such Convertible Debentures will initially be issued in the same form as the
Convertible Preferred Securities that such Convertible Debentures replace. Under
certain limited circumstances, Convertible Debentures may be issued in
certificated form in exchange for a Global Security. See "Book-Entry and
Settlement" below. In the event that Convertible Debentures are issued in
certificated form, such Convertible Debentures will be in denominations of $50
and integral multiples thereof and may be transferred or exchanged at the
offices described below. Payments on Convertible Debentures issued as a Global
Security will be made to DTC, a successor depositary or, in the event that no
depositary is used, to a Paying Agent for the Convertible Debentures. With
respect to Convertible Debentures issued in certificated form, principal and
interest will be payable, the transfer of the Convertible Debentures will be
registrable and Convertible Debentures will be exchangeable for Convertible
Debentures of other denominations of a like aggregate principal amount at the
corporate trust office of the Institutional Trustee at 101 Barclay Street, 21st
floor, New York, New York, 10286; provided that payment of interest may be made
at the option of Devon by check mailed to the address of the holder entitled
thereto or by wire transfer to an account appropriately designated by the holder
entitled thereto. Notwithstanding the foregoing, so long as the holder of any
Convertible Debenture is the Institutional Trustee, the payment of principal and
interest on such Convertible Debenture will be made at such place and to such
account as may be designated by the Institutional Trustee.
The Indenture does not contain provisions that afford holders of the
Convertible Debentures protection in the event of a highly leveraged transaction
involving Devon that would adversely affect such holders.
INTEREST
Each Convertible Debenture shall bear interest at the rate of 6 1/2% per
annum from July 3, 1996, payable quarterly in arrears on March 15, June 15,
September 15 and December 15 of each year (each an "Interest Payment Date"),
commencing September 15, 1996, to the person in whose name such Convertible
Debenture is registered, subject to certain exceptions, 15 days prior to such
Interest Payment Date.
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The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period for which interest is computed
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on the
Convertible Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as Devon shall not be in default in the payment of interest on the
Convertible Debentures, Devon shall have the right at any time, and from time to
time, during the term of the Convertible Debentures to defer payments of
interest by extending the interest payment period for a period not exceeding 20
consecutive quarters, at the end of which Extension Period, Devon shall pay all
interest then accrued and unpaid (including any Additional Interest, as herein
defined) together with interest thereon compounded quarterly at the rate
specified for the Convertible Debentures to the extent permitted by applicable
law ("Compound Interest"); provided that during any such Extension Period, (a)
Devon shall not declare or pay dividends on, make any distribution with respect
to, or redeem, purchase, acquire or make a liquidation payment with respect to
any of its capital stock (other than (i) purchases or acquisitions of shares of
Devon Common Stock in connection with the satisfaction by Devon of its
obligations under any employee benefit plans, (ii) as a result of a
reclassification of Devon capital stock or the exchange or conversion of one
class or series of Devon's capital stock for another class or series of Devon
capital stock or (iii) the purchase of fractional interests in shares of Devon's
capital stock pursuant to the conversion or exchange provisions of such Devon
capital stock or the security being converted or exchanged for Devon capital
stock), (b) Devon shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by Devon
that rank pari passu with or junior to the Convertible Debentures and (c) Devon
shall not make any guarantee payments with respect to the foregoing (other than
pursuant to the Guarantee). Prior to the termination of any such Extension
Period, Devon may further defer payments of interest by extending the interest
payment period; provided, however, that, such Extension Period, including all
such previous and further extensions, may not exceed 20 consecutive quarters or
extend beyond the maturity of the Convertible Debentures. Upon the termination
of any Extension Period and the payment of all amounts then due, Devon may
commence a new Extension Period, subject to the terms set forth in this section.
No interest during an Extension Period, except at the end thereof, shall be due
and payable. Devon has no present intention of exercising its right to defer
payments of interest by extending the interest payment period on the Convertible
Debentures. If the Institutional Trustee shall be the sole holder of the
Convertible Debentures, Devon shall give the Regular Trustees and the
Institutional Trustee notice of its selection of such Extension Period one
Business Day prior to the earlier of (i) the date distributions on the
Convertible Preferred Securities are payable or (ii) the date the Regular
Trustees are required to give notice to any applicable self-regulatory
organization or to holders of the Convertible Debentures of the record or
payment date of such related interest payment.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, Devon will pay as additional interest ("Additional Interest") such
additional amounts as shall be required so that the net amounts received and
retained by the Trust after paying any such taxes, duties, assessments or other
governmental charges will be not less than the amounts the Trust would have
received had no such taxes, duties, assessments or other governmental charges
been imposed.
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PROPOSED TAX LEGISLATION
Please refer to discussion above under the heading "Description of the
Convertible Preferred Securities -- Proposed Tax Legislation."
SUBORDINATION
The Indenture provides that the Convertible Debentures are subordinated and
junior in right of payment to all Senior Indebtedness of Devon. No payment of
principal (including redemption payments, if any), premium, if any, or interest
on the Convertible Debentures may be made (i) if any Senior Indebtedness of
Devon is not paid when due and any applicable grace period with respect to such
default has ended and such default has not been cured or waived or ceased to
exist or (ii) if the maturity of any Senior Indebtedness of Devon has been
accelerated because of a default. Devon also may not make any payment upon or in
respect of the Convertible Debentures if (i) a default in the payment of the
principal of, premium, if any, interest or other obligations in respect of
Senior Indebtedness occurs and is continuing beyond any applicable period of
grace or (ii) any nonpayment default occurs and is continuing with respect to
the Credit Agreements that permits the lenders to accelerate the maturity of the
loans made thereunder and the Debt Trustee receives a notice of such default (a
"Payment Blockage Notice") from Devon or other person permitted to give such
notice under the Indenture. Payments on the Convertible Debentures may and shall
be resumed (a) in case of a payment default, upon the date on which such default
is cured or waived and (b) in case of a nonpayment default, the earlier of the
date on which such nonpayment default is cured or waived or 179 days after the
date on which the applicable Payment Blockage Notice is received. No new period
of payment blockage may be commenced pursuant to a Payment Blockage Notice
unless and until (i) 365 days have elapsed since the initial effectiveness of
the immediately prior Payment Blockage Notice and (ii) all scheduled payments of
principal, premium, if any, and interest on the Convertible Debentures that have
come due have been paid in full in cash. No nonpayment default that existed or
was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
Upon any distribution of assets of Devon to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary, or
in bankruptcy, insolvency, receivership or other proceedings, all principal,
premium, if any, and interest due or to become due on all Senior Indebtedness of
Devon must be paid in full before the holders of Convertible Debentures are
entitled to receive or retain any payment. Upon satisfaction of all claims of
all Senior Indebtedness then outstanding, the rights of the holders of the
Convertible Debentures will be subrogated to the rights of the holders of Senior
Indebtedness of Devon to receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on the Convertible Debentures are paid in
full.
The term "Senior Indebtedness" means, with respect to Devon, (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of such
obligor, for money borrowed under any credit agreements, notes, guarantees or
similar documents and (B) indebtedness evidenced by securities, debentures,
bonds or other similar instruments issued by such obligor, (ii) all capital
lease obligations of such obligor, (iii) all obligations of such obligor issued
or assumed as the deferred purchase price of property, all conditional sale
obligations of such obligor and all obligations of such obligor under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of such obligor for the
reimbursement on any letter of credit, bankers' acceptance, security purchase
facility or similar credit transaction, (v) all obligations of such obligor
(contingent or otherwise) with respect to an interest rate or other swap, cap or
collar agreements, oil or gas commodity hedge transactions or other similar
instruments or agreements or foreign currency hedge, exchange, purchase or
similar instruments or agreements, (vi) all obligations of the types referred to
in clauses (i) through (v) above of other persons for the payment of which such
obligor is responsible or liable as obligor, guarantor or otherwise and (vii)
all obligations of the types referred to in clauses (i) through (vi) above of
other persons secured by any lien on any property or asset of such obligor
(whether or not such obligation is assumed by such obligor), whether outstanding
on the date of the Indenture or thereafter created, incurred, assumed,
guaranteed or in effect guaranteed by such obligor, except for (1) any such
indebtedness that is by its terms subordinated to or pari passu with the
Convertible Debentures and (2) any indebtedness between or among such obligor or
its affiliates, including all other debt
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securities and guarantees in respect of those debt securities, issued to any
trust, or a trustee of such trust, partnership or other entity affiliated with
Devon that is a financing vehicle of Devon (a "financing entity") in connection
with the issuance by such financing entity of Convertible Preferred Securities
or other securities that rank pari passu with, or junior to, the Convertible
Preferred Securities. Such Senior Indebtedness shall continue to be Senior
Indebtedness and be entitled to the benefits of the subordination provisions
irrespective of any deferrals, renewals, extensions or refundings of, or
amendments, modifications, supplements or waivers of any term of such Senior
Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by Devon. Devon's operations are conducted through its direct
and indirect wholly-owned subsidiaries which have credit facilities totaling
$260 million. Indebtedness under these facilities is effectively senior to the
Convertible Debentures. As of August 9, 1996, no debt was outstanding under the
credit facilities, leaving all $260 million available.
CERTAIN COVENANTS
In the Indenture, Devon has covenanted that, so long as any Convertible
Debentures are outstanding, if (i) there shall have occurred any event that
would constitute an Event of Default, (ii) Devon shall be in default with
respect to its payment of any obligations under the Guarantee, or (iii) Devon
shall have given notice of its election to defer interest payments on the
Convertible Debentures by extending the interest payment period and such period,
or any extension thereof, shall be continuing, then Devon (a) shall not declare
or pay dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
other than (i) purchases or acquisitions of shares of Common Stock in connection
with the satisfaction by the Company of its obligations under any employee
benefit plans, (ii) as a result of a reclassification of the Company's capital
stock or the exchange or conversion of one class or series of the Company's
capital stock for another class of series of the Company's capital stock or,
(iii) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock of
the Company or the security being converted or exchanged for Devon capital
stock) or make any guarantee payments with respect to the foregoing, and (b)
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities (including guarantees), issued
by Devon that rank pari passu with or junior to the Convertible Debentures.
Devon has agreed (i) to directly or indirectly maintain 100% ownership of
the Trust Common Securities; provided, however, that any permitted successor of
Devon under the Indenture may succeed to Devon's ownership of such Trust Common
Securities, (ii) to use its reasonable efforts to cause the Trust (x) to remain
a statutory business trust, except in connection with the distribution of
Convertible Debentures to the holders of Trust Securities in liquidation of the
Trust, the redemption of all of the Trust Securities of the Trust, or certain
mergers, consolidations or amalgamations, each as permitted by the Declaration,
and (y) to continue to be classified as a grantor trust for United States
federal income tax purpose and (iii) to use its reasonable efforts to cause each
holder of Trust Securities to be treated as owning an undivided beneficial
interest in the Convertible Debentures.
Devon may not merge or consolidate or sell or convey all or substantially
all of its assets unless the successor corporation (if other than Devon) is a
domestic corporation and assumes Devon's obligations on the Convertible
Debentures and under the Indenture, and unless after giving effect to such
transaction Devon or the successor corporation would not be in default under the
Indenture.
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<PAGE> 42
REDEMPTION AT THE OPTION OF DEVON
Devon shall have the right to redeem the Convertible Debentures, in whole
or in part, from time to time, on or after June 18, 1999, upon not less than 30
nor more than 60 days notice, at the following prices (expressed as percentages
of the principal amount of the Convertible Debentures) together with accrued and
unpaid interest, including Compound Interest (as defined herein) to, but
excluding, the redemption date, if redeemed during the 12-month period beginning
June 15:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
1999................................................................. 104.55%
2000................................................................. 103.90
2001................................................................. 103.25
2002................................................................. 102.60
2003................................................................. 101.95
2004................................................................. 101.30
2005................................................................. 100.65
</TABLE>
and 100% if redeemed on or after June 15, 2006.
If Convertible Debentures are redeemed on any March 15, June 15, September
15, or December 15, accrued and unpaid interest shall be payable to holders of
record on the relevant record date.
Devon shall also have the right to redeem the Convertible Debentures at any
time in certain circumstances upon the occurrence of a Special Event as
described under "Description of the Convertible Preferred Securities -- Special
Event Distribution; Tax Event Redemption" at 100% of the principal amount
thereof together with accrued and unpaid interest (including compound interest)
to the redemption date.
So long as the corresponding Convertible Preferred Securities are
outstanding, the proceeds from the redemption of the Convertible Debentures will
be used to redeem Convertible Preferred Securities.
CONVERSION OF THE CONVERTIBLE DEBENTURES
The Convertible Debentures are convertible into Devon Common Stock at the
option of the holders of the Convertible Debentures at any time beginning 90
days following the first date that any Convertible Preferred Securities were
issued and prior to the close of business on the Business Day prior to the
maturity date of the Convertible Debentures (or, in the case of Convertible
Debentures called for redemption, the close of business on the Business Day
prior to the Redemption Date) at an initial conversion rate of 1.6393 shares of
Devon Common Stock for each Convertible Debenture (equivalent to a conversion
price of $30.50 per share of Devon Common Stock), subject to adjustment as
described under "Description of the Convertible Preferred
Securities -- Conversion Rights." The Trust has agreed not to convert
Convertible Debentures held by it except pursuant to a notice of conversion
delivered to the Conversion Agent by a holder of Convertible Preferred
Securities. Upon surrender of a Convertible Preferred Security to the Conversion
Agent for conversion, the Trust will distribute Convertible Debentures to the
Conversion Agent on behalf of the holder of the Convertible Preferred Securities
so converted, whereupon the Conversion Agent will convert such Convertible
Debentures to Devon Common Stock on behalf of such holder. Devon's delivery to
the holders of the Convertible Debentures (through the Conversion Agent) of the
fixed number of shares of Devon Common Stock into which the Convertible
Debentures are convertible (together with the cash payment, if any, in lieu of
fractional shares) will be deemed to satisfy Devon's obligation to pay the
principal amount of the Convertible Debentures so converted, and the accrued and
unpaid interest thereon attributable to the period from the last date to which
interest has been paid or duly provided for; provided, however, that if any
Convertible Debenture is converted on or after a record date for payment of
interest, the interest payable on the related interest payment date with respect
to such Convertible Debenture shall be paid to the Trust (which will distribute
such interest to the converting holder) or other holder of Convertible
Debentures, as the case may be, despite such conversion; provided further, that
if a Redemption Date falls between such record date and the related interest
payment date, the amount of such payment shall include interest accrued to, but
excluding, such Redemption Date.
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<PAGE> 43
INDENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Event of Default"
with respect to the Convertible Debentures: (i) failure for 30 days to pay
interest on the Convertible Debentures, including any Additional Interest,
Compounded Interest and Liquidated Damages in respect thereof, when due;
provided that a valid extension of an interest payment period will not
constitute a default in the payment of interest (including any Additional
Interest, Compounded Interest or Liquidated Damages) for this purpose; or (ii)
failure to pay principal of or premium, if any, on the Convertible Debentures
when due whether at maturity, upon redemption, by declaration or otherwise; or
(iii) failure by Devon to deliver shares of Devon Common Stock upon an election
by a holder of Convertible Preferred Securities to convert such Convertible
Preferred Securities; (iv) failure to observe or perform any other covenant
contained in the Indenture for 90 days after notice to Devon by the Debt Trustee
or by the holders of not less than 25% in aggregate outstanding principal amount
of the Convertible Debentures; (v) the dissolution, winding up or termination of
the Trust, except in connection with the distribution of Convertible Debentures
to the holders of Convertible Preferred Securities in liquidation of the Trust
upon the redemption of all outstanding Convertible Preferred Securities and in
connection with certain mergers, consolidations or amalgamations permitted by
the Declaration; or (vi) certain events in bankruptcy, insolvency or
reorganization of Devon.
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Convertible Debentures, will have
the right to declare the principal of and the interest on the Convertible
Debentures (including any Compound Interest and Additional Interest, if any) and
any other amounts payable under the Indenture to be forthwith due and payable
and to enforce its other rights as a creditor with respect to the Convertible
Debentures. An Indenture Event of Default also constitutes a Declaration Event
of Default. The holders of Convertible Preferred Securities in certain
circumstances have the right to direct the Institutional Trustee to exercise its
rights as the holder of the Convertible Debentures. See "Description of the
Convertible Preferred Securities -- Declaration Events of Default" and
"-- Voting Rights." Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing and such event is attributable to the failure of
Devon to pay interest or principal on the Convertible Debentures on the date
such interest or principal is otherwise payable (or in the case of redemption,
the redemption date), then a holder of Convertible Preferred Securities may
institute a Direct Action for payment on or after the respective due date
specified in the Convertible Debentures. Notwithstanding any payments made to
such holder of Convertible Preferred Securities by Devon in connection with a
Direct Action, Devon shall remain obligated to pay the principal of or interest
on the Convertible Debentures held by the Trust or the Institutional Trustee of
the Trust, and Devon shall be subrogated to the rights of the holder of such
Convertible Preferred Securities with respect to payments on the Convertible
Preferred Securities to the extent of any payments made by Devon to such holder
in any Direct Action. The holders of Convertible Preferred Securities will not
be able to exercise directly any other remedy available to the holders of the
Convertible Debentures.
The Indenture contains provisions permitting the holders of a majority in
aggregate principal amount of the Convertible Debentures, on behalf of all of
the holders of the Convertible Debentures, to waive any past default in the
performance of any of the covenants contained in the Indenture, except a default
in the payment of the principal of or premium, if any, or interest on any of the
Convertible Debentures.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Convertible Preferred Securities in connection
with the involuntary or voluntary dissolution, winding-up or liquidation of the
Trust as a result of the occurrence of a Special Event, the Convertible
Debentures will be issued in the same form as the Convertible Preferred
Securities that such Convertible Debentures replace. Except under the limited
circumstances described below, Convertible Debentures represented by a Global
Security will not be exchangeable for, and will not otherwise be issuable as,
Convertible Debentures in definitive form. The Global Securities described above
may not be transferred except by DTC to a nominee of DTC or by a nominee of DTC
to DTC or another nominee of DTC or to successor depositary or its nominee.
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<PAGE> 44
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in a Global
Security.
Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of Convertible
Debentures in definitive form and will not be considered the holders (as defined
in the Indenture) thereof for any purpose under the Indenture, and no Global
Security representing Convertible Debentures shall be exchangeable, except for
another Global Security of like denomination and tenor to be registered in the
name of DTC or its nominee or to a successor depositary or its nominee.
Accordingly, each beneficial owner must rely on the procedures of DTC or if such
person is not a Participant, on the procedures of the Participant through which
such person owns its interest to exercise any rights of a holder under the
Indenture.
THE DEPOSITARY
If Convertible Debentures are distributed to holders of Convertible
Preferred Securities in liquidation of such holders' interests in the Trust and
a global security is issued, DTC will act as securities depositary for the
Convertible Debentures represented by such global security. For a description of
DTC and the specific terms of the depositary arrangements, see "Description of
the Convertible Preferred Securities -- Form, Denomination and
Registration -- Global Convertible Preferred Securities; Book-Entry Form." As of
the date of this Prospectus, the description therein of DTC's book-entry system
and DTC's practices as they relate to purchases, transfers, notices and payments
with respect to the Convertible Preferred Securities apply in all material
respects to any debt obligations represented by one or more global securities
held by DTC. Devon may appoint a successor to DTC or any successor depositary in
the event DTC or such successor depositary is unable or unwilling to continue as
a depositary for such global securities.
None of Devon, the Trust, the Institutional Trustee, any paying agent and
any other agent of Devon or the Debt Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in a global security for such Convertible
Debentures or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Convertible Debentures
registered in the names of persons other than DTC or its nominee only if (i) DTC
notifies Devon that it is unwilling or unable to continue as a depositary for
such Global Security and no successor depositary shall have been appointed, (ii)
DTC, at any time, ceases to be a clearing agency registered under the Exchange
Act when DTC is required to be so registered to act as such depositary and no
successor depositary shall have been appointed, (iii) Devon, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Event of Default with respect to such
Convertible Debentures. Any Global Security that is exchangeable pursuant to the
preceding sentence shall be exchangeable for Convertible Debentures registered
in such names as DTC shall direct. It is expected that such instructions will be
based upon directions received by DTC from its Participants with respect to
ownership of beneficial interests in such Global Security.
MODIFICATIONS AND AMENDMENTS OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Debt
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the outstanding Convertible Debentures, to modify
the Indenture or the rights of the holders of Convertible Debentures; provided,
however, that no such modification may, without the consent of the holder of
each outstanding Convertible Debenture affected thereby, (i) extend the stated
maturity of the Convertible Debentures or reduce the principal amount thereof,
or reduce the rate or extend the time for payment of interest thereon, or reduce
any premium payable upon the redemption thereof, or adversely affect the right
to convert Convertible Debentures or the subordination provisions of the
Indenture, or (ii) reduce the percentage in aggregate principal amount of
outstanding Convertible Debentures, the holders of which are required to consent
to any such supplemental indenture.
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<PAGE> 45
In addition, the Company and the Debt Trustee may execute, without the
consent of any holder of Convertible Debentures, any supplemental indenture to
cure any ambiguities, comply with the Trust Indenture Act and for certain other
customary purposes.
INFORMATION CONCERNING THE DEBT TRUSTEE
The Debt Trustee, prior to default, has undertaken to perform only such
duties as are specifically set forth in the Indenture and, after default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Debt Trustee
is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Convertible Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Debt Trustee is not required to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debt Trustee reasonably believes that repayment
or adequate indemnity is not reasonably assured to it.
The Indenture also contains limitations on the right of the Debt Trustee,
as a creditor of Devon, to obtain payment of claims in certain cases or to
realize on certain property received in respect of any such claim as security or
otherwise. In addition, the Debt Trustee may be deemed to have a conflicting
interest and may be required to resign as Debt Trustee if at the time of a
default under the Indenture it is a creditor of Devon. The Company may from time
to time maintain deposit accounts and conduct its banking transactions with the
Debt Trustee in the ordinary course of business.
GOVERNING LAW
The Indenture and the Convertible Debentures are governed by, and construed
in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
The Indenture provides that Devon will pay all fees and expenses related to
(i) the offering of the Trust Securities and the Convertible Debentures, (ii)
the organization, maintenance and dissolution of the Trust, (iii) the retention
of the DFT Trustees and (iv) the enforcement by the Institutional Trustee of the
rights of the holders of the Convertible Preferred Securities. The payment of
such fees and expenses will be fully and unconditionally guaranteed by Devon.
Devon has the right at all times to assign any of its respective rights or
obligations under the Indenture to a direct or indirect wholly-owned subsidiary
of Devon; provided that, in the event of any such assignment, Devon will remain
liable for all of their respective obligations. Subject to the foregoing, the
Indenture will be binding upon and inure to the benefit of the parties thereto
and their respective successors and assigns. The Indenture provides that it may
not otherwise be assigned by the parties thereto.
EFFECT OF OBLIGATIONS UNDER THE
CONVERTIBLE DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
the Trust Securities evidencing undivided beneficial interests in the assets of
the Trust, and to invest the proceeds from such issuance and sale in the
Convertible Debentures.
As long as payments of interest and other payments are made when due on the
Convertible Debentures, such payments will be sufficient to cover distributions
and payments due on the Trust Securities because of the following factors: (i)
the aggregate principal amount of Convertible Debentures will be equal to the
sum of the aggregate stated liquidation amount of the Trust Securities; (ii) the
interest rate and the interest and other payment dates on the Convertible
Debentures will match the distribution rate and distribution and other payment
dates for the Convertible Preferred Securities; (iii) Devon shall pay, and the
Trust shall not be obligated to pay, directly or indirectly, all costs,
expenses, debt, and obligations of the Trust (other than with respect to the
Trust Securities); and (iv) the Declaration further provides that the DFT
Trustees shall not
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<PAGE> 46
take or cause or permit the Trust to, among other things, engage in any activity
that is not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Convertible Preferred Securities (to the extent funds
therefor are available) are guaranteed by Devon as and to the extent set forth
under "Description of the Guarantee" herein. If Devon does not make interest
payments on the Convertible Debentures purchased by the Trust, it is expected
that the Trust will not have sufficient funds to pay distributions on the
Convertible Preferred Securities. The Guarantee is a full guarantee on a
subordinated basis with respect to the Convertible Preferred Securities issued
by the Trust from the time of its issuance but does not apply to any payment of
distributions unless and until the Trust has sufficient funds for the payment of
such distributions. The Guarantee covers the payment of distributions and other
payments on the Convertible Preferred Securities only if and to the extent that
Devon has made a payment of interest or principal on the Convertible Debentures
held by the Trust as its sole asset. The Guarantee, when taken together with
Devon's obligations under the Convertible Debentures, the Indenture and the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust Securities),
provides a full and unconditional guarantee of amounts on the Convertible
Preferred Securities.
If Devon fails to make interest or other payments on the Convertible
Debentures when due (taking account of any Extension Period), the Declaration
provides a mechanism whereby a holder of the Convertible Preferred Securities,
using the procedures described in "Description of the Convertible Preferred
Securities -- Voting Rights," may direct the Institutional Trustee to enforce
its rights under the Convertible Debentures. Notwithstanding the foregoing, in
such circumstances a holder of Convertible Preferred Securities may institute a
Direct Action for payment on or after the respective due date specified in the
Convertible Debentures. In connection with such Direct Action, Devon will be
subrogated to the rights of such holder of Convertible Preferred Securities
under the Declaration to the extent of any payment made by Devon to such holder
of Convertible Preferred Securities in such Direct Action. Devon, under the
Guarantee, acknowledges that the Guarantee Trustee shall enforce the Guarantee
on behalf of the holders of the Convertible Preferred Securities. If Devon fails
to make payments under the Guarantee, the Guarantee provides a mechanism whereby
the holders of the Convertible Preferred Securities may direct the Guarantee
Trustee to enforce its rights thereunder. Any holder of Convertible Preferred
Securities may institute a legal proceeding directly against Devon to enforce
such holder's right to receive payment under the Guarantee without first
instituting a legal proceeding against the Trust, the Guarantee Trustee or any
other person or entity.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of Devon consists of 120,000,000 shares of
Common Stock, par value $.10 per share, and 3,000,000 shares of preferred stock,
par value $1.00 per share.
COMMON STOCK
As of August 9, 1996, there were 22,130,896 shares of Devon Common Stock
outstanding held of record by approximately 1,000 stockholders. Holders of Devon
Common Stock are entitled to receive dividends out of funds legally available
therefor when and if declared by the Board of Directors. Subject to the rights
of the holders of any outstanding shares of preferred stock, holders of Devon
Common Stock are entitled to cast one vote for each share held of record on all
matters submitted to a vote of stockholders. They are not entitled to cumulative
voting rights for the election of directors. Except pursuant to the Rights
Agreement (as defined herein), the Devon Common Stock has no preemptive,
conversion or other rights to subscribe for or purchase any securities of Devon.
The Devon Common Stock has no redemption or sinking fund provisions. Upon
liquidation or dissolution of Devon, the holders of Devon Common Stock are
entitled to share ratably in any of Devon's assets that remain after payment or
provision for payment to creditors and holders of preferred stock. All
outstanding shares of Devon Common Stock are fully paid and non-assessable, and
the shares of Devon
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<PAGE> 47
Common Stock issued upon conversion of the Convertible Preferred Securities will
be fully paid and non-assessable.
PREFERRED STOCK
The preferred stock may be issued in one or more series. Devon's Board of
Directors is authorized to establish attributes of such series which may
include, but are not limited to, the designation and number of shares
constituting each series, dividend rates payable (cumulative or non-cumulative),
voting rights, redemptions, conversion or preference rights, and any other
rights and qualifications, preferences and limitations or restrictions on shares
of such series. The issuance of preferred stock may have the effect of delaying,
deferring or preventing a change in control of Devon without any further vote or
action by the stockholders and may adversely affect the voting and other rights
of the holders of Devon Common Stock. The specific terms of a particular series
of preferred stock will be described in a certificate of designation relating to
that series. No shares of preferred stock are outstanding and at present the
Company has no plans to issue any of the preferred stock. The Board of Directors
has designated 300,000 shares of preferred stock as Series A Junior
Participating Preferred Stock (the "Series A Preferred Stock") in connection
with the Rights Agreement.
SHARE RIGHTS PLAN
Under the Rights Agreement dated April 17, 1995 (the "Rights Agreement"),
holders of Devon Common Stock have one right with respect to each share of Devon
Common Stock held. The certificates representing outstanding shares of Devon
Common Stock also evidence one right for each share. Currently the rights trade
with the shares of Devon Common Stock. Upon the occurrence of certain events
generally associated with an unsolicited takeover attempt of the Company or
certain transactions involving a change of control, the rights will be
distributed, will become exercisable and will be tradable separately from the
Devon Common Stock.
The rights have certain anti-takeover effects. They will cause substantial
dilution to a person or group that attempts to acquire the Company in a manner
which causes the rights to become exercisable. The Company believes, however,
that the rights should neither affect any prospective offeror willing to
negotiate with the Board of Directors of the Company nor interfere with any
merger or other business combination approved by the Board of Directors of the
Company. The rights may be redeemed by the Board of Directors for $0.01 per
right. The terms of the Rights Agreement may be amended by the Board of
Directors of the Company without the consent of the holders of the Devon Common
Stock or the rights.
BUSINESS COMBINATION PROVISIONS
The Oklahoma General Corporation Act and the Company's Certificate of
Incorporation have provisions placing limitations on business combinations with
a shareholder who is the beneficial owner of 15% or more of the Devon Common
Stock or any affiliate of such beneficial owner (an "interested shareholder")
for a period of three years from the date a person becomes an interested
shareholder. The effect of these provisions is to limit unsolicited takeover
attempts or certain transactions involving a change of control. Such business
combinations are permitted, however, under certain circumstances, including
super-majority shareholder approval.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Boston EquiServe.
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<PAGE> 48
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
The following is a summary of certain material United States federal income
tax consequences pertaining to the purchase, ownership, disposition, and
conversion of Convertible Preferred Securities. Unless otherwise stated, this
summary deals only with Convertible Preferred Securities held as capital assets
by holders who purchased the securities upon original issuance. This summary
does not deal with special classes of holders such as banks, thrifts, real
estate investment trusts, regulated investment companies, insurance companies,
dealers in securities or currencies, tax-exempt investors, or persons which hold
the Convertible Preferred Securities as other than a capital asset. This summary
does not address the tax consequences to persons which have a functional
currency other than the U.S. Dollar or the tax consequences to shareholders,
partners, or beneficiaries of a holder of Convertible Preferred Securities.
Further, this summary does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government which may be applicable to the Convertible Preferred
Securities. This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations promulgated thereunder, and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis.
CLASSIFICATION OF CONVERTIBLE DEBENTURES
The Company intends to take the position that the Convertible Debentures
will be classified for United States federal income tax purposes as indebtedness
of the Company under current law, and, by acceptance of a Convertible Preferred
Security, each holder covenants to treat the Convertible Debentures as
indebtedness and the Convertible Preferred Securities as evidence of an indirect
beneficial ownership interest in the Convertible Debentures. No assurance can be
given, however, that such position of the Company will not be challenged by the
Internal Revenue Service (the "Service") or, if challenged, that such a
challenge will not be successful. The remainder of this discussion assumes that
the Convertible Debentures will be classified as indebtedness of the Company for
United States federal income tax purposes.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Convertible Preferred Securities,
McAfee & Taft A Professional Corporation, special counsel to the Company and the
Trust, will render its opinion generally to the effect that, under then current
law and assuming full compliance with the terms of the Declaration and Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, the Trust will be classified for United States
federal income tax purposes as a grantor trust and not as an association taxable
as a corporation. Accordingly, for United States federal income tax purposes,
each holder of Convertible Preferred Securities generally will be considered to
be the owner of an undivided interest in the Convertible Debentures, and each
holder will be required to include in its gross income any original issue
discount accrued with respect to its allocable share of those Convertible
Debentures.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT
Because the Company has the option, under the terms of the Convertible
Debentures, to defer payments of interest by extending interest payment periods
for up to 20 quarters, interest on the Convertible Debentures will be reportable
as "original issue discount." Holders of debt instruments issued with OID must
include that discount in income on an economic accrual basis regardless of their
method of tax accounting, and without regard to whether such accrual causes
amounts to be included in income prior to the receipt of cash attributable to
the interest. Generally, all of a holder's taxable interest income with respect
to the Convertible Debentures will be accounted for as OID. Actual payments and
distributions of stated interest will not, however, be separately reported as
includable in taxable income. The amount of OID which accrues in any quarter
will approximately equal the amount of the interest which accrues on the
Convertible Debentures in that quarter at the stated interest rate. In the event
the interest payment period is extended, holders will continue to accrue OID
approximately equal to the amount of the interest payment due at the end of the
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<PAGE> 49
extended interest payment period on an economic accrual basis over the length of
the extended interest payment.
Because interest on the Convertible Preferred Securities will constitute
OID, corporate holders of Convertible Preferred Securities will not be entitled
to a dividends-received deduction with respect to any income recognized with
respect to the Convertible Preferred Securities.
MARKET DISCOUNT AND BOND PREMIUM
Holders of the Convertible Preferred Securities other than a holder who
purchased the Convertible Preferred Securities upon original issuance may be
considered to have acquired their undivided interests in the Convertible
Debentures with "market discount" or "acquisition premium" as such terms are
defined for United States federal income tax purposes. Such holders are advised
to consult their tax advisors as to the income tax consequences associated with
the acquisition, ownership, and disposition of the Convertible Preferred
Securities.
RECEIPT OF CONVERTIBLE DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
the Convertible Preferred Securities -- Special Event Distribution; Tax
Redemption," Convertible Debentures may be distributed to holders in exchange
for the Convertible Preferred Securities and in liquidation of the Trust. Under
current law, such a distribution to holders, for United States federal income
tax purposes, would be treated as a nontaxable event to each holder, and each
holder would receive an aggregate tax basis in the Convertible Debentures equal
to such holder's aggregate tax basis in its Convertible Preferred Securities. A
holder's holding period in the Convertible Debentures so received in liquidation
of the Trust would include the period during which the Convertible Preferred
Securities were held by such holder. If, however, the related Special Event is a
Tax Event which results in the Trust being treated as an association taxable as
a corporation, the distribution would likely constitute a taxable event to
holders of the Convertible Preferred Securities, in which event the Company
could, at its option, redeem the Convertible Debentures and distribute the
resulting cash in liquidation of the Trust.
Under certain circumstances described herein (see "Description of the
Convertible Preferred Securities"), the Convertible Debentures may be redeemed
for cash and the proceeds of such redemption distributed to holders in
redemption of their Convertible Preferred Securities. Under current law, such a
redemption would, for United States federal income tax purposes, constitute a
taxable disposition of the redeemed Convertible Preferred Securities, and a
holder would recognize gain or loss as if it had sold such redeemed Convertible
Preferred Securities for cash. See "-- Sales of Convertible Preferred
Securities" below.
SALES OF CONVERTIBLE PREFERRED SECURITIES
A holder which sells Convertible Preferred Securities will recognize gain
or loss equal to the difference between the amount realized on the sale of the
Convertible Preferred Securities and the holder's adjusted tax basis in such
Convertible Preferred Securities. A holder's adjusted tax basis in the
Convertible Preferred Securities generally will be equal to its initial purchase
price increased by OID previously includable in such holder's gross income to
the date of disposition and decreased by payments received on the Convertible
Preferred Securities to the date of disposition. Such gain or loss will be a
capital gain or loss and will be long-term gain or loss if the Convertible
Preferred Securities have been held for more than one year at the time of sale.
The Convertible Preferred Securities may trade at a price which does not
accurately reflect the value of accrued but unpaid interest with respect to the
underlying Convertible Debentures. A holder which disposes of or converts its
Convertible Preferred Securities between record dates for payments of
distribution thereon will be required to include in its income, as ordinary
income, the accrued but unpaid interest on the Convertible Debentures through
the date of disposition or conversion, and to add such amount to its adjusted
tax basis in its pro rata share of the underlying Convertible Debentures which
will be deemed disposed of or converted. To the extent the selling price is less
than the holder's adjusted tax basis (which basis will include, in the form of
48
<PAGE> 50
OID, all accrued but unpaid interest), a holder will recognize a capital loss.
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes.
CERTAIN NON-U.S. HOLDERS
For purposes of this discussion, the term "Non-U.S. Holder" refers to any
corporation, individual, partnership, estate, or trust which is, for United
States tax purposes, treated as a foreign corporation, a non-resident alien
individual, or a non-resident fiduciary of a foreign estate or trust.
Under present United States federal income tax law, interest on the
Convertible Debentures and the Convertible Preferred Securities, including OID,
will generally be classified as "portfolio interest" to a Non-U.S. Holder of a
Convertible Preferred Security provided such interest is not effectively
connected with the conduct of a trade or business within the United States by
the holder. As a result, payments by the Trust or any of its paying agents of
stated interest to any holder of a Convertible Preferred Security who or which
is a Non-U.S. Holder will not be subject to withholding of United States federal
income tax provided:
(a) the beneficial owner of the Convertible Preferred Security does
not actually or constructively (including by virtue of its interest in the
underlying Convertible Debentures) own 10% or more of the total combined
voting power of all classes of stock of Devon entitled to vote, which
ownership is determined after the application of certain attribution rules;
(b) the beneficial owner of the Convertible Preferred Security is not
a controlled foreign corporation which is related to Devon through stock
ownership; and
(c) either (i) the beneficial owner of the Convertible Preferred
Security or (ii) a securities clearing organization, a bank, or other
financial institution which holds customers' securities in the ordinary
course of its trade or business and which holds the Convertible Preferred
Security in such capacity certifies to the Trust or its agent, under
penalties of perjury, that it is not a United States person, or in the case
of an individual, is neither a citizen nor a resident of the United States,
and provides the owner's name and address to the Trust or its agent.
Devon, by reason of its ownership of interests in oil and gas properties
located in the United States is classified as a "United States real property
holding corporation" for United States tax purposes. As a result, capital gain
income realized by a Non-U.S. Holder upon the disposition of a Convertible
Preferred Security will, except as set forth below, be treated as income
effectively connected with the conduct of a trade or business within the United
States and will be taxed at regular United States capital gains rates. A Non-
U.S. Holder will generally be subject to withholding of United States federal
income tax in an amount equal to 10% of the amount realized on the disposition
of a Convertible Preferred Security. A Non-U.S. Holder may request the Service
to determine the maximum amount of tax which would be owing as a result of such
disposition and the maximum amount required to be withheld will not exceed the
sum of (i) such liability and (ii) any unsatisfied prior withholding tax
liabilities caused by prior foreign ownership with respect to the transferred
securities.
Stock which is regularly traded on an established securities market
("Publicly Traded Stock"), such as shares of Devon Common Stock, will only be
treated as stock of a United States real property holding corporation with
respect to a person who, at any time during the shorter of (i) that period after
June 18, 1980 in which the person held such stock or (ii) the 5-year period
ending on the date of the disposition of such stock, held more than 5 percent of
such class of stock (a "5 Percent Shareholder"). Capital gain produced by the
disposition of Publicly Traded Stock will, therefore, except in the case of a
disposition by a 5 Percent Shareholder, not be subject to United States income
tax if not effectively connected with the conduct of a trade or business within
the United States by the holder. Generally no withholding is required on a
disposition of Publicly Traded Stock, unless such stock is effectively connected
with the conduct of a trade or business within the United States by the holder.
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<PAGE> 51
If a Non-U.S. Holder is treated as receiving a deemed dividend as a result
of an adjustment of the conversion price of the Convertible Debentures, as
described below under the heading "Adjustment of Conversion Price," such deemed
dividend will be subject to United States federal withholding tax at a 30% (or
lower treaty) rate. Should the Trust be classified as an association taxable as
a corporation for United States federal income tax purposes, distributions made
in liquidation of the Trust would also be subject to various withholding
requirements.
Non-U.S. Holders are encouraged to contact their tax advisors concerning
the possible tax implications to such holders associated with the ownership and
disposition of United States Real Property Interests, including Convertible
Preferred Securities or shares of Devon Common Stock.
PROPOSED TAX LEGISLATION
On March 19, 1996, as part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed the Proposed Legislation which, among
other things, would treat as equity for United States federal income tax
purposes instruments with a maximum term of more than 20 years which are not
shown as indebtedness on the consolidated balance sheet of the issuer. The
Proposed Legislation, in its current form, would appear to be applicable to the
Convertible Preferred Securities.
On March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr.,
and House Ways and Means Committee Chairman Bill Archer issued the Joint
Statement indicating their intent that certain legislative proposals initiated
by the Clinton Administration, including the Proposed Legislation, if adopted by
either of the tax-writing committees of Congress, would have an effective date
no earlier than the date of "appropriate Congressional action." Based on the
Joint Statement, it is anticipated that if the Proposed Legislation were
enacted, such legislation would not apply to the Convertible Debentures if they
are issued prior to the date of any "appropriate Congressional action." There
can be no assurance that any proposed legislation enacted after the date hereof
will not otherwise adversely affect the tax treatment of the Convertible
Debentures. If legislation is enacted which adversely affects the tax treatment
of the Convertible Debentures, such legislation could result in the distribution
of the Convertible Debentures to holders of the Convertible Preferred Securities
or, in certain limited circumstances, the redemption of such securities by the
Company and the distribution of the resulting cash in redemption of the
Convertible Preferred Securities. See "Description of the Convertible Preferred
Securities -- Special Event Distribution; Tax Redemption."
CONVERSION OF CONVERTIBLE PREFERRED SECURITIES INTO COMMON STOCK
A holder will not recognize gain or loss upon the conversion, through the
Conversion Agent, of Convertible Preferred Securities for a proportionate share
of the Convertible Debentures held by the Trust.
A holder will not recognize income, gain, or loss upon the conversion,
through the Conversion Agent, of Convertible Debentures into Company Common
Stock. A holder will, however, recognize gain upon the receipt of cash in lieu
of a fractional share of Company Common Stock equal to the amount of cash
received less the holder's tax basis in such fractional share. A holder's tax
basis in the Company Common Stock received upon exchange and conversion should
generally be equal to the holder's tax basis in the Convertible Preferred
Securities delivered to the Conversion Agent for exchange less the basis
allocated to any fractional share for which cash is received, and a holder's
holding period in the Company Common Stock received upon exchange and conversion
should generally begin on the date the holder acquired the Convertible Preferred
Securities delivered to the Conversion Agent for exchange.
ADJUSTMENT OF CONVERSION PRICE
Treasury Regulations promulgated under Section 305 of the Code would treat
holders of Convertible Preferred Securities as having received a constructive
distribution from the Company in the event the conversion ratio of the
Convertible Debentures is adjusted if (i) as a result of such adjustment, the
proportionate interest (measured by the quantum of Devon Common Stock into or
for which the Convertible Debentures are convertible or exchangeable) of the
holder's Convertible Preferred Securities in the assets or earnings and profits
of the Company is increased, and (ii) the adjustment is not made pursuant to a
bona fide,
50
<PAGE> 52
reasonable, antidilution formula. An adjustment in the conversion ratio would
not be considered made pursuant to such formula if the adjustment is made to
compensate for certain taxable distributions with respect to the Devon Common
Stock. Thus, under certain circumstances, a reduction in the conversion price of
the holders may result in deemed dividend income to holders to the extent of the
current or accumulated earnings and profits of the Company. Holders of the
Convertible Preferred Securities would be required to include their allocable
share of such deemed dividend income in gross income but would not receive any
cash related thereto.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Generally, income on the Convertible Preferred Securities will be reported
to holders on Forms 1099, which forms should be mailed to holders of Convertible
Preferred Securities by January 31 following each calendar year.
Payments made on, and proceeds from the sale of, the Convertible Preferred
Securities may be subject to a "backup" withholding tax of 31% unless the holder
complies with certain identification requirements. Any withheld amounts will be
allowed as a credit against the holder's United States federal income tax,
provided the required information is provided to the Service.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP, AND DISPOSITION OF THE
CONVERTIBLE PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE,
LOCAL, FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED
STATES FEDERAL OR OTHER TAX LAWS.
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<PAGE> 53
SELLING HOLDERS
The Convertible Preferred Securities were originally issued by the Trust
and sold by Morgan Stanley & Co. Incorporated (the "Initial Purchaser"), in
transactions exempt from the registration requirements of the Securities Act, to
persons reasonably believed by such Initial Purchaser to be "qualified
institutional buyers" (as defined in Rule 144A of the Securities Act), to
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3), or
(7) under the Securities Act) or outside the United States to non-U.S. persons
in off-shore transactions in reliance on regulations under the Securities Act.
These purchasers, or their transferees, pledges, donees or successors (the
"Selling Holders") may from time to time offer and sell pursuant to this
Prospectus any or all of the Convertible Preferred Securities, the Convertible
Subordinated Debentures, Devon Common Stock issued upon conversion of the
Convertible Preferred Securities, and the associated Guarantee.
The Offered Securities have been registered pursuant to the Registration
Rights Agreement which provides that the Company file a registration statement
with regard to the Offered Securities within ninety (90) days of the Original
Offering Date and keep such registration statement effective until the earlier
of (i) the sale pursuant to the Shelf Registration Statement or Rule 144(a)
under the Securities Act of all the Registrable Securities, and (ii) the
expiration of the holding period applicable to sales of Registrable Securities
under Rule 144(k) under the Securities Act, or any successor provision. Although
none of the Selling Holders have advised the Company that they currently intend
to sell all or any of the Offered Securities pursuant to this Prospectus, the
Selling Holders may choose to sell the Offered Securities from time to time upon
notice to Devon and the Trust. See "Plan of Distribution."
Prior to any use of this Prospectus in connection with an offering of the
Offered Securities, this Prospectus will be supplemented to set forth the name
and number of shares beneficially owned by the Selling Holder intending to sell
such Offered Securities, and the number of Offered Securities to be offered. The
Prospectus Supplement will also disclose whether any Selling Holder selling in
connection with such Prospectus Supplement has held any position or office with,
been employed by or otherwise has a material relationship with, Devon or any of
its affiliates during the three (3) years prior to the date of the Prospectus
Supplement.
PLAN OF DISTRIBUTION
The Offered Securities may be sold from time to time to purchasers directly
by the Selling Holders. Alternatively, the Selling Holders may from time to time
offer the Offered Securities to or through underwriters, broker/dealers or
agents, who may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Holders or the purchasers of such
securities for whom they may act as agents. The Selling Holders and any
underwriters, broker/dealers or agents that participate in the distribution of
Offered Securities may be deemed to be "underwriters" within the meaning of the
Securities Act and any profit on the sale of such securities and any discounts,
commissions, concessions or other compensation received by any such underwriter,
broker/dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act.
The Offered Securities may be sold from time to time in one or more
transactions at fixed prices, at the prevailing market prices at the time of
sale, at varying prices determined at the time of sale or at negotiated prices.
This sale of the Offered Securities may be effectuated in transactions (which
may involve crosses or block transactions) (i) on any national securities
exchange or quotation service on which the Offered Securities may be listed or
quoted at the time of sale, (ii) in the over-the-counter market, (iii) in
transactions otherwise than on such exchanges or in the over-the-counter market,
or (iv) through the writing and exercise of options. At the time a particular
offering of the Offered Securities is made, a Prospectus Supplement, if
required, will be distributed which will set forth the aggregate amount of the
type of Offered Securities being offered and the terms of the offering,
including the name or names of any underwriters, broker/dealers or agents, any
discounts, commissions and other terms constituting compensation from the
Selling Holders and any discounts, commissions or concessions allowed or
reallowed to paid to broker/dealers. To comply with the securities laws of
certain jurisdictions, if applicable, the Offered Securities will be offered or
sold in such
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<PAGE> 54
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain jurisdictions the Offered Securities may not be offered or
sold unless they have been registered or qualified for sale in such
jurisdictions or any exemption from registration or qualification is available
and is complied with.
The Selling Holders will be subject to applicable provisions of the
Exchange Act and rules and regulations thereunder, which provisions may limit
the timing of purchases and sales of any of the Offered Securities by the
Selling Holders. The foregoing may affect the marketability of such securities.
Pursuant to the Registration Rights Agreement, the Company shall pay all
expenses of the registration of the Offered Securities including, without
limitation, commission filing fees and expenses of compliance with state
securities or "blue sky" laws; provided, however, that the Selling Holders will
pay all underwriting discounts and selling commissions, if any. The Selling
Holders will be indemnified by the Company and the Trust, jointly and severally
against certain civil liabilities, including certain liabilities under the
Securities Act, or will be entitled to contribution in connection therewith. The
Company and the Trust will be indemnified by the Selling Holders severally
against certain civil liabilities, including certain liabilities under the
Securities Act, or will be entitled to contribution in connection therewith.
LEGAL MATTERS
The validity of the Offered Securities and certain United States federal
income taxation matters will be passed upon for Devon and Devon Financing Trust
by McAfee and Taft A Professional Corporation, Oklahoma City, Oklahoma.
EXPERTS
The consolidated financial statements of Devon and its subsidiaries as of
December 31, 1993, 1994, and 1995, and for each of the years in the three-year
period ended December 31, 1995, and the statement of revenues and direct
operating expenses of the Worland Properties for the year ended December 31,
1994, have been incorporated by reference herein and in the registration
statement in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, also incorporated by reference herein, and upon
the authority of said firm as experts in accounting and auditing. The report of
KPMG Peat Marwick LLP covering the 1993 consolidated financial statements of
Devon refers to a change in the method of accounting for income taxes.
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NO DEALER, SALES PERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE ISSUER OR ANY OF THEIR AGENTS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY OR THE ISSUER SINCE SUCH DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 4
Incorporation of Certain Documents by
Reference........................... 4
Special Note Regarding Forward-Looking
Statements.......................... 5
Certain Definitions................... 5
Prospectus Summary.................... 6
Risk Factors.......................... 10
Accounting Treatment.................. 16
Ratio of Earnings to Fixed Charges.... 16
Devon Financing Trust................. 17
Description of the Convertible
Preferred Securities................ 18
Description of the Guarantee.......... 34
Description of the Convertible
Debentures.......................... 37
Effect of Obligations Under the
Convertible Debentures and the
Guarantee........................... 44
Description of Capital Stock.......... 45
United States Federal Income
Taxation............................ 47
Selling Holders....................... 52
Plan of Distribution.................. 52
Legal Matters......................... 53
Experts............................... 53
</TABLE>
------------------------------------------------------
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------------------------------------------------------
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DEVON FINANCING TRUST
2,990,000
TRUST CONVERTIBLE PREFERRED SECURITIES
6 1/2% TRUST CONVERTIBLE PREFERRED SECURITIES
(LIQUIDATION AMOUNT $50 PER
CONVERTIBLE PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET
FORTH HEREIN BY
DEVON ENERGY CORPORATION
[DEVON LOGO]
Dated , 1996.
------------------------------------------------------
------------------------------------------------------
<PAGE> 56
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the distribution of the Offered
Securities (all of which shall be paid by the Registrant) being registered
hereunder (other than underwriting discounts) are set forth in the following
table (all amounts except the SEC registration fee are estimated):
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee........................ $53,614
Accounting Fees and Expenses............................................... $
Legal Fees and Expenses.................................................... $
Printing Expenses.......................................................... $
Miscellaneous.............................................................. $
--------
Total............................................................ $
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Oklahoma General Corporation Act, under which the Registrant is
incorporated, permits indemnification against expenses, including attorneys,
fees, actually and reasonably incurred by such persons in connection with the
defense of any action, suit or proceeding in which such a person is a party by
reason of his being of having been a director, employee or agent of the
Registrant, or of any corporation, partnership, joint venture, Trust or other
enterprise in which he served as such at the request of the Registrant, provided
that he acted in good faith and then reasonably believed to be in or not opposed
to the best interests of the corporation, and with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful, and provided further (if the threatened, pending or completed action
or suit is by or in the right of the corporation) that he shall not have been
adjudged to be liable for the negligence or misconduct in the performance of his
duty to the Corporation (unless the court determines that indemnity would
nevertheless be proper under the circumstances). Article Ninth of Registrant's
Certificate of Incorporation provides for the elimination of the directors'
liability for monetary damages for a breach of certain fiduciary duties and for
indemnification of directors, officers, employees or agents of Devon as
permitted by the Oklahoma General Corporation Act. These provisions cannot be
amended without the affirmative vote of the holders of at least eighty percent
(80%) of the outstanding shares entitled to vote. Under Devon's Certificate of
Incorporation, even though Devon's directors stand in a fiduciary relationship
to Devon, they are not liable to stockholders of Devon for damages for breach of
any such fiduciary duty, except that a director will be personably liable for
(i) acts or omissions not in good faith or which involve intentional misconduct
or annoying violation of law, (ii) the payment of dividends or redemption or
purchase of stock in violation of the Oklahoma General Corporation Act, (iii)
any breach of the duty of loyalty to Devon or its stockholders, or (iv) any
transaction from which the director derived an improper personal benefit.
Article Thirteenth of the Registrant's Certificate of Incorporation, also
provides for indemnification of the Registrant's directors and officers. Such
article also permits the Registrant to purchase and maintain insurance on behalf
of the Registrant's directors and officers against any liability arising out of
their status as such, whether or not Registrant would have the power to
indemnify him against such liability. These provisions may be sufficiently
brought to indemnify such persons for liabilities arising out of the Securities
Act of 1933.
Indemnification of Trustees of the Trust. The Amended and Restated
Declaration of Trust (the "Declaration") provides for full indemnification of
any Trustee, affiliate of any regular Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives or agents of the
Trust or its affiliates (each an "Indemnified Person") by Devon in connection
with any act or omission performed or omitted by such Indemnified Person in good
faith on behalf of the Trust and in a manner such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by the Declaration or by law. The Declaration further provides that, to
the fullest extent permitted by applicable law expenses (including legal fees)
incurred by an Indemnified Person in defending any claim, demand, action, suit
or proceeding, shall from time to time, be advanced by Devon prior to the filing
and disposition of such claim, demand, action, suit or proceeding upon receipt
by or an undertaking by or on behalf of the Indemnified Person to repay such
amount if it shall be determined that the Indemnified Person is not entitled to
be indemnified for the underlying cause of action as authorized by the
Declaration.
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<PAGE> 57
The Selling Holders will be indemnified by Devon and the Trust, jointly and
severally, against certain civil liabilities, including certain liabilities
under the Securities Act, or will be entitled to contribution in connection
therewith. Devon and the Trust will be indemnified by the Selling Holders
severally against certain civil liabilities, including certain liabilities under
the Securities Act, or will be entitled to contribution in connection therewith.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
4.1 -- Form of Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to Registrant's Registration Statement on Form 8-B filed
on June 7, 1995).
4.2 -- Rights Agreement between Registrant and the First National Bank of
Boston (incorporated herein by reference to Exhibit 4.2 to
Registrant's Registration Statement on Form 8-B filed on June 7,
1995).
4.3 -- Certificate of Incorporation of Registrant (incorporated herein by
reference to Exhibit B to Registrant's definitive proxy statement for
its 1995 Annual Meeting of Shareholders filed on April 21, 1995).
4.4 -- Bylaws of Registrant (incorporated herein by reference to Exhibit 3.2
to Registrant's Registration Statement on Form 8-B filed on June 7,
1995).
4.5 -- Certificate of Trust of Devon Financing Trust.
4.6 -- Amended and Restated Declaration of Trust of Devon Financing Trust
dated as of July 3, 1996 by J. Larry Nichols, H. Allen Turner,
William T. Vaughn, The Bank of New York (Delaware) and The Bank of
New York as Trustees and Devon Energy Corporation as Sponsor.
4.7 -- Indenture dated as of July 3, 1996, between Devon Energy Corporation
and The Bank of New York.
4.8 -- First Supplemental Indenture dated as of July 3, 1996, between Devon
Energy Corporation and The Bank of New York.
4.9 -- Forms of 6 1/2% Preferred Convertible Securities (included as Exhibit
A-1 to Exhibit 4.6 above).
4.10 -- Form of 6 1/2% Convertible Junior Subordinated Debentures (included
in Exhibit 4.8 above).
4.11 -- Preferred Securities Guarantee Agreement dated July 3, 1996 between
Devon Energy Corporation, as Guarantor, and the Bank of New York, as
Preferred Guarantee Trustee.
4.12 -- Certificate of Designations of Series A Junior Participating
Preferred Stock of Registrant (incorporated herein by reference to
Exhibit 3.3 to Registrant's Registration Statement on Form 8-B filed
on June 7, 1995).
5.1 -- Opinion of McAfee & Taft A Professional Corporation as to the
legality of the Devon Energy Corporation Common Stock, 6 1/2%
Convertible Junior Subordinated Debentures, the 6 1/2% Convertible
Preferred Securities and Preferred Securities Guarantee being
registered hereby and as to certain tax matters.*
8.1 -- Opinion of McAfee & Taft A Professional Corporation as to certain tax
matters (included in Exhibit 5.1)*
10.1 -- Registration Rights Agreement dated July 3, 1996, by and among Devon
Energy Corporation, Devon Financing Trust and Morgan Stanley & Co.
Incorporated.
12.1 -- Computation of Ratio of Earnings to Fixed Charges
23.1 -- Consent of KPMG Peat Marwick, LLP
</TABLE>
II-2
<PAGE> 58
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
23.2 -- Consent of LaRoche & Associates*
23.3 -- Consent of McAfee & Taft A Professional Corporation (included as part
of Exhibit 5.1 and incorporated herein by reference).*
24. -- Powers of Attorney**
25.1 -- Form T-1 Statement of Eligibility Under the Trust Indenture Act of
1939, as amended, of the Bank of New York, as Trustee under the
6 1/2% Convertible Subordinated Debentures Indenture.
25.2 -- Form T-1 Statement of Eligibility Under the Trust Indenture Act of
1939, as amended, of the Bank of New York, as Institutional Trustee
under the Amended and Restated Declaration of Trust.
25.3 -- Form T-1 Statement of Eligibility Under the Trust Indenture Act of
1939, as amended, of the Bank of New York, as Preferred Guarantee
Trustee under the Preferred Securities Guarantee Agreement.
</TABLE>
- ---------------
* To be filed by amendment.
** Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The Registrant hereby undertakes that, for purposes of determining any
liability under the Act, each filing of the Registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-3
<PAGE> 59
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 15 above, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-4
<PAGE> 60
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Devon has duly
caused this amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Oklahoma City,
State of Oklahoma, on August 9, 1996.
DEVON ENERGY CORPORATION
By: *
--------------------------------
J. Larry Nichols, President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- -----------------
<C> <S> <C>
* Chairman of the Board and
- --------------------------------------------- Director
John W. Nichols
* President, Chief Executive
- --------------------------------------------- Officer and Director
J. Larry Nichols
* Executive Vice President and
- --------------------------------------------- Director
H.R. Sanders, Jr.
* Vice President -- Finance
- --------------------------------------------- and Chief Financial
William T. Vaughn Officer
* Controller
- ---------------------------------------------
Danny J. Heatly
* Director
- ---------------------------------------------
Thomas F. Ferguson
* Director
- ---------------------------------------------
David M. Garvin
* Director
- ---------------------------------------------
Michael E. Gellert
*By /s/ H. ALLEN TURNER
- ---------------------------------------------
Attorney-in-fact
</TABLE>
August 9, 1996
II-5
<PAGE> 61
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Devon Financing
Trust has duly caused this amendment to the Registration Statement to be signed
on its behalf of the undersigned, thereunto duly authorized, in the City of
Oklahoma City, State of Oklahoma, on August 9, 1996.
DEVON FINANCING TRUST
By: /s/ H. ALLEN TURNER
----------------------------
H. Allen Turner, Trustee
By: /s/ WILLIAM T. VAUGHN
----------------------------
William T. Vaughn, Trustee
II-6
<PAGE> 62
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ---------- -----------------------------------------------------------------------------------
<C> <S> <C>
4.1 -- Form of Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to Registrant's Registration Statement on Form 8-B filed
on June 7, 1995).
4.2 -- Rights Agreement between Registrant and the First National Bank of
Boston (incorporated herein by reference to Exhibit 4.2 to
Registrant's Registration Statement on Form 8-B filed on June 7,
1995).
4.3 -- Certificate of Incorporation of Registrant (incorporated herein by
reference to Exhibit B to Registrant's definitive proxy statement for
its 1995 Annual Meeting of Shareholders filed on April 21, 1995).
4.4 -- Bylaws of Registrant (incorporated herein by reference to Exhibit 3.2
to Registrant's Registration Statement on Form 8-B filed on June 7,
1995).
4.5 -- Certificate of Trust of Devon Financing Trust.
4.6 -- Amended and Restated Declaration of Trust of Devon Financing Trust
dated as of July 3, 1996 by J. Larry Nichols, H. Allen Turner,
William T. Vaughn, The Bank of New York (Delaware) and The Bank of
New York as Trustees and Devon Energy Corporation as Sponsor.
4.7 -- Indenture dated as of July 3, 1996, between Devon Energy Corporation
and The Bank of New York.
4.8 -- First Supplemental Indenture dated as of July 3, 1996, between Devon
Energy Corporation and The Bank of New York.
4.9 -- Forms of 6 1/2% Preferred Convertible Securities (included as Exhibit
A-1 to Exhibit 4.6 above).
4.10 -- Form of 6 1/2% Convertible Junior Subordinated Debentures (included
in Exhibit 4.8 above).
4.11 -- Preferred Securities Guarantee Agreement dated July 3, 1996 between
Devon Energy Corporation, as Guarantor, and the Bank of New York, as
Preferred Guarantee Trustee.
4.12 -- Certificate of Designations of Series A Junior Participating
Preferred Stock of Registrant (incorporated herein by reference to
Exhibit 3.3 to Registrant's Registration Statement on Form 8-B filed
on June 7, 1995).
5.1 -- Opinion of McAfee & Taft A Professional Corporation as to the
legality of the Devon Energy Corporation Common Stock, 6 1/2%
Convertible Junior Subordinated Debentures, the 6 1/2% Convertible
Preferred Securities and Preferred Securities Guarantee being
registered hereby and as to certain tax matters.*
8.1 -- Opinion of McAfee & Taft A Professional Corporation as to certain tax
matters (included in Exhibit 5.1)*
10.1 -- Registration Rights Agreement dated July 3, 1996, by and among Devon
Energy Corporation, Devon Financing Trust and Morgan Stanley & Co.
Incorporated.
12.1 -- Computation of Ratio of Earnings to Fixed Charges
23.1 -- Consent of KPMG Peat Marwick, LLP
23.2 -- Consent of LaRoche & Associates*
23.3 -- Consent of McAfee & Taft A Professional Corporation (included as part
of Exhibit 5.1 and incorporated herein by reference).*
24. -- Powers of Attorney**
</TABLE>
<PAGE> 63
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ---------- -----------------------------------------------------------------------------------
<C> <S> <C>
25.1 -- Form T-1 Statement of Eligibility Under the Trust Indenture Act of
1939, as amended, of the Bank of New York, as Trustee under the
6 1/2% Convertible Subordinated Debentures Indenture.
25.2 -- Form T-1 Statement of Eligibility Under the Trust Indenture Act of
1939, as amended, of the Bank of New York, as Institutional Trustee
under the Amended and Restated Declaration of Trust.
25.3 -- Form T-1 Statement of Eligibility Under the Trust Indenture Act of
1939, as amended, of the Bank of New York, as Preferred Guarantee
Trustee under the Preferred Securities Guarantee Agreement.
</TABLE>
- ---------------
* To be filed by amendment.
** Previously filed.
<PAGE> 1
EXHIBIT 4.5
CERTIFICATE OF TRUST
OF
DEVON FINANCING TRUST
1. The name of the business trust is:
DEVON FINANCING TRUST
2. The name and business address of the trustee having its principal
place of business in the State of Delaware are:
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
3. This Certificate shall be effective upon the filing hereof.
Executed this 25 day of June, 1996.
THE BANK OF NEW YORK, a New York
banking corporation
By: /s/ STEPHEN J. GIURLANDO
-----------------------------------
Name: Stephen J. Giurlando
Title: Assistant Vice President
THE BANK OF NEW YORK (DELAWARE),
a Delaware banking corporation
By: /s/ CATHERINE MARSH
-----------------------------------
Name: Catherine Marsh
Title: President and Chief
Operating Officer
DEVON ENERGY CORPORATION, an
Oklahoma corporation
By: /s/ J. LARRY NICHOLS
-----------------------------------
J. Larry Nichols, President and
Chief Executive Officer
<PAGE> 2
/s/ J. LARRY NICHOLS
-----------------------------------
J. Larry Nichols
/s/ H. ALLEN TURNER
-----------------------------------
H. Allen Turner
/s/ WILLIAM T. VAUGHN
-----------------------------------
William T. Vaughn
"TRUSTEES"
-2-
<PAGE> 1
EXHIBIT 4.6
-----------------------------------------------
AMENDED AND RESTATED DECLARATION
OF TRUST
DEVON FINANCING TRUST
Dated as of July 3, 1996
-----------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act: Application . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.3 Reports by the Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.4 Periodic Reports to Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . 11
SECTION 2.6 Events of Default; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.7 Event of Default: Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III
ORGANIZATION
SECTION 3.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.5 Title to Property of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.6 Powers and Duties of the Regular Trustees . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees . . . . . . . . . . . . . . . . . 18
SECTION 3.8 Powers and Duties of the Institutional Trustee . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee . . . . . . . . . . . 21
SECTION 3.10 Certain Rights of Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.11 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.12 Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . 26
SECTION 3.14 Duration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.15 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.2 Responsibilities of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.2 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.3 Institutional Trustee; Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware Trustee Generally . . . . . . . 31
SECTION 5.5 Regular Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.7 Appointment, Removal and Resignation of Trustees . . . . . . . . . . . . . . . . . . . 32
SECTION 5.8 Vacancies among Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.9 Effect of Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.10 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.11 Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.2 Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.3 Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.4 Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.2 Transfer of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.3 Deemed Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.4 Book Entry Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.5 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.6 Appointment of Successor Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.7 Definitive Convertible Preferred Security Certificates Under Certain Circumstances . . 45
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . 46
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF
SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.2 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.3 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 11.2 Certain Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 11.3 Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 11.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent . . . . . . . . . . . 56
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee . . . . . . . . . . . . . . . . 57
SECTION 13.2 Representations and Warranties of Delaware Trustee . . . . . . . . . . . . . . . . . . 58
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 14.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 14.3 Intention of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 14.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 14.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 14.6 Partial Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 14.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ANNEX I TERMS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT A-1 FORM OF CONVERTIBLE PREFERRED SECURITY CERTIFICATE . . . . . . . . . . . . . . . . . . . . . A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . A2-1
EXHIBIT B SPECIMEN OF DEBENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C PLACEMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
iv
<PAGE> 6
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
<S> <C> <C>
310(a) . . . . . . . . . . . . . . . . . . . . . . . . 5.3(a)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(c) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(f) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
315(c) . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . Annex I
316(c) . . . . . . . . . . . . . . . . . . . . . . . . 3.6(e)
</TABLE>
- --------------------
* This Cross-Reference table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
v
<PAGE> 7
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
DEVON FINANCING TRUST
July 3, 1996
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated
and effective as of July 3, 1996, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established Devon Financing
Trust (the "Trust"), a trust under the Delaware Business Trust Act pursuant to
a Declaration of Trust dated as of June 26, 1996 (the "Original Declaration"),
and a Certificate of Trust filed with the Secretary of State of the State of
Delaware on June 26, 1996, for the sole purpose of issuing and selling certain
securities representing undivided beneficial interests in the assets of the
Trust and investing the proceeds thereof in certain Debentures of the Debenture
Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have
been issued;
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
<PAGE> 8
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined
in the preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration"
are to this Declaration as modified, supplemented or amended from time
to time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"144A Global Certificate" has the meaning assigned such term in
Section 9.4(b).
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent or Conversion Agent.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Base Indenture" means the Indenture dated as of July 3, 1996,
among the Debenture Issuer and the Debenture Trustee.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
2
<PAGE> 9
"Business Day" means any day other than a Saturday, Sunday or any
other day on which banking institutions in New York, New York are permitted or
required by any applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to
time, or any successor legislation.
"Certificate" means a Common Security Certificate or a
Convertible Preferred Security Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Convertible Preferred Securities and in whose name or in the
name of a nominee of that organization shall be registered a Global Certificate
and which shall undertake to effect book entry transfers and pledges of the
Convertible Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means July 3, 1996.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.1.
"Common Securities Guarantee" means the guarantee agreement to be
dated as of July 3, 1996 of the Sponsor in respect of the Common Securities.
"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A-2.
"Common Stock" means the common stock of Devon Energy
Corporation, an Oklahoma corporation, par value $.10 per share and any other
shares of common stock as may constitute "Common Stock" under the Indenture.
"Company Indemnified Person" means (a) any Regular Trustee; (b)
any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members,
3
<PAGE> 10
partners, employees, representatives or agents of any Regular Trustee; or (d)
any officer, employee or agent of the Trust or its Affiliates.
"Conversion Agent" has the meaning specified in Section 7.4.
"Convertible Preferred Securities Guarantee" means the guarantee
agreement to be dated as of July 3, 1996, of the Sponsor in respect of the
Convertible Preferred Securities.
"Convertible Preferred Security" has the meaning specified in
Section 7.1.
"Convertible Preferred Security Beneficial Owner" means, with
respect to a Book Entry Interest, a Person who is the beneficial owner of such
Book Entry Interest, as reflected on the books of the Clearing Agency, or on
the books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an indirect participant, in
each case in accordance with the rules of such Clearing Agency).
"Convertible Preferred Security Certificate" means a certificate
representing a Preferred Security substantially in the form of Exhibit A-1.
"Corporate Trust Office" means the office of the Institutional
Trustee at which the corporate trust business of the Institutional Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Agreement is located at 101 Barclay Street, Floor 21
West, New York, New York 10286.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Devon Energy Corporation, an Oklahoma
corporation, in its capacity as issuer of the Debentures under the Indenture.
"Debenture Trustee" means The Bank of New York, as trustee under
the Indenture until a successor is appointed thereunder, and thereafter means
such successor trustee.
"Debentures" means the series of Debentures to be issued by the
Debenture Issuer under the Indenture to be held by the Institutional Trustee, a
specimen certificate for such series of Debentures being Exhibit B.
"Delaware Trustee" has the meaning set forth in Section 5.2.
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"Definitive Convertible Preferred Security Certificates" has the
meaning set forth in Section 9.4.
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4(b).
"Holder" means a Person in whose name a Certificate representing
a Security is registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Base Indenture as supplemented by the
Supplemental Indenture.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Institutional Trustee Account" has the meaning set forth in
Section 3.8(c).
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex I
hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
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"Liquidated Distribution" has the meaning specified in the terms
or Securities as set forth in Annex I.
"Majority in liquidation amount of the Securities" means, except
as provided in the terms of the Convertible Preferred Securities or by the
Trust Indenture Act, Holder(s) of outstanding Securities voting together as a
single class or, as the context may require, Holders of outstanding Convertible
Preferred Securities or Holders of outstanding Common Securities voting
separately as a class, who are the record owners of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of
the Securities as set forth in Annex I.
"Non-U.S. Person" means a Person other than a U.S. person (as
such term is defined in Regulation S).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Option Closing Date" means the date of closing of any sale of
Additional Securities (as defined in the Placement Agreement).
"Paying Agent" has the meaning specified in Section 3.8(h).
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"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Payment Amount" has the meaning set forth in Section 6.1.
"Placement Agreement" means the Placement Agreement for the
offering and sale of Convertible Preferred Securities in the form of Exhibit C.
"PORTAL Market" means the Private Offerings, Resales and Trading
through Automated Linkages Market operated by the National Association of
Securities Dealers, Inc. or any successor thereto.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them.
"Registration Rights Agreement" means the Registration Rights
Agreement dated July 3, 1996 among Devon Energy Corporation, the Trust and
Morgan Stanley & Co. Incorporated, as Initial Purchaser.
"Regular Trustee" has the meaning set forth in Section 5.1.
"Regulation S" means Regulation S under the Securities Act or any
successor provision.
"Regulation S Global Certificate" has the meaning assigned such
term in Section 9.4(b)
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice president, any assistant vice president, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Institutional Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
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"Restricted Security" has the meaning specified in Section 9.1(d).
"Rule 144A" means Rule 144A as promulgated under the Securities
Act, or any successor rule.
"Rule 144(k)" means Rule 144(k) as promulgated under the
Securities Act, or any successor rule.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act or
any successor rule.
"Securities" means the Common Securities and the Convertible
Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and
the Convertible Preferred Securities Guarantee.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" or "Devon" means Devon Energy Corporation, an Oklahoma
corporation, or any successor entity in a merger, consolidation or
amalgamation, in its capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Supplemental Indenture" means the First Supplemental Indenture
dated as of July 3, 1996 among the Debenture Issuer and the Debenture Trustee
pursuant to which the Debentures are to be issued.
"Tax Event" has the meaning set forth in Annex I hereto.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Convertible Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context may require, Holders of outstanding Convertible
Preferred Securities or Holders of outstanding Common Securities voting
separately as a class, who are the record owners of 10% or more of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
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"Transfer Restriction Termination Date" means the first date on
which the Securities and any Common Stock issued or issuable upon the
conversion or exchange thereof (other than (i) Securities acquired by the Trust
or any Affiliate thereof and (ii) Common Stock issued upon the conversion or
exchange of any Security described in clause (i) above) may be sold pursuant to
Rule 144(k).
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act: Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to
the extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee which
is a Trustee for the purposes of the Trust Indenture Act.
(c) If, and to the extent that, any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by Sections
310 to 317, inclusive, of the Trust Indenture Act, such duties imposed under
the Trust Indenture Act shall control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
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SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of
the Trust shall provide the Institutional Trustee (i) within 14 days after each
record date for payment of Distributions, a list in such form as the
Institutional Trustee may reasonably require of the names and addresses of the
Holders of the Securities ("List of Holders") as of such record date, provided
that, neither the Sponsor nor the Regular Trustees on behalf of the Trust shall
be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Institutional
Trustee by the Sponsor and the Regular Trustees on behalf of the Trust, and
(ii) at any other time, within 30 days of receipt by the Trust of a written
request for a List of Holders as of a date no more than 14 days before such
List of Holders is given to the Institutional Trustee. The Institutional
Trustee shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it receives in
the capacity as Paying Agent (if acting in such capacity), provided that, the
Institutional Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Institutional Trustee shall comply with its obligations
under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
Within 60 days after May 15 of each year, the Institutional
Trustee shall provide to the Holders of the Convertible Preferred Securities
such reports as are required by Section 313 of the Trust Indenture Act, if
any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Institutional Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Institutional Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act.
Delivery of such reports, information and documents to the
Institutional Trustee is for informational purposes only and the Institutional
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Sponsor's compliance with any of its covenants hereunder
(as to which the Institutional Trustee is entitled to rely exclusively on
Officers' Certificates).
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SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Institutional Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Declaration that
relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of
Convertible Preferred Securities may by vote on behalf of the Holders of all of
the Convertible Preferred Securities, waive any past Event of Default in
respect of the Convertible Preferred Securities and its consequences, provided
that, if the underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Debentures (a "Super Majority")
to be waived under the Indenture, the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in liquidation amount of the Convertible Preferred
Securities that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Convertible Preferred Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend
to any subsequent or other default or an Event of Default with respect to the
Convertible Preferred Securities or impair any right consequent thereon. Any
waiver by the Holders of the Convertible Preferred Securities of an Event of
Default with respect to the Convertible Preferred Securities shall also be
deemed to constitute a waiver by the Holders of the Common Securities of any
such Event of Default with respect to the Common Securities for all purposes of
this Declaration without any further act, vote, or consent of the Holders of
the Common Securities.
(b) The Holders of a Majority in liquidation amount of the
Common Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive
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any past Event of Default with respect to the Common Securities and its
consequences, provided that, if the underlying Event of Default under the
Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event of
Default under the Declaration as provided below in this Section 2.6(b), the
Event of Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to have
waived such Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration may only be waived
by the vote of the Holders of at least the proportion in liquidation amount of
the Common Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Convertible Preferred Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the Holders of the Convertible Preferred Securities and
only the Holders of the Convertible Preferred Securities will have the right to
direct the Institutional Trustee in accordance with the terms of the
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Securities, as permitted by
the Trust Indenture Act. Subject to the foregoing provisions of this Section
2.6(b), upon such waiver, any such default shall cease to exist and any Event
of Default with respect to the Common Securities arising therefrom shall be
deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Institutional Trustee at the direction of the Holders of the Convertible
Preferred Securities, constitutes a waiver of the corresponding Event of
Default under this Declaration. The foregoing provisions of this Section 2.6(c)
shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such
Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded
from this Declaration and the Securities, as permitted by the Trust Indenture
Act.
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SECTION 2.7 Event of Default: Notice.
(a) The Institutional Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of all defaults with respect
to the Securities actually known to a Responsible Officer of the Institutional
Trustee, unless such defaults have been cured before the giving of such notice
(the term "defaults" for the purposes of this Section 2.7(a) being hereby
defined to be an Event of Default as defined in the Indenture, not including
any periods of grace provided for therein and irrespective of the giving of any
notice provided therein); provided that, except for a default in the payment of
principal of (or premium, if any) or interest on any of the Debentures or in
the payment of any sinking fund installment established for the Debentures, the
Institutional Trustee shall be protected in withholding such notice if and so
long as a Responsible Officer of the Institutional Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Securities.
(b) The Institutional Trustee shall not be deemed to have
knowledge of any default except:
(i) a default under Sections 5.1(1) and 5.1(2) of the Indenture;
or
(ii) any default as to which the Institutional Trustee shall
have received written notice or of which a Responsible Officer of the
Institutional Trustee charged with the administration of the Declaration shall
have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Devon Financing Trust" as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders of Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Devon
Energy Corporation, 20 North Broadway, Suite 1500, Oklahoma City, Oklahoma
73102-8260. On ten Business Days written notice to the Holders of Securities,
the Regular Trustees may designate another principal office.
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SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
SECTION 3.4 Authority.
(a) Subject to the limitations provided in this Declaration and
to the specific duties of the Institutional Trustee, the Regular
Trustees shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Regular Trustees in
accordance with their powers shall constitute the act of and serve to
bind the Trust and an action taken by the Institutional Trustee on
behalf of the Trust in accordance with its powers shall constitute the
act of and serve to bind the Trust. In dealing with the Trustees acting
on behalf of the Trust, no person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of
the Trustees as set forth in this Declaration.
(b) Except as expressly set forth in this Declaration and
except if a meeting of the Regular Trustees is called with respect to
any matter over which the Regular Trustees have power to act, any power
of the Regular Trustees may be exercised by, or with the consent of, any
one such Regular Trustee.
(c) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act or applicable
law, any Regular Trustee is authorized to execute on behalf of the Trust
any documents which the Regular Trustees have the power and authority to
cause the Trust to execute pursuant to Section 3.6, provided, that the
registration statement referred to in Section 3.6, including any
amendments thereto, shall be signed by a majority of the Regular
Trustees; and
(d) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21
his or her power for the purposes of signing any documents which the
Regular Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
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SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures
and the Institutional Trustee Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders of securities shall not have legal title to any part of the
assets of the Trust, but shall have an undivided beneficial interest in the
assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this
Declaration; provided however, that the Trust may issue no more than one
series of Convertible Preferred Securities and no more than one series
of Common Securities, and provided further, that there shall be no
interests in the Trust other than the Securities, and the issuance of
Securities shall be limited to a simultaneous issuance of both
Convertible Preferred Securities and Common Securities on the Closing
Date and Option Date, if any;
(b) in connection with the issue and sale of the Convertible
Preferred Securities, at the direction of the Sponsor, to:
(i) prepare and execute, if necessary, an offering memorandum
(the "Offering Memorandum") in preliminary and final form prepared by
the Sponsor, in relation to the offering and sale of Convertible
Preferred Securities to qualified institutional buyers in reliance on
Rule 144A under the Securities Act, to institutional "accredited
investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) and outside the United States to non-U.S. persons in
offshore transactions in reliance on Regulation S under the Securities
Act and to execute and file with the Commission, at such time as
determined by the Sponsor, a registration statement filed on Form S-3
prepared by the Sponsor, including any amendments thereto in relation to
the Preferred Securities;
(ii) execute and file an application, prepared by the Sponsor,
to the Private Offerings, Resale and Trading through Automated Linkages
("PORTAL") Market;
(iii) to execute and deliver letters, documents, or instruments
with The Depository Trust Company relating to the Convertible Preferred
Securities;
(iv) execute and file with the Commission, at such time as
determined by the Sponsor, a registration statement on Form 8-A,
including any amendments thereto,
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prepared by the Sponsor relating to the registration of the Convertible
Preferred Securities under Section 12(b) of the Exchange Act;
(v) execute and enter into the Placement Agreement,
Registration Rights Agreement and other related agreements providing for
the sale of the Preferred Securities;
(vi) execute and file with the Commission a registration
statement on Form S-3 prepared by the Sponsor, including any amendments
thereto, pertaining to the resale from time to time of Convertible
Preferred Securities; and
(vii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary in order to
qualify or register all or part of the Convertible Preferred Securities
in any State in which the Sponsor has determined to qualify or register
such Convertible Preferred Securities for sale or resale, as the case
may be;
(c) to acquire the Debentures with the proceeds of the sale of
the Convertible Preferred Securities and the Common Securities;
provided, however, that the Regular Trustees shall cause legal title to
the Debentures to be held of record in the name of the Institutional
Trustee for the benefit of the Holders of the Convertible Preferred
Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee prompt
written notice of the occurrence of a Special Event; provided that the
Regular Trustees shall consult with the Sponsor and the Institutional
Trustee before taking or refraining from taking any Ministerial Action
in relation to a Special Event;
(e) to establish a record date with respect to all actions to
be taken hereunder that require a record date be established, including
and with respect to, for the purposes of Section 316 (c) of the Trust
Indenture Act, Distributions, voting rights, redemptions and exchanges,
and to issue relevant notices to the Holders of Convertible Preferred
Securities and Holders of Common Securities as to such actions and
applicable record dates;
(f) to take all actions and perform such duties as may be
required of the Regular Trustees pursuant to the terms of the
Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or
against the Trust ("Legal Action"), unless pursuant to Section 3.8(e),
the Institutional Trustee has the exclusive power to bring such Legal
Action;
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(h) to employ or otherwise engage employees and agents (who may
be designated as officers with titles) and managers, contractors,
advisors, and consultants and pay reasonable compensation for such
services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of
the Trust Indenture Act to the Institutional Trustee, which certificate
may be executed by any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry
out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar
and transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the
Securities of any notice received from the Debenture Issuer of its
election to defer payments of interest on the Debentures by extending
the interest payment period under the Indenture;
(n) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid existence,
rights, franchises and privileges as a statutory business trust under
the laws of the State of Delaware and of each other jurisdiction in
which such existence is necessary to protect the limited liability of
the Holders of the Convertible Preferred Securities or to enable the
Trust to effect the purposes for which the Trust was created;
(p) to take any action, not inconsistent with this Declaration
or with applicable law, that the Regular Trustees determine in their
discretion to be necessary or desirable in carrying out the activities
of the Trust as set out in this Section 3.6, including, but not limited
to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
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(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes,
provided that such action does not adversely affect the interests of
Holders; and
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with
respect to the Trust to be duly prepared and filed by the Regular
Trustees, on behalf of the Trust.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none
of the powers or the authority of the Institutional Trustee set forth in
Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the sponsor.
The Trust initially appoints the Institutional Trustee as
transfer agent and registrar for the Convertible Preferred Securities.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the
Institutional Trustee) shall not, engage in any activity other than as required
or authorized by this Declaration. In particular the Trust shall not and the
Trustees (including the Institutional Trustee) shall not cause the Trust to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
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(v) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as provided in this Declaration or Annex I
hereto, (A) direct the time, method and place of exercising any trust or
power conferred upon the Debenture Trustee with respect to the
Debentures, (B) waive any past default that is not waivable under the
Indenture, (C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable, or
(D) consent to any amendment, modification or termination of the
Indenture or the Debentures where such consent shall be required unless
the Trust shall have received an opinion of counsel to the effect that
such modification will not cause more than an insubstantial risk that
(x) the Trust will be deemed an Investment Company required to be
registered under the Investment Company Act or (y) for United States
federal income tax purposes the Trust will not be classified as a
grantor trust.
SECTION 3.8 Powers and Duties of the Institutional Trustee.
(a) The legal title to the Debentures shall be owned by and
held of record in the name of the Institutional Trustee in trust for the
benefit of the Holders of the Securities. The right, title and interest of the
Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with
Section 5.7. Such vesting and cessation of title shall be effective whether or
not conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Institutional Trustee shall not transfer its right,
title and interest in the Debentures to the Regular Trustees or to the Delaware
Trustee (if the Institutional Trustee does not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Institutional Trustee Account") in the name of and
under the exclusive control of the Institutional Trustee on behalf of
the Holders of the Securities and, upon the receipt of payments of funds
made in respect of the Debentures held by the Institutional Trustee,
deposit such funds into the Institutional Trustee Account and make
payments to the Holders of the Convertible Preferred Securities and
Holders of the Common Securities from the Institutional Trustee Account
in accordance with Section 6.1. Funds in the Institutional Trustee
Account shall be held
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uninvested until disbursed in accordance with this Declaration. The
Institutional Trustee Account shall be an account that is maintained
with a banking institution the rating on whose long-term unsecured
indebtedness is at least equal to the rating assigned to the Convertible
Preferred Securities by a "nationally recognized statistical rating
organization," as that term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
(ii) engage in such ministerial activities as shall be necessary
or appropriate to effect the redemption of the Convertible Preferred
Securities and the Common Securities to the extent the Debentures are
redeemed or mature; and
(iii) upon written notice of Distribution issued by the Regular
Trustees in accordance with the terms of the Securities, engage in such
ministerial activities as shall be necessary or appropriate to effect
the distribution of the Debentures to Holders of Securities upon the
occurrence of certain special events (as may be defined in the terms of
the Securities) arising from a change in law or a change in legal
interpretation or other specified circumstances pursuant to the terms of
the Securities.
(d) The Institutional Trustee shall take all actions and
perform such duties as may be specifically required of the Institutional
Trustee pursuant to the terms of the Securities.
(e) The Institutional Trustee shall take any Legal Action which
arises out of or in connection with an Event of Default of which a Responsible
Officer of the Institutional Trustee has actual knowledge or the Institutional
Trustee's duties and obligations under this Declaration or the Trust Indenture
Act; provided however, that if a Declaration Event of Default has occurred and
is continuing and such event is attributable to the failure of the Debenture
Issuer to pay interest or principal on the Debentures on the date such interest
or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a Holder of Preferred Securities may directly institute
a proceeding for enforcement of payment to such Holder of the principal of or
interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such Holder (a "Direct
Action") on or after the respective due date specified in the Debentures. In
connection with such Direct Action, the rights of the Holders of the Common
Securities will be subrogated to the rights of such Holder of Preferred
Securities to the extent of any payment made by the Debenture Issuer to such
Holder of Preferred Securities in such Direct Action. Except as provided in the
preceding sentences, the Holders of Preferred Securities will not be able to
exercise directly any other remedy available to the holders of the Debentures.
(f) The Institutional Trustee shall not resign as a Trustee
unless either:
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(i) the Trust has been completely liquidated and the proceeds
of the liquidation distributed to the Holders of Securities pursuant to
the terms of the Securities; or
(ii) a Successor Institutional Trustee has been appointed
and has accepted that appointment in accordance with Section 5.7.
(g) The Institutional Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Debentures
under the Indenture and, if an Event of Default actually known to a Responsible
Officer of the Institutional Trustee occurs and is continuing, the
Institutional Trustee shall, for the benefit of Holders of the Securities,
enforce its rights as holder of the Debentures subject to the rights of the
Holders pursuant to the terms of such Securities.
(h) The Institutional Trustee may authorize one or more Persons
(each, a "Paying Agent") to pay Distributions, redemption payments or
Liquidation Distributions on behalf of the Trust with respect to all Securities
and any such Paying Agent shall comply with Section 317(b) of the Trust
Indenture Act. Any Paying Agent may be removed by the Institutional Trustee at
any time and a successor Paying Agent or additional Paying Agents may be
appointed at any time by the Institutional Trustee.
(i) Subject to this Section 3.8, the Institutional Trustee
shall have none of the duties, liabilities, powers or the authority of the
Regular Trustees set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth in
this Section 3.8 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Institutional Trustee shall not
take any action that is inconsistent with the purposes and functions of the
Trust set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee.
(a) The Institutional Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Institutional Trustee has actual knowledge, the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
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(b) No provision of this Declaration shall be construed to
relieve the Institutional Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Institutional
Trustee shall be determined solely by the express provisions of
this Declaration and the Institutional Trustee shall not be
liable except for the performance of such duties and obligations
as are specifically set forth in this Declaration, and no implied
covenants or obligations shall be read into this Declaration
against the Institutional Trustee; and
(B) in the absence of bad faith on the part of the
Institutional Trustee, the Institutional Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions
furnished to the Institutional Trustee and conforming to the
requirements of this Declaration; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Institutional
Trustee, the Institutional Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Institutional Trustee, unless it shall be proved that the Institutional
Trustee was negligent in ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
in liquidation amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon
the Institutional Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Institutional
Trustee against such risk or liability is not reasonably assured to it;
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(v) the Institutional Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Institutional Trustee Account shall be to deal with such property in
a similar manner as the Institutional Trustee deals with similar
property for its own account, subject to the protections and limitations
on liability afforded to the Institutional Trustee under this
Declaration and the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or liability
for or with respect to the value, genuineness, existence or sufficiency
of the Debentures or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Institutional Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree in
writing with the Sponsor. Money held by the Institutional Trustee need
not be segregated from other funds held by it except in relation to the
Institutional Trustee Account maintained by the Institutional Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise
required by law; and
(viii) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Institutional Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and shall
be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed, sent or presented by the proper party
or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by an
Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Institutional Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the Regular
Trustees;
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(iv) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel of its
selection or other experts and the advice or opinion of such counsel and
experts with respect to legal matters or advice within the scope of such
experts' area of expertise shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Sponsor or any of its Affiliates, and
may include any of its employees. The Institutional Trustee shall have
the right at any time to seek instructions concerning the administration
of this Declaration from any court of competent jurisdiction;
(vi) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at
the request or direction of any Holder, unless such Holder shall have
provided to the Institutional Trustee security and indemnity, reasonably
satisfactory to the Institutional Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Institutional Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Institutional Trustee provided, that, nothing contained in this Section
3.10(a)(vi) shall be taken to relieve the Institutional Trustee, upon
the occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Declaration;
(vii) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional Trustee,
in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
(viii) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, custodians, nominees or attorneys and the
Institutional Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care
by it hereunder;
(ix) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and
the signature of the Institutional Trustee or its agents alone shall be
sufficient and effective to perform
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any such action and no third party shall be required to inquire as to
the authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration,
both of which shall be conclusively evidenced by the Institutional
Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive written
instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the Institutional Trustee (i) may request
written instructions from the Holders of the Securities which
instructions may only be given by the Holders of the same proportion in
liquidation amount of the Securities as would be entitled to direct the
Institutional Trustee under the terms of the Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received, and (iii) shall be protected in conclusively relying on or
acting in or accordance with such instructions;
(xi) except as otherwise expressly provided by this Declaration,
the Institutional Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this Declaration;
and
(xii) the Institutional Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose
any duty or obligation on the Institutional Trustee to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on it, in
any jurisdiction in which it shall be illegal, or in which the Institutional
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Institutional
Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees or the Institutional Trustee described
in this Declaration. Except as set forth in Section 5.2, the Delaware Trustee
shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Business Trust Act.
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SECTION 3.12 Execution of Documents.
Except as otherwise required by the Business Trust Act, any
Regular Trustee is authorized to execute on behalf of the Trust any documents
that the Regular Trustees have the power and authority to execute pursuant to
Section 3.6; provided that, the registration statement referred to in Section
3.6(b)(i), including any amendments thereto, shall be signed by all of the
Regular Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall have existence for forty (40) years from June 26.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or,
if there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Securities, the Delaware Trustee or the
Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided
that:
(i) such successor entity ( the "Successor Entity") either:
(A) expressly assumes all of the obligations of the
Trust under the Securities; or
(B) substitutes for the Convertible Preferred Securities
other securities having substantially the same terms as the
Convertible Preferred Securities (the "Successor Securities") so
long as the Successor Securities rank the same as the Convertible
Preferred Securities rank with respect to Distributions and
payments upon liquidation, redemption and otherwise;
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(ii) the Debenture Issuer expressly acknowledges a trustee of
the Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the Holder of the Debentures;
(iii) such merger, consolidation, amalgamation or replacement
does not cause the Convertible Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization;
(iv) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges of the
Holders of the Securities (including any Successor Securities) in any
material respect;
(v) such Successor Entity has a purpose identical to that of
the Trust;
(vi) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of independent counsel
to the Trust experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Securities (including any
successor Securities) in any material respect;
(B) following such merger, consolidation, amalgamation
or replacement, neither the Trust nor the Successor Entity will
be required to register as an Investment Company;
(C) following such merger, consolidation, amalgamation
or replacement, the Trust (or the Successor Entity) will continue
to be classified as a grantor trust for United States federal
income tax purposes; and
(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent provided by
the Securities Guarantees.
(c) Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
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ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date the Sponsor will purchase all of the Common
Securities issued by the Trust, in an amount at least equal to 3% of the
capital of the Trust, at the same time as the Convertible Preferred Securities
are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Convertible
Preferred Securities, the Sponsor shall have the exclusive right and
responsibility to engage in the following activities:
(a) prepare and execute, if necessary, the Offering Memorandum
in preliminary and final form, in relation to the offering and sale by the
Trust of Convertible Preferred Securities to qualified institutional buyers in
reliance on Rule 144A under the Securities Act, to institutional "accredited
investors" (as defined in Rule 501(a)(1),(2), (3) or (7) under the Securities
Act) and outside the United States to non-U.S. persons in offshore transactions
in reliance on Regulation S under the Securities Act;
(b) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Convertible Preferred
Securities and the Convertible Preferred Securities Guarantees, including any
amendments thereto;
(c) prepare for execution and filing by the Trust of an
application, prepared by the Sponsor, to the PORTAL Market;
(d) prepare for execution and filing by the Trust of documents,
or instruments to be delivered to The Depository Trust Company relating to the
Convertible Preferred Securities;
(e) prepare for execution and filing by the Trust of a
registration statement on Form 8-A, including any amendments thereto, prepared
by the Sponsor relating to the registration of the Convertible Preferred
Securities under Section 12(b) of the Exchange Act;
(f) to determine the States in which to take appropriate action
to qualify or register for sale all or part of the Convertible Preferred
Securities and the Convertible Preferred Securities Guarantees and to do any
and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for
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execution and filing any documents to be executed and filed by the Trust, as
the Sponsor deems necessary or advisable in order to comply with the applicable
laws of any such States;
(g) to negotiate the terms of the Placement Agreement providing
for the sale of the Convertible Preferred Securities; and
(h) to negotiate the terms of the Registration Rights Agreement
providing for, among other things, the registration under the Securities Act of
resales from time to time of the Convertible Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities; provided however, that the number of
Trustees shall in no event be less than two (2); provided further, that (1) one
Trustee, in the case of a natural person, shall be a person who is a resident
of the State of Delaware or that, if not a natural person, is an entity which
has its principal place of business in the State of Delaware (the "Delaware
Trustee"); (2) there shall be at least one Trustee who is an employee or
officer of, or is affiliated with the Sponsor (a "Regular Trustee"); and (3)
one Trustee shall be the Institutional Trustee at such time and for so long as
this Declaration is required to qualify as an indenture under the Trust
Indenture Act, and such Trustee may also serve as Delaware Trustee if it meets
the applicable requirements.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
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(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the
requirements of applicable law,
(c) the Initial Delaware Trustee shall be: The Bank of New
York (Delaware).
provided that, if the Institutional Trustee has its principal place of business
in the State of Delaware and otherwise meets the requirements of applicable
law, then the Institutional Trustee shall also be the Delaware Trustee and
Section 3.11 shall have no application.
SECTION 5.3 Institutional Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as
Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof or of
the District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by federal, state, territorial or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then for the purposes of
this Section 5.3(a)(ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Institutional Trustee shall cease to be
eligible to so act under Section 5.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.7(c).
(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Institutional Trustee and the Holder of the Common
Securities (as if it were the obligor referred to in Section 310(b) of the
Trust Indenture Act) shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
(d) The Convertible Preferred Securities Guarantee shall be
deemed to be specifically described in this Declaration for purposes of clause
(i) of the first provision contained in Section 310(b) of the Trust Indenture
Act.
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(e) The initial Institutional Trustee shall be:
The Bank of New York.
SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware Trustee
Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Institutional Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Regular Trustees.
The initial Regular Trustees shall be:
J. Larry Nichols
H. Allen Turner
William T. Vaughn
(a) Except as expressly set forth in this Declaration and
except if a meeting of the Regular Trustees is called with respect to any
matter over which the Regular Trustees have power to act, any power of the
Regular Trustees may be exercised by, or with the consent of, any one such
Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act or applicable law, any
Regular Trustee is authorized to execute on behalf of the Trust any documents
which the Regular Trustees have the power and authority to cause the Trust to
execute pursuant to Section 3.6, provided, that, the registration statement
referred to in Section 3.6, including any amendments thereto, shall be signed
by all of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.7(b), Trustees may be appointed or
removed without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
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(ii) after the issuance of any Securities, by vote of the
Holders of a Majority in liquidation amount of the Common Securities
voting as a class at a meeting of the Holders of the Common Securities.
(b)(i) The Trustee that acts as Institutional Trustee shall
not be removed in accordance with Section 5.7(a) until a Successor
Institutional Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor
Institutional Trustee and delivered to the Regular Trustees and the
Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with this Section 5.7(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections
5.2 and 5.4 (a "Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by such
Successor Delaware Trustee and delivered to the Regular Trustees and the
Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) No such resignation of the Trustee that acts as the
Institutional Trustee shall be effective:
(A) until a Successor Institutional Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Institutional Trustee and delivered to
the Trust, the Sponsor and the resigning Institutional Trustee;
or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the holders
of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the Trust,
the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appointment a Successor Delaware Trustee or Successor
Institutional Trustee as the case may be if the Institutional Trustee or the
Delaware Trustee delivers an instrument of resignation in accordance with this
Section 5.7.
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(e) If no Successor Institutional Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.7 within 60 days after delivery of an instrument of resignation or
removal, the Institutional Trustee or Delaware Trustee resigning or being
removed, as applicable, may petition any court of competent jurisdiction for
appointment of a Successor Institutional Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be
liable for the acts or omissions to act of any Successor Institutional Trustee
or Successor Delaware Trustee, as the case may be.
SECTION 5.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number
of Trustees is not reduced pursuant to Section 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.7.
SECTION 5.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.7, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Declaration.
SECTION 5.10 Meetings.
If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight
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courier) not less than 48 hours before such meeting. Notice of any telephonic
meetings of the Regular Trustee or any committee thereof shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 24 hours before a meeting.
Notices shall contain a brief statement of the time, place and anticipated
purposes of the meeting. The presence (whether in person or by telephone) of a
Regular Trustee at a meeting shall constitute a waiver of notice of such
meeting except where a Regular Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the ground that the
meeting has not been lawfully called or convened. Unless provided otherwise in
this Declaration, any action of the Regular Trustees may be taken at a meeting
by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Regular Trustees. In the event there is only one Regular Trustee, any and all
action of such Regular Trustee shall be evidenced by a written consent of such
Regular Trustee.
SECTION 5.11 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
his or her power for the purpose of executing any documents contemplated in
Section 3.6, including any registration statement or amendment thereto filed
with the Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time
to time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
Section 5.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Institutional Trustee or the
Delaware Trustee, as the case may be, may be merged or converted or with which
either may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Institutional Trustee or the Delaware
Trustee, as the case may be, shall be a party, or any corporation succeeding to
all or substantially all the corporate trust business of the Institutional
Trustee or the Delaware Trustee, as the case may be, shall be the successor of
the Institutional Trustee or the Delaware Trustee, as the case may be,
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article, without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
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ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders of Securities shall receive Distributions (as defined
herein) in accordance with the applicable terms of the relevant Holder's
Securities. Distributions shall be made on the Convertible Preferred
Securities and the Common Securities in accordance with the preferences set
forth in their respective terms. If and to the extent that the Debenture Issuer
makes a payment of interest (including Compounded Interest (as defined in the
Indenture) and Additional Interest (as defined in the Indenture)), premium
and/or principal on the Debentures held by the Institutional Trustee (the
amount of any such payment being a "Payment Amount"), the Institutional Trustee
shall and is directed, to the extent funds are available for that purpose, to
make a distribution (a "Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one
class of convertible preferred securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Annex I (the "Convertible Preferred Securities") and one class of convertible
common securities representing undivided beneficial interests in the assets of
the Trust having such terms as are set forth in Annex I (the "Common
Securities"). The Trust shall issue no securities or other interests in the
assets of the Trust other than the Convertible Preferred Securities and the
Common Securities.
(b) The consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
(d) Every Person, by virtue of having become a Holder or a
Convertible Preferred Security Beneficial Owner in accordance with the terms of
this Declaration, shall be deemed to have expressly assented and agreed to the
terms of and shall be bound by this Declaration.
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SECTION 7.2 Execution and Authentication.
(a) The Certificates shall be signed on behalf of the Trust by
a Regular Trustee. In case any Regular Trustee of the Trust who shall have
signed any of the Securities shall cease to be such Regular Trustee before the
Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates
had not ceased to be such Regular Trustee; and any Certificate may be signed on
behalf of the Trust by such persons who, at the actual date of execution of
such Security, shall be the Regular Trustees of the Trust, although at the date
of the execution and delivery of the Declaration any such person was not such a
Regular Trustee.
(b) One Regular Trustee shall sign the Convertible Preferred
Securities for the Trust by manual or facsimile signature. Unless otherwise
determined by the Trust, such signature shall, in the case of Common
Securities, be a manual signature.
A Convertible Preferred Security shall not be valid until
authenticated by the manual signature of an authorized signatory of the
Institutional Trustee. The signature shall be conclusive evidence that the
Convertible Preferred Security has been authenticated under this Declaration.
Upon a written order of the Trust signed by one Regular Trustee,
the Institutional Trustee shall authenticate the Preferred Convertible
Securities for original issue.
The Institutional Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Convertible Preferred Securities. An
authenticating agent may authenticate Convertible Preferred Securities whenever
the Institutional Trustee may do so. Each reference in this Declaration to
authentication by the Institutional Trustee includes authentication by such
agent. An authenticating agent has the same rights as the Institutional
Trustee to deal with the Company or an Affiliate.
SECTION 7.3 Form and Dating.
The Convertible Preferred Securities and the Institutional
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A-1 and the Common Securities shall be substantially in the form of
Exhibit A-2, each of which is hereby incorporated in and expressly made a part
of this Declaration. Certificates may be printed, lithographed or engraved or
may be produced in any other manner as is reasonably acceptable to the Regular
Trustees, as evidenced by their execution thereof. The Securities may have
letters, numbers, notations or other marks of identification or designation and
such legends or endorsements required by law, stock exchange rule, agreements
to which the Trust is subject, if any, or usage (provided that any such
notation, legend or endorsement is in a form acceptable to the Trust). The
Trust at the direction of the Sponsor shall furnish any such legend not
contained in Exhibit A-1 to the Institutional
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Trustee in writing. Each Convertible Preferred Security Certificate shall be
dated the date of its authentication. The terms and provisions of the
Securities set forth in Annex I and the forms of Securities set forth in
Exhibits A-1 and A-2 are part of the terms of this Declaration and to the
extent applicable, the Institutional Trustee and the Sponsor, by their
execution and delivery of this Declaration, expressly agree to such terms and
provisions and to be bound thereby.
SECTION 7.4 Paying Agent.
The Trust shall maintain in the Borough of Manhattan, City of New
York, State of New York, an office or agency where Convertible Preferred
Securities not held in book-entry only form may be presented for payment
("Paying Agent"). The Trust shall maintain an office or agency where
Securities may be presented for conversion ("Conversion Agent"). The Trust may
appoint the Paying Agent and the Conversion Agent and may appoint one or more
additional paying agents and one or more additional conversion agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent and the term "Conversion Agent" includes any additional
conversion agent. The Trust may change any Paying Agent or Conversion Agent
without prior notice to any Holder. The Trust shall notify the Institutional
Trustee in writing of the name and address of any Agent not a party to this
Declaration. If the Trust fails to appoint or maintain another entity as
Paying Agent or Conversion Agent, the Institutional Trustee shall act as such.
The Trust or any of its Affiliates may act as Paying Agent or Conversion Agent.
The Trust shall act as Paying Agent and Conversion Agent for the Common
Securities.
The Trust initially appoints the Institutional Trustee as Paying
Agent and Conversion Agent for the Convertible Preferred Securities.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor; the filing of a certificate of
cancellation with respect to the Trust after having obtained the consent
of a majority in liquidation amount of the Securities voting together as
a single class to file such certificate of cancellation or
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the revocation of the Sponsor's charter and the expiration of 90 days
after the date of revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of the
Sponsor or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Securities;
(v) upon the occurrence and continuation of a Special Event
pursuant to which the Trust shall have been dissolved in accordance with
the terms of the Securities and all of the Debentures held by the
Institutional Trustee shall have been distributed to the Holders of
Securities in exchange for all of the Securities;
(vi) upon the distribution of the Sponsor's Common Stock to all
Holders of Convertible Preferred Securities upon conversion of all
outstanding Convertible Preferred Securities;
(vii) the expiration of the term of the Trust on June 25, 2036; or
(viii) before the issuance of any Securities, with the consent of
all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Sections 3.9 and 3.10 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
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(b) Subject to this Article IX, Convertible Preferred
Securities shall be freely transferable.
(c) Subject to this Article IX, the Sponsor and any Related
Party may only transfer Common Securities to the Sponsor or a Related Party of
the Sponsor; provided that, any such transfer is subject to the condition
precedent that the transferor obtain the written opinion of independent counsel
experienced in such matters that such transfer would not cause more than an
insubstantial risk that:
(i) the Trust would not be classified for United States federal
income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company required to
register under the Investment Company Act or the transferee would become
an Investment Company required to register under the Investment Company
Act.
(d) Each Security that bears or is required to bear the legend
set forth in this Section 9.1(d) (a "Restricted Security") shall be subject to
the restrictions on transfer provided in the legend set forth in this Section
9.1(d), unless such restrictions on transfer shall be waived by the written
consent of the Regular Trustees, and the Holder of each Restricted Security, by
such securityholder's acceptance thereof, agrees to be bound by such
restrictions on transfer. As used in this Section 9.1(d) and in Section
9.1(e), the terms "transfer" encompasses any sale, pledge, transfer or other
disposition of any Restricted Security.
Prior to the Transfer Restriction Termination Date, any
certificate evidencing a Security shall bear a legend in substantially the
following form, unless otherwise agreed by the Regular Trustees (with written
notice thereof to the Indenture Trustee):
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C)
IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY
IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR
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TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR
ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THE SECURITY
EVIDENCED HEREBY OR THE COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION
OR EXCHANGE OF SUCH SECURITY EXCEPT (A) TO DEVON ENERGY CORPORATION OR
ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (D) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE BANK OF
NEW YORK, AS TRUSTEE (OR, IF THIS CERTIFICATE EVIDENCES COMMON STOCK,
THE TRANSFER AGENT FOR THE COMMON STOCK), A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM SUCH TRUSTEE OR TRANSFER AGENT), (E) OUTSIDE THE UNITED
STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (F)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IFAVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH
ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF
THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY
UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE BANK OF NEW YORK, AS TRUSTEE (OR, IF THIS CERTIFICATE
EVIDENCES COMMON STOCK, SUCH HOLDER MUST FURNISH TO THE TRANSFER AGENT
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT). IF THIS CERTIFICATE
DOES NOT EVIDENCE COMMON STOCK
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AND IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE BANK OF NEW YORK, AS TRUSTEE,
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS DEVON MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE
REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO THE
SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
Following the Transfer Restriction Termination Date, any Security
or security issued in exchange or substitution therefor (other than (i)
Securities acquired by Devon or any Affiliate and (ii) Common Stock issued upon
the conversion or exchange of any Security described in clause (i) above) may
upon surrender of such Security for exchange to any Regular Trustee on behalf
of the Trust in accordance with the provisions of this Section 9.1, be
exchanged for a new Security or Securities, of like tenor and aggregate
liquidation amount, which shall not bear the restrictive legend required by
this Section 9.8(d).
Any Convertible Preferred Security or Common Stock issued upon
the conversion or exchange of a Convertible Preferred Security that, prior to
the Transfer Restriction Termination Date, is purchased or owned by the Company
or any Affiliate thereof may not be resold by the Company or such Affiliate
unless registered under the Securities Act or resold pursuant to an exemption
from the registration requirements of the Securities Act in a transaction which
results in such Convertible Preferred Securities or Common Stock, as the case
may be, no longer being "restricted securities" (as defined under Rule 144).
SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written
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instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole holder of
such Certificate and of the Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
(a) So long as Convertible Preferred Securities are eligible
for book-entry settlement with the Clearing Agency or unless otherwise required
by law, all Convertible Preferred Securities that are so eligible may be
represented by one or more fully registered Convertible Preferred Security
Certificates (each a "Global Certificate") in global form to be delivered to
DTC, the initial Clearing Agency, by, or on behalf of, the Trust. Such Global
Certificates shall initially be registered on the books and records of the
Trust in the name of Cede & Co., the nominee of DTC, and no Convertible
Preferred Security Beneficial Owner will receive a definitive Convertible
Preferred Security Certificate representing such Convertible Preferred Security
Beneficial Owner's interests in such Global Certificates, except as provided in
Section 9.7 below. The transfer and exchange of beneficial interests in any
such Security in global form shall be effected through the Clearing Agency in
accordance with this Declaration and the procedures of the Clearing Agency
therefor.
(b) Convertible Preferred Securities that upon initial issuance
are beneficially owned by QIBs may, at the option of the trust, be represented
by a Global Certificate (a "144A Global Security"), and Convertible Preferred
Securities that upon initial issuance are beneficially owned by Non-U.S.
Persons may, at the option of the trust, be represented by another Global
Certificate (a "Regulation S Global Security"). Transfers of interests in the
Convertible Preferred Securities between any 144A Global Security and any
Regulation S Global Security will be made in accordance with the standing
instructions and procedures of the Clearing Agency and its participants. The
Institutional Trustee shall make appropriate endorsements to reflect increases
or decreases
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in the amount of such Convertible Preferred Securities in global form to
reflect any such transfers.
Except as provided below, beneficial owners of a Convertible
Preferred Security in global form shall not be entitled to have certificates
registered in their names, will not receive or be entitled to receive physical
delivery of certificates in definitive form and will not be considered Holders
of such Convertible Preferred Security in global form.
(c) So long as the Convertible Preferred Securities are
eligible for book-entry settlement and to the extent Convertible Preferred
Securities held by QIBs or Non-U.S. Persons, as the case may be, are held in a
global form, or unless otherwise required by law, upon any transfer of a
definitive Convertible Preferred Security to a QIB in accordance with Rule 144A
or to a Non-U.S. Person in accordance with Regulation S, unless otherwise
requested by the transferor, and upon receipt of the definitive Convertible
Preferred Security or Convertible Preferred Securities being so transferred,
together with a certification from the transferor that the transfer is being
made in compliance with Rule 144A or Regulation S, as the case may be (or other
evidence satisfactory to the Institutional Trustee on behalf of the Trust), the
Institutional Trustee on behalf of the Trust shall make an endorsement on any
144A Global Security or any Regulation S Global Security, as the case may be,
to reflect an increase in the number of Convertible Preferred Securities
represented by such Global Certificate, and the Institutional Trustee on behalf
of the Trust shall cancel such definitive Convertible Preferred Security or
Convertible Preferred Securities in accordance with the standing instructions
and procedures of the Clearing Agency, the number of Convertible Preferred
Securities represented by such Convertible Preferred Security in global form to
be increased accordingly; provided that no definitive Convertible Preferred
Security, or portion thereof, in respect of which the Trust or an Affiliate of
the Trust held any beneficial interest shall be included in such Convertible
Preferred Security in global form until such definitive Convertible Preferred
Security is freely tradable in accordance with Rule 144(k); provided further
that the Trust shall issue Convertible Preferred Securities in definitive form
upon any transfer of a beneficial interest in the Convertible Preferred
Security in global form to the Company or any Affiliate of the Company.
(d) Any Global Certificate may be endorsed with or have
incorporated in the text thereof such legends or recitals or changes not
inconsistent with the provisions of this Declaration as may be required by the
Clearing Agency, by any national securities exchange or by the National
Association of Securities Dealers, Inc. in order for the Convertible Preferred
Securities to be tradeable on the PORTAL Market or as may be required for the
Convertible Preferred Securities to be tradeable on any other market developed
for trading of securities pursuant to Rule 144A or required to comply with any
applicable law or any regulation thereunder or with the rules and regulations
of any securities exchange upon which the Convertible Preferred Securities may
be listed or traded or to conform with any usage with respect thereto, or to
indicate any special
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limitations or restrictions to which any particular Convertible Preferred
Securities are subject.
(e) Unless and until definitive, fully registered Convertible
Preferred Security Certificates (the "Definitive Convertible Preferred Security
Certificates") have been issued to the Convertible Preferred Security
Beneficial Owners of a Convertible Preferred Security in global form pursuant
to Section 9.7:
(i) the provisions of this Section 9.4 shall be in full force
and effect with respect to such Convertible Preferred Securities;
(ii) the Trust and the Trustees shall be entitled to deal with
the Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of such
Convertible Preferred Securities and the sole holder of the Global
Certificates and shall have no obligation to the Convertible Preferred
Security Beneficial Owners of such Convertible Preferred Securities;
(iii) to the extent that the provisions of this Section 9.4
conflict with any other provisions of this Declaration, the provisions
of this Section 9.4 shall control; and
(iv) the rights of the Convertible Preferred Security Beneficial
Owners of Convertible Preferred Securities in global form shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Convertible Preferred
Security Beneficial Owners and the Clearing Agency and/or the Clearing
Agency Participants. The Clearing Agency will make book-entry transfers
among Clearing Agency Participants and receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency
Participants. DTC will make book entry transfers among the Clearing
Agency Participants.
(f) Notwithstanding any other provisions of this Declaration
(other than the provisions set forth in this Section 9.4(f)), a Convertible
Preferred Security in global form may not be transferred as a whole except by
the Clearing Agency to a nominee of the Clearing Agency or by a nominee of the
Clearing Agency to the Clearing Agency or another nominee to a successor
Clearing Agency or a nominee of such successor Clearing Agency.
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SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Convertible
Preferred Security Holders is required under this Declaration, unless and until
Definitive Convertible Preferred Security Certificates shall have been issued
to the Convertible Preferred Security Beneficial Owners pursuant to Section
9.7, the Regular Trustees shall give all such notices and communications
specified herein to be given to the Convertible Preferred Security Holders to
the Clearing Agency, and shall have no notice obligations to the Convertible
Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Convertible Preferred Securities, the
Regular Trustees may, in their sole discretion, appoint a successor Clearing
Agency with respect to such Convertible Preferred Securities.
SECTION 9.7 Definitive Convertible Preferred Security Certificates Under
Certain Circumstances.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Convertible Preferred
Securities and a successor Clearing Agency is not appointed within 90
days after such discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the
Sponsor to terminate the book entry system through the Clearing Agency
with respect to the Convertible Preferred Securities in global form,
then:
(c) Definitive Convertible Preferred Security Certificates
shall be prepared by the Regular Trustees on behalf of the Trust with
respect to such Convertible Preferred Securities; and
(d) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees
shall cause Definitive Certificates to be delivered to Convertible
Preferred Security Beneficial Owners of such Convertible Preferred
Securities in accordance with the instructions of the Clearing Agency.
Neither the Trustees nor the Trust shall be liable for any delay in
delivery of such instructions and each of them may conclusively rely on
and shall be
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protected in relying on, said instructions of the Clearing Agency. The
Definitive Convertible Preferred Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which Convertible
Preferred Securities may be listed, or to conform to usage.
At such time as all interests in a Convertible Preferred Security
in global form have been redeemed, converted, exchanged, repurchased or
canceled, such Convertible Preferred Security in global form shall be, upon
receipt thereof, canceled by the Trust in accordance with standing procedures
and instructions of the Clearing Agency.
Convertible Preferred Securities that upon initial issuance are
beneficially owned by persons that are neither QIBs nor Non-U.S. Persons will
be issued as Definitive Convertible Preferred Security Certificates and may not
be represented by a Global Certificate. Convertible Preferred Securities that
upon initial issuance are beneficially owned by persons that are Non-U.S.
Persons may, at the option of the Trust, be issued as Definitive Convertible
Preferred Security Certificates.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the
Regular Trustees, or if the Regular Trustees shall receive evidence to
their satisfaction of the destruction, loss or theft of any Certificate;
and
(b) there shall be delivered to the Institutional Trustee or
the Regular Trustees such security or indemnity as may be required by
them to keep each of them harmless,
then:
in the absence of notice that such Certificate shall have been
acquire by a bona fide purchaser, the Institutional Trustee or any
Regular Trustee on behalf of the Trust shall execute and deliver, in
exchange for, or in lieu of, any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like denomination. In
connection with the issuance of any new Certificate under this Section
9.8, the Institutional Trustee or the Regular Trustees may require the
payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in
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connection therewith. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in
the relevant Securities, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF
SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the
Securities Guarantees and the terms of the Securities, the Sponsor shall not
be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; or
(ii) be required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all
of the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Convertible Preferred Securities shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions.
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(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be
paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to any other Covered
Person for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity
(other than the duties imposed on the Institutional Trustee under the Trust
Indenture Act), are agreed by the parties hereto to replace such other duties
and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between
any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person shall
act in a manner that is, or provides terms that are, fair and reasonable
to the Trust or any Holder of Securities, the Indemnified Person shall
resolve such conflict of interest, take such action or provide such
terms, considering in each case the relative interest of each party
(including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any
customary or accepted industry practices, and any applicable generally
accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made,
taken or provided by the Indemnified Person shall not constitute a
breach of this Declaration or any other agreement contemplated herein or
of any duty or obligation of the Indemnified Person at law or in equity
or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
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(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no
duty or obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not
be subject to any other or different standard imposed by this
Declaration or by applicable law.
SECTION 10.4 Indemnification.
(a)(i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified 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 Trust) by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' 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 interests of the Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe 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 Company Indemnified Person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified 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 Trust to procure a
judgment in its favor by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' 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
interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust
unless and only to the extent that the Court of Chancery of Delaware or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such Court of Chancery or
such other court shall deem proper.
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(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the full
extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the
Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person is
proper in the circumstances because he has met the applicable standard
of conduct set forth in paragraphs (i) and (ii). Such determination
shall be made (1) by the Regular Trustees by a majority vote of a quorum
consisting of such Regular Trustees who were not parties to such action,
suit or proceeding, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion, or (3) by the Common
Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i)
and (ii) of this Section 10.4(a) shall be paid by the Debenture Issuer
in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such Company
Indemnified Person to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Debenture
Issuer as authorized in this Section 10.4(a). Notwithstanding the
foregoing, no advance shall be made by the Debenture Issuer if a
determination is reasonably and promptly made (i) by the Regular
Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion or (iii) the Common
Security Holder of the Trust, that, based upon the facts known to the
Regular Trustees, counsel or the Common Security Holder at the time such
determination is made, such Company Indemnified Person acted in bad
faith or in a manner that such person did not believe to be in or not
opposed to the best interests of the Trust, or, with respect to any
criminal proceeding, that such Company Indemnified Person believed or
had reasonable cause to believe his conduct was unlawful. In no event
shall any advance be made in instances where the Regular Trustees,
independent legal counsel or Common Security Holder reasonably determine
that such person deliberately breached his duty to the Trust or its
Common or Convertible Preferred Security Holders.
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(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 10.4(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer or Convertible Preferred Security
Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
All rights to indemnification under this Section 10.4(a) shall be deemed
to be provided by a contract between the Debenture Issuer and each
Company Indemnified Person who serves in such capacity at any time while
this Section 10.4(a) is in effect. Any repeal or modification of this
Section 10.4(a) shall not affect any rights or obligations then
existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person 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 Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 10.4(a)
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of
another entity, shall stand in the same position under the provisions of
this Section 10.4(a) with respect to the resulting or surviving entity
as he would have with respect to such constituent entity if its separate
existence had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall, unless
otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a Company Indemnified Person and shall inure to the
benefit of the heirs, executors and administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i)
Institutional Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the
Institutional Trustee and the Delaware Trustee, and (iv) any officers,
directors, shareholders, members, partners, employees, representatives,
custodians, nominees or agents of the Institutional Trustee and the Delaware
Trustee (each of the Persons in (i) through (iv) being referred to as a
"Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified
Person harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising
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out of or in connection with the acceptance or administration or the trust or
trusts hereunder, including the costs and expenses (including reasonable legal
fees and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The obligation to indemnify as set forth in this Section
10.4(b) shall survive the satisfaction and discharge of this Declaration.
SECTION 10.05 Outside Business.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor, the Delaware Trustee, or the Institutional Trustee shall be obligated
to present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, shall have the right to take for
its own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity. Any Covered
Person, the Delaware Trustee and the Institutional Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for,
or act on any committee or body of holders of, securities or other obligations
of the Sponsor of its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
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SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books, records and supporting
documents, which shall reflect in detail, each transaction of the Trust. The
books of account shall be maintained on the accrual method of accounting in
compliance with generally accepted accounting principles, consistently applied.
The Trust shall use the accrual method of accounting for the United States
federal income tax purposes. The books of account and the records of the Trust
shall be examined by and reported upon as of the end of each Fiscal Year of the
Trust by a firm of independent certified public accountants selected by the
Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and
delivered to each of the Holders of Securities, within 90 days after the end of
each Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year, and
the related income or loss.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States
federal income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the
Code to deliver any such statement at a later date, the Regular Trustees shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and
filed with the appropriate taxing authority, an annual United States federal
income tax return, on a Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to be
filed by the Regular Trustees on behalf of the Trust with any state or local
taxing authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Institutional Trustee shall be
made directly to the Institutional Trustee Account and no other funds of the
Trust shall be deposited in the Institutional Trustee Account. The sole
signatories for such accounts shall be designated by the Regular Trustees;
provided, however, that the Institutional Trustee shall designate the
signatories for the Institutional Trustee Account.
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SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a distribution in the amount of the withholding to the
Holder. In the event of any claimed over-withholding, Holders shall be limited
to an action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular
Trustees a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Institutional Trustee, the
Institutional Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Institutional Trustee shall have first received an Officers' Certificate
from each of the Trust and the
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Sponsor that such amendment is permitted by, and conforms to, the terms
of this Declaration (including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which affects
the rights, powers, duties, obligations or immunities of the
Institutional Trustee, the Institutional Trustee shall have first
received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the
Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor or
the Trust) that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the
Institutional Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) at such time after the Trust has issued any securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only with
such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities; and
(f) the rights of the holders of the Common Securities under
Article V to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Common Securities; and
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(g) notwithstanding Section 12.1(c), this Declaration may be
amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this declaration
that may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor; and
(iv) to conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body,
court, government agency or regulatory authority which amendment does
not have a material adverse effect on the right, preferences or
privileges of the Holders.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms
of the Securities or the rules of any stock exchange on which the Convertible
Preferred Securities are listed or admitted for trading. The Regular Trustees
shall call a meeting of the Holders of such class if directed to do so by the
Holders of at least 10% in liquidation amount of such class of Securities.
Such direction shall be given by delivering to the Regular Trustees one or more
calls in a writing stating that the signing Holders of Securities wish to call
a meeting and indicating the general or specific purpose for which the meeting
is to be called. Any Holders of Securities calling a meeting shall specify in
writing the Security Certificates held by the Holders of Securities exercising
the right to call a meeting and only those Securities specified shall be
counted for purposes of determining whether the required percentage set forth
in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders
of Securities having a right to vote thereat at least 7 days and not
more than 60 days before the date of such meeting. Whenever a vote,
consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on
which the Convertible Preferred Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting of the
Holders of Securities. Any action that may be taken at a meeting of the
Holders of Securities may be taken without a meeting if a consent in
writing setting forth the action so
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taken is signed by the Holders of Securities owning not less than the
minimum amount of Securities in liquidation amount that would be
necessary to authorize or take such action at a meeting at which all
Holders of Securities having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a meeting shall
be given to the Holders of Securities entitled to vote who have not
consented in writing. The Regular Trustees may specify that any written
ballot submitted to the Security Holder for the purpose of taking any
action without a meeting shall be returned to the Trust within the time
specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of Securities executing it. Except as otherwise provided herein,
all matters relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as if the
Trust were a Delaware corporation and the Holders of the Securities
were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms
of the Securities, the Trust Indenture Act or the listing rules of any
stock exchange on which the Convertible Preferred Securities are then
listed or trading, otherwise provides, the Regular Trustees, in their
sole discretion, shall establish all other provisions relating to
meetings of Holders of Securities, including notice of the time, place
or purpose of any meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee.
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The Trustee that acts as initial Institutional Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Institutional Trustee represents and warrants, as
applicable, to the Trust and the Sponsor at the time of the Successor
Institutional Trustee's acceptance of its appointment as Institutional Trustee
that:
(a) the Institutional Trustee is a New York banking corporation
with trust powers, duly organized, validly existing and in good
standing, with trust power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, the
Declaration;
(b) the execution, delivery and performance by the
Institutional Trustee of the Declaration has been duly authorized by all
necessary corporate action on the part of the Institutional Trustee.
The Declaration has been duly executed and delivered by the
Institutional Trustee, and it constitutes a legal, valid and binding
obligation of the Institutional Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law);
(c) the execution, delivery and performance of the Declaration
by the Institutional Trustee does not conflict with or constitute a
breach of the charter or by-laws of the Institutional Trustee; and
(d) no consent, approval or authorization of, or registration
with or notice to, any New York or federal banking authority is required
for the execution, delivery or performance by the Institutional Trustee,
of the Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking corporation with
trust powers, duly organized, validly existing and in good standing,
with trust power and authority to execute and deliver, and to carry out
and perform its obligations under the terms of, the Declaration.
(b) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration. The
Declaration under Delaware
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law constitutes a legal, valid and binding obligation of the Delaware
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding
in equity or at law).
(c) No consent, approval or authorization of, or registration
with or notice to, any Delaware or federal banking authority is required
for the execution, delivery or performance by the Delaware Trustee, of
the Declaration.
(d) The Delaware Trustee is a natural person who is a resident
of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at
the Trust's mailing address set forth below (or such other address as
the Trust may give notice of to the Holders of the Securities):
Devon Financing Trust
c/o Devon Energy Corporation
20 North Broadway
Suite 1500
Oklahoma City, OK 73102-8260
Attention: Corporate Secretary
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice
of to the Holders of the Securities):
The Bank of New York (Delaware)
23 White Clay Center
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Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
(c) if given to the Institutional Trustee, at its Corporate
Trust Office to the attention of Corporate Trust Trustee Administration
(or such other address as the Institutional Trustee may give notice of
to the Holders of the Securities).
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as
the Holder of the Common Securities may give notice to the Trust):
Devon Energy Corporation
20 North Broadway
Suite 1500
Oklahoma City, OK 73102-8260
Attention: Corporate Secretary
(e) if given to any other Holder, at the address set forth on
the books and records of the Trust.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.
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SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 14.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named
or referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder
of this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to
be executed as of the day and year first above written.
/s/ J. LARRY NICHOLS
------------------------------------
J. Larry Nichols, as Regular Trustee
/s/ H. ALLEN TURNER
------------------------------------
H. Allen Turner, as Regular
Trustee
/s/ WILLIAM T. VAUGHN
------------------------------------
William T. Vaughn, as Regular
Trustee
THE BANK OF NEW YORK (Delaware)
as Delaware Trustee
By: /s/ MELISSA BENEDUCE
---------------------------------
Name: Melissa Beneduce
Title: Vice President
THE BANK OF NEW YORK, as Institu-
tional Trustee
By: /s/ BYRON MERINO
---------------------------------
Name: Byron Merino
Title: Assistant Treasurer
DEVON ENERGY CORPORATION, as Sponsor
By: /s/ H. ALLEN TURNER
---------------------------------
Name: H. Allen Turner
Title: Vice President
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ANNEX I
TERMS OF
6 1/2% CONVERTIBLE PREFERRED SECURITIES
6 1/2% CONVERTIBLE COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration
of Trust, dated as of July 3, 1996 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Convertible Preferred Securities and the
Common Securities are set out below (each capitalized term used but not defined
herein has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
(a) Convertible Preferred Securities. 2,990,000 Convertible
Preferred Securities of the Trust with an aggregate liquidation amount with
respect to the assets of the Trust of one-hundred forty-nine million, five
hundred thousand Dollars ($149,500,000), and a liquidation amount with respect
to the assets of $50 per convertible preferred security, are hereby designated
for the purposes of identification only as "6 1/2% Trust Convertible Preferred
Securities" (the "Convertible Preferred Securities"). The Convertible
Preferred Security Certificates evidencing the Convertible Preferred Securities
shall be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any stock
exchange on which the Convertible Preferred Securities are listed.
(b) Common Securities. 92,475 Common Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
four million, six-hundred twenty-three thousand seven-hundred and fifty Dollars
($4,623,750), and a liquidation amount with respect to the assets of the Trust
of $50 per common security, are hereby designated for the purposes of
identification only as "6 1/2% Common Securities" (the "Common Securities").
The Common Securities Certificates evidencing the Common Securities shall be in
the form of Exhibit A-2 to the Declaration, with and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a
rate per annum of 6 1/2% (the "Coupon Rate") of the stated liquidation amount
of $50 per Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears
for more than one quarter will bear interest thereon compounded quarterly at
the Coupon Rate (to the extent permitted by applicable law).
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The term "Distributions" as used herein includes such cash distributions and
any such interest payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 30-day month.
(b) Distributions on the Securities will be cumulative, will
accrue from July 3, 1996, and will be payable quarterly in arrears, on March
15, June 15, September 15 and December 15 of each year, commencing on September
15, 1996, except as otherwise described below. So long as the Debenture Issuer
shall not be in default in the payment of interest on the Debentures, the
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period from time to time on the
Debenture for a period not exceeding 20 consecutive quarters (each an
"Extension Period"), during which Extension Period no interest shall be due and
payable on the Debentures, provided that no Extension Period shall last beyond
the date of maturity or any redemption date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred. Despite
such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded quarterly during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters or extend beyond the maturity or any redemption date of the
Debentures. Payments of accrued Distributions will be payable to Holders as
they appear on the books and records of the Trust on the first record date
after the end of the Extension Period. Upon the termination of any Extension
Period and the payment of all amounts then due, the Debenture Issue may
commence a new Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates which shall be fifteen days prior to the relevant payment
dates which payment dates correspond to the record and interest payment dates
on the Debentures. The relevant record dates for the Common Securities shall be
the same record date as for the Convertible Preferred Securities.
Distributions payable on any Securities that are not punctually paid on any
Distribution payment date, as a result of the Debenture Issuer having failed to
make a payment under the Debentures, will cease to be payable to the Person in
whose name such Securities are registered on the relevant record date, and such
defaulted Distribution will instead be payable to the Person whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture. If any
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date on which Distributions are payable on the Securities is not a Business
Day, then payment of the Distribution payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date.
(d) In the event of an election by the Holder to convert its
Securities through the Conversion Agent into Common Stock pursuant to the terms
of the Securities as set forth in this Annex I to the Declaration, no payment,
allowance or adjustment shall be made with respect to accumulated and unpaid
Distributions on such Securities, or be required to be made; provided, however,
that Holders of Securities at the close of business on any record date for the
payment of Distributions will be entitled to receive the Distributions payable
on such Securities on the corresponding payment date notwithstanding the
conversion of such Securities into Common Stock following such record date;
provided, further that if the date of any redemption of related Debentures
falls between such record date and such corresponding payment date, the amount
of such Distribution shall include accumulated and unpaid Distributions accrued
to but excluding such date of redemption.
(e) In the event that there is any money or other property held
by or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust, the Holders of the Securities on the
date of the dissolution, winding-up or termination, as the case may be, will be
entitled to receive out of the assets of the Trust available for distribution
to Holders of Securities after satisfaction of liabilities of creditors an
amount equal to the aggregate of the stated liquidation amount of $50 per
Security plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"), unless, such dissolution,
winding-up or termination occurs in connection with a Special Event in which,
in accordance with Section 4(c), Debentures in an aggregate stated principal
amount equal to the aggregate stated liquidation amount of such Securities,
with an interest rate equal to the Coupon Rate of, and bearing accrued and
unpaid interest in an amount equal to the accrued and unpaid Distributions on,
such Securities, shall be distributed on a Pro Rata basis to the Holders of the
Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can
be paid only in part because the Trust has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities
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shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in part,
whether at maturity or upon redemption (either at the option of the Debenture
Issuer or pursuant to a Special Event as described below), the proceeds from
such repayment or payment shall be simultaneously applied to redeem Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Debentures so repaid or redeemed at a redemption price per Security
equal to the redemption price of the Debentures, together with accrued and
unpaid Distributions thereon through the date of the redemption, payable in
cash (the "Redemption Price"). Holders will be given not less than 30 nor more
than 60 days' notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Convertible Preferred Securities will
be redeemed Pro Rata and the Convertible Preferred Securities to be redeemed
will be as described in Section 4(f)(ii) below.
(c) If, at any time, a Tax Event or an Investment Company Event
(each, as defined below, a "Special Event") shall occur and be continuing, the
Regular Trustees may with the consent of the Debenture Issuer, except in
certain limited circumstances in relation to a Tax Event described in this
Section 4(c), dissolve the Trust and, after satisfaction of creditors, cause
Debentures held by the Institutional Trustee, having an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the Coupon Rate of, and accrued and unpaid interest equal to
accrued and unpaid Distributions on, and having the same record date for
payment as the Securities, to be distributed to the Holders of the Securities
in liquidation of such Holders' interests in the Trust on a Pro Rata basis,
within 90 days following the occurrence of such Special Event (the "90 Day
Period"); provided, however, that such dissolution and distribution shall be
conditioned on (i) the Regular Trustees' receipt of an opinion of independent
tax counsel experienced in such matters (a "No Recognition Opinion"), which
opinion may rely on published revenue rulings of the Internal Revenue Service,
to the effect that the Holders of the Securities will not recognize any gain or
loss for United States federal income tax purposes as a result of the
dissolution of the Trust ad the distribution of Debentures, (ii) in the case of
a Tax Event, the Debenture Issuer or the Trust being unable to eliminate,
within the 90 Day Period, the Tax Event by taking some ministerial action, such
as filing a form or making an election, or pursuing some other similar
reasonable measure that has no adverse effect on the Trust, the Debenture
Issuer, the Sponsor or the Holders of the Securities ("Ministerial Action"),
and (iii) the Debenture Issuer's prior written consent to such dissolution and
distribution.
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If in the event of a Tax Event (i) after receipt of a Dissolution
Tax Opinion (as defined hereinafter) by the Regular Trustees, the Debenture
Issuer has received an opinion (a "Redemption Tax Opinion") of independent tax
counsel experienced in such matters that, as a result of a Tax Event, there is
more than an insubstantial risk that the Debenture Issuer would be precluded
from deducting the interest on the Debentures for United States federal income
tax purposes even after the Debentures were distributed to the Holders of
Securities in liquidation of such Holders' interests in the Trust as described
in this Section 4(c), or (ii) the Regular Trustees shall have been informed by
such tax counsel that a No Recognition Opinion cannot be delivered to the
Trust, the Debenture Issuer shall have the right at any time, upon not less
than 30 nor more than 60 days' notice, to redeem the Debentures in whole or in
part, at a redemption price equal to 100% of the principal amount thereof plus
accrued and unpaid interest thereon, for cash within 90 days following the
occurrence of such Tax Event. Following such redemption, Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so redeemed shall be redeemed by the Trust at the Redemption Price
on a Pro Rata basis; provided, however, that, if at the time there is available
to the Debenture Issuer or the Trust the opportunity to eliminate, within such
90 day period, the Tax Event by taking some Ministerial Action, the Trust or
the Debenture Issuer will pursue such Ministerial Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have received
an opinion of independent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that on or after July 3, 1996, as a
result of (a) any amendment to, clarification of, or change (including any
announced prospective change) in the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein affecting taxation, (b) any judicial decision, official administrative
pronouncement, ruling, regulatory procedure, notice or announcement, including
any notice or announcement of intent to adopt such procedures or regulations
(an "Administrative Action") or (c) any amendment to, clarification of, or
change in the official position or the interpretation of such Administrative
Action or judicial decision that differs from the theretofore generally
accepted position, in each case, by any legislative body, court, governmental
authority or regulatory body, irrespective of the manner in which such
amendment, clarification or change is made known, which amendment,
clarification, or change is effective or such pronouncement or decision is
announced, in each case, on or after, July 3, 1996, there is more than an
insubstantial risk that (i) the Trust is or will be within 90 days of the date
thereof, subject to United States federal income tax with respect to interest
accrued or received on the Debentures, (ii) the Trust is, or will be within 90
days of the date thereof, subject to more than a de minimis amount of taxes,
duties or other governmental charges, or (iii) interest payable in cash by the
Debenture Issuer to the Trust on the Debentures is not, or within 90 days of
the date thereof will not be, deductible, in whole or in part, by the Debenture
Issuer for United States federal income tax purposes. Notwithstanding the
foregoing, a Tax Event shall not include any change in tax law that requires
the Debenture Issuer of United States federal income tax purposes to
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defer taking a deduction for any original issue discount ("OID") that accrues
with respect to the Debentures until the interest payment related to such OID
is paid by the Debenture Issuer in cash; provided, that such change in tax law
does not create more than an insubstantial risk that the Debenture Issuer will
be prevented from taking a deduction for OID accruing with respect to the
Debentures as a date that is no later than the date the interest payment
related to such OID is actually paid by the Debenture Issuer in cash.
"Investment Company Event" means that the Regular Trustees shall
have received an opinion of independent counsel experienced in such matters to
the effect that, as a result of the occurrence of a change in law or regulation
or a written change in interpretation or application of law or regulations by
any legislative body, court, governmental agency or regulatory authority on or
after July 3, 1996 (a "Change in 1940 Act Law"), there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" which is required to be registered under the Investment Company Act of
1940, as amended (the "1940 Act").
On and from the date fixed by the Regular Trustees for any
distribution of Debentures upon dissolution of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) The Depository Trust Company
(the "Depository") or its nominee (or any successor Clearing Agency or its
nominee), as the record Holder of the Convertible Preferred Securities held in
global form, will receive a registered certificate or certificates representing
the Debentures held in global form to be delivered upon such distribution, and
(iii) certificates representing Securities held in definitive form, except for
certificates representing Convertible Preferred Securities held by the
Depository or its nominee (or any successor Clearing Agency or its nominee),
will be deemed to represent Debentures having an aggregate principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the Coupon Rate of, and accrued and unpaid interest equal to
accrued and unpaid Distributions on such Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or before the
date of redemption.
(e) Notice of any redemption of, or notice of distribution of
Debentures in exchange for the Securities (a "Redemption/Distribution Notice")
will be given by the Trust by mail to each Holder of Securities to be redeemed
or exchanged not fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a redemption, will be the
date fixed for redemption of the Debentures. For purposes of the calculation
of the date of redemption or exchange and the dates on which notices are given
pursuant to this Section 4(f), a Redemption/Distribution Notice shall be deemed
to be given on the day such notice is first mailed by first-class mail, postage
prepaid, or by such other means suitable to assure delivery of such written
notice, to
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Holders of Securities. Each Redemption/Distribution Notice shall be addressed
to the Holders of Securities at the address of each such Holder appearing in
the books and records of the Trust. No defect in the Redemption/Distribution
Notice or in the mailing of either thereof with respect to any Holder of
Securities shall affect the validity of the redemption or exchange proceedings
with respect to any other Holder of Securities.
(f) In the event that fewer than all the outstanding Securities
are to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata
from each Holder of Convertible Preferred Securities, it being understood that,
in respect of Convertible Preferred Securities registered in the name of and
held of record by the Depository or its nominee (or any successor Clearing
Agency or its nominee) or any nominee, the distribution of the proceeds of such
redemption will be made to each Clearing Agency Participant (or Person on whose
behalf such nominee holds such securities) in accordance with the procedures
applied by such agency or nominee.
(g) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 4 (which notice will be
irrevocable), then (A) with respect to Convertible Preferred Securities held in
book-entry form by 12:00 noon, New York City time, on the redemption date,
provided that the Debenture Issuer has paid the Institutional Trustee a
sufficient amount of cash in connection with the related redemption or maturity
of the Debentures, the Institutional Trustee will deposit irrevocably with the
Depository or its nominee (or successor Clearing Agency or its nominee) funds
sufficient to pay the applicable Redemption Price with respect to such
Convertible Preferred Securities and will give the Depository irrevocable
instructions and authority to pay the Redemption Price to the Holders of such
Convertible Preferred Securities, and (B) with respect to Convertible Preferred
Securities issued in definitive form and Common Securities, provided that the
Debenture Issuer has paid the Institutional Trustee a sufficient amount of cash
in connection with the related redemption or maturity of the Debentures, the
Institutional Trustee will pay the relevant Redemption Price to the Holders of
such Securities by check mailed to the address of the relevant Holder appearing
on the books and records of the Trust on the redemption date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business on the
required date of such deposit, distributions will cease to accrue on the
Securities so called for redemption and all rights of Holders of such
Securities so called for redemption will cease, except the right of the Holders
of such Securities to receive the Redemption Price, but without interest on
such Redemption Price. Neither the Regular Trustees nor the Trust shall be
required to register or cause to be registered the transfer of any Securities
that have been so called for redemption. If any date fixed for redemption of
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment
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will be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date fixed for redemption. If payment
of the Redemption Price in respect of any Securities is improperly withheld or
refused and not paid either by the Institutional Trustee or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee, Distributions on such
Securities will continue to accrue from the original redemption date to the
actual date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
Redemption Price.
(h) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to (A) in respect of Convertible
Preferred Securities held in global form, the Depository or its nominee (or any
successor Clearing Agency or its nominee), (B) with respect to Convertible
Preferred Securities held in definitive form, to the Holder thereof, and (C) in
respect of the Common Securities, to the Holder thereof.
(i) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), the Sponsor or any
of its subsidiaries may at any time and from time to time purchase outstanding
Convertible Preferred Securities by tender, in the open market or otherwise.
5. Conversion Rights.
The Holders of Securities shall have the right at any time,
beginning October 1, 1996 through the close of business on June 14, 2026 (or,
in the case of Securities called for redemption, prior to the close of business
on the Business Day prior to the redemption date), at their option, to cause
the Conversion Agent to convert Securities, on behalf of the converting
Holders, into shares of Common Stock in the manner described herein on and
subject to the following terms and conditions:
(a) The Securities will be convertible at the office of the
Conversion Agent into fully paid and nonassessable shares of Devon Common Stock
pursuant to the Holder's direction to the Conversion Agent to exchange such
Securities for a portion of the Debentures theretofore held by the Trust on the
basis of one Security per $50 principal amount of Debentures, and immediately
convert such amount of Debentures into fully paid and nonassessable shares of
Common Stock at an initial rate of 1.6393 shares of Common Stock per $50
principal amount of Debentures (which is equivalent to a conversion price of
$30.50 per share of Common Stock, subject to certain adjustments set forth in
Sections 6.3 and 6.4 of the Supplemental Indenture (as so adjusted, "Conversion
Price")).
(b) In order to convert Securities into Common Stock the Holder
shall submit to the Conversion Agent at the office referred to above an
irrevocable request to convert Securities on behalf of such Holder (the
"Conversion Request"), together, if the Securities are in certificated form,
with such certificates. The Conversion Request shall (i)
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set forth the number of Securities to be converted and the name or names, if
other than the Holder, in which the shares of Common Stock should be issued and
(ii) direct the Conversion Agent (a) to exchange such Securities for a portion
of the Debentures held by the Trust (at the rate of exchange specified in the
preceding paragraph) and (b) to immediately convert such Debentures on behalf
of such Holder, into Common Stock (at the conversion rate specified in the
preceding paragraph). The Conversion Agent shall notify the Trust of the
Holder's election to exchange Securities for a portion of the Debentures held
by the Trust and the Trust shall, upon receipt of such notice, deliver to the
Conversion Agent the appropriate principal amount of Debentures for exchange in
accordance with this Section. The Conversion Agent shall thereupon notify
Devon of the Holder's election to convert such Debentures into shares of Common
Stock. Holders of Securities at the close of business on a Distribution record
date will be entitled to receive the Distribution payable on such securities on
the corresponding Distribution payment date notwithstanding the conversion of
such Securities following such record date but prior to such distribution
payment date; provided, however, that if the date of any redemption of the
related Debentures falls between such record date and the related Distribution
payment date, the amount of such Distribution shall include accumulated and
unpaid Distributions accrued to but excluding such date of redemption. Except
as provided above, neither the Trust nor the Sponsor will make, or be required
to make, any payment, allowance or adjustment upon any conversion on account of
any accumulated and unpaid Distributions accrued on the Securities (including
any Additional Amounts accrued thereon) surrendered for conversion, or on
account of any accumulated and unpaid dividends on the shares of Devon's Common
Stock issued upon such conversion. Securities shall be deemed to have been
converted immediately prior to the close of business on the day on which a
Notice of Conversion relating to such Securities is received by the Trust in
accordance with the foregoing provision (the "Conversion Date"). The Person or
Persons entitled to receive Devon's Common Stock issuable upon conversion of
the Debentures shall be treated for all purposes as the record holder or
holders of such Common Stock at such time. As promptly as practicable on or
after the Conversion Date, Devon shall issue and deliver at the office of the
Conversion Agent a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion, together with the cash payment, if
any, in lieu of any fraction of any share to the Person or Persons entitled to
receive the same, unless otherwise directed by the Holder in the notice of
conversion and the Conversion Agent shall distribute such certificate or
certificates to such Person or Persons.
(c) Each Holder of a Security by his acceptance thereof
appoints The Bank of New York as "Conversion Agent" for the purpose of
effecting the conversion of Securities in accordance with this Section. In
effecting the conversion and transactions described in this Section, the
Conversion Agent shall be acting as agent of the Holders of Securities
directing it to effect such conversion transactions. The Conversion Agent is
hereby authorized (i) to exchange Securities from time to time for Debentures
held by the Trust in connection with the conversion of such Securities in
accordance with this Section
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and (ii) to convert all or a portion of the Debentures into Common Stock and
thereupon to deliver such shares of Common Stock in accordance with the
provisions of this Section and to deliver to the Trust a new Debenture or
Debentures for any resulting unconverted principal amount.
(d) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, such fractional interest will be
paid in cash by Devon to the Conversion Agent, which in turn will make such
payment to the Holder or Holders of Securities so converted.
(e) Devon shall at all times reserve and keep available out of
its authorized and unissued Devon Common Stock, solely for issuance upon the
conversion of the Debentures, free from any preemptive or other similar rights,
such number of shares of Devon Common Stock as shall from time to time be
issuable upon the conversion of all the Debentures then outstanding.
Notwithstanding the foregoing, Devon shall be entitled to deliver upon
conversion of Debentures, shares of Devon Common Stock reacquired and held in
the treasury of Devon (in lieu of the issuance of authorized and unissued
shares of Devon Common Stock), so long as any such treasury shares are free and
clear of all liens, charges, security interests or encumbrances. Any shares of
Devon Common Stock issued upon conversion of the Debentures shall be duly
authorized, validly issued and fully paid and nonassessable. The Trust shall
deliver the shares of Devon Common Stock received upon conversion of the
Debentures to the converting Holder free and clear of all liens, charges,
security interests and encumbrances, except for United States withholding
taxes. Each of Devon and the Trust shall prepare and shall use its best
efforts to obtain and keep in force such governmental or regulatory permits or
other authorizations as may be required by law, and shall comply with all
applicable requirements as to registration or qualification of Devon Common
Stock (and all requirements to list Devon Common Stock issuable upon conversion
of Debentures that are at the time applicable), in order to enable Devon to
lawfully issue Devon Common Stock to the Trust upon conversion of the
Debentures and the Trust to lawfully deliver Devon Common Stock to each Holder
upon conversion of the Securities.
(f) Devon will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Devon Common Stock on conversion
of Debentures and the delivery of the shares of Devon Common Stock by the Trust
upon conversion of the Securities. Devon shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Devon Common Stock in a name other than that in
which the Securities so converted were registered, and no such issue or
delivery shall be made unless and until the person requesting such issue has
paid to the Trust the amount of any such tax, or has established to the
satisfaction of the Trust that such tax has been paid.
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(g) Nothing in the preceding Paragraph (f) shall limit the
requirement of the Trust to withhold taxes pursuant to the terms of the
Securities or set forth in this Annex I to the Declaration or to the
Declaration itself or otherwise require the Institutional Trustee or the Trust
to pay any amounts on account of such withholdings.
6. Voting Rights - Convertible Preferred Securities.
(a) Except as provided under Sections 6(b) and 8 and as
otherwise required by law and the Declaration, the Holders of the Convertible
Preferred Securities will not have voting rights.
(b) Subject to the requirements set forth in this paragraph, the
Holders of a Majority in liquidation amount of the Convertible Preferred
Securities, voting separately as a class, may direct the time, method, and
place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the
Institutional Trustee, as holder of the Debentures, to (i) exercise the
remedies available under the Indenture with respect to the Debentures, (ii)
waive any past default and its consequences that is waivable under Section 5.13
of the Indenture, or (iii) exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable, provided,
however, that, where a consent under the Indenture would require the consent or
act of the Holders of greater than a majority of the Holders in principal
amount of Debentures affected thereby, (a "Super Majority"), the Institutional
Trustee may only give such consent or take such action at the written direction
of the Holders of at least the proportion in liquidation amount of the
Convertible Preferred Securities which the relevant Super Majority represents
of the aggregate principal amount of the Debentures outstanding. The
Institutional Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Convertible Preferred Securities.
Other than with respect to directing the time, method and place of conducting
any remedy available to the Institutional Trustee or the Debenture Trustee as
set forth above, the Institutional Trustee shall not take any action in
accordance with the directions of the Holders of the Convertible Preferred
Securities under this paragraph unless the Institutional Trustee has obtained
an opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action. If a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay interest or principal on the Debentures on the date
such interest or principal is otherwise payable (or in the case of redemption,
on the redemption date), then a holder of Preferred Securities may directly
institute a proceeding for enforcement of payment to such Holder of the
principal of or interest on the Debentures having a principal amount equal to
the aggregate liquidation amount of the Preferred Securities of such holder (a
"Direct Action") on or after the respective due date specified in the
Debentures. In connection with such Direct Action, the rights of the holders
of the Common Securities
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Holder will be subrogated to the rights of such holder of Preferred Securities
to the extent of any payment made by the Issuer to such holder of Preferred
Securities in such Direct Action. Except as provided in the preceding
sentences, the Holders of Preferred Securities will not be able to exercise
directly any other remedy available to the holders of the Debentures.
Any approval or direction of Holders of Convertible Preferred
Securities may be given at a separate meeting of Holders of Convertible
Preferred Securities convened for such purpose, at a meeting of all of the
Holders of Securities in the Trust or pursuant to written consent. The Regular
Trustees will cause a notice of any meeting at which Holders of Convertible
Preferred Securities are entitled to vote, or of any matter upon which action
by written consent of such Holders is to be taken, to be mailed to each Holder
of record of Convertible Preferred Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Convertible Preferred
Securities will be required for the Trust to redeem and cancel Convertible
Preferred Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
Notwithstanding that Holders of Convertible Preferred Securities
are entitled to vote or consent under any of the circumstances described above,
any of the Convertible Preferred Securities that are owned by the Sponsor or
any Affiliate of the Sponsor shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if they were not
outstanding.
7. Voting Rights - Common Securities.
(a) Except as provided under Sections 7(b), (c) and 8 and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will not have voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after
any Event of Default with respect to the Convertible Preferred Securities has
been cured, waived, or otherwise eliminated and subject to the requirements of
the second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities,
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<PAGE> 81
voting separately as a class, may direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional
Trustee under the Declaration, including (i) directing the time method, place
of conducting any proceeding for any remedy available to the Debenture Trustee,
or exercising any trust or power conferred on the Debenture Trustee with
respect to the Debentures, (ii) waive any past default and its consequences
that is waivable under Section 5.13 of the Indenture, or (iii) exercise any
right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable, provided that, where a consent or action
under the Indenture would require the consent or act of the Holders of greater
than a majority in principal amount of Debentures affected thereby (a "Super
Majority"), the Institutional Trustee may only give such consent or take such
action at the written direction of the Holders of at least the proportion in
liquidation amount of the Common Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding.
Pursuant to this Section 6(c), the Institutional Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Convertible Preferred Securities. Other than with respect to directing the
time, method and place of conducting any remedy available to the Institutional
Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of
the Common Securities under this paragraph unless the Institutional Trustee has
obtained an opinion of tax counsel to the effect that for the purposes of
United States federal income tax the Trust will not be classified as other than
a grantor trust on account of such action. If the Institutional Trustee fails
to enforce its rights under the Declaration, any Holder of Common Securities
may institute a legal proceeding directly against any Person to enforce the
Institutional Trustee's rights under the Declaration, without first instituting
a legal proceeding against the Institutional Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will
be required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
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<PAGE> 82
8. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities
voting together as a single class, will be entitled to vote on such amendment
or proposal (but not on any other amendment or proposal) and such amendment or
proposal shall not be effective except with the approval of the Holders of at
least a Majority in liquidation amount of the Securities affected thereby;
provided, however, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Convertible Preferred Securities or only the
Common Securities, then only the affected class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of a Majority in liquidation amount of such
class of Securities.
(b) In the event the consent of the Institutional Trustee as
the holder of the Debentures is required under the Indenture with respect to
any amendment, modification or termination on the Indenture or the Debentures,
the Institutional Trustee shall request the written direction of the Holders of
the Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a Majority in liquidation amount of the Securities voting together
as a single class; provided, however, that where a consent under the Indenture
would require the consent of the holders of greater than a majority in
aggregate principal amount of the Debentures (a "Super Majority"), the
Institutional Trustee may only give such consent at the direction of the
Holders of at least the proportion in liquidation amount of the Securities
which the relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding; provided, further, that the Institutional
Trustee shall not take any action in accordance with the directions of the
Holders of the Securities under this Section 8(b) unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that for the
purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action.
9. Pro Rata.
A reference in these terms of the Securities to any distribution
or treatment as being "Pro Rata" shall mean pro rata to each Holder of
Securities according to the aggregate liquidation amount of the Securities held
by the relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of
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<PAGE> 83
the Convertible Preferred Securities pro rata according to the aggregate
liquidation amount of Convertible Preferred Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Convertible
Preferred Securities outstanding, and only after satisfaction of all amounts
owed to the Holders of the Convertible Preferred Securities, to each Holder of
Common Securities pro rata according to the aggregate liquidation amount of
Common Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Common Securities outstanding.
10. Ranking.
The Convertible Preferred Securities rank pari passu and payment
thereon shall be made Pro Rata with the Common Securities except that, where a
Declaration Event of Default occurs and is continuing, the rights of Holders of
the Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Convertible Preferred Securities.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Convertible Preferred Securities and Common
Securities, by the acceptance thereof, agrees to the provisions of the
Convertible Preferred Securities Guarantee and the Common Securities Guarantee,
respectively, including the subordination provisions therein and to the
provisions of the Indenture.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Convertible Preferred Securities Guarantee or the Common Securities Guarantee
(as may be appropriate), and the Indenture to a Holder without charge on
written request to the Sponsor at its principal place of business.
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<PAGE> 84
EXHIBIT A-1
FORM OF CONVERTIBLE PREFERRED SECURITY CERTIFICATE
[IF THE CONVERTIBLE PREFERRED SECURITY IS TO BE A GLOBAL
CERTIFICATE INSERT - THIS CONVERTIBLE PREFERRED SECURITY IS A GLOBAL
CERTIFICATE WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR
A NOMINEE OF THE DEPOSITARY. THIS CONVERTIBLE PREFERRED SECURITY IS
EXCHANGEABLE FOR CONVERTIBLE PREFERRED SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS CONVERTIBLE
PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS CONVERTIBLE PREFERRED
SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CONVERTIBLE PREFERRED SECURITY IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW
YORK, NEW YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CONVERTIBLE PREFERRED SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.]
CERTIFICATE NUMBER: NUMBER OF CONVERTIBLE PREFERRED SECURITIES:
CUSIP NO.
Certificate Evidencing Convertible Preferred Securities
of
DEVON FINANCING TRUST
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
A1-1
<PAGE> 85
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1),(2), (3) OR (7) UNDER THE SECURITIES
ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF
THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY
OR THE COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OR EXCHANGE OF
SUCH SECURITY EXCEPT (A) TO DEVON ENERGY CORPORATION OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (D) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE BANK OF NEW
YORK, AS TRUSTEE (OR, IF THIS CERTIFICATE EVIDENCES COMMON STOCK, THE
TRANSFER AGENT FOR THE COMMON STOCK), A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM SUCH TRUSTEE OR TRANSFER AGENT), (E) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR
(F) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO
THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT
(OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS
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<PAGE> 86
CERTIFICATE TO THE BANK OF NEW YORK, AS TRUSTEE (OR, IF THIS
CERTIFICATE EVIDENCES COMMON STOCK, SUCH HOLDER MUST FURNISH TO THE
TRANSFER AGENT SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT). IF
THIS CERTIFICATE DOES NOT EVIDENCE COMMON STOCK AND IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO
IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH
TO THE BANK OF NEW YORK, AS TRUSTEE, SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS DEVON MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER
THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO THE SALES OF THE
SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT.
6 1/2% Trust Convertible Preferred Securities (liquidation
amount $50 per Trust Convertible Preferred Security)
Devon Financing Trust, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), hereby certifies that
(the "Holder") is the registered owner of convertible preferred securities of
the Trust representing undivided beneficial interests in the assets of the
Trust designated the 6 1/2% Trust Convertible Preferred Securities (liquidation
amount $50 per Trust Convertible Preferred Security) (the "Convertible
Preferred Securities"). The Convertible Preferred Securities are transferable
on the books and records of the Trust, in person or by a duly authorized
attorney, upon surrender of this certificate duly endorsed and in proper form
for transfer.
The designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Convertible Preferred Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of July 3, 1996, as the same may be amended from time to time (the
Declaration"), including the designation of the terms of the Convertible
Preferred Securities as set forth in Annex I to the Declaration.
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<PAGE> 87
Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits
of the Convertible Preferred Securities Guarantee to the extent provided
therein. The Sponsor will provide a copy of the Declaration, the Convertible
Preferred Securities Guarantee and the Indenture to a Holder without charge
upon written request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Convertible
Preferred Securities as evidence of indirect beneficial ownership in the
Debentures.
Unless the Institutional Trustee's Certificate of
Authentication hereon has been properly executed, these Convertible Preferred
Securities shall not be entitled to any benefit under the Declaration or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Trust has executed this certificate
this 3rd day of July, 1996.
Devon Financing Trust
By:___________________________
Name:
Title: Regular Trustee
[FORM OF CERTIFICATE OF AUTHENTICATION]
INSTITUTIONAL TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Convertible Preferred Securities referred
to in the within-mentioned Declaration.
Dated: July 3, 1996
The Bank of New York,
as Institutional Trustee or as Authentication Agent
By:___________________________ By:__________________________
Authorized Signatory Authorized Signatory
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<PAGE> 88
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Convertible Preferred Security
will be fixed at a rate per annum of 6 1/2% (the "Coupon Rate") of the stated
liquidation amount of $50 per Preferred Security, such rate being the rate of
interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears for more than one quarter will bear interest thereon
compounded quarterly at the Coupon Rate (to the extent permitted by applicable
law). The term "Distributions" as used herein includes such cash distributions
and any such interest payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of Distributions payable for any
period will be computed for any full quarterly Distribution period on the basis
of a 360-day year of twelve 30-day months, and for any period shorter than a
full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days
elapsed per 30-day month.
Except as otherwise described below, Distributions on the
Preferred Securities will be cumulative, will accrue from July 3, 1996 and will
be payable quarterly in arrears, on March 15, June 15, September 15 and
December 15 of each year, commencing on September 15, 1996, which payment dates
shall correspond to the interest payment dates on the Debentures, to Holders of
record at the close of business on the regular record date for such
Distribution which shall be the close of business 15 days prior to such
Distribution payment date unless otherwise provided in the Declaration. The
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period from time to time on the
Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period") provided that no Extension Period shall last beyond the
date of the maturity or any redemption date of the Debentures and, as a
consequence of such deferral, Distributions will also be deferred. Despite
such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded quarterly during any such Extension Period. Prior to the termination
of any such Extension Period, the Debenture Issuer may further extend such
Extension Period; provided that such Extension Period together with all such
previous and further extensions thereof may not exceed 20 consecutive quarters
or extend beyond the maturity or any redemption date of the Debentures.
Payments of accrued Distributions will be payable to Holders as they appear on
the books and records of the Trust on the first record date after the end of
the Extension Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Convertible Preferred Securities shall be redeemable as
provided in the Declaration.
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<PAGE> 89
The Convertible Preferred Securities shall be convertible into
shares of Devon Common Stock, through (i) the exchange of Preferred Securities
for a portion of the Debentures and (ii) the immediate conversion of such
Debentures into Debenture Issuer Common Stock, in the manner and according to
the terms set forth in the Declaration.
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<PAGE> 90
CONVERSION REQUEST
To: The Bank of New York,
as Institutional Trustee of
Devon Financing Trust
The undersigned owner of these Preferred Securities hereby
irrevocably exercises the option to convert these Convertible Preferred
Securities, or the portion below designated, into Common Stock of Devon Energy
Corporation (the "Devon Common Stock") in accordance with the terms of the
Amended and Restated Declaration of Trust (the "Declaration"), dated as of July
3, 1996, by J. Larry Nichols, H. Allen Turner and William T. Vaughn, as Regular
Trustees, The Bank of New York (Delaware), as Delaware Trustee, The Bank of New
York, as Institutional Trustee, Devon Energy Corporation, as Sponsor, and by
the Holders, from time to time, of individual beneficial interests in the Trust
to be issued pursuant to the Declaration. Pursuant to the aforementioned
exercise of the option to convert these Convertible Preferred Securities, the
undersigned hereby directs the Conversion Agent (as that term is defined in the
Declaration) to (i) exchange such Convertible Preferred Securities for a
portion of the Debentures (as that term is defined in the Declaration) held by
the Trust (at the rate of exchange specified in the terms of the Convertible
Preferred Securities set forth as Annex I to the Declaration) and (ii)
immediately convert such Debentures on behalf of the undersigned, into Devon
Common Stock (at the conversion rate specified in the terms of the Convertible
Preferred Securities set forth as Annex I to the Declaration).
The undersigned does also hereby direct the Conversion Agent
that the shares issuable and deliverable upon conversion, together with any
check in payment for fractional shares, be issued in the name of and delivered
to the undersigned, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
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<PAGE> 91
Date:
_______________, _____
in whole in part
___ ___
Number of Convertible Preferred
Securities to be converted:
____________________
If a name or names other than the
undersigned, please indicate in the
spaces below the name or names in
which the shares of Devon Common
Stock are to be issued, along with
the address or addresses of such
person or persons
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
__________________________________
__________________________________
__________________________________
Signature Guarantee:*
____________
_________________________________
*(Signature must be guaranteed by an "eligible guarantor institution" that
is, a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Conversion Agent, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Conversion Agent in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.)
A1-8
<PAGE> 92
[FORM OF ASSIGNMENT FOR DEFINITIVE CONVERTIBLE PREFERRED SECURITY]
For value received ___________________ hereby sell(s), assign(s) and
transfer(s) unto__________________________________
(Please insert social security or other
taxpayer identification number of assignee.)
the within security and hereby irrevocably constitutes and appoints
______________ attorney to transfer the said security on the books of the
Company, with full power of substitution in the premises.
In connection with any transfer of the within security occurring prior to the
Transfer Restriction Termination Date, the undersigned confirms that such
security is being transferred:
To Devon Energy Corporation or a subsidiary thereof; or
Pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
Pursuant to and in compliance with Regulation S under the
Securities Act of 1933, as amended; or
Pursuant to and in compliance with Rule 144 under the
Securities Act of 1933, as amended;
A1-9
<PAGE> 93
and unless the box below is checked, the undersigned confirms that such
security is not being transferred to an "affiliate" of the Company as defined
in Rule 144 under the Securities Act of 1933, as amended (an "Affiliate"):
The transferee is an Affiliate of the Company.
Dated: __________________________
__________________________
__________________________
Signature(s)
Signature(s) must be guaranteed by
a commercial bank or trust company
or a member firm of a major stock
exchange.
__________________________________
Signature Guarantee
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of this Security in every particular without
alteration or enlargement or any change whatever.
A1-10
<PAGE> 94
SCHEDULE I
Changes to Number of Convertible Preferred Securities
in Global Security
<TABLE>
<CAPTION>
===========================================================================================================================
Number of Convertible
Preferred Securities by which
this Global Security Is To Be Remaining Convertible
Reduced or Increased, and Preferred Securities
Reason for Reduction Represented by this Global Notation
Date or Increase Security Made by
-------- ---------------------------- --------------- -------
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
-------- -------------------- ------------------- ---------
- ---------------------------------------------------------------------------------------------------------------------------
-------- -------------------- ------------------- ---------
- ---------------------------------------------------------------------------------------------------------------------------
-------- -------------------- ------------------- ---------
- ---------------------------------------------------------------------------------------------------------------------------
-------- -------------------- ------------------- ---------
- ---------------------------------------------------------------------------------------------------------------------------
-------- -------------------- ------------------- ---------
- ---------------------------------------------------------------------------------------------------------------------------
-------- -------------------- ------------------- ---------
- ---------------------------------------------------------------------------------------------------------------------------
-------- -------------------- ------------------- ---------
- ---------------------------------------------------------------------------------------------------------------------------
-------- -------------------- ------------------- ---------
===========================================================================================================================
</TABLE>
A1-11
<PAGE> 95
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
DEVON FINANCING TRUST
6 1/2% Common Securities
(liquidation amount $50 per Common Security)
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD UNLESS SUCH OFFER AND SALE ARE
REGISTERED UNDER OR ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT. THE TRANSFER OF THE SECURITY EVIDENCED HEREBY IS ALSO SUBJECT TO
THE RESTRICTIONS SET FORTH IN THE DECLARATION REFERRED TO BELOW.
Devon Financing Trust, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), hereby certifies that Devon
Energy Corporation, an Oklahoma corporation (the "Holder") is the registered
owner of common securities of the Trust representing undivided beneficial
interests in the assets of the Trust designated the 6 1/2% Common Securities
(liquidation amount $50 per Common Security) (the "Common Securities"). The
Common Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer.
The designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Common Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended
and Restated Declaration of Trust of the Trust dated as of July 3, 1996, as the
same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Common Securities as set forth in Annex I to
the Declaration. Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration.
A2-1
<PAGE> 96
The Holder is entitled to the benefits of the Common
Securities Guarantee to the extent provided therein. The Sponsor will provide
a copy of the Declaration, the Common Securities Guarantee and the Indenture to
a Holder without charge upon written request to the Sponsor at its principal
place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate
this 3rd day of July 1996.
DEVON FINANCING TRUST
By:___________________________
Name:
Title: Regular Trustee
A2-2
<PAGE> 97
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at
a rate per annum of 6 1/2% (the "Coupon Rate") of the stated liquidation amount
of $50 per Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears
for more than one quarter will bear interest thereon compounded quarterly at
the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 30-day month.
Except as otherwise described below, Distributions on the
Common Securities will be cumulative, will accrue from July 3, 1996 and will be
payable quarterly in arrears, on March 15, June 15, September 15 and December
15 of each year, commencing on September 15, 1996, which payment dates shall
correspond to the interest payment dates on the Debentures, to Holders of
record at the close of business on the regular record date for such
Distribution which shall be the close of business 15 days prior to such
Distribution payment date unless otherwise provided in the Declaration. The
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period from time to time on the
Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period") provided that no Extension Period shall last beyond the
date of maturity of the Debentures and, as a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded quarterly during any
such Extension Period. Prior to the termination of any such Extension Period,
the Debenture Issuer may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarters or extend beyond the date of
maturity of the Debentures. Payments of accrued Distributions will be payable
to Holders as they appear on the books and records of the Trust on the first
record date after the end of the Extension Period. Upon the termination of any
Extension Period and the payment of all amounts then due, the Debenture Issuer
may commence a new Extension Period, subject to the above requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
The Common Securities shall be convertible into shares of
Devon Common Stock, through (i) the exchange of Common Securities for a portion
of the Debentures and (ii) the immediate conversion of such Debentures into
Devon Common Stock, in the manner and according to the terms set forth in the
Declaration.
A2-3
<PAGE> 98
CONVERSION REQUEST
To: The Bank of New York
as Institutional Trustee of
Financing Trust
The undersigned owner of these Common Securities hereby
irrevocably exercises the option to convert these Common Securities, or the
portion below designated, into Common Stock of Devon Energy Corporation (the
"Devon Common Stock") in accordance with the terms of the Amended and Restated
Declaration of Trust (the "Declaration"), dated as of July 3, 1996, J. Larry
Nichols, H. Allen Turner and William T. Vaughn as Regular Trustees, The Bank of
New York (Delaware), as Delaware Trustee, The Bank of New York, as
Institutional Trustee, Devon Energy Corporation, as Sponsor, and by the
Holders, from time to time, of individual beneficial interests in the Trust to
be issued pursuant to the Declaration. Pursuant to the aforementioned exercise
of the option to convert these Common Securities, the undersigned hereby
directs the Conversion Agent (as that term is defined in the Declaration) to
(i) exchange such Common Securities for a portion of the Debentures (as that
term is defined in the Declaration) held by the Trust (at the rate of exchange
specified in the terms of the Common Securities set forth as Annex I to the
Declaration) and (ii) immediately convert such Debentures on behalf of the
undersigned, into Devon Common Stock (at the conversion rate specified in the
terms of the Common Securities set forth as Annex I to the Declaration).
The undersigned does also hereby direct the Conversion Agent
that the shares issuable and deliverable upon conversion, together with any
check in payment for fractional shares, be issued in the name of and delivered
to the undersigned, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
A2-4
<PAGE> 99
Date:
_____________, _____ in whole ___ in part ___
Number of Common Securities to be
converted:
________________
If a name or names other than the
undersigned, please indicate in the
spaces below the name or names in
which the shares of Devon Common
Stock are to be issued, along with
the address or addresses of such
person or persons
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
___________________________________
___________________________________
___________________________________
Signature Guarantee:*
_____________
__________________________________
*(Signature must be guaranteed by an "eligible guarantor institution" that
is, a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Conversion Agent, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Conversion Agent in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.)
A2-5
<PAGE> 100
[FORM OF ASSIGNMENT FOR SECURITY OR
COMMON STOCK ISSUABLE UPON CONVERSION THEREOF]
For value received ___________________ hereby sell(s), assign(s)
and transfer(s) unto__________________________________
(Please insert social security or other
taxpayer identification number of assignee.)
the within security and hereby irrevocably constitutes and appoints
______________ attorney to transfer the said security on the books of the
Company, with full power of substitution in the premises.
In connection with any transfer of the within security occurring prior to the
Transfer Restriction Termination Date, the undersigned confirms that such
Security is being transferred:
To Devon Energy Corporation or a subsidiary thereof; or
Pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
Pursuant to and in compliance with Regulation S under the
Securities Act of 1933, as amended; or
Pursuant to and in compliance with Rule 144 under the
Securities Act of 1933, as amended;
A2-6
<PAGE> 101
and unless the box below is checked, the undersigned confirms that such
security is not being transferred to an "affiliate" of the Company as defined
in Rule 144 under the Securities Act of 1933, as amended (an "Affiliate"):
The transferee is an Affiliate of the Company.
Dated: __________________________
__________________________
__________________________
Signature(s)
Signature(s) must be guaranteed by
a commercial bank or trust company
or a member firm of a major stock
exchange.
_________________________________
Signature Guarantee
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of this Security in every particular without
alteration or enlargement or any change whatever.
A2-7
<PAGE> 1
EXHIBIT 4.7
DEVON ENERGY CORPORATION,
as Issuer
TO
THE BANK OF NEW YORK
as Trustee
Indenture
Dated as of July 3, 1996
Subordinated Debentures
<PAGE> 2
TABLE OF CONTENTS:(1)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
RECITALS OF THE COMPANY
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1.3 Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1.4 Acts of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.5 Notices, Etc., to Trustee and Company . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 1.6 Notice to Holders of Debentures; Waiver . . . . . . . . . . . . . . . . . . . . . 16
SECTION 1.7 Language of Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 1.8 Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 1.9 Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . 17
SECTION 1.10 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.11 Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.12 Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.14 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.15 Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.16 Immunity of Incorporators, Shareholders, Officers, Directors and Employees . . . . 19
ARTICLE II
DEBENTURE FORMS
SECTION 2.1 Forms Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.2 Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . 20
SECTION 2.3 Debentures in Global Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.4 Form of Legend for Book-Entry Debentures . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
____________________
(1) NOTE: This table of contents shall not, for any purpose, be deemed to
be a part of the Indenture.
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 2.5 Form of Conversion Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III
THE DEBENTURES
SECTION 3.1 Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.2 Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.3 Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . 26
SECTION 3.4 Temporary Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.5 Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . 31
SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Debentures and Coupons . . . . . . . . . . . 35
SECTION 3.7 Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . . . . 36
SECTION 3.8 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.9 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.10 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 3.11 Electronic Debenture Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 3.12 CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.2 Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.3 Company's Option to Effect Defeasance or Covenant Defeasance . . . . . . . . . . . 41
SECTION 4.4 Discharge and Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.5 Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.6 Conditions to Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . 43
ARTICLE V
REMEDIES
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 5.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . 48
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . 49
SECTION 5.4 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 5.5 Trustee May Enforce Claims Without Possession of Debentures or Coupons . . . . . . 51
SECTION 5.6 Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 5.7 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium and Interest . . . . 53
SECTION 5.9 Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 5.10 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 5.11 Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 5.12 Control by Holders of Debentures . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 5.13 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 5.14 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 5.15 Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VI
THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default . . . 56
SECTION 6.2 Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 6.3 Not Responsible for Recitals or Issuance of Debentures . . . . . . . . . . . . . . 58
SECTION 6.4 May Hold Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 6.5 Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 6.6 Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 6.7 Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . 60
SECTION 6.8 Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 6.9 Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.10 Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.11 Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . 63
SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . 63
SECTION 6.13 Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . 64
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 6.14. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1 Preservation of Information: Communications to Holders . . . . . . . . . . . . . . 66
SECTION 7.2 Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 7.3 Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE VIII
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 8.1 Company May Consolidate, Etc. on Certain Terms . . . . . . . . . . . . . . . . . . 69
SECTION 8.2 Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 8.3 Opinion of Counsel to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . 70
SECTION 9.2 Supplemental Indentures with Consent of Holders . . . . . . . . . . . . . . . . . 71
SECTION 9.3 Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 9.4 Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 9.5 Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 9.6 Reference in Debentures to Supplemental Indentures . . . . . . . . . . . . . . . . 73
ARTICLE X
COVENANTS
SECTION 10.1 Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . . . . . . 74
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 10.2 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.3 Money for Debentures Payments to Be Held in Trust . . . . . . . . . . . . . . . . 76
SECTION 10.4 Limitation on Dividends; Transactions with Affiliates . . . . . . . . . . . . . . 77
SECTION 10.5 Covenants as to Devon Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 10.6 Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 10.7 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 10.8 Purchase of Debentures by Company or Subsidiary . . . . . . . . . . . . . . . . . 79
SECTION 10.9 Statement by Officers as to Default . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 10.10 Calculation of Original Issue Discount . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 10.11 Financial Information; SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE XI
REDEMPTION OF DEBENTURES
SECTION 11.1 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 11.2 Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 11.3 Selection by Trustee of Debentures to Be Redeemed . . . . . . . . . . . . . . . . 81
SECTION 11.4 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 11.5 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 11.6 Debentures Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 11.7 Debentures Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE XII
SINKING FUNDS
SECTION 12.1 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 12.2 Satisfaction of Sinking Fund Payments with Debentures . . . . . . . . . . . . . . 85
SECTION 12.3 Redemption of Debentures for Sinking Fund . . . . . . . . . . . . . . . . . . . . 85
ARTICLE XIII
MEETINGS OF HOLDERS OF DEBENTURES
SECTION 13.1 Purposes for Which Meetings May be Called . . . . . . . . . . . . . . . . . . . . 85
</TABLE>
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SECTION 13.2 Call, Notice and Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 13.3 Persons Entitled to Vote at Meetings . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 13.4 Quorum; Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 13.5 Determination of Voting Rights; Conduct and Adjournment of Meetings . . . . . . . 88
SECTION 13.6 Counting Votes and Recording Action of Meetings . . . . . . . . . . . . . . . . . 89
ARTICLE XIV
CONVERSION OF DEBENTURES
SECTION 14.1 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 14.2 Exercise of Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 14.3 No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 14.4 Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 14.5 Notice of Certain Corporate Actions . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 14.6 Reservation of Shares of Common Stock . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 14.7 Payment of Certain Taxes upon Conversion . . . . . . . . . . . . . . . . . . . . . 93
SECTION 14.8 Nonassessability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 14.9 Effect of Consolidation or Merger on Conversion Privilege . . . . . . . . . . . . 93
SECTION 14.10 Duties of Trustee Regarding Conversion . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 14.11 Repayment of Certain Funds upon Conversion . . . . . . . . . . . . . . . . . . . . 95
ARTICLE XV
SUBORDINATION OF DEBENTURES
SECTION 15.1 Debentures Subordinate to Senior Indebtedness . . . . . . . . . . . . . . . . . . 95
SECTION 15.2 Payment Over of Proceeds Upon Dissolution, Etc . . . . . . . . . . . . . . . . . . 96
SECTION 15.3 Prior Payment to Senior Indebtedness Upon Acceleration of Debentures . . . . . . . 97
SECTION 15.4 No Payment When Senior Indebtedness in Default . . . . . . . . . . . . . . . . . . 98
SECTION 15.5 Payment Permitted in Certain Situations . . . . . . . . . . . . . . . . . . . . . 99
SECTION 15.6 Subrogation to Rights of Holders of Senior Indebtedness . . . . . . . . . . . . . 99
SECTION 15.7 Provisions Solely to Define Relative Rights . . . . . . . . . . . . . . . . . . . 99
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SECTION 15.8 Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . 100
SECTION 15.9 No Waiver of Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . 100
SECTION 15.10 Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
SECTION 15.11 Reliance on Judicial Order or Certificate of Liquidating Agent . . . . . . . . . . 101
SECTION 15.12 Trustee Not Fiduciary for Holders of Senior Indebtedness . . . . . . . . . . . . . 102
SECTION 15.13 Rights of Trustee as Holder of Senior Indebtedness, Preservation of Trustee's
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 15.14 Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 15.15 Certain Conversions Deemed Payment . . . . . . . . . . . . . . . . . . . . . . . . 102
</TABLE>
vii
<PAGE> 9
INDENTURE, dated as of July 3, 1996, between Devon Energy
Corporation, a corporation duly organized and existing under the laws of the
State of Oklahoma (herein called the "Company"), having its principal office at
20 North Broadway, Suite 1500, Oklahoma City, Oklahoma 73102-8260 and The Bank
of New York, a New York banking corporation having its principal corporate
trust office at 101 Barclay Street, Floor 21 West, New York, New York 10286, as
Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its secured or
unsecured subordinated debentures, notes or other evidences of indebtedness
(herein called the "Debentures"), to be issued in one or more series as in this
Indenture provided.
All things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Debentures by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Debentures or of a series thereof,
as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1 Definitions. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise
requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States of America, and, except as otherwise herein
<PAGE> 10
expressly provided, the term "generally accepted accounting principles"
with respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted in the United States
of America at the date of such computation; and
(d) The words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"Act", when used with respect to any Holder of a Debenture, has
the meaning specified in Section 1.4.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.13 to act on behalf of the Trustee to authenticate
Debentures of one or more series.
"Authorized Newspaper" means a newspaper, in the English language
or in an official language of the country of publication, customarily published
on each Business Day, whether or not published on Saturdays, Sundays or
holidays, and of general circulation in the place, in connection with which the
term is used, or in the financial community of such place. Where successive
publications are required to be made in Authorized Newspapers, the successive
publications may be made in the same or in different newspapers in the same
city meeting the foregoing requirements and in each case on any Business Day.
"Bearer Debenture" means any Debenture in the form established
pursuant to Section 2.1 which is payable to bearer.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Book-Entry Debenture" means a Debenture bearing the legend
specified in Section 2.4, evidencing all or part of a series of Debentures,
issued to the Depositary for such series or its nominee, and registered in the
name of such Depositary or nominee.
2
<PAGE> 11
Book-Entry Debentures shall not be deemed to be securities in global form for
purposes of Sections 2.1 and 2.3 and Article III of this Indenture.
"Business Day", when used with respect to any Place of Payment or
any other particular location referred to in this Indenture or in the
Debentures, means each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in that Place of Payment or other
location are authorized or obligated by law or executive order to close.
"Cedel S.A." means Cedel Bank, societe anonyme, or its successor.
"Commission" means the United States Securities and Exchange
Commission.
"Common Depositary" has the meaning specified in Section 3.4.
"Common Securities" means undivided beneficial interests in the
assets of the Devon Trust which rank pari passu with Preferred Securities
issued by such Devon Trust; provided, however, that upon the occurrence of an
Event of Default, the rights of holders of Common Securities to payment in
respect to distributions and payments upon liquidation, redemption and
otherwise are subordinated to the rights of holders of Preferred Securities.
"Common Securities Guarantee" means any Guarantee that the Company
enters into that operates directly or indirectly for the benefit of holders of
Common Securities of Devon Trust.
"Common Stock" includes any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which is not subject to redemption by the Company. Subject to
the anti-dilution provisions of any convertible Debenture, however, shares of
Devon Common Stock issuable on conversion of a Debenture shall include only
shares of the class designated as Common Stock of the Company at the date of
any supplemental indenture, Board Resolution or other instrument authorizing
such Debenture or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of the payment of dividends or the distribution of assets upon any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which are not subject to redemption by the Company, provided that if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all classes resulting from all such
reclassifications.
3
<PAGE> 12
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by the Chairman of the Board of
Directors or the President or any Executive Vice President or any Vice
President and by the Treasurer or the Secretary or any Assistant Treasurer or
any Assistant Secretary of the Company and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee
at which at any particular time its corporate trust business shall be
administered.
"Corporation" means a corporation, association, company,
joint-stock company or business trust.
"Coupon" means any interest Coupon appertaining to a Bearer
Debenture.
"Credit Agreement" means, collectively, the credit agreement dated
October 7, 1994, as amended, among Devon Energy Corporation (Nevada), as
borrower, Devon Energy Corporation, Devon Energy Operating Corporation and Avon
Energy Corporation, as guarantors, NationsBank of Texas, N.A., as agent,
NationsBank of Texas, N.A., Bank One, Texas, N.A., Bank of Montreal and First
Union Bank of North Carolina, as lenders, and the Credit Agreement dated June
20, 1995 among Devon Energy Corporation (Nevada), as borrower, and Bank of
Oklahoma, N.A., as lender, in each case including any refinancing thereof in
the bank credit market (including institutional participants therein).
"Debenture Register" and "Debenture Registrar" have the respective
meanings specified in Section 3.5.
"Debentures" has the meaning stated in the first recital of this
Indenture and more particularly means any Debentures authenticated and
delivered under this Indenture.
"Declaration," with respect to a Devon Trust, means the Amended
and Restated Declaration of Trust of such Devon Trust.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Defeasance" has the meaning specified in Section 4.4
4
<PAGE> 13
"Depositary" means, with respect to the Debentures of any series
issuable or issued in whole or in part in the form of one or more Book-Entry
Debentures, the clearing agency registered under the Exchange Act specified for
that purpose as contemplated by Section 3.1.
"Devon Trust" means Devon Financing Trust, a Delaware statutory
business trust, or any substantially similar Delaware statutory business
trust sponsored by the Company.
"Dollar" or "$" means a dollar or other equivalent unit in such
coin or currency of the United States of America as at the time shall be legal
tender for the payment of public and private debts.
"Euro-clear" means Morgan Guaranty Trust Company of New York,
Brussels Office, or its successor as operator of the Euro-clear System.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Date" has the meaning specified in Section 3.4.
"Guarantor" means the Company in its capacity as guarantor under
any Trust Securities Guarantees.
"Holder", when used with respect to any Debenture, means in the
case of a Registered Debenture, the Person in whose name the Debenture is
registered in the Debenture Register and in the case of a Bearer Debenture the
bearer thereof and, when used with respect to any Coupon, means the bearer
thereof.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of Debentures of any series established as
contemplated by Section 3.1.
"Institutional Trustee" has the meaning set forth in the
Declaration of Devon Trust.
"Interest," when used with respect to an Original Issue Discount
Debenture which by its terms bears interest only at Maturity, means interest
payable at Maturity.
"Interest Payment Date," when used with respect to any Debenture,
means the Stated Maturity of an installment of interest on such Debenture.
5
<PAGE> 14
"Maturity," when used with respect to any Debenture, means the
date on which the principal of such Debenture or an installment of such
principal becomes due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration, call for redemption, notice
of option to elect repayment or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman
of the Board of Directors or the President or any Executive Vice President or
any Vice President and by the Treasurer or the Secretary or any Assistant
Treasurer or any Assistant Secretary of the Company and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may
be an employee of or counsel for the Company and who shall be acceptable to the
Trustee.
"Original Issue Discount Debenture" means any Debenture which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 5.2.
"Outstanding," when used with respect to Debentures of any series,
means, as of the date of determination, all Debentures of such series
theretofore authenticated and delivered under this Indenture, except:
(i) Debentures of such series theretofore canceled by the
Trustee or any Paying Agent or delivered to the Trustee for cancellation or
that have previously been canceled;
(ii) Debentures of such series for whose payment or redemption
of which money or United States Government Obligations in the necessary
amount has been theretofore deposited in accordance with Article IV with
the Trustee or any Paying Agent (other than the Company) in trust or set
aside and segregated in trust by the Company (if the Company shall act as
its own Paying Agent) for the Holders of Debentures of such series and any
Coupons appertaining thereto; provided that, if Debentures of such series
or portions of Debentures of such series are to be redeemed prior to the
Maturity thereof, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has been
made;
(iii) Debentures of such series which have been paid pursuant to
Section 3.6 or in exchange for or in lieu of which other Debentures of such
series have been authenticated and delivered pursuant to this Indenture,
other than any Debentures of such series in respect of which there shall
have been presented to the Trustee proof satisfactory to it that Debentures
of such series are held by a bona fide purchaser in whose hands Debentures
of such series are valid obligations of the Company; and
6
<PAGE> 15
(iv) Debentures of such series as to which Defeasance has been
effected pursuant to Section 4.4.
provided, however, that in determining whether the Holders of the requisite
aggregate principal amount of the Outstanding Debentures of such series have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder or whether a quorum is present at a meeting of Holders of Debentures
of such Series (A) the principal amount of an Original Issue Discount Debenture
of such series that shall be deemed to be Outstanding shall be the amount of
the principal thereof that would be due and payable as of the date of such
determination upon acceleration of the Maturity thereof pursuant to Section
5.2, (B) the principal amount of a Debenture of such series denominated in a
foreign currency or currencies shall be the U.S. dollar equivalent, determined
on the date of original issuance of such Debenture, of the principal amount
(or, in the case of an Original Issue Discount Debenture of such series, the
U.S. dollar equivalent on the date of original issuance of such Debenture of
the amount determined as provided in (A) above) of such Debenture, and (C)
Debentures of such series owned by the Company or any other obligor upon such
Debentures, or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, or upon any such
determination as to the presence of a quorum, only Debentures of such series
which the Trustee actually knows to be so owned shall be so disregarded.
Debentures of such series so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Debentures and that
the pledgee is not the Company or any other obligor upon such Debentures or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay
the principal of and any premium and interest on any Debentures or any Coupons
appertaining thereto on behalf of the Company.
"Person" means a legal person, including any individual,
corporation, state, partnership, joint venture, trust, association, joint stock
company, limited liability company, unincorporated association or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.
"Place of Payment," when used with respect to the Debentures of
any series, means the place or places where, subject to the provisions of
Section 10.2, the principal of and any premium and interest on Debentures of
such series are payable as specified as contemplated by Section 3.1.
"Predecessor Debenture" of Debenture of any series means every
previous Debenture evidencing all or a portion of the same debt as that
evidenced by such
7
<PAGE> 16
Debenture; and, for the purposes of this definition, Debenture of any series
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Debenture or a Debenture to which a
mutilated, destroyed, lost or stolen Coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Debenture or
the Debenture to which the mutilated, destroyed, lost or stolen Coupon
appertains, as the case may be.
"Preferred Securities" means undivided beneficial interests in the
assets of Devon Trust which rank pari passu with Common Securities issued by
such Devon Trust; provided however, that upon the occurrence of an Event of
Default, the rights of holders of Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of Preferred Securities.
"Preferred Securities Guarantee" means any Guarantee that the
Guarantor may enter into with The Bank of New York or other Persons that
operates directly or indirectly for the benefit of holders of Preferred
Securities of such Devon Trust.
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Debenture to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Debenture" means any Debenture in the form established
pursuant to Section 2.1 which is registered in the Debenture Register.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Registered Debentures of any series means the date
specified for that purpose as contemplated by Section 3.1., whether or not such
day is a Business Day.
"Representative" means the (a) indenture trustee or other trustee,
agent or representative for any Senior Indebtedness or (b) with respect to any
Senior Indebtedness that does not have any such trustee, agent or other
representative, (i) in the case of such Senior Indebtedness issued pursuant to
an agreement providing for voting arrangements as among the holders or owners
of such Senior Indebtedness, any holder or owner of such Senior Indebtedness
acting with the consent of the required persons necessary to bind such holders
or owners of such Senior Indebtedness and (ii) in the case of all other such
Senior Indebtedness, the holder or owner of such Senior Indebtedness.
"Responsible Officer" means, when used with respect to the
Trustee, the chairman of the board of directors, the executive committee of the
board of directors, the chairman of the trust committee, the president, any
vice president, any assistant vice
8
<PAGE> 17
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, any trust officer or assistant trust officer, the controller or any
assistant controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
"Rule 144(k)" means Rule 144(k) under The Securities Act or any
successor rule.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor statute.
"Senior Indebtedness" means, with respect to the Company, (i) the
principal, premium, if any, and interest in respect of (a) indebtedness of the
Company for money borrowed under any credit agreements, notes, guarantees or
similar documents and (b) indebtedness evidenced by securities, debentures,
bonds or other similar instruments issued by the Company, including, without
limitation, all indebtedness and all obligations of the Company to pay fees and
other amounts, under the Credit Agreement, and any refinancing of the Credit
Agreement in the bank credit market (including institutional participants
therein), including interest accruing on or after a bankruptcy or other similar
event, whether or not an allowed claim therein; (ii) all capital lease
obligations of the Company; (iii) all obligations of the Company issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of the Company and all obligations of the Company under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations of the Company for the
reimbursement on any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction; (v) all obligations of the Company
(contingent or otherwise) with respect to interest rate or other swap, cap or
collar agreements, oil or gas commodity hedge transactions or other similar
instruments or agreements or foreign currency hedge, exchange, purchase or
similar instruments or agreements; (vi) all obligations of the types referred
to in clauses (i) through (v) of other Persons for the payment of which the
Company is responsible or liable as obligor, guarantor or otherwise; and (vii)
all obligations of the types referred to in clauses (i) through (vi) of other
Persons secured by any lien on any property or asset of the Company (whether or
not such obligation is assumed by the Company), whether outstanding on the date
of the Indenture or thereafter created, incurred, assumed, guaranteed or in
effect guaranteed by the Company, except for (A) any such indebtedness that is
by its terms subordinated to or pari passu with the Debentures, and (B) any
indebtedness between or among the Company or its Affiliates, including all
other debt securities and guarantees in respect of those debt securities,
issued to (a) Devon Trust or a trustee of such trust and (b) any other trust,
or a trustee of such trust, partnership or other entity affiliated with the
Company that is a financing vehicle of the Company (a "Financing Entity") in
connection with the issuance by such Financing
9
<PAGE> 18
Entity of preferred securities or other securities that rank pari passu with,
or junior to, such preferred securities.
"Special Record Date" for the payment of any Defaulted Interest on
Registered Debentures of any series means a date fixed by the Trustee pursuant
to Section 3.7.
"Stated Maturity", when used with respect to any Debenture or any
installment of principal thereof or interest thereon, means the date specified
in such Debenture or a Coupon representing such installment of interest as the
fixed date on which the principal of such Debenture or such installment of
principal or interest is due and payable.
"Subsidiary" means, with respect to any Person, (i) any
corporation at least a majority of whose outstanding Voting Stock shall at the
time be owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture, business trust or similar entity, at least
a majority of whose outstanding partnership or similar interests shall at the
time be owned by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries and (iii) any limited partnership of
which such Person or any of its Subsidiaries is a general partner.
"Transfer Restriction Termination Date" means the first date on
which the Preferred Securities, the Debentures and any Common Stock issued or
issuable upon the conversion or exchange thereof (other than (i) such
securities acquired by the Company or any Affiliate thereof and (ii) Common
Stock issued upon the conversion or exchange of any such security described in
clause (i) above) may be sold pursuant to Rule 144(k).
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder,
and if at any time there is more than one such Person, "Trustee" as used with
respect to the Debentures of any series shall mean the Trustee with respect to
Debentures of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed, provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trust Securities" means Common Securities and Preferred Securities
of a Devon Trust.
10
<PAGE> 19
"Trust Securities Guarantees" means the Common Securities
Guarantee and the Preferred Securities Guarantee.
"United States" means the United States of America (including the
States and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
"United States Alien" means any Person who, for United States
federal income tax purposes, is a foreign corporation, a non-resident alien
individual, a non-resident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more of the members of which is, for United States
federal income tax purposes, a foreign corporation, a non-resident alien
individual or a nonresident alien fiduciary of a foreign estate or trust of a
foreign partnership.
"U.S. Government Obligations" means direct obligations of the
United States for the payment of which its full faith and credit is pledged, or
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States and the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a
bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with
respect to any such U.S. Government Obligations or a specific payment of
principal of or interest on any such U.S. Government Obligations held by such
custodian for the account of the holder of such depository receipt, provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligations or the specific payment of principal of or interest on the U.S.
Government Obligations evidenced by such depository receipt.
"Voting Stock", as applied to stock of any Person, means shares,
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than
shares, interests, participations or other equivalents having such power only
by reason of the occurrence of a contingency.
"Yield to Maturity" means the yield to maturity on Debentures of
any series, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series, and
calculated in accordance with accepted financial practice.
SECTION 1.2 Compliance Certificates and Opinions. Except as
otherwise expressly provided by this Indenture, upon any application or request
by the Company to the Trustee to take any action under any provision of this
Indenture, the
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Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion by or on behalf of the Company with
respect to compliance with a condition or covenant provided for in this
Indenture, except for certificates provided for in Section 10.9, shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual,
the individual has made such examination or investigation as is necessary
to enable such individual to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.3 Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such
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counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4 Acts of Holders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided or permitted by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing.
If Debentures of any series are issuable as Bearer Debentures of such series,
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given or taken by Holders
of Debentures of such series may, alternatively, be embodied in and evidenced
by the record of Holders of Debentures of such series voting in favor thereof,
either in person or by proxies duly appointed in writing, at any meeting of
Holders of Debentures of such series duly called and held in accordance with
the provisions of Article XIII, or a combination of such instruments and any
such record. Except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments or record or both are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments and any such record (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments and so voting at
any such meeting. Proof of execution of any such instrument or of a writing
appointing any such agent or proxy, or of the holding by any Person of a
Debenture of any series, shall be sufficient for any purpose of this Indenture
and (subject to Section 6.2) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section. The record of any
meeting of Holders of Debentures of any series shall be proved in the manner
provided in Section 13.6.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to the execution thereof. Where such
execution is by a signer acting in a capacity other than the signer's
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of the signer's authority. The fact and date of the execution
of any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems
sufficient.
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(c) The principal amount and serial numbers of Registered
Debentures of any series held by any Person, and the date of holding the same,
shall be proved by the Debenture Register.
(d) The principal amount and serial numbers of Bearer
Debentures of any series held by any Person, and the date of holding the same,
may be proved by the production of such Bearer Debentures or by a certificate
executed, as depositary, by any trust company, bank, banker or other
depositary, wherever situated, if such certificate shall be deemed by the
Trustee to be satisfactory, showing that at the date therein mentioned such
Person had on deposit with such depositary, or exhibited to it, the Bearer
Debentures therein described; or such facts may be proved by the certificate or
affidavit of the Person holding such Bearer Debentures, if such certificate or
affidavit is deemed by the Trustee to be satisfactory. The Trustee and the
Company may assume that such ownership of any Bearer Debenture continues until
(i) another certificate or affidavit bearing a later date issued in respect of
the same Bearer Debenture is produced, or (ii) such Bearer Debenture is
produced to the Trustee by some other Person, or (iii) such Bearer Debenture is
surrendered in exchange for a Registered Debenture, or (iv) such Bearer
Debenture is no longer Outstanding. The principal amount and serial numbers of
Bearer Debentures held by any Person, and the date of holding the same, may
also be proved in any other manner which the Trustee deems sufficient.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Debenture of any series shall
bind every future Holder of the same Debenture and the Holder of every
Debenture issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Debenture.
(f) With respect to the Debentures of any series, upon receipt
by the Trustee of (i) any written notice directing the time, method or place of
conducting any proceeding or exercising any trust or power pursuant to Section
5.1 with respect to Debentures of such series or (ii) any written demand,
request or notice with respect to any matter on which the Holders of Debentures
of such series are entitled to act under this Indenture, in each case from
Holders of less than, or proxies representing less than, the requisite
principal amount of Outstanding Debentures of such series entitled to give such
demand, request or notice, the Trustee shall establish a record date for
determining Holders of Outstanding Debentures of such series entitled to join
in such demand, request or notice, which record date shall be the close of
business on the day the Trustee received such demand, request or notice. The
Holders on such record date, or their duly designated proxies, and only such
Persons, shall be entitled to join in such demand, request or notice whether or
not such Holders remain Holders after such record date; provided, however, that
unless the Holders of the requisite principal amount of Outstanding Debentures
of such series shall have joined in such demand, request or notice
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prior to the day which is the ninetieth day after such record date, such
demand, request or notice shall automatically and without further action by any
Holder be canceled and of no further effect. Nothing in this paragraph shall
prevent a Holder, or a proxy of a Holder, from giving, (i) after the expiration
of such 90-day period, a new demand, request or notice identical to a demand,
request or notice which has been canceled pursuant to the proviso to the
preceding sentence or (ii) during any such 90-day period, a new demand, request
or notice which has been canceled pursuant to the proviso to the preceding
sentence or (iii) during any such 90-day period, a new demand, request or
notice contrary to or different from such demand, request or notice, in either
of which events a new record date shall be established pursuant to the
provisions of this clause.
(g) The Company may set any day as the record date for the
purpose of determining the Holders of Outstanding Debentures of any series
entitled to give or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given or taken by Holders of Debentures of such series. With regard to any
record date set pursuant to this paragraph, the Holders of Outstanding
Debentures of such series on such record date (or their duly appointed agents),
and only such Persons, shall be entitled to give or take the relevant action,
whether or not such Holders remain Holders after such record date. With regard
to any action that may be given or taken hereunder only by Holders of a
requisite principal amount of Outstanding Debentures of any series (or their
duly appointed agents) and for which a record date is set pursuant to this
paragraph, the Company may, at its option, set an expiration date after which
no such action purported to be given or taken by any Holder shall be effective
hereunder unless given or taken on or prior to such expiration date by Holders
of the requisite principal amount of Outstanding Debentures of such series on
such record date (or their duly appointed agents). On or prior to any
expiration date set pursuant to this paragraph, the Company may, on one or more
occasions at its option, extend such date to any later date. Nothing in this
paragraph shall prevent any Holder (or any duly appointed agent thereof) from
giving or taking, after any expiration date, any action identical to, or, at
any time, contrary to or different from, any action given or taken, or
purported to have been given or taken, hereunder by a Holder on or prior to
such date, in which event the Company may set a record date in respect thereof
pursuant to this clause. Notwithstanding the foregoing or the Trust Indenture
Act, the Company shall not set a record date for, and the provisions of this
clause shall not apply with respect to, any action to be given or taken by
Holders pursuant to Section 5.1, 5.2 or 5.12.
SECTION 1.5 Notices, Etc., to Trustee and Company. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the
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Trustee at its Corporate Trust Office, Attention: Corporate Trust Trustee
Administration, or
(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Company addressed to it at the address of its principal office specified in
the first paragraph of this Indenture, to the attention of its Treasurer,
or at any other address previously furnished in writing to the Trustee by
the Company.
SECTION 1.6 Notice to Holders of Debentures; Waiver. Except
as otherwise expressly provided herein, where this Indenture provides for
notice to Holders of Debentures of any event:
(a) such notice shall be sufficiently given to Holders of
Registered Debentures of any series if in writing and mailed, first-class
postage prepaid, to each Holder of a Registered Debenture affected by such
event, at the address of such Holder as it appears in the Debenture
Register, not earlier than the earliest date, and not later than the latest
date, prescribed for the giving of such notice; and
(b) such notice shall be sufficiently given to Holders of
Bearer Debentures of any series if published in an Authorized Newspaper in
The City of New York, The City of London and in such other city or cities
as may be specified in such Debentures on a Business Day at least twice,
the first such publication to be not earlier than the earliest date, and
the second such publication to be not later than the latest date,
prescribed for the giving of such notice.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice to
Holders of Registered Debentures by mail, then such notification as shall be
made with the approval of the Trustee shall constitute sufficient notice to
such Holders for every purpose hereunder. In any case where notice to Holders
of Registered Debentures is given by mail, neither the failure to mail such
notice, nor any defect in any notice mailed to any particular Holder of a
Registered Debenture shall affect the sufficiency of such notice with respect
to other Holders of Registered Debentures or the sufficiency of any notice to
Holders of Bearer Debentures given as provided herein.
In case by reason of the suspension of publication of any
Authorized Newspaper or Authorized Newspapers or by reason of any other cause
it shall be impracticable to publish any notice to Holders of Bearer Debentures
as provided above, then such notification as shall be given with the approval
of the Trustee shall constitute sufficient notice to such Holders for every
purpose hereunder. Neither the failure to give notice by publication to
Holders of Bearer Debentures as provided above, nor any defect
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in any notice so published, shall affect the sufficiency of any notice to
Holders of Registered Debentures given as provided herein.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders of Debentures shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
SECTION 1.7 Language of Notices, Etc. Any request, demand,
authorization, direction, notice, consent or waiver required or permitted under
this Indenture shall be in the English language, except that any published
notice may be in an official language of the country of publication.
SECTION 1.8 Conflict with Trust Indenture Act. If and to the
extent that any provision of this Indenture limits, qualifies or conflicts with
another provision included in this Indenture which is required to be included
in this Indenture by any of Sections 310 to 318, inclusive, of the Trust
Indenture Act of 1939, such required provision shall control.
SECTION 1.9 Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.10 Successors and Assigns. All covenants and
agreements in this Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.
SECTION 1.11 Separability Clause. In case any provision in
this Indenture or the Debentures or Coupons shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 1.12 Benefits of Indenture. Nothing in this
Indenture or the Debentures or Coupons, express or implied, shall give to any
Person, other than the parties hereto, any Authenticating Agent, any Paying
Agent, any Debentures Registrar and their successors hereunder, the holders of
Trust Securities, and the Holders of Debentures and Coupons, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
SECTION 1.13 Governing Law. This Indenture and the Debentures
and Coupons shall be governed by and construed in accordance with the laws of
the State of New York, without regard to conflicts of laws principles thereof.
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SECTION 1.14 Legal Holidays. In any case where any Interest
Payment Date, Redemption Date, sinking fund payment date, Maturity or Stated
Maturity of any Debenture of any series shall not be a Business Day at any
Place of Payment, then (notwithstanding any other provision of this Indenture
or of the Debentures or Coupons other than a provision in the Debentures of any
series which specifically states that such provision shall apply in lieu of
this Section) payment of interest or principal (and premium, if any) need not
be made on the next succeeding Business Day at such Place of Payment on such
date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment Date
or Redemption Date, or at the Stated Maturity, provided that no interest shall
accrue on the amount so payable for the period from and after such Interest
Payment Date, Redemption Date or Stated Maturity, as the case may be, to such
succeeding Business Day.
SECTION 1.15 Judgment Currency. The Company agrees, to the
fullest extent that it may effectively do so under applicable law, that (a) if
for the purpose of obtaining judgment in any court it is necessary to convert
the sum due on the Debentures of any series from the currency in which such sum
is payable in accordance with the terms of such Debentures (the "Required
Currency") into a currency in which a judgment will be rendered (the "Judgment
Currency"), the rate of exchange used shall be the rate at which in accordance
with normal banking procedures the Trustee could purchase in The City of New
York the Required Currency with the Judgment Currency on the New York Banking
Day preceding that on which a final unappealable judgment is rendered and (b)
its obligations under this Indenture to make payments in the Required Currency
(i) shall not be discharged or satisfied by any tender, or any recovery
pursuant to any judgment (whether or not entered in accordance with subsection
(a)), in any currency other than the Required Currency, except to the extent
that such tender or recovery shall result in the actual receipt, by the payee,
of the full amount of the Required Currency expressed to be payable in respect
of such payments, (ii) shall be enforceable as an alternative or additional
cause of action for the purpose of recovering in the Required Currency the
amount, if any, by which such actual receipt shall fall short of the full
amount of the Required Currency so expressed to be payable and (iii) shall not
be affected by judgment being obtained for any other sum due under this
Indenture. For purposes of the foregoing, "New York Banking Day" means any day
except a Saturday, Sunday or a legal holiday in The City of New York or a day
on which banking institutions in The City of New York are authorized or
required by law or executive order to close.
SECTION 1.16 Immunity of Incorporators, Shareholders,
Officers, Directors and Employees. No recourse under or upon any obligation,
covenant or agreement of this Indenture, or of a Debenture of any series, or
for any claim based thereon or otherwise in respect thereof, shall be had
against any incorporator, shareholder, officer, director or employee, as such,
past, present or future, of the Company or of any successor corporation, either
directly or through the Company, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or
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otherwise; it being expressly understood that this Indenture and the
obligations issued hereunder are solely corporate obligations of the Company,
and that no such personal liability whatever shall attach to, or is or shall be
incurred by, the incorporators, shareholders, officers, directors or employees,
as such, of the Company or of any successor corporation, or any of them,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations or agreements contained in this Indenture or in any
of the Debentures or implied therefrom; and that any and all such personal
liability, either at common law or in equity or by constitution or statute, of,
and any and all such rights and claims against, every such incorporator,
shareholder, officer, director or employee, as such, because of the creation of
the indebtedness hereby authorized, or under of by reason of the obligations or
agreements contained in this Indenture or in any of the Debentures or implied
therefrom, are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of such
Debentures.
All payments of interest and other amounts, if any, to be made by
the Trustee hereunder shall be made only from the money deposited with the
Trustee and only to the extent that the Trustee shall have sufficient income or
proceeds to make such payments in accordance with the terms of this Indenture,
and each Holder thereof, by its acceptance of a Debenture, agrees that it will
look solely to the income and proceeds deposited with the Trustee to the extent
available for distribution to such Holder as provided and that the Trustee is
not personally liable in any manner to such Holder for any amounts payable or
any liability under this Indenture or any Debenture.
ARTICLE II
DEBENTURE FORMS
SECTION 2.1 Forms Generally. The Registered Debentures, if
any, of each series and the Bearer Debentures, if any, of each series and
related Coupons shall be in such form (including temporary or permanent global
form) as shall be established by or pursuant to a Board Resolution or in one or
more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Debentures
or Coupons, as evidenced by their execution of the Debentures or Coupons. If
temporary Debentures of any series are issued in global form as permitted by
Section 3.4, the form thereof shall be established as provided in the preceding
sentence. If the forms of Debentures or Coupons of any series (or any such
temporary global Debenture) are established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be
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certified by the Secretary or any Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 3.3 for the authentication and delivery of such
Debentures (or any such temporary global Debenture) or Coupons.
Unless otherwise specified as contemplated by Section 3.1,
Debentures in bearer form shall have interest Coupons attached.
The definitive Debentures and Coupons, if any, shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Debentures or
Coupons, as evidenced by their execution of such Debentures or Coupons.
SECTION 2.2 Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Debentures of the series designated therein
referred to in the within-mentioned Indenture.
The Bank of New York,
As Trustee
By:________________________
Authorized Signatory
SECTION 2.3 Debentures in Global Form. If Debentures
of a series are issuable in global form, as contemplated by Section 3.1, then,
notwithstanding clause (e) of Section 3.1 and the provisions of Section 3.2,
any such Debenture shall represent such of the Outstanding Debentures of such
series as shall be specified therein and may provide that it shall represent
the aggregate amount of Outstanding Debentures from time to time endorsed
thereon and that the aggregate amount of Outstanding Debentures represented
thereby may from time to time be reduced to reflect exchanges. Any endorsement
of a Debenture in global form to reflect the amount, or any increase or
decrease in the amount, of Outstanding Debentures represented thereby shall be
made by the Trustee in such manner and upon instructions given by such Person
or Persons as shall be specified therein or in the Company Order to be
delivered to the Trustee pursuant to Section 3.3 or Section 3.4. Subject to
the provisions of Section 3.3 and, if applicable, Section 3.4, the Trustee
shall deliver and redeliver any Debenture in permanent global form in the
manner and upon instructions given by the Person or Persons specified therein
or in the applicable Company Order. If a Company Order pursuant to Section 3.3
or 3.4 has been, or simultaneously is, delivered, any instructions by the
Company with respect to
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endorsement or delivery or redelivery of a Debenture in global form shall be in
writing but need not comply with Section 1.2 and need not be accompanied by an
Opinion of Counsel.
The provisions of the last sentence of Section 3.3 shall apply to
any Debenture represented by a Debenture in global form if such Debenture was
never issued and sold by the Company and the Company delivers to the Trustee
the Debenture in global form together with written instructions (which need not
comply with Section 1.2 and need not be accompanied by an Opinion of Counsel)
with regard to the reduction in the principal amount of Debentures represented
thereby, together with the written statement contemplated by the last sentence
of Section 3.3.
Notwithstanding the provisions of Sections 2.1 and 3.7, unless
otherwise specified as contemplated by Section 3.1, payment of principal of and
any premium and interest on any Debenture in permanent global form shall be
made to the Person or Persons specified therein.
Notwithstanding the provisions of Section 3.8 and except as
provided in the preceding paragraph, the Company, the Trustee and any agent of
the Company and the Trustee shall treat a Person as the Holder of such
principal amount of Outstanding Debentures represented by a permanent global
Debenture as shall be specified in a written statement of the Holder of such
permanent global Debenture or, in the case of a permanent global Debenture in
bearer form, of Euro-clear or Cedel S.A. which is provided to the Trustee by
such Person.
SECTION 2.4 Form of Legend for Book-Entry Debentures. Any
Book-Entry Debenture authenticated and delivered hereunder shall bear a legend
in substantially the following form:
"This Debenture is a Book-Entry Debenture within the meaning of
the Indenture hereinafter referred to and is registered in the name of a
Depositary or a nominee of a Depositary. This Debenture is exchangeable for
Debentures registered in the name of a Person other than the Depositary or its
nominee only in the limited circumstances described in the Indenture, and no
transfer of this Debenture (other than a transfer of this Debenture as a whole
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in such limited circumstances."
SECTION 2.5 Form of Conversion Notice. The form of
conversion notice for the conversion of Debentures into shares of Common Stock
or other securities of the Company shall be in substantially the form included
with the applicable form of Debentures as shall be established pursuant to
Section 2.1 hereinabove.
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ARTICLE III
THE DEBENTURES
SECTION 3.1 Amount Unlimited; Issuable in Series. The
aggregate principal amount of Debentures which may be authenticated and
delivered under this Indenture is unlimited.
The Debentures may be issued in one or more series. There shall
be established in or pursuant to a Board Resolution and, subject to Section
3.3, set forth, or determined in the manner provided, in an Officers'
Certificate, or established in one or more indentures supplemental hereto,
prior to the issuance of Debentures of any series:
(a) the title of the Debentures of the series (which shall
distinguish the Debentures of the series from all other series of
Debentures);
(b) any limit upon the aggregate principal amount of the
Debentures of the series which may be authenticated and delivered under
this Indenture except for Debentures of the series authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Debentures of the series pursuant to Section 3.4, 3.5, 3.6, 9.6
or 11.7 and except for any Debentures which, pursuant to Section 3.3, are
deemed never to have been authenticated and delivered hereunder;
(c) whether Debentures of the series are to be issuable as
Registered Debentures, Bearer Debentures or both, whether any Debentures of
the series are to be issuable initially in temporary global form and
whether any Debentures of the series are to be issuable in permanent global
form with or without Coupons and, if so, whether beneficial owners of
interests in any such permanent global Debenture may exchange such
interests for Debentures of such series and of like tenor of any authorized
form and denomination and the circumstances under which any such exchanges
may occur, if other than in the manner provided in Section 3.5;
(d) the Person to whom any interest on any Registered
Debenture of the series shall be payable, if other than the Person in whose
name that Debenture (or one or more Predecessor Debentures) is registered
at the close of business on the Regular Record Date for such interest, the
manner in which, or the Person to whom, any interest on any Bearer
Debenture of the series shall be payable, if otherwise than upon
presentation and surrender of the Coupons appertaining thereto as they
severally mature, and the extent to which, or the manner in which, any
interest payable on a temporary global Debenture on an Interest Payment
Date will be paid if other than in the manner provided in Section 3.4;
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(e) the date or dates, or the method by which such date or
dates will be determined or extended, on which the principal of the
Debentures of the series is payable;
(f) the rate or rates at which the Debentures of the series
shall bear interest, if any, or the formula pursuant to which such rate or
rates shall be determined, the date or dates from which any such interest
shall accrue, the Interest Payment Dates on which any such interest shall
be payable, and the Regular Record Date for any interest payable on any
Registered Debentures on any Interest Payment Date and the basis upon which
interest shall be calculated if other than that of a 360-day year
consisting of twelve 30-day months;
(g) the place or places where, subject to the provisions of
Sections 11.4 and 10.2, the principal of and any premium and interest on
Debentures of the series shall be payable, any Registered Debentures of the
series may be surrendered for registration of transfer, Debentures of the
series may be surrendered for conversion or exchange, notices and demands
to or upon the Company in respect of the Debentures of the series and this
Indenture may be served and where notices to Holders of Bearer Debentures
pursuant to Section 1.6 will be published;
(h) the right, if any, to extend the interest payment periods
and the duration of such extension;
(i) the period or periods within which, the price or prices at
which and the terms and conditions upon which Debentures of the series may
be redeemed, in whole or in part, at the option of the Company;
(j) the obligation, if any, of the Company to redeem, repay or
purchase Debentures of the series, or particular Debentures within the
series, pursuant to any sinking fund or analogous provisions and the period
or periods within which, the price or prices at which and the terms and
conditions upon which such Debentures shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
(k) the terms of any right to convert or exchange Debentures
of the series, either at the option of the Holder thereof or the Company,
into or for shares of Common Stock of the Company or other securities or
property, including without limitation the period or periods within which
and the price or prices (including adjustments thereto) at which any
Debentures of the series shall be converted or exchanged, in whole or in
part and any other provision in addition to or in lieu of those set forth
in this Indenture;
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(l) the denominations in which any Registered Debentures of
the series shall be issuable, if other than denominations of $1,000 and any
integral multiple thereof, and the denomination or denominations in which
any Bearer Debentures of the series shall be issuable, if other than the
denomination of $5,000;
(m) the currency or currencies, including composite
currencies, in which payment of the principal of and any premium and
interest on the Debentures of the series shall be payable if other than the
currency of the United States of America;
(n) if the principal of and any premium or interest on the
Debentures of the series are to be payable, at the election of the Holders
thereof or the Company, in a currency or currencies, including composite
currencies, other than that or those in which the Debentures are stated to
be payable, the currency or currencies in which payment of the principal of
and any premium and interest on Debentures of such series as to which such
election is made shall be payable, and the periods within which and the
terms and conditions upon which such election is to be made;
(o) if the amount of payments of principal of and any premium
or interest on the Debentures of the series may be determined with
reference to an index, the manner in which such amounts shall be
determined;
(p) if other than the principal amount thereof, the portion of
the principal amount of any Debentures of the series which shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to
Section 5.2;
(q) the Person who shall be the Debenture Registrar, if other
than the Trustee;
(r) whether the Debentures of the series shall be issued upon
original issuance in whole or in part in the form of one or more Book-Entry
Debentures and, in such case, (a) the Depositary with respect to such
Book-Entry Debenture or Debentures; and (b) the circumstances under which
any such Book-Entry Debenture may be exchanged for Debentures registered in
the name of, and any transfer of such Book-Entry Debenture may be
registered to, a Person other than such Depositary or its nominee, if other
than as set forth in Section 3.5;
(s) if the provisions of Section 4.4 or 4.5 are applicable to
the Debentures of such series;
(t) provisions, if any, granting special rights to the Holders
of Debentures of the series upon the occurrence of such events as may be
specified;
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(u) any deletions from, modifications of or additions to the
Events of Default or covenants of the Company with respect to Debentures of
the series, whether or not such Events of Default or covenants are
consistent with the Events of Default or covenants set forth herein;
(v) whether and under what conditions additional amounts will
be payable to Holders of Debentures of the series pursuant to Section 10.4;
(w) the terms and conditions, if any, pursuant to which such
Debentures are secured;
(x) the subordination terms of the Debentures of the series;
(y) the restrictions, if any, limiting the transfer of the
Debentures; and
(z) any other terms of the series.
All Debentures of any one series and the Coupons appertaining to
any Bearer Debentures of such series shall be substantially identical except,
in the case of Registered Debentures, as to denomination and except as may
otherwise be provided in or pursuant to the Board Resolution referred to above
and (subject to Section 3.3) set forth in, or determined in the manner provided
in, the Officers' Certificate referred to above or in any such indenture
supplemental hereto. Not all Debentures of any one series need be issued at
the same time, and, unless otherwise provided, a series may be reopened for
issuances of additional Debentures of such series.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary of the Company and delivered to the Trustee
at or prior to the delivery of the Officers' Certificate setting forth the
terms, or the manner of determining the terms, of the series.
SECTION 3.2 Denominations. Unless otherwise
provided as contemplated by Section 3.1 with respect to Debentures of any
series, any Registered Debentures of a series shall be issuable in
denominations of $1,000 and any integral multiple thereof and any Bearer
Debentures shall be issuable in the denomination of $5,000.
SECTION 3.3 Execution, Authentication, Delivery and Dating.
Debentures shall be signed on behalf of the Company by both (a) its Chairman of
the Board of Directors or any Vice Chairman of the Board of Directors or its
President or one of its Vice Presidents and (b) its Treasurer or one of its
Assistant Treasurers or its Secretary or one of its Assistant Secretaries,
under its corporate seal which may, but need not,
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be attested. The signature of any of these officers on the Debentures may be
manual or facsimile. Coupons shall bear the facsimile signature of the
Treasurer of the Company.
Debentures and Coupons bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Debentures or did not hold such offices at the date of such Debentures.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Debentures of any series, together
with any Coupons appertaining thereto executed by the Company to the Trustee
for authentication, together with a Company Order for the authentication and
delivery of Debentures of such series, and the Trustee in accordance with the
Company Order shall authenticate and make Debentures of any series available
for delivery; provided, however, that, in connection with its original
issuance, no Bearer Debenture of such series shall be mailed or otherwise
delivered to any location in the United States; and provided, further, that a
Bearer Debenture of such series may be delivered in connection with its
original issuance only if the Person entitled to receive such Bearer Debenture
shall have furnished a certificate in the form specified in the Debenture of
such series as to certain tax matters in respect of United States citizens,
dated no earlier than 15 days prior to the earlier of the date on which the
Bearer Debenture of such series is delivered and the date on which any
temporary global Debenture first becomes exchangeable for such Bearer Debenture
in accordance with the terms of such temporary global Debenture and this
Indenture. If any Debenture of such series shall be represented by a permanent
global Bearer Debenture of such series, then, for purposes of this Section and
Section 3.4, the notation of a beneficial owner's interest therein upon
original issuance of such Debenture or upon exchange of a portion of a
temporary global Debenture shall be deemed to be delivery in connection with
its original issuance of such beneficial owner's interest in such permanent
global Debenture. Except as permitted by Section 3.6, the Trustee shall not
authenticate and deliver any Bearer Debenture of such series unless all
appurtenant Coupons for interest then matured have been detached and canceled.
If all the Debentures of any series are not to be issued at one
time and if the Board Resolution and indenture supplement establishing such
series shall so permit, such Company Order may set forth procedures acceptable
to the Trustee for the issuance of Debentures of such series and determining
the terms of such series, such as interest rate, maturity date, date of
issuance and date from which interest shall accrue.
If the forms or terms of the Debentures of any series, together
with any Coupons appertaining thereto, have been established in or pursuant to
one or more Board Resolutions as permitted by Sections 2.1 and 3.1, in
authenticating Debentures of such series, and accepting the additional
responsibilities under this Indenture in relation to such
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Debentures of such series, the Trustee shall be entitled to receive, and
(subject to Section 6.2) shall be fully protected in relying upon, an Opinion
of Counsel stating:
(a) that such forms have been established in conformity with
the provisions of this Indenture;
(b) that such terms, or the manner of determining such terms,
have been established in conformity with the provisions of this Indenture;
(c) that Debentures of such series, together with any Coupons
appertaining thereto, when authenticated and delivered by the Trustee and
issued by the Company in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except, as enforcement may be limited by bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting the enforcement of creditors' rights generally and general
equity principles (regardless of whether enforceability is considered in a
proceeding at law or equity): and
(d) that the Company has complied with all laws and
requirements in respect of the execution and delivery by the Company of
Debentures of such series.
If such forms or terms have been so established, the Trustee shall
not be required to authenticate Debentures of such series if the issue of such
Debentures pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under such Debentures and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the two
preceding paragraphs, if all Debentures of any series are not to be originally
issued at one time, it shall not be necessary to deliver the Officers'
Certificate otherwise required pursuant to Section 3.1 or the Company Order and
Opinion of Counsel otherwise required pursuant to such preceding paragraphs at
or prior to the time of authentication of each Debenture of such series if such
documents are delivered at or prior to the authentication upon original
issuance of the first Debenture of such series to be issued.
Each Registered Debenture shall be dated the date of its
authentication; and each Bearer Debenture shall be dated as of the date of
original issuance of the first Debenture of such series to be issued.
No Debenture of such series or any Coupon appertaining thereto
shall be entitled to any benefit under this Indenture nor shall such Debenture
or Coupon be a valid
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obligation for any purpose unless there appears on the Debenture or the Coupon
appertaining to such Debenture, a certificate of authentication substantially
in the form provided for herein executed by the Trustee by manual signature,
and such certificate upon any Debenture shall be conclusive evidence, and the
only evidence, that such Debenture has been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Debenture shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Debenture to the Trustee for cancellation as
provided in Section 3.9 together with a written statement (which need not
comply with Section 1.2 and need not be accompanied by an Opinion of Counsel)
stating that such Debenture has never been issued and sold by the Company, for
all purposes of this Indenture such Debenture shall be deemed never to have
been authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
SECTION 3.4 Temporary Debentures. Pending the preparation of
definitive Debentures of any series, the Company may execute, and upon Company
Order the Trustee shall authenticate and make available for delivery, temporary
Debentures of such series which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Debentures in lieu of which they
are issued, in registered form or, if authorized, in bearer form with one or
more Coupons or without Coupons, and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Debentures or Coupons may determine, as evidenced by their execution of such
Debentures or Coupons. In the case of Debentures of any series issuable as
Bearer Debentures, such temporary Debentures may be in global form. A
temporary Bearer Debenture shall be delivered only in compliance with the
conditions set forth in Section 3.3.
Except in the case of temporary Debentures in global form issued
in a transaction exempt from registration under the Securities Act pursuant to
Regulation S thereunder (a "Regulation S Debenture") (which shall be exchanged
in accordance with the provisions of the following paragraphs), if temporary
Debentures of any series are issued, the Company will cause definitive
Debentures of such series to be prepared without unreasonable delay. After the
preparation of definitive Debentures of such series, the temporary Debentures
of such series shall be exchangeable for definitive Debentures of such series
upon surrender of the temporary Debentures of such series at the office or
agency of the Company maintained pursuant to Section 10.2 in a Place of Payment
for such series for the purpose of exchanges of Debentures of such series,
without charge to the Holder. Upon surrender for cancellation of any one or
more temporary Debentures of any series (accompanied by any unmatured Coupons
appertaining thereto) the Company shall execute and the Trustee shall
authenticate and make available for delivery in exchange therefor a like
aggregate principal amount of definitive Debentures of such series and of like
tenor of authorized denominations; provided, however, that no definitive Bearer
Debenture shall be delivered in exchange for a temporary Registered Debenture.
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If Regulation S temporary Debentures of any series are issued in
global form, any such temporary global Regulation S Debenture shall, unless
otherwise provided therein, be delivered to the London office of a depositary
or common depositary (the "Common Depositary"), for the benefit of Euro-clear
and Cedel S.A., for credit to the respective accounts of the beneficial owners
of such Debentures (or to such other accounts as they may direct).
Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary global
Regulation S Debenture (the "Exchange Date"), the Company shall deliver to the
Trustee definitive Debentures of such series, in aggregate principal amount
equal to the principal amount of such temporary global Regulation S Debenture,
executed by the Company. On or after the Exchange Date such temporary global
Regulation S Debenture shall be surrendered by the Common Depositary to the
Trustee, as the Company's agent for such purpose, to be exchanged, in whole or
from time to time in part, for definitive Debentures of such series without
charge and the Trustee shall authenticate and make available for delivery, in
exchange for each portion of such temporary global Regulation S Debenture, a
like aggregate principal amount of definitive Debentures of such series of
authorized denominations and of like tenor as the portion of such temporary
global Regulation S Debenture to be exchanged; provided, however, that, unless
otherwise specified in such temporary global Regulation S Debenture, upon such
presentation by the Common Depositary, such temporary global Regulation S
Debenture is accompanied by a certificate dated the Exchange Date or a
subsequent date and signed by Cedel S.A. as to the portion of such temporary
global Regulation S Debenture held for its account then to be exchanged, each
in the form or in such form as shall be specified in such Regulation S
Debenture. The definitive Debentures of such series to be delivered in
exchange for any such temporary global Regulation S Debenture shall be in
bearer form, registered form, permanent global bearer form or permanent global
registered form, or any combination thereof, as specified as contemplated by
Section 3.1, and, if any combination thereof is so specified, as requested by
the beneficial owner thereof; provided, however, that definitive Bearer
Debentures of such series shall be delivered in exchange for a portion of a
temporary global Regulation S Debenture of such series only in compliance with
the requirements of Section 3.3.
Unless otherwise specified in such temporary global Regulation S
Debenture, the interest of a beneficial owner of Debentures of any series in a
temporary global Regulation S Debenture shall be exchanged for definitive
Debentures of such series and of like tenor following the Exchange Date when
the account holder instructs Euro-clear or Cedel S.A., as the case may be, to
request such exchange on the Holder's behalf and delivers to Euro-clear or
Cedel S.A., as the case may be, a certificate in such form as shall be
specified in the Regulation S Debenture of such series, dated no earlier than
15 days prior to the Exchange Date, copies of which certificate shall be
available from the offices of Euro-clear and Cedel S.A., the Trustee, any
Authenticating Agent
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appointed for the Debentures of such series and each Paying Agent. Unless
otherwise specified in such temporary global Regulation S Debenture, any such
exchange shall be made free of charge to the beneficial owners of such
temporary global Regulation S Debenture, except that a Person receiving
definitive Debentures must bear the cost of insurance, postage, transportation
and the like in the event that such Person does not take delivery of such
definitive Debentures of such series in person at the offices of Euro-clear or
Cedel S.A. Definitive Debentures of such series in bearer form to be delivered
in exchange for any portion of a temporary global Regulation S Debenture of
such series shall be delivered only outside the United States.
Until exchanged in full as hereinabove provided, the temporary
Regulation S Debentures of any series shall in all respects be entitled to such
benefits under this Indenture as definitive Debentures of such series and of
like tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 3.1, interest payable on a temporary
global Regulation S Debenture on an Interest Payment Date for Debentures of
such series occurring prior to the applicable Exchange Date shall be payable to
Euro-clear and Cedel S.A. on such Interest Payment Date upon delivery by
Euro-clear and Cedel S.A. to the Trustee of a certificate or certificates in
such form as shall be specified in the Debenture of such series, for credit
without further interest on or after such Interest Payment Date to the
respective accounts of the Persons who are the beneficial owners of such
temporary global Regulation S Debenture on such Interest Payment Date and who
have each delivered to Euro-clear or Cedel S.A., as the case may be, a
certificate in such form as shall be specified in the Debenture of such series.
Any interest so received by Euro-clear and Cedel S.A. and not paid as herein
provided shall be returned to the Trustee immediately prior to the expiration
of two years after such Interest Payment Date in order to be repaid to the
Company in accordance with Section 10.3.
SECTION 3.5 Registration, Registration of Transfer and
Exchange. The Company shall cause to be kept at an office or agency to be
maintained by the Company in accordance with Section 10.2 a register (the
"Debenture Register") in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Registered
Debentures and the registration of transfers of Registered Debentures. The
Trustee is hereby appointed "Debenture Registrar" for the purpose of
registering Registered Debentures and transfers of Registered Debentures as
herein provided.
Upon due surrender for registration of transfer of any Registered
Debenture of any series at the office or agency of the Company maintained
pursuant to Section 10.2 for such purpose in a Place of Payment for such
series, the Company shall execute, and the Trustee shall authenticate and make
available for delivery, in the name of the designated transferee or
transferees, one or more new Registered Debentures of the
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such series of any authorized denominations and of a like aggregate principal
amount and tenor.
At the option of the Holder, Registered Debentures of any series
may be exchanged for other Registered Debentures of such series of any
authorized denominations and of a like aggregate principal amount and tenor,
upon surrender of the Debentures to be exchanged at any such office or agency.
Whenever any Debentures are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and make available for delivery,
the Debentures which the Holder making the exchange is entitled to receive.
Bearer Debentures will not be issued in exchange for Registered Debentures.
At the option of the Holder, Bearer Debentures of any series may
be exchanged for Registered Debentures of such series of any authorized
denominations and of a like aggregate principal amount and tenor, upon
surrender of the Bearer Debentures of such series to be exchanged at any such
office or agency, with all unmatured Coupons, and all matured Coupons in
default appertaining thereto. If the Holder of a Bearer Debenture of such
series is unable to produce any such unmatured Coupon or Coupons or matured
Coupon or Coupons in default, such exchange may be effected if the Bearer
Debentures of such series are accompanied by payment in funds acceptable to the
Company in an amount equal to the face amount of such missing Coupon or
Coupons, or the surrender of such missing Coupon or Coupons may be waived by
the Company and the Trustee if there is furnished to them such security or
indemnity as they may require to save each of them and any Paying Agent
harmless. If thereafter the Holder of such Debentures of such series shall
surrender to any Paying Agent any such missing Coupon in respect of which such
a payment shall have been made, such Holder shall be entitled to receive the
amount of such payment; provided, however, that, except as otherwise provided
in Section 10.2, interest represented by Coupons shall be payable only upon
presentation and surrender of those Coupons at an office or agency located
outside the United States. Notwithstanding the foregoing, in case a Bearer
Debenture of any series is surrendered at any such office or agency in exchange
for a Registered Debenture of such series and of like tenor after the close of
business at such office or agency on (i) any Regular Record Date and before the
opening of business at such office or agency on the relevant Interest Payment
Date, or (ii) any Special Record Date and before the opening of business at
such office or agency on the related proposed date for payment of Defaulted
Interest, the Bearer Debenture of such series shall be surrendered without the
Coupon relating to such Interest Payment Date or proposed date for payment, as
the case may be, and interest or Defaulted Interest, as the case may be, will
not be payable on such Interest Payment Date or proposed date for payment, as
the case may be, in respect of the Registered Debenture of such series issued
in exchange for such Bearer Debenture, but will be payable only to the Holder
of such Coupon when due in accordance with the provisions of this Indenture.
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Whenever any Debentures of any series are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
make available for delivery, the Debentures of such series which the Holder
making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 3.1, any permanent global Regulation S Debenture of any
series shall be exchangeable only as provided in this paragraph. If the
beneficial owners of interests in a permanent global Regulation S Debenture are
entitled to exchange such interests for Debentures of such series and of
principal amount and like tenor of another authorized form and denomination, as
specified as contemplated by Section 3.1, then without unnecessary delay but in
any event not later than the earliest date on which such interests may be so
exchanged, the Company shall deliver to the Trustee definitive Debentures of
such series in aggregate principal amount equal to the principal amount of such
permanent global Regulation S Debenture executed by the Company. On or after
the earliest date on which such interests may be so exchanged, such permanent
global Regulation S Debenture of any series shall be surrendered by the Common
Depositary or such other depositary or Common Depositary as shall be specified
in the Company Order with respect thereto to the Trustee, as the Company's
agent for such purpose, to be exchanged, in whole or from time to time in part,
for definitive Debentures of such series without charge and the Trustee shall
authenticate and make available for delivery, in exchange for each portion of
such permanent global Regulation S Debenture, a like aggregate principal amount
of definitive Debentures of such series of authorized denominations and of like
tenor as the portion of such permanent global Debenture of such series to be
exchanged which, unless the Debentures of such series are not issuable both as
Bearer Debentures and as Registered Debentures of such series, as specified as
contemplated by Section 3.1, shall be in the form of Bearer Debentures or
Registered Debentures of such series, or any combination thereof, as shall be
specified by the beneficial owner thereof; provided, however, that no Bearer
Debenture delivered in exchange for a portion of a permanent global Debenture
of such series shall be mailed or otherwise delivered to any location in the
United States. If a Registered Debenture of such series is issued in exchange
for any portion of a permanent global Debenture of such series after the close
of business at the office or agency where such exchange occurs on (i) any
Regular Record Date and before the opening of business at such office or agency
on the relevant Interest Payment Date, or (ii) any Special Record Date and
before the opening of business at such office or agency on the related proposed
date for payment of Defaulted Interest, interest or Defaulted Interest, as the
case may be, will not be payable on such Interest Payment Date or proposed date
for payment, as the case may be, in respect of such Registered Debenture of
such series, but will be payable on such Interest Payment Date or proposed date
for payment, as the case may be, only to the Person to whom interest in respect
of such portion of such permanent global Debenture of such series is payable in
accordance with the provisions of this Indenture.
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All Debentures issued upon any registration of transfer or
exchange of Debentures shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Debentures surrendered upon such registration of transfer or
exchange.
Every Registered Debenture presented or surrendered for
registration of transfer or for exchange shall (if so required by the Company
or the Trustee or any transfer agent) be duly endorsed, or be accompanied by a
written instrument of transfer, in form satisfactory to the Company and the
Debenture Registrar or any transfer agent, duly executed by the Holder thereof
or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Debentures, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Debentures, other
than exchanges pursuant to Section 3.4, 9.6 or 11.7 not involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange Debentures of any series during a period beginning at
the opening of business 15 days before any selection of Debentures of such
series to be redeemed and ending at the close of business on (A) if Debentures
of such series are issuable only as Registered Debentures, the day of the
mailing of the relevant notice of redemption and (B) if Debenture of such
series are issuable as Bearer Debentures, the day of the first publication of
the relevant notice of redemption or, if Debentures of such series are also
issuable as Registered Debentures and there is no publication, the mailing of
the relevant notice of redemption, (ii) to register the transfer of or exchange
any Registered Debenture so selected for redemption, in whole or in part,
except the unredeemed portion of any Debenture being redeemed in part, or (iii)
to exchange any Bearer Debenture so selected for redemption except that such a
Bearer Debenture may be exchanged for a Registered Debenture of such series and
like tenor, provided that such Registered Debenture shall be simultaneously
surrendered for redemption.
Notwithstanding the foregoing and except as otherwise specified or
contemplated by Section 3.1, any Book-Entry Debenture shall be exchangeable
pursuant to this Section 3.5 or Sections 3.4, 9.6 and 11.7 for Debentures
registered in the name of, and a transfer of a Book-Entry Debenture of any
series may be registered to, any Person other than the Depositary for such
Debenture or its nominee only if (i) such Depositary notifies the Company that
it is unwilling or unable to continue as Depositary for such Book-Entry
Debenture or if at any time such Depositary ceases to be a clearing agency
registered under the Exchange Act, (ii) the Company executes and delivers to
the Trustee a Company Order that such Book-Entry Debenture shall be so
exchangeable and the transfer thereof so registerable or (iii) there shall have
occurred and be continuing an Event of Default, or an event which after notice
or lapse of time would be an Event of
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Default, with respect to the Debentures of such series. Upon the occurrence in
respect of any Book-Entry Debenture of any series of any one or more of the
conditions specified in clauses (i), (ii) or (iii) of the preceding sentence or
such other conditions as may be specified as contemplated by Section 3.1 for
such series, such Book-Entry Debenture may be exchanged for Debentures
registered in the names of, and the transfer of such Book-Entry Debenture may
be registered to, such Persons (including Persons other than the Depositary
with respect to such series and its nominees) as such Depositary shall direct.
Notwithstanding any other provision of this Indenture, any Debenture
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, any Book-Entry Debenture shall also be a Book-Entry
Debenture and shall bear the legend specified in Section 2.4 except for any
Debenture authenticated and delivered in exchange for, or upon registration or
transfer of, any Book-Entry Debenture pursuant to the preceding sentence.
Notwithstanding anything in this Indenture or in the terms of a
Debenture to the contrary, the exchange of Bearer Debentures for Registered
Debentures will be subject to satisfaction of the provisions of the United
States federal income tax laws in effect at the time of such exchange. None of
the Company, the Trustee or any Authenticating Agent of the Company or the
Trustee (any of which, other than the Company, shall rely on an Officers'
Certificate and an Opinion of Counsel) shall be required to exchange any Bearer
Debenture for a Registered Debenture if as a result thereof and in the
Company's reasonable judgment, the Company would incur adverse consequences
under then applicable United States federal income tax laws.
SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Debentures
and Coupons. If any mutilated Debenture of any series or a Debenture of any
series with a mutilated Coupon appertaining thereto is surrendered to the
Trustee, the Company shall execute and the Trustee shall authenticate and make
available for delivery in exchange therefor a new Debenture of the same series
and of principal amount and like tenor and bearing a number not
contemporaneously outstanding, with Coupons corresponding to the Coupons, if
any, appertaining to the surrendered Debenture and such mutilated Debenture or
a Debenture with a mutilated Coupon, if any, shall be canceled by the Trustee
in accordance with the Indenture.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Debenture of any series or Coupon appertaining thereto and (ii) such security
or indemnity as may be required by them, then, in the absence of notice to the
Company or the Trustee that such Debenture or Coupon has been acquired by a
bona fide purchaser, the Company shall, subject to the following paragraph,
execute, and the Trustee shall authenticate and make available for delivery, in
lieu of any such destroyed, lost or stolen Debenture or in exchange for the
Debenture to which a destroyed, lost or stolen Coupon appertains (with all
appurtenant Coupons not destroyed, lost or stolen), a new Debenture of such
series and of like tenor and principal
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amount and bearing a number not contemporaneously outstanding, with Coupons
corresponding to the Coupons, if any, appertaining to such destroyed, lost or
stolen Debenture or to the Debenture to which such destroyed, lost or stolen
Coupon appertains.
In case any such mutilated, destroyed, lost or stolen Debenture or
Coupon appertaining thereto has become or is about to become due and payable,
the Company in its discretion may, instead of issuing a new Debenture pay such
Debenture or Coupon; provided, however, that principal of and any premium and
interest on Bearer Debentures shall, except as otherwise provided in Section
10.2, be payable only at an office or agency located outside the United States.
Upon the issuance of any new Debenture under this Section, the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Debenture of any series, with any Coupons appertaining
thereto, issued pursuant to this Section in lieu of any destroyed, lost or
stolen Debenture or in exchange for a Debenture to which a destroyed, lost or
stolen Coupon appertains, shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen
Debenture and any Coupons appertaining thereto, or the destroyed, lost or
stolen Coupon shall be at any time enforceable by anyone, and any such new
Debenture and Coupons, if any, shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Debentures of such
series and their Coupons appertaining thereto, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Debentures or
Coupons.
SECTION 3.7 Payment of Interest; Interest Rights Preserved.
Unless otherwise provided as contemplated by Section 3.1 with respect to any
series of Debentures, interest on any Registered Debenture which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Debenture (or one or more Predecessor
Debentures) is registered at the close of business on the Regular Record Date
for such interest.
Unless otherwise provided as contemplated by Section 3.1 with
respect to any series of Debentures, any interest on any Registered Debenture
of any series which is payable, but is not punctually paid or duly provided
for, on any Interest Payment Date (herein called "Defaulted Interest") shall
forthwith cease to be payable to the Holder on the relevant Regular Record Date
by virtue of having been such Holder, and such Defaulted Interest may be paid
by the Company, at its election in each case, as provided in
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Clause (a) and (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Registered Debentures of such
series (or their respective Predecessor Debentures) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Registered Debenture of such series
and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in
this Clause provided. Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall be not more
than 15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of
the Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder of Registered Debentures of such series at
the address of such Holder as it appears in the Debenture Register, not
less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to
the Persons in whose names the Registered Debentures of such series (or
their respective Predecessor Debentures) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (b); and
(b) The Company may make payment of any Defaulted Interest on
the Registered Debentures of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which such
Debentures may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this Clause, such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section
3.5, each Debenture delivered under this Indenture upon registration of,
transfer of or in exchange for or in lieu of any other Debenture shall carry
the rights to interest accrued and unpaid, and to accrue, which were carried by
such other Debenture.
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Except as otherwise specified as contemplated by Section 3.1, in
the case of any Debenture which is converted into Common Stock of the Company
after any Regular Record Date and on or prior to the next succeeding Interest
Payment Date (other than any Debenture whose Maturity is prior to such Interest
Payment Date), interest whose Stated Maturity is on such Interest Payment Date
shall be payable on such Interest Payment Date notwithstanding such conversion,
and such interest (whether or not punctually paid or duly provided for) shall
be paid to the Person in whose name that Debenture (or one or more Predecessor
Debentures) is registered at the close of business on such Regular Record Date.
However, if a Redemption Date falls between a Regular Record Date and the
subsequent Interest Payment Date, the amount of such payment shall include
accumulated and unpaid interest accrued to, but excluding, such Redemption Date
and shall be made on such Redemption Date. Except as otherwise expressly
provided in the first two sentences of this paragraph, in the case of any
Debenture which is converted, interest whose Stated Maturity is after the date
of conversion of such Debenture shall not be payable.
SECTION 3.8 Persons Deemed Owners. Prior to due presentment
of a Registered Debenture for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name such Registered Debenture is registered as the owner of such
Registered Debenture for the purpose of receiving payment of principal of (and
premium, if any) and (subject to Sections 3.5 and 3.7) any interest on such
Debenture and for all other purposes whatsoever, whether or not such Debenture
shall be overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
Title to any Bearer Debenture and any Coupons appertaining thereto
shall pass by delivery. The Company, the Trustee and any agent of the Company
or the Trustee may treat the bearer of any Bearer Debenture and the bearer of
any Coupon as the absolute owner of such Debenture or Coupon for the purpose of
receiving payment thereof or on account thereof and for all other purposes
whatsoever, whether or not such Debenture or Coupon shall be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
SECTION 3.9 Cancellation. All Debentures and Coupons
surrendered for payment, redemption, registration of transfer or exchange or
for credit against any sinking fund payment shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee. All Registered Debentures
and matured Coupons so delivered shall be promptly canceled by the Trustee.
All Bearer Debentures and unmatured Coupons so delivered shall be canceled.
All Bearer Debentures and unmatured Coupons held by the Trustee pending such
cancellation or reissuance shall be deemed to be delivered for cancellation for
all purposes of this Indenture and the Debentures. The Company may at any time
deliver to the Trustee for cancellation any Debentures previously authenticated
and delivered hereunder which the Company may have acquired
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in any manner whatsoever, and may deliver to the Trustee (or to any other
Person for delivery to the Trustee) for cancellation any Debentures previously
authenticated hereunder which the Company has not issued and sold, and all
Debentures so delivered shall be promptly canceled by the Trustee. No
Debentures shall be authenticated in lieu of or in exchange for any Debentures
canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Debentures and Coupons held by the Trustee shall be
returned to the Company.
Notwithstanding the foregoing, with respect to any Book-Entry
Debenture, nothing herein shall prevent the Company, the Trustee or any agent
of the Company or the Trustee, from giving effect to any written certification,
proxy or other authorization furnished by a Depositary or impair, as between a
Depositary and holders of beneficial interests in any Book-Entry Debenture, the
operation of customary practices governing the exercise of the rights of the
Depositary (or its nominee) as Holder of such Book-Entry Debenture.
SECTION 3.10 Computation of Interest. Except as otherwise
specified as contemplated by Section 3.1 for Debentures of any series, interest
on the Debentures of each series shall be computed on the basis of a 360-day
year of twelve 30-day months.
SECTION 3.11 Electronic Debenture Issuance. The Debentures
may, pursuant to a Board Resolution and Officers' Certificate complying with
Section 3.1 hereof, be issued by means of an electronic issuance system. Any
such Debenture issuance instructions may specify the name, address and taxpayer
identification number of the Holder, the principal amount and Maturity of the
Debenture, the interest rate to be borne by the Debenture and any other terms
not inconsistent with such Board Resolution and Officers' Certificate. Nothing
in this Section 3.11 shall be construed as prohibiting the Company from issuing
Debentures by any means not inconsistent with the provisions of this Indenture.
SECTION 3.12 CUSIP Numbers. The Company in issuing the
Debentures may use "CUSIP" numbers (if then generally in use), and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Debentures or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Debentures, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Trustee of any change in the CUSIP
numbers.
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture. Except
as otherwise specified as contemplated by Section 3.1, this Indenture shall
upon Company Request cease to be of further effect (except as to any surviving
rights of registration of transfer or exchange of Debentures herein expressly
provided for, and any right to receive additional amounts, as provided in
Section 10.4), and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when:
(a) either
(1) all Debentures theretofore authenticated and
delivered and all Coupons, if any, appertaining thereto (other
than (i) Coupons appertaining to Bearer Debentures surrendered for
exchange for Registered Debentures and maturing after such
exchange, whose surrender is not required or has been waived as
provided in Section 3.5, (ii) Debentures and Coupons which have
been destroyed, lost or stolen and which have been replaced or
paid as provided in Section 3.6, (iii) Coupons appertaining to
Debentures called for redemption and maturing after the relevant
Redemption Date, whose surrender has been waived as provided in
Section 11.6, and (iv) Debentures and Coupons for whose payment
money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company
or discharged from such trust, as provided in Section 10.3) have
been delivered to the Trustee for cancellation; or
(2) all such Debentures and, in the case of (i) or
(ii) below, any Coupons appertaining thereto not theretofore
delivered to the Trustee for cancellation,
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company,
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and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose, an amount sufficient to pay and
discharge the entire indebtedness on such Debentures and Coupons
not theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and any interest to the date of
such deposit (in the case of Debentures which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case
may be;
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 6.6, the
obligations of the Company to any Authenticating Agent under Section 6.13 and,
if money shall have been deposited with the Trustee pursuant to clause (a)(2)
of this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
SECTION 4.2 Application of Trust Money. Subject to the
provisions of the last paragraph of Section 10.3, all money and U.S. Government
Obligations deposited with the Trustee pursuant to Section 4.1 or 4.3 and all
money received by the Trustee in respect of such U.S. Government Obligations
shall be held in trust and applied by it, in accordance with the provisions of
the Debentures, the Coupons and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of the
principal (and premium, if any) and any interest for whose payment such money
and U.S. Government Obligations has been deposited with or received by the
Trustee. Money deposited pursuant to this Section not in violation of this
Indenture shall not be subject to claims of the holders of Senior Indebtedness
under Article XV.
SECTION 4.3 Company's Option to Effect Defeasance or Covenant
Defeasance. If applicable to Debentures of any series, the Company may elect,
at its option at any time, to have Section 4.4 or Section 4.5 applied to any
such series of Debentures or any Debentures of such series, as the case may be,
designated pursuant to Section 3.1 as being defeasible pursuant to such Section
4.4 or 4.5, in accordance with any applicable requirements provided pursuant to
Section 3.1 and upon compliance with the conditions set forth below in this
Article. Any such election shall be evidenced by a Board
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Resolution or in another manner specified as contemplated by Section 3.1 for
such Debentures.
SECTION 4.4 Discharge and Defeasance. If this Section 4.4 is
specified, as contemplated by Section 3.1, to be applicable to Debentures of
any series, then notwithstanding Section 4.1 and upon compliance with the
applicable conditions set forth in 4.6: (1) the Company shall be deemed to have
paid and discharged the entire indebtedness on all the Outstanding Debentures
of any such series ("Defeasance"); and (2) the provisions of this Indenture as
it relates to such Outstanding Debentures shall no longer be in effect (except
as to the rights of Holders of Debentures of such series to receive, solely
from the trust fund described in Section 4.6, payment of (a) the principal of
(and premium, if any) and any installment of principal of (and premium, if any)
or interest on Debentures of such series on the Stated Maturity of such
principal (and premium, if any) or installment of principal (and premium, if
any) or interest or upon optional redemption and/or (b) any mandatory sinking
fund payments or analogous payments applicable to the Debentures of such series
on that day on which such payments are due and payable in accordance with the
terms of the Indenture and of Debentures of such series, the Company's
obligations with respect to Debentures of such series under Sections 3.4, 3.5,
3.6, 10.2, 10.3, and 10.4 and the rights, powers, trusts, duties and immunities
of the Trustee hereunder, including those under Section 6.8 hereof;
SECTION 4.5 Covenant Defeasance. If this Section 4.5 is
specified, as contemplated by Section 3.1, to be applicable to any series of
Debentures or any Debentures of such series, as the case may be, (a) the
Company shall be released from its obligations under Sections 10.4 through
10.7, inclusive, and any covenants provided pursuant to Section 3.1(u) or
9.1(b) for the benefit of the Holders of Debentures of such series that
pursuant to the terms of such Debentures of such series are defeasible pursuant
to this Section 4.5 and (b) the occurrence of any event specified in Sections
5.1(d) (with respect to any of Sections 10.3 through 10.7, inclusive, and any
such covenants provided pursuant to Section 3.1(u), 9.1(b), or 9.1(f) and
5.1(g) (if pursuant to the terms of such Debentures this Section 4.5 is
applicable to any such event specified in Section 5.1(g)) shall be deemed not
to be or result in an Event of Default, in each case with respect to Debentures
of such series as provided in this Section on and after the date the conditions
set forth in Section 4.6 are satisfied (hereinafter called "Covenant
Defeasance"). For this purpose, such Covenant Defeasance means that, with
respect to Debentures of such series, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such specified Section (to the extent so specified in the case of
Section 5.1(d) and 5.1(g)), whether directly or indirectly by reason of any
reference elsewhere herein to any such Section or by reason of any reference in
any such Section to any other provision herein or in any other document, but
the remainder of this Indenture and such Debentures shall be unaffected
thereby.
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SECTION 4.6 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section 4.4 or
Section 4.5 to any applicable series of Debentures or any Debentures of such
series, as the case may be.
(a) either
(1) with respect to all Outstanding Debentures of
such series or such Debentures of such Series, as the case may
be, with reference to this Section 4.6, the Company has deposited
or caused to be deposited with the Trustee irrevocably (but
subject to the provisions of Section 4.2 and the last paragraph of
Section 10.3), as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders
of the Debentures of such series, (i) lawful money of the United
States in an amount, or (ii) U.S. Government Obligations which
through the payment of interest and principal in respect thereof
in accordance with their terms will provide not later than the
opening of business on the due dates of any payment referred to in
clause (i) or (ii) of this subparagraph (a)(1) lawful money of the
United States in an amount, or (iii) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and
discharge (A) the principal of (and premium, if any) and each
installment of principal (and premium, if any) and interest on
such Debentures the Stated Maturity of such principal or
installment of principal or interest or upon optional redemption
and (B) any mandatory sinking fund payments or analogous payments
applicable to the Debentures of such series on the day on which
such payments are due and payable in accordance with the terms of
this Indenture and of the Debentures of such series; or
(2) the Company has properly fulfilled such other
means of satisfaction and discharge as is specified, as
contemplated by Section 3.1, to be applicable to the Debentures of
such series;
(b) the Company has paid or caused to be paid all other sums
payable with respect to the Debentures of such series;
(c) such deposit for the benefit of Holders of Debentures of
such series will not result in a breach or violation of, or constitute a
default under, this Indenture or any other agreement or instrument to which
the Company is a party or by which it is bound;
(d) no Event of Default or event which with the giving of
notice or lapse of time, or both, would become an Event of Default with
respect to the
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Debentures of such series shall have occurred and be continuing on the date
of such deposit and no Event of Default under Section 5.1(e) or Section
5.1(f) or event which with the giving of notice or lapse of time, or both,
would become an Event of Default under Section 5.1(e) or Section 5.1(f)
shall have occurred and be continuing on the 91st day after such date;
(e) in the event of an election to have Section 4.4 apply to
the Debentures of any series, the Company has delivered to the Trustee an
Opinion of Counsel to the effect that (i) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling, or (ii)
since the date of this Indenture there has been a change in applicable
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of
Debentures of such series will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount and
in the same manner and at the same times as would have been the case if
such deposit, defeasance and discharge had not occurred;
(f) in the event of an election to have Section 4.5 apply to
Debentures of any series, the Company shall have delivered to the Trustee
an Opinion of Counsel, to the effect that the Holders of Debentures of such
series will not recognize gain or loss for federal income tax purposes as a
result of the deposit and Covenant Defeasance to be effected with respect
to the Debentures of such series and will be subject to United States
federal income tax on the same amount, in the same manner and at the same
times as would be the case if such deposit and Covenant Defeasance were not
to occur;
(g) if the Debentures of such series are then listed on any
domestic or foreign securities exchange, the Company shall have delivered
to the Trustee an Opinion of Counsel to the effect that such deposit,
defeasance and discharge will not cause the Debentures of such series to be
delisted;
(h) no default in the payment of the principal (and premium,
if any) or any interest on any Senior Indebtedness beyond any applicable
grace period shall have occurred and be continuing;
(i) no other default with respect to any Senior Indebtedness
shall have occurred and be continuing and shall have resulted in the
acceleration of such Senior Indebtedness; and
(j) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the Defeasance or Covenant
Defeasance with respect to
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Debentures of such series have been complied with and an Opinion of Counsel
to the effect that either (i) as a result of such deposit and the related
exercise of the Company's option under this Article, registration is not
required under the Investment Company Act of 1940, as amended, by the
Company, the trust funds representing such deposit or the Trustee or (ii)
all necessary registrations under said Act have been effected.
Any deposits with the Trustee referred to in Section 4.6(a)(1)
above shall be irrevocable and shall be made under the terms of an escrow/trust
agreement in form and substance satisfactory to the Trustee. If any
Outstanding Debentures of such series are to be redeemed prior to their Stated
Maturity, whether pursuant to any optional redemption provisions or in
accordance with any mandatory sinking fund requirement, the applicable escrow
trust agreement shall provide therefor and the Company shall make such
arrangements as are satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company.
Upon Defeasance with respect to all the Debentures of any series,
the terms and conditions of the Debentures of such series, including the terms
and conditions with respect thereto set forth in this Indenture, shall no
longer be binding upon, or applicable to, the Company; provided that the
Company shall not be discharged from any payment obligations in respect of
Debentures of such series which are deemed not to be Outstanding under clause
(iii) of the definition thereof if such obligations continue to be valid
obligations of the Company under applicable law.
Notwithstanding the cessation, termination and discharge of all
obligations, covenants and agreements (except as provided above in this Section
4.6) of the Company under this Indenture with respect to the Debentures of any
series, the obligations of the Company to the Trustee under Section 6.6, and
the obligations of the Trustee under Section 4.2 and the last paragraph of
Section 10.3 shall survive with respect the Debentures of such series.
Anything in this Article to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in this
Section 4.6 with respect to Debentures of any series which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect the
Defeasance or Covenant Defeasance, as the case may be, with respect to
Debentures of such series.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to this Section 4.6 or the principal and
interest received in respect thereof other
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than any such tax, fee or other charge which by law is for the account of the
Holders of Outstanding Debentures.
ARTICLE V
REMEDIES
SECTION 5.1 Events of Default. "Event of Default", wherever
used herein with respect to Debentures of any series, unless otherwise provided
the applicable supplemental indenture, means any one or more of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of any interest upon or any
additional amounts payable in respect of any Debenture of such series when
it becomes due and payable, and continuance of such default for a period of
30 days (whether or not such payment is prohibited by the subordination
provisions set forth in Article XV hereof); provided, however, that a valid
extension of an interest payment period by the Company in accordance with
the terms of any indenture supplemental hereto, shall not constitute a
default in the payment of interest for this purpose; or
(b) default in the payment of the principal of (or premium, if
any, on) any Debenture of such series as and when the same shall become due
and payable whether at maturity, upon redemption, by declaration or
otherwise, or in any payment required by any sinking or analogous fund
established with respect to that series (whether or not such payment is
prohibited by the subordination provisions set forth in Article XV hereof);
provided, however, that a valid extension of the maturity of the Debentures
of such series in accordance with the terms of any indenture supplemental
hereto shall not constitute a default in the payment of principal or
premium, if any; or
(c) if the Debentures of such series are convertible or
exchangeable into or for shares of Common Stock of the Company or other
securities, cash or other property pursuant to any supplemental indenture,
Board Resolution or other instrument authorizing Debentures of such series,
failure by the Company to convert such Debentures (whether or not
conversion or exchange is prohibited by the subordination provisions set
forth in Article XV); or
(d) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in
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whose performance or whose breach is elsewhere in this Section specifically
dealt with or which has expressly been included in this Indenture solely
for the benefit of any series of Debentures other than such series), and
continuance of such default or breach for a period of 90 days after there
has been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Outstanding Debentures of such series, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default," hereunder;
or
(e) the entry by a court having jurisdiction in the premises
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance
of any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
(f) the commencement by the Company of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated as bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief
under any applicable federal or state law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidation, assignee, trustee, sequestrator or
similar official of the Company or of any substantial part of its property,
or the making by it of an assignment for the benefit of creditors; or
(g) in the event Debentures of any series are issued to a
Devon Trust or a trustee of such trust in connection with the issuance of
Trust Securities by such Devon Trust, such Devon Trust shall have
voluntarily or involuntarily dissolved, wound-up its business or otherwise
terminated its existence except in connection with (i) the distribution of
Debentures of such series to holders of Trust Securities in liquidation of
their interest in such Devon Trust, (ii) the redemption of all of the
outstanding Trust Securities of such Devon Trust or (iii) certain mergers,
consolidations or amalgamations, each as permitted by the Declaration of
such Devon Trust; or
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(h) any other Event of Default provided with respect to
Debentures of such series.
SECTION 5.2 Acceleration of Maturity; Rescission and
Annulment. If an Event of Default described in clause (a), (b), (c), (d), (g)
or (h) (if the Event of Default under clause (d) is with respect to less than
all series of Debentures then Outstanding) of Section 5.1 above occurs and is
continuing, then, and in each and every such case, unless the principal of all
of the Debentures of such series shall have already become due and payable,
either the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Debentures of such series then Outstanding hereunder (each such
series voting as a separate class), by notice in writing to the Company (and to
the Trustee if given by the Holders of Debentures of such series), may declare
the entire principal (or, if the Debentures of such series are Original Issue
Discount Debentures, such portion of the principal amount as may be specified
in the terms of such series) of all Debentures of such series and the interest
accrued thereon, if any, to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable. If an Event of
Default described in clause (d) (if the Event of Default under clause (d)
relates to all series of Debentures then Outstanding), (e) or (f) of Section
5.1 occurs and is continuing, then and in each and every such case, unless the
principal of all the Debentures of all series shall have already become due and
payable, either the Trustee or the Holders of not less than 25% in aggregate
principal amount of all the Debentures of all series then Outstanding hereunder
(treated as one class), by notice in writing to the Company (and to the Trustee
if given by Holders of Debentures), may declare the entire principal (or, if
any Debentures are Original Issue Discount Debentures such portion of the
principal as may be specified in the terms thereof) of all Debentures of all
series then Outstanding and interest accrued thereon, if any, to be due and
payable immediately, and upon any such declaration the same shall become
immediately due and payable.
The foregoing provisions, however, are subject to the condition
that if, at any time after the principal (or, if any Debentures are Original
Issue Discount Debentures, such portion of the principal as may be specified in
the terms thereof) of the Debentures of any series (or of all the Debentures of
all series, as the case may be) then Outstanding shall have been so declared
due and payable, and before any judgment or decree for the payment of such
moneys shall have been obtained or entered as hereinafter provided, the Company
shall pay or shall deposit with the Trustee a sum sufficient to pay all matured
installments of interest upon all the Debentures of such series (or of all
Debentures of all series, as the case may be) and the principal of (and
premium, if any on) Debentures of such series (or of all Debentures of all
series, as the case may be) which shall have become due otherwise than by
acceleration (with interest upon such principal and, to the extent that payment
of such interest is enforceable under applicable law, on overdue installments
of interest, at the same rate as the rate of interest or Yield to Maturity (in
the case of Original Issue Discount Debentures) specified in the Debentures of
such series (or at the respective rates of interest or Yields to Maturity of
all Debentures of all series, as the case
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may be) to the date of such payment or deposit) and such amount as shall be
sufficient to cover reasonable compensation to the Trustee, and each
predecessor Trustee, their respective agents, attorneys and counsel, and all
other expenses and liabilities incurred, and all advances made, by the Trustee
and each predecessor Trustee except as a result of negligence or bad faith, and
if any and all Events of Default under the Indenture, other than the
non-payment of the principal of Debentures of such series (or, if any
Debentures are Original Issue Discount Debentures, such portion of the
principal as may be specified in the terms thereof) which shall have become due
by acceleration, shall have been cured, waived or otherwise remedied as
provided herein -- then and in every such case the Holders of a majority in
aggregate principal amount of all the Debentures of such series, each series
voting as a separate class (or of all Debentures of all series, as the case may
be, voting as a single class), then Outstanding, by written notice to the
Company and to the Trustee, may waive all such defaults with respect to the
Debentures of such series (or with respect to all Debentures of all series, as
the case may be) and rescind and annul such declaration and its consequence,
but no such waiver or rescission and annulment shall extend to or shall affect
any subsequent default or shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right with
respect to Debentures of such series under this Indenture and such proceedings
shall have been discontinued or abandoned because of such rescission or
annulment or for any other reason or shall have been determined adversely to
the Trustee, then and in every such case the Company and the Trustee shall be
restored respectively to their former positions and rights hereunder, and all
rights, remedies and powers of the Company and the Trustee shall continue as
though no such proceedings had been taken.
SECTION 5.3 Collection of Indebtedness and Suits for
Enforcement by Trustee. The Company covenants that if, (a) default is
made in the payment of any interest on any Debenture of any series, or any
payment required by any sinking or analogous fund established with respect to
Debentures of such series as and when the same shall have become due and
payable and such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of (or
premium, if any, on) any Debenture of any series when the same shall have
become due and payable, whether upon maturity of the Debentures of such series
or upon redemption or upon declaration or otherwise, the Company will, upon
demand of the Trustee, pay to it, for the benefit of the Holders of Debentures
of such series and any Coupons appertaining thereto, the whole amount then due
and payable on such Debentures of such series and Coupons for principal and any
premium and interest and, to the extent that payment of such interest shall be
legally enforceable under applicable law, interest on any overdue principal and
on the premium, if any, and overdue interest, at the rate or rates prescribed
therefor in Debentures of such series and, if the Debentures of such series are
held by a Devon Trust
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or a trustee of such trust, without duplication of any other amounts paid by
such Devon Trust or trustee in respect thereof, upon overdue installments of
interest at the rate per annum expressed in the Debentures of such series; and
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel
under Section 6.6.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon Debentures of
such series and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon Debentures of such series, wherever situated.
If an Event of Default with respect to Debentures of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Debentures of such
series and any Coupons appertaining thereto by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, either at law or in equity or in bankruptcy or otherwise whether
for the specific enforcement of any covenant or agreement in this Indenture or
in aid of the exercise of any power granted herein, or to enforce any other
proper remedy.
SECTION 5.4 Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Debentures of
any series or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Debentures
of such series shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(a) to file and prove a claim for the whole amount of
principal and any premium and interest owing and unpaid in respect of the
Debentures of any series and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of
the Holders of Debentures of such series and Coupons allowed in such
judicial proceeding, and
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(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same,
and any custodian, receiver, assignee, trustee, liquidation, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Debentures of such series and Coupons appertaining thereto to
make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders of Debentures of
such series and Coupons appertaining thereto, to pay to the Trustee any amount
due it for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 6.6.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder of a
Debenture of any series or any Coupon appertaining thereto, any plan of
reorganization, arrangement, adjustment or composition affecting the Debentures
of such series or Coupons appertaining thereto or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the claim of any
Holder of Debentures of any series or Coupon appertaining thereto in any such
proceeding.
SECTION 5.5 Trustee May Enforce Claims Without Possession of
Debentures or Coupons. All rights of action and claims under this Indenture or
under any of the terms established with respect to the Debentures of any series
or Coupons appertaining thereto may be prosecuted and enforced by the Trustee
without the possession of any of the Debentures of such series or Coupons
appertaining thereto or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel due
under Section 6.6, be for the ratable benefit of the Holders of the Debentures
of such series and Coupons appertaining thereto in respect of which such
judgment has been recovered.
SECTION 5.6 Application of Money Collected. Any money
collected by the Trustee pursuant to this Article with respect to Debentures of
any series shall be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of such money on account of
principal or any premium or interest, upon presentation of the Debentures of
such series or any Coupons appertaining thereto, or both, as the case may be,
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 6.6;
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SECOND: To the payment of all Senior Indebtedness of the Company
and to the extent required by Article XV:
THIRD: To the payment of the amounts then due and unpaid for
principal of and any premium and interest on the Debentures of such series
and Coupons appertaining thereto in respect of which or for the benefit of
which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on
Debentures of such series and Coupons appertaining thereto for principal
and any premium and interest, respectively; and
FOURTH: To the payment of the remainder, if any, to the Company.
SECTION 5.7 Limitation on Suits. No Holder of any
Debenture of any series or any Coupons appertaining thereto shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless;
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Debentures of
such series and of the continuance thereof with respect to the Debentures
of such series specifying such Event of Default, as hereinbefore provided;
(b) the Holders of not less than 25% in principal amount of
the Outstanding Debentures of such series shall have made written request
to the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(c) such Holder or Holders shall have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding;
and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 60 day period by the Holders of a
majority in principal amount of the Outstanding Debentures of such series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right
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under this Indenture, except in the manner herein provided and for the equal
and ratable benefit of all of such Holders.
SECTION 5.8 Unconditional Right of Holders to Receive
Principal, Premium and Interest. Notwithstanding any other provision in this
Indenture, but subject to Article XV of this Indenture, the Holder of any
Debenture of any series or Coupon appertaining thereto shall have the right,
which is absolute and unconditional, to receive payment of the principal of and
any premium and (subject to Section 3.7) interest on Debenture of such series,
and any additional amounts contemplated by Section 10.4 in respect of
Debentures of such series or payment of any Coupons appertaining thereto on the
Stated Maturity or Maturities expressed in Debentures of such series or Coupons
appertaining thereto (or, in the case of redemption, on the Redemption Date)
and to institute suit for the enforcement of any such payment, and such rights
shall not be impaired without the consent of such Holder.
SECTION 5.9 Restoration of Rights and Remedies. If the
Trustee or any Holder of Debentures of any series or Coupon appertaining
thereto has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders of Debentures of such series and any
Coupons appertaining thereto shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 5.10 Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Debentures or Coupons in the last paragraph of
Section 3.6, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders of Debentures or Coupons is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 5.11 Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any Holder of any Debenture or Coupon to exercise
any right or remedy accruing upon any Event of Default occurring and continuing
as aforesaid shall impair any such right or remedy or constitute a waiver of
any such Event of Default or an acquiescence therein. Subject to the
provisions of Section 5.7, every right and remedy given by this Article or by
law to the Trustee or to the Holders of Debentures or Coupons
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may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Holders of Debentures or Coupons, as the case may be.
SECTION 5.12 Control by Holders of Debentures. The Holders of
a majority in aggregate principal amount of the Outstanding Debentures of any
series shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, with respect to the Debentures of such
series, provided that,
(a) such direction shall not be in conflict with any rule of
law or with this Indenture, and
(b) the Trustee may take any other action deemed proper by the
Trustee; provided, however, that such direction shall not be in conflict
with any rule of law or with this Indenture or be unduly prejudicial to the
rights of Holders of Debentures of any other series at the time
Outstanding. Subject to the provisions of Section 6.2, the Trustee shall
have the right to decline to follow any such direction if the trustee in
good faith shall, by a Responsible Officer or Officers of the Trustee,
determine that the proceeding so directed would involve the Trustee in
personal liability.
SECTION 5.13 Waiver of Past Defaults. The Holders of not less
than a majority in principal amount of the Outstanding Debentures of any series
may on behalf of the Holders of all the Debentures of such series and any
Coupons appertaining thereto waive any past default hereunder with respect to
the Debentures of such series and its consequences, except a default
(a) in the payment of the principal of (or premium, if any) or
any interest on any Debenture of such series as and when the same shall
become due by the terms of Debentures of such series otherwise than by
acceleration (unless such default has been cured and sums sufficient to pay
all matured installments of interest and principal and any premium has been
deposited with the Trustee (in accordance with Section 5.2), or
(b) in the covenants contained in Section 10.4, or
(c) in respect of a covenant or provision hereof which under
Article IX cannot be modified or amended without the consent of the Holder
of each Outstanding Debenture of such series affected;
provided, however, that if the Debentures of such series are held by a Devon
Trust or a trustee of such trust, such waiver or modification to such waiver
shall not be effective until the holders of a majority in liquidation
preference of Trust Securities of the applicable
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Devon Trust shall have consented to such waiver or modification to such waiver;
provided further, that if the consent of the Holder of each Outstanding
Debenture of such series is required, such waiver shall not be effective
until each holder of the Trust Securities of the applicable Devon Trust shall
have consented to such waiver.
Upon any such waiver, the default covered thereby shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture and the Company, the Trustee and the
holders of the Debentures of such series shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend
to any subsequent or other default or impair any right consequent thereon.
SECTION 5.14 Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Debenture or Coupon by his acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to any suit instituted by
the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the Outstanding Debentures of any series, or to any suit
instituted by any Holder of any Debenture or Coupon for the enforcement of the
payment of the principal of or any premium or interest on such Debenture or the
payment of any Coupon on or after the Stated Maturity or Maturities expressed
in such Debenture or Coupon (or, in the case of redemption, on or after the
Redemption Date).
SECTION 5.15 Waiver of Stay or Extension Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
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ARTICLE VI
THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of the Trustee;
During Default; Prior to Default. With respect to the Holders of any series of
Debentures issued hereunder, the Trustee, prior to the occurrence of an Event
of Default with respect to the Debentures of a such series and after the curing
or waiving of all Events of Default which may have occurred with respect to
Debentures of such series, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of
Default with respect to the Debentures of such series has occurred (which has
not been cured or waived), the Trustee shall exercise with respect to the
Debentures of such series such of the rights and powers vested in it by this
Indenture, and shall use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct
of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own wilful misconduct, except that:
(a) prior to the occurrence of an Event of Default with
respect to the Debentures of any series and after the curing or waiving of
all such Events of Default with respect to the Debentures of such series
which may have occurred:
(i) the duties and obligations of the Trustee with
respect to the Debentures of such series shall be determined
solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Indenture, and no implied covenants or mobilizations shall be read
into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon any statements, certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but
in the case of any such statement, certificates or opinions which
by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements
of this Indenture;
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or
Responsible Officers of the
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Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders pursuant to Section
5.12 relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising
any trust or Power conferred upon the Trustee, under this
Indenture.
No provision of this Indenture shall require the Trustee to extend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
SECTION 6.2 Certain Rights of Trustee. Subject to the
provisions of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, Coupon, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order or as
otherwise expressly provided herein and any resolution of the Board of
Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the
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Holders of Debentures of any series or any Coupons appertaining thereto
pursuant to this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request
or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, Coupon, other evidence of indebtedness or other
paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder; and
(h) the Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Indenture.
SECTION 6.3 Not Responsible for Recitals or Issuance of
Debentures. The recitals contained herein and in the Debentures (except the
Trustee's certificates of authentication) and in any Coupons shall be taken as
the statements of the Company, and the Trustee or any Authenticating Agent
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of any
Debentures or Coupons. The Trustee or any Authenticating Agent shall not be
accountable for the use or application by the Company of Debentures or the
proceeds thereof.
SECTION 6.4 May Hold Debentures. The Trustee, any
Authenticating Agent, any Paying Agent, any Debenture Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Debentures and Coupons and, subject to Section 6.9 and
6.11, may otherwise deal with the Company with the same rights it would have if
it were not Trustee, Authenticating Agent, Paying Agent, Debenture Registrar or
such other agent.
SECTION 6.5 Money Held in Trust. Money held by the Trustee
in trust hereunder need not be segregated from other funds except to the extent
required by
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law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing with the
Company.
SECTION 6.6 Compensation and Reimbursement. The Company
agrees:
(a) to pay to the Trustee or any successor Trustee from time
to time such compensation as shall be agreed in writing between the Company
and the Trustee for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee or any predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture (including the
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(c) to indemnify the Trustee and any predecessor Trustee for,
and to hold it harmless against, any and all loss, damage, claim, liability
or expense, including taxes (other than taxes based on the income of the
Trustee) incurred without negligence or bad faith on its part, arising out
of or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 5.1(e) or Section 5.1(f), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar laws.
The Trustee shall have a lien prior to the Debentures as to all
property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 6.6, except with respect to funds
held in trust for the benefit of the Holders of particular Debentures.
The provisions of this Section 6.6 shall survive the termination of
this Indenture.
SECTION 6.7 Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no appointment of
a successor Trustee
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pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 6.8.
(b) The Trustee may resign at any time with respect to the
Debentures of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 6.8 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Debentures of such series.
(c) The Trustee may be removed at any time with respect to the
Debentures of any series by Act of the Holders of a majority in principal
amount of the Outstanding Debentures of such series delivered to the Trustee
and to the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.8 shall not have been delivered to the Trustee within 30
days after the delivery of such Act of removal, the Trustee being removed may
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Debentures of such series.
(d) If at any time:
(1) the Trustee shall fail to comply with Section
310(b) of the Trust Indenture Act after written request therefor by the
Company or by any Holder of a Debenture who has been a bona fide Holder of
a Debenture for at least six months, or
(2) the Trustee shall cease to be eligible under
Section 6.10 and Section 310(a) of the Trust Indenture Act and shall fail
to resign after written request therefor by the Company or by any such
Holder of a Debenture who has been a bona fide Holder of Debenture for at
least six months, or
(3) the Trustee shall become incapable of acting or
shall be adjudged bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any such case, (i)
the Company by a Board Resolution may remove the Trustee with respect to
all Debentures, or (ii) subject to Section 5.14 any Holder of a Debenture
who has been a bona fide Holder of a Debenture for at least six months may,
on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to
all Debentures and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, with respect to
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the Debentures of one or more series, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to the Debentures
of that or those series (it being understood that any such successor Trustee
may be appointed with respect to the Debentures of one or more or all of such
series and that at any time there shall be only one Trustee with respect to the
Debentures of any particular series) and shall comply with the applicable
requirements of Section 6.8. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Debentures of any series shall be appointed by Act of the
Holders of a majority in principal amount of Outstanding Debentures of such
series delivered to the Company and the retiring Trustee, the successor Trustee
so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 6.8, become the
successor Trustee with respect to the Debentures of such series and to that
extent supersede the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Debentures of any series shall have been
so appointed by the Company or the Holders of Debentures of such series and
accepted appointment in the manner required by Section 6.8, any Holder of a
Debenture of such series who has been a bona fide Holder of a Debenture of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Debentures of such
series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Debentures of any series and each
appointment of a successor Trustee with respect to the Debentures of any series
in the manner provided in Section 1.6. Each notice shall include the name of
the successor Trustee with respect to the Debentures of such series and the
address of its Corporate Trust Office.
SECTION 6.8 Acceptance of Appointment by Successor. (a) In
case of the appointment hereunder of a successor Trustee with respect to all
Debentures, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but on the written
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring
Trustee and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Debentures of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the
Debentures of such series shall
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execute and deliver an indenture supplemental hereto wherein each successor
Trustee shall accept such appointment and which (i) shall contain such
provisions as shall be necessary or desirable to transfer and conform to, and
to vest in, each successor Trustee all the rights, powers, trusts and duties of
the retiring Trustee with respect to the Debentures of such series to which the
appointment of such successor Trustee relates, (ii) if the retiring Trustee is
not retiring with respect to all Debentures, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Debentures of
such series as to which the retiring Trustee is not retiring shall continue to
be vested in the retiring Trustee, and (iii) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees as co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Debentures of such series to which
the appointment of such successor Trustee relates; but, on the written request
of the Company or any successor Trustee, such retiring Trustee shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder with respect to the Debentures of such
series to which the appointment of such successor Trustee relates.
(c) Upon the written request of any such successor Trustee,
the Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 6.9 Disqualification; Conflicting Interests. If the
Trustee has or shall acquire a conflicting interest within the meaning of the
Trust Indenture Act, the Trustee shall either eliminate such interest or
resign, to the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Indenture.
SECTION 6.10 Corporate Trustee Required; Eligibility. There
shall be at all times a Trustee hereunder which shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000. If such Person publishes reports
of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the
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purposes of this Section, the combined capital and surplus of such Person shall
be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereunder specified
in this Article.
SECTION 6.11 Preferential Collection of Claims Against
Company. If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Debentures), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
SECTION 6.12 Merger, Conversion, Consolidation or Succession
to Business. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Debentures shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Debentures so authenticated with the same
effect as if such successor Trustee had itself authenticated such Debentures.
SECTION 6.13 Appointment of Authenticating Agent. The Trustee
may appoint an Authenticating Agent or Agents with respect to Debentures of one
or more series which shall be authorized to act on behalf of the Trustee to
authenticate Debentures of each such series issued upon original issue or upon
exchange, registration of transfer or partial redemption thereof or pursuant to
Section 3.6, and Debentures of such series so authenticated shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Debentures by the
Trustee or the Trustee's certificate of authentication such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
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Any corporation into which an Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of such Authenticating Agent, shall continue to be an
Authenticating Agent provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or such Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall promptly give notice
of such appointment to all Holders of Debentures pursuant to Section 1.6. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time
to time reasonable compensation for its services under this Section.
If an appointment with respect to Debentures of one or more series
is made pursuant to this Section, the Debentures of such series may have
endorsed thereon, in addition to the Trustee's certificate of authentication,
an alternative certificate of authentication in the following form:
This is one of the Debentures of the series designated therein
referred to in the within-mentioned Indenture.
The Bank of New York.
As Trustee
By_____________________________
Authenticating Agent
By_____________________________
Authorized Signatory
If all of the Debentures of any series may not be originally
issued at one time, and if the Company has an Affiliate eligible to be
appointed as an Authenticating
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Agent hereunder or the Trustee does not have an office capable of
authenticating Debentures of such series upon original issuance located in a
Place of Payment where the Company wishes to have Debentures of such series
authenticated upon original issuance, the Trustee, if so requested by the
Company in writing (which writing need not comply with Section 1.2 and need not
be accompanied by an Opinion of Counsel), shall appoint in accordance with this
Section an Authenticating Agent (which if so requested by the Company, shall be
such Affiliate of the Company) having an office in a Place of Payment
designated by the Company with respect to such series of Debentures.
SECTION 6.14. Notice of Defaults. If a default occurs
hereunder with respect to Debentures of any series, the Trustee shall give the
Holders of Debentures of such series notice of such default as and to the
extent provided by the Trust Indenture Act; provided, however, that in the case
of any default of the character specified in Section 5.1(d) with respect to
Debentures of such series, no such notice to Holders shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section,
the term "default" means any event which is, or after notice or lapse of time
or both would become, an Event of Default with respect to Debentures of such
series.
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1 Preservation of Information: Communications to
Holders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders of Debentures (i)
contained in the most recent list furnished to the Trustee as provided in
Section 312(a) of the Trust Indenture Act, (ii) received by the Trustee in its
capacity as Debenture Registrar and (iii) filed with it within the two
preceding years pursuant to Section 313(c)(2) of the Trust Indenture Act. The
Trustee may (A) destroy any list furnished to it as provided in Section 312(a)
of the Trust Indenture Act upon receipt of a new list so furnished, (B) destroy
any information received by it as Paying Agent (if so acting) hereunder upon
delivering to itself as Trustee, not earlier than March 20 or September 20 of
each year, a list containing the names and addresses of the Holders of
Debentures obtained from such information since the delivery of the next
previous list, if any, (C) destroy any list delivered to itself as Trustee
which was compiled from information received by it as Paying Agent (if so
acting) hereunder upon the receipt of a new list so delivered and (D) destroy
not earlier than two years after filing, any information filed with it pursuant
to Section 313(c)(2) of the Trust Indenture Act. For purposes of Section
312(a) of the Trust Indenture Act, the term "stated intervals" shall mean
January 15 and July 15.
(b) If three or more Holders of Debentures of any series (herein
referred to as "applicants") apply in writing to the Trustee, and furnish to
the Trustee reasonable
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proof that each such applicant has owned a Debenture of such series for a
period of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other Holders
of Debentures of such series with respect to their rights under this Indenture
or under the Debentures of such series and is accompanied by a copy of the form
of proxy or other communication which such applicants propose to transmit, then
the Trustee shall, within five business days after the receipt of such
application, at its election, either
(i) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 7.1(a), or
(ii) inform such applicants as to the approximate number of
Holders of Debentures of such series whose names and addresses appear in
the information preserved at the time by the Trustee in accordance with
Section 7.l(a), and as to the approximate cost of mailing to such Holders
the form of proxy or other communication, if any, specified in such
application.
If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder of Debentures of such series whose name and
address appears in the information preserved at the time by the Trustee in
accordance with Section 7.1(a) a copy of the form of proxy or other
communication which is specified in such request, with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment of the reasonable expenses of mailing, unless within
five days after such tender the Trustee shall mail to such applicants and file
with the Commission, together with a copy of the material to be mailed, a
written statement to the effect that, in the opinion of the Trustee, such
mailing would be contrary to the best interest of the Holders of Debentures of
such series or would be in violation of applicable law. Such written statement
shall specify the basis of such opinion. If the Commission, after opportunity
for a hearing upon the objections specified in the written statement so filed,
shall enter an order refusing to sustain any of such objections or if after the
entry of an order sustaining one or more of such objections, the Commission
shall find, after notice and opportunity for hearing that all the objections so
sustained have been met and shall enter an order so declaring, the Trustee
shall mail copies of such material to all such Holders of Debentures of such
series with reasonable promptness after the entry of such order and the renewal
of such tender; otherwise the Trustee shall be relieved of any obligation or
duty to such applicants respecting their application.
(c) Every Holder of Debentures or Coupons, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any agent of either of them shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders of Debentures in accordance with Section 7.l(b),
regardless of the source from which such information was
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derived and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Section 7.l(b).
SECTION 7.2 Reports by Trustee. The Trustee shall in each
year transmit to Holders such reports concerning the Trustee and its actions
under this Indenture as may be required pursuant to the Trust Indenture Act in
the manner provided pursuant thereto. If required by Section 313(a) of the
Trust Indenture Act, the Trustee shall, within sixty days after each May 15
following the date of this Indenture deliver to Holders a brief report, dated
as of such May 15, which complies with the provisions of Section 313(a).
A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which any
Debentures are listed, with the Commission and with the Company. The Company
will promptly notify the Trustee when any Debentures are listed on any stock
exchange or market center.
SECTION 7.3 Reports by Company. The Company shall:
(a) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the Exchange
Act; or, if the Company is not required to file information, documents or
reports pursuant to either of such Sections, then it shall file with the
Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the supplementary
and periodic information, documents and reports which may be required
pursuant to Section 13 of the Exchange Act in respect of a security listed
and registered on a national securities exchange as may be prescribed from
time to time in such rules and regulations;
(b) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports required to be filed
with respect to compliance by the Company with the conditions and covenants
of this Indenture as may be required from time to time by such rules and
regulations; and
(c) transmit to all Holders, in the manner and to the extent
provided in Trust Indenture Act Section 313(c), within 30 days after the
filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
paragraphs (a) and (b) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
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Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute notice of any information contained therein or determinable from
information contained therein, including the Company's compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates).
ARTICLE VIII
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 8.1 Company May Consolidate, Etc. on Certain Terms.
The Company shall not merge or consolidate with any other corporation or sell
or convey all or substantially all of its assets to any Person, unless (a)
either the Company shall be the continuing corporation, or the successor
corporation (if other than the Company) shall be a corporation organized under
the laws of the United States of America or any State thereof and shall
expressly assume the due and punctual payment of the principal of and interest
on all the Debentures, according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed or observed by the Company, by supplemental indenture
satisfactory to the Trustee, executed and delivered to the Trustee by such
corporation, and (b) the Company or such successor corporation, as the case may
be, shall not, immediately after such merger or consolidation, or such sale or
conveyance, be in default in the performance of any such covenant or condition.
SECTION 8.2 Successor Corporation Substituted. In case of
any such consolidation, merger, sale or conveyance, and following such an
assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Company, with the same effect as if it
had been named herein. Such successor corporation may cause to be signed, and
may issue either in its own name or in the name of the Company prior to such
succession any or all of the Debentures issuable hereunder which theretofore
shall not have been signed by the Company and delivered to the Trustee; and,
upon the order of such successor corporation instead of the Company and subject
to all the terms, conditions and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall deliver any securities which previously
shall have been signed and delivered by the officers of the Company, to the
Trustee for authentication, and any Debentures which such successor corporation
thereafter shall cause to be signed and delivered to the Trustee for that
purpose. All of the Debentures so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Debentures theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Debentures had been issued at the date of the execution hereof.
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In case of any such consolidation, merger, sale or conveyance such
changes in phraseology and form (but not in substance) may be made in the
Debentures thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a
conveyance by way of lease) the Company or any successor corporation which
shall theretofore have become such in the manner described in this Article
shall be discharged from all obligations and covenants under this Indenture and
the Debentures and may be liquidated and dissolved.
SECTION 8.3 Opinion of Counsel to Trustee. The Trustee may
receive an Opinion of Counsel, prepared in accordance with Section 1.2, as
conclusive evidence that any such consolidation, merger, sale, lease or
conveyance, and any such assumption, and any such liquidation or dissolution,
complies with the applicable provisions of this Indenture.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures Without Consent of
Holders. Without the consent of any Holders of Debentures or Coupons, the
Company, when authorized by a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of the
Company herein and in the Debentures; or
(b) to add to the covenants of the Company for the benefit of
the Holders of Debentures of all or any series (and if such covenants are
to be for the benefit of Debentures of less than all series, stating that
such covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company; or
(c) to add any additional Events of Default (and if such
Events of Default are to be for the benefit of Debentures of less than all
series, stating that such Events of Default are expressly being included
solely for the benefit of such series); or
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(d) to add to or change any of the provisions of this
Indenture to provide that Bearer Debentures may be registerable as to
principal, to change or eliminate any restrictions on the payment of
principal of or any premium or interest on Bearer Debentures, to permit
Bearer Debentures to be issued in exchange for Registered Debentures, to
permit Bearer Debentures to be issued in exchange for Bearer Debentures of
other authorized denominations or to permit or facilitate the issuance of
Debentures in uncertificated form, provided that any such action shall not
adversely affect the interests of the Holders of Debentures of any series
or any related Coupons in any material respect; or
(e) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become
effective only when there is no Debenture Outstanding of any series created
prior to the execution of such supplemental indenture which is entitled to
the benefit of such provision; or
(f) to establish the form or terms of Debentures of any series
and any related Coupons as permitted by Sections 2.1 and 3.1; or
(g) to evidence and provide for the acceptance of appointment
thereunder by a successor Trustee with respect to the Debentures of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 6.8(b); or
(h) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article XIV, including providing
for the conversion of the Debentures into any security or property (other
than the Common Stock of the Company); or
(i) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions
arising under this Indenture, provided that such action shall not adversely
affect the interests of the Holders of Debentures of any series or any
related Coupons in any material respect.
SECTION 9.2 Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Debentures of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Debentures of such series and any related Coupons under this
Indenture;
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provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Debenture affected thereby,
(a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Debenture of any series, or
reduce the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or change any obligation of
the Company to pay additional amounts pursuant to Section 10.4 (except as
contemplated by Section 8.1 and permitted by Section 9.1(a)), or reduce the
amount of the principal of an Original Issue Discount Debenture that would
be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 5.2 or change the coin or currency in which any
Debenture or any premium or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after
the Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or
(b) reduce the percentage in principal amount of the
Outstanding Debentures of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver of certain defaults hereunder and their
consequences provided for in this Indenture, or reduce the requirements of
Section 13.4 for quorum or voting, or
(c) change any obligation of the Company to maintain an office
or agency in the places and for the purposes specified in Section 10.2, or
(d) modify any of the provisions of this Section or Section
5.13, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Debenture affected thereby;
provided, however, that this clause shall not be deemed to require the
consent of any Holder of a Debenture of such series or Coupon with respect
to changes in the references to "the Trustee" and concomitant changes in
this Section or the deletion of this proviso, in accordance with the
requirements of Sections 6.7(b) and 9.1(h), or
(e) make any change that adversely affects the right to
convert any Debenture of any series as provided in Article XIV or pursuant
to Section 3.1 (except as permitted by Section 9.1) or decrease the
conversion rate or increase the conversion price of any such Debenture of
such series, or
(f) if the Debentures of any series are secured, change the
terms and conditions pursuant to which the Debentures of such series are
secured in a manner adverse to the Holders of the secured Debentures of
such series, or
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(g) make any change in Article XV that adversely affects the
rights of any Holders of Outstanding Debentures of such series,
If the Debentures of such series are held by a Devon Trust or a
trustee of such trust, such supplemental indenture shall not be effective
until the holders of a majority in liquidation preference of Trust
Securities of the applicable Trust shall have consented to such
supplemental indenture; provided that if the consent of the Holder of each
Outstanding Debenture of such series is required, such supplemental
indenture shall not be effective until each holder of the Trust Securities
of the applicable Devon Trust shall have consented to such supplemental
indenture.
A supplemental indenture which changes or eliminates any covenant
or other provision of this Indenture which has expressly been included solely
for the benefit of Debentures of one or more particular series, or which
modifies the rights of the Holders of Debentures of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights
under this Indenture of the Holders of Debentures of any other series.
It shall not be necessary for any Act of Holders of Debentures of
any series under this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act shall approve
the substance thereof.
SECTION 9.3 Execution of Supplemental Indentures. In
executing or accepting the additional trusts created by any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 6.2) shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article, this Indenture
shall be modified in accordance therewith, and such supplemental indenture
shall form a part of this Indenture for all purposes; and every Holder of
Debentures theretofore or thereafter authenticated and delivered hereunder and
of any Coupons appertaining thereto shall be bound thereby.
SECTION 9.5 Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act of 1939, as amended, in effect on such
date.
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SECTION 9.6 Reference in Debentures to Supplemental
Indentures. Debentures of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company
shall so determine, new Debentures of any series so modified as to conform, in
the opinion of the Trustee and the Company, to any such supplemental indenture
may be prepared and executed by the Company and authenticated and delivered by
the Trustee in exchange for Outstanding Debentures of such series.
ARTICLE X
COVENANTS
SECTION 10.1 Payment of Principal, Premium and Interest. The
Company covenants and agrees for the benefit of Debentures of any series that
it will duly and punctually pay the principal of and any premium and interest
on the Debentures of such series in accordance with the terms of the
Debentures of such series, any Coupons appertaining thereto and this Indenture.
Unless otherwise specified as contemplated by Section 3.1 with respect to
Debentures of such series, any interest due on Bearer Debentures of such series
on or before Maturity shall be payable only upon presentation and surrender
outside the United States of the several Coupons for such interest installments
as are evidenced thereby as they severally mature.
SECTION 10.2 Maintenance of Office or Agency. If Debentures
of any series are issuable only as Registered Debentures, the Company will
maintain in each Place of Payment for such series an office or agency where
Debentures of such series may be presented or surrendered for payment, where
Debentures of such series may be surrendered for registration of transfer,
exchange, or conversion and where notices and demands to or upon the Company in
respect of the Debentures of such series and this Indenture may be served. If
Debentures of any series are issuable as Bearer Debentures, the Company will
maintain (a) in The City of New York, an office or agency where any Registered
Debentures of such series may be presented or surrendered for payment, where
any Registered Debentures of such series may be surrendered for registration of
transfer, where Debentures of such series may be surrendered for conversion or
exchange, where notices and demands to or upon the Company in respect of
Debentures of such series and this Indenture may be served and where Bearer
Debentures of such series and related Coupons may be presented or surrendered
for payment in the circumstances described in the following paragraph (and not
otherwise), (b) subject to any laws or regulations applicable thereto, in a
Place of Payment for such series which is located outside the United States, an
office or agency where Debentures of such series and related Coupons may be
presented and surrendered for payment (including payment of any additional
amounts payable on Debentures of such series pursuant to Section 10.4);
provided,
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however, that if the Debentures of such series are listed on The Stock
Exchange of the United Kingdom and the Republic of Ireland, the Luxembourg
Stock Exchange or any other stock exchange located outside the United States
and such stock exchange shall so require, the Company will maintain a Paying
Agent for the Debentures of such series in London, Luxembourg or any other
required city located outside the United States, as the case may be, so long as
Debentures of such series are listed on such exchange, and (c) subject to any
laws or regulations applicable thereto in a Place of Payment for such series
located outside the United States an office or agency where any Registered
Debentures of such series may be surrendered for registration of transfer,
where Debentures of such series may be surrendered for conversion or exchange
and where notices and demands to or upon the Company in respect of the
Debentures of such series and this Indenture may be served. The Company will
give prompt notice to the Trustee and to the Holders as provided in Sections
1.5 and 1.6, respectively, of the location and any change in the location, of
any such office or agency. If at any time the Company shall fail to maintain
any such required office or agency in respect of Debentures of any series or
shall fail to furnish the Trustee with the address thereof, such presentations
and surrenders of Debentures of such series may be made and notices and demands
may be made or served at the Corporate Trust Office of the Trustee, except that
Bearer Debentures of such series and the related Coupons may be presented and
surrendered for payment (including payment of any additional amounts payable on
Bearer Debentures of such series pursuant to Section 10.4) at the office of the
Trustee for such series located outside the United States, and the Company
hereby appoints the same as its agent to receive such respective presentations,
surrenders, notices and demands.
No payment of principal, premium or interest on Bearer Debentures
shall be made at any office or agency of the Company in the United States or by
check mailed to any address in the United States or by transfer to any account
maintained with a bank located in the United States; provided, however, that if
the Debentures of any series are denominated and payable in Dollars, payment of
principal of and any premium and interest on any Bearer Debenture of such
series (including any additional amounts payable on Debentures of such series
pursuant to Section 10.4) shall be made at the office of the Company's Paying
Agent in The City of New York, if (but only if) payment in Dollars of the full
amount of such principal, premium, interest or additional amounts, as the case
may be, at all offices or agencies outside the United States maintained for the
purpose by the Company in accordance with this Indenture is illegal or
effectively precluded by exchange controls or other similar restrictions.
The Company may also from time to time designate one or more other
offices or agencies where the Debentures of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in accordance with the requirements set forth above for Debentures of
any series for such
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purposes. The Company will give prompt written notice to the Trustee and the
Holders of Debentures of such series of any such designation or rescission and
of any change in the location of any such other office or agency.
SECTION 10.3 Money for Debentures Payments to Be Held in
Trust. If the Company shall at any time act as its own Paying Agent with
respect to Debentures of any series, it will, on or before each due date of the
principal of and any premium or interest on any of the Debentures of such
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and any premium or interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure to act.
Whenever the Company shall have one or more Paying Agents for
Debentures of any series it will, prior to each due date of the principal of
and any premium or interest on any Debentures of such series, deposit with a
Paying Agent a sum sufficient to pay the principal and any premium or interest
so becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of its action or
failure to act.
The Company will cause each Paying Agent for Debentures of any
series other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal
of and any premium or interest on Debentures of such series in trust for
the benefit of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or
any other obligor upon the Debentures of such series) in the making of any
payment of principal of and any premium or interest on the Debentures of
such series; and
(c) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon
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which such sums were held by the Company or such Paying Agent; and, upon such
payment by any Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of and any
premium or interest on any Debenture of any series and remaining unclaimed for
two years after such principal and any premium or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by
the Company) shall be discharged from such trust; and the Holder of the
Debenture of such series or any Coupon appertaining thereto shall thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such
trust money and all liability of the Company as trustee thereof shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in an Authorized Newspaper in each Place of Payment, notice
that such money remains unclaimed and that after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 10.4 Limitation on Dividends; Transactions with
Affiliates. If Debentures of any series are issued to a Devon Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
such Devon Trust and (a) there shall have occurred any event that would
constitute an Event of Default, (b) the Guarantor shall be in default with
respect to its payment of any obligations under the Preferred Securities
Guarantee or the Common Securities Guarantee relating to such Devon Trust, or
(c) the Company shall have given notice of its election to defer payments of
interest on Debentures of such series by extending the interest payment period
as provided herein and such period, or any extension thereof, shall be
continuing, then (y) the Company shall not declare or pay any dividend on, make
any distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock (other than (i) purchases or
acquisitions of shares of Common Stock of the Company in connection with the
satisfaction by the Company of its obligations under any employee benefit
plans, (ii) as a result of a reclassification of capital stock of the Company
or the exchange or conversion of one class or series of the Company's capital
stock for another class or series of capital stock of the Company or, (iii) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock of the
Company or the security being converted or exchanged) or make any guarantee
payments with respect to the foregoing, and (z) the Company shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees) issued by the Company which
rank pari passu with or junior to the Debentures of such series.
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SECTION 10.5 Covenants as to Devon Trust. In the event
Debentures are issued to a Devon Trust or a trustee of such trust in connection
with the issuance of Trust Securities by such Devon Trust, for so long as such
Trust Securities remain outstanding, the Company will (a) maintain 100% direct
or indirect ownership of the Common Securities of such Devon Trust; provided,
however, that any permitted successor of the Company under the Indenture may
succeed to the Company's ownership of the Common Securities, (b) use its
reasonable efforts to cause such Devon Trust (i) to remain a statutory business
trust, except in connection with a distribution of Debentures of such series to
the holders of Trust Securities in liquidation of such Devon Trust, the
redemption of all of the Trust Securities of such Devon Trust, or certain
mergers, consolidations or amalgamations, each as permitted by the Declaration
of such Devon Trust, (ii) to continue to be classified as a grantor trust for
United States federal income tax purposes and (iii) to continue to qualify for
an exemption from registration under the Investment Company Act of 1940, as
amended, and (c) use its reasonable efforts to cause each holder of Trust
Securities to be treated as owning an undivided beneficial interest in the
Debentures of such series.
SECTION 10.6 Additional Amounts. If the Debentures of any
series provide for the payment of additional amounts, the Company will pay to
the Holder of any Debenture of such series or any Coupon appertaining thereto
additional amounts as provided therein. Whenever in this Indenture there is
mentioned, in any context, the payment of the principal of or any premium or
interest on, or in respect of any Debenture of any series or payment of any
related Coupon or the net proceeds received on the sale or exchange of any
Debenture of any series, such mention shall be deemed to include mention of the
payment of additional amounts provided for in this Section to the extent that,
in such context additional amounts are, were or would be payable in respect
thereof pursuant to the provisions of this Section and express mention of the
payment of additional amounts (if applicable) in any provisions hereof shall
not be construed as excluding additional amounts in those provisions hereof
where such express mention is not made.
If the Debentures of any series provide for the payment of
additional amounts, at least 10 days prior to the first Interest Payment Date
with respect to Debentures of such series (or if the Debentures of such series
will not bear interest prior to Maturity, the first day on which a payment of
principal and any premium is made), and at least 10 days prior to each date of
payment of principal and any premium or interest if there has been any change
with respect to the matters set forth in the below-mentioned Officers'
Certificate, the Company will furnish the Trustee and the Company's principal
Paying Agent or Paying Agents, if other than the Trustee, with an Officers'
Certificate instructing the Trustee and such Paying Agent or Paying Agents
whether such payment of principal of and any premium or interest on the
Debentures of such series shall be made to Holders of Debentures of such series
or any Coupons appertaining thereto who are United States Aliens without
withholding for or on account of any tax assessment or other governmental
charge described in the Debentures of such series. If any such withholding
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shall be required, then such Officers' Certificate shall specify by country the
amount, if any, required to be withheld on such payments to such Holders of
Debentures of such series or any Coupons appertaining thereto and the Company
will pay to the Trustee or such Paying Agent the additional amounts required by
this Section. The Company covenants to indemnify the Trustee and any Paying
Agent for, and to hold them harmless against, any loss, liability or expense
reasonably incurred without negligence or willful misconduct on their part
arising out of or in connection with actions taken or omitted by any of them in
reliance on any Officers' Certificate furnished pursuant to this Section.
SECTION 10.7 Existence. Subject to Article VIII, the Company
will do or cause to be done all things necessary to preserve and keep in full
force and effect its existence, rights (charter and statutory) and franchises;
provided, however, that the Company shall not be required to preserve any such
right or franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and that the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 10.8 Purchase of Debentures by Company or Subsidiary.
If and so long as the Debentures of any series are listed on The Stock Exchange
of the United Kingdom and the Republic of Ireland and such stock exchange shall
so require, the Company will not, and will not permit any of its Subsidiaries
to, purchase any Debentures of such series by private treaty at a price
(exclusive of expenses and accrued interest) which exceeds 120% of the mean of
the nominal quotations of the Debentures of such series as shown in The Stock
Exchange Daily Official List for the last trading day preceding the date of
purchase.
SECTION 10.9 Statement by Officers as to Default. The Company
will deliver to the Trustee, within 120 days after the end of each fiscal year
of the Company ending after the date hereof, an Officers' Certificate signed by
its principal executive officer, principal financial officer or principal
accounting officer stating whether or not to the best knowledge of the signer
thereof the Company is in default in the performance and observance of any of
the terms, provisions and conditions of this Indenture, and if the Company
shall be in default, specifying all such defaults and the nature and status
thereof of which they may have knowledge.
The Company shall file with the Trustee written notice of the
occurrence of any default or Event of Default within five Business Days of its
becoming aware of any such default or Event of Default.
SECTION 10.10 Calculation of Original Issue Discount. The
Company shall file with the Trustee promptly at the end of each year a written
notice specifying the amount of Original Issue Discount (including daily rates
and accrual periods) accrued on Outstanding Debentures as of the end of such
year.
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SECTION 10.11 Financial Information; SEC Reports. The Company
will deliver to the Trustee (a) as soon as available and in any event within 90
days after the end of each fiscal year of the Company (i) a consolidated
balance sheet of the Company and its Subsidiaries as of the end of such fiscal
year and the related consolidated statements of operations, stockholders'
equity and cash flows for such fiscal year, all reported on by an independent
public accountant of nationally recognized standing and (ii) a report
containing a management's discussion and analysis of the financial condition
and results of operations and a description of the business and properties of
the Company and (b) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the Company
(i) an unaudited consolidated financial report for such quarter and (ii) a
report containing a management's discussion and analysis of the financial
condition and results of operations of the Company; provided that the foregoing
shall not be required for any fiscal year or quarter, as the case may be, with
respect to which the Company files or expects to file with the Trustee an
annual report or quarterly report, as the case may be, pursuant to the second
paragraph of this Section 10.11.
The Company shall file with the Trustee, within 15 days after it
files such annual and quarterly reports, information, documents and other
reports with the Commission, copies of its annual report and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) which
the Company is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act.
With respect to Debentures originally issued in an offering not
registered pursuant to the Securities Act, if prior to the Transfer Restriction
Termination Date, the Company is neither subject to Section 13 or 15(d) of the
Exchange Act, the Company shall at the request of any Holder provide to such
Holder and any prospective purchaser designated by such Holder such
information, if any, required by Rule 144A(d)(4) under the Securities Act.
ARTICLE XI
REDEMPTION OF DEBENTURES
SECTION 11.1 Applicability of Article. Debentures of any
series which are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 3.1 for Debentures of any series) in accordance with this Article.
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SECTION 11.2 Election to Redeem; Notice to Trustee. The
election of the Company to redeem Debentures of any series shall be evidenced
by an Officers' Certificate. In the case of any redemption, at the election of
the Company, the Company shall, at least 60 days prior to the Redemption Date
fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date and of the principal
amount of Debentures of such series to be redeemed. In the case of any
redemption of Debentures of such series (a) prior to the expiration of any
restriction on such redemption provided in the terms of such Debentures of such
series or elsewhere in this Indenture, or (b) pursuant to an election of the
Company which is subject to a condition specified in the terms of Debentures of
such series, the Company shall furnish the Trustee with an Officers'
Certificate evidencing compliance with such restriction or condition.
SECTION 11.3 Selection by Trustee of Debentures to Be
Redeemed. If less than all the Debentures of any series and of like tenor are
to be redeemed, the particular Debentures of such series to be redeemed shall
be selected not more than 60 days prior to the Redemption Date by the Trustee,
from the Outstanding Debentures of such series and of like tenor not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection, for redemption of portions
(equal to the minimum authorized denomination for Debentures of such series or
any integral multiple thereof) of the principal amount of Registered Debentures
of such series of a denomination larger than the minimum authorized
denomination for Debentures of such series. If so specified in the Debentures
of any series, partial redemptions must be in an amount not less than
$1,000,000 principal amount of Debentures.
If Debenture of any series selected for partial redemption are
converted in part before termination of the conversion right with respect to
the portion of the Debenture of such series so selected, the converted portion
of the Debentures of such series shall be deemed (so far as may be) to be the
portion selected for redemption. Debentures (or portions thereof) which have
been converted during a selection of Debentures of such series to be redeemed
shall be treated by the Trustee as Outstanding for the purpose of such
selection. In any case where more than one Debenture of such series is
registered in the same name, the Trustee in its discretion may treat the
aggregate principal amount so registered as if it were represented by one
Debenture of such series.
The Trustee shall promptly notify the Company in writing of the
Debentures of such series selected for redemption and, in the case of any
Debentures of such series selected for partial redemption, the principal amount
thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Debentures of such
series of such series shall relate, in the case of any Debentures of such
series redeemed or to be redeemed only in
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part, to the portion of the principal amount of the Debentures of such series
which has been or is to be redeemed.
SECTION 11.4 Notice of Redemption. Notice of redemption shall
be given in the manner provided in Section 1.6 to the Holders of Debentures to
be redeemed not less than 30 nor more than 60 days prior to the Redemption
Date.
All notices of redemption shall identify the Debentures (including
the CUSIP number) to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all the Outstanding Debentures of any series
are to be redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular Debentures of such
series to be redeemed, and a statement to the effect that on or after the
Redemption Date upon surrender of such Debenture a new Debenture of such
series in the principal amount equal to the unredeemed portion will be
issued;
(d) that on the Redemption Date the Redemption Price will
become due and payable upon each such Debenture of such series to be
redeemed and, if applicable, that interest thereon will cease to accrue on
and after said date;
(e) the place or places where such Debentures of such series,
together in the case of Bearer Debentures of such series with all Coupons
appertaining thereto, if any maturing after the Redemption Date, are to be
surrendered for payment of the Redemption Price;
(f) that the redemption is for a sinking fund, if such is the
case; and
(g) if applicable, the conversion rate or price, the date on
which the right to convert the Debentures of such series to be redeemed
will terminate and the place or places where such Debentures may be
surrendered for conversion.
A notice of redemption published as contemplated by Section 1.6
need not identify particular Registered Debentures of such series to be
redeemed.
Notice of redemption of Debentures to be redeemed at the election
of the Company shall be given by the Company or, at the Company's request, by
the Trustee in the name and at the expense of the Company.
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SECTION 11.5 Deposit of Redemption Price. Prior to any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 10.3) an amount of money sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Debentures which are to be redeemed
on that date.
If any Debenture called for redemption is converted into Common
Stock of the Company, any money deposited with the Trustee or with any Paying
Agent or so segregated and held in trust for the redemption of such Debenture
shall (subject to any right of the Holder of such Debenture or any Predecessor
Debenture to receive interest as provided in the last paragraph of Section 3.7)
be paid to the Company upon Company Request or, if then held by the Company,
shall be discharged from such trust.
SECTION 11.6 Debentures Payable on Redemption Date. Notice of
redemption having been given as aforesaid, the Debentures so to be redeemed
shall on the Redemption Date become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Debentures shall cease to bear interest and the Coupons for such interest
appertaining to any Bearer Debentures so to be redeemed except to the extent
provided below, shall be void. Upon surrender of any such Debenture for
redemption in accordance with said notice together with all Coupons, if any,
appertaining thereto maturing after the Redemption Date, such Debenture shall
be paid by the Company at the Redemption Price together with accrued interest
to the Redemption Date; provided, however, that installments of interest on
Bearer Debentures whose Stated Maturity is on or prior to the Redemption Date
shall be payable only at an office or agency located outside the United States
(except as otherwise provided in Section 10.2) and, unless otherwise specified
as contemplated by Section 3.1, only upon presentation and surrender of Coupons
for such interest; and provided, further, that, unless otherwise specified as
contemplated by Section 3.1, installments of interest on Registered Debentures
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders of such Debentures or one or more Predecessor Debentures,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 3.7.
If any Bearer Debenture surrendered for redemption shall not be
accompanied by all appurtenant Coupons maturing after the Redemption Date, such
Debenture may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing Coupons, or the surrender of such
missing Coupon or Coupons may be waived by the Company and the Trustee if there
be furnished to them such security or indemnity as they may require to save
each of them and any Paying Agent harmless. If thereafter the Holder of such
Debenture shall surrender to the Trustee or any Paying Agent any such missing
Coupon in respect of which a deduction shall have been
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made from the Redemption Price, such Holder shall be entitled to receive the
amount so deducted; provided, however, that interest represented by Coupons
shall be payable only at an office or agency located outside the United States
(except as otherwise provided in Section 10.2) and unless otherwise specified
as contemplated by Section 3.1 only upon presentation and surrender of those
Coupons.
If any Debenture called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Debenture.
SECTION 11.7 Debentures Redeemed in Part. Any Registered
Debenture of any series which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and make available for delivery to
the Holder of such Debenture without service charge, a new Registered Debenture
or Debentures of such series and of like tenor of any authorized denomination
as requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Debenture of such
series so surrendered.
ARTICLE XII
SINKING FUNDS
SECTION 12.1 Applicability of Article. The provisions of this
Article shall be applicable to any sinking fund for the retirement of
Debentures of any series except as otherwise specified as contemplated by
Section 3.1 for Debentures of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Debentures of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Debentures of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Debentures of any
series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 12.2. Each sinking fund payment shall be applied to the
redemption of Debentures of any series as provided for by the terms of
Debentures of such series.
SECTION 12.2 Satisfaction of Sinking Fund Payments with
Debentures. The Company (a) may deliver Outstanding Debentures of any series
(other than any
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previously called for redemption), together in the case of any Bearer
Debentures of such series with all unmatured Coupons appertaining thereto, and
(b) may apply as a credit Debentures of such series which have been redeemed
either at the election of the Company pursuant to the terms of the Debentures
of such series or through the application of permitted optional sinking fund
payments pursuant to the terms of the Debentures, in each case in satisfaction
of all or any part of any sinking fund payment with respect to the Debentures
of such series required to be made pursuant to the terms of the Debentures of
such series; provided that the Debentures of such series have not been
previously so credited. The Debentures shall be received and credited for such
purpose by the Trustee at the Redemption Price specified in the Debentures of
such series for redemption through operation of the sinking fund and the amount
of such sinking fund payment shall be reduced accordingly.
SECTION 12.3 Redemption of Debentures for Sinking Fund. Not
less than 60 days prior to each sinking fund payment date for Debentures of any
series, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for such series
pursuant to the terms of such series, the portion thereof, if any, which is to
be satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Debentures of such series pursuant to
Section 12.2 and will also deliver to the Trustee any Debentures of such series
to be so delivered. Not less than 45 days before each such sinking fund
payment date the Trustee shall select the Debentures of such series to be
redeemed upon such sinking fund payment date in the manner specified in Section
11.3 and cause notice of the redemption thereof to be given in the name of and
at the expense of the Company in the manner provided in Section 11.4. Such
notice having been duly given, the redemption of such Debentures of such series
shall be made upon the terms and in the manner stated in Sections 11.6 and
11.7.
ARTICLE XIII
MEETINGS OF HOLDERS OF DEBENTURES
SECTION 13.1 Purposes for Which Meetings May be Called. If
Debentures of any series are issuable as Bearer Debentures, a meeting of
Holders of Debentures of such series may be called at any time and from time to
time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Debentures of such
series.
SECTION 13.2 Call, Notice and Place of Meetings. (a) The
Trustee may at any time call a meeting of Holders of Debentures of such series
for any purpose specified in Section 13.1, to be held at such time and at such
place in the Borough of
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Manhattan, The City of New York, or in London as the Trustee shall determine.
Notice of every meeting of Holders of Debentures of any series, setting forth
the time and the place of such meeting and in general terms the action proposed
to be taken at such meeting, shall be given, in the manner provided in Section
1.6, not less than 21 nor more than 180 days prior to the date fixed for the
meeting (or, in the case of a meeting of Holders with respect to Debentures of
any series all or part of which are represented by a Book-Entry Debenture, not
less than 20 nor more than 40 days).
(b) In case at any time the Company, pursuant to a Board
Resolution, or the Holders of at least 25% in principal amount of the
Outstanding Debentures of any series shall have requested the Trustee to call a
meeting of the Holders of Debentures of such series for any purpose specified
in Section 13.1, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have made
the first publication of the notice of such meeting within 21 days after
receipt of such request or shall not thereafter proceed to cause the meeting to
be held as provided herein, then the Company or the Holders of Debentures of
such series in the amount above specified, as the case may be, may determine
the time and the place in the Borough of Manhattan, The City of New York or in
London for such meeting and may call such meeting for such purposes by giving
notice thereof as provided in subsection (a) of this Section.
SECTION 13.3 Persons Entitled to Vote at Meetings. Upon the
calling of any meeting of Holders with respect to the Debentures of any series
all or part of which are represented by a Book-Entry Debenture, a record date
shall be established for determining Holders of Outstanding Debentures of such
series entitled to vote at such meeting, which record date shall be the close
of business on the day the notice of the meeting of Holders is given in
accordance with Section 13.2. The Holders on such record date, and their
designated proxies, and only such Persons, shall be entitled to vote at any
meeting of Holders. To be entitled to vote at any meeting of Holders a Person
shall (a) be a Holder of one or more Debentures of such series or (b) be a
Person appointed by an instrument in writing as proxy by a Holder of one or
more Debentures of such series; provided, however, that in the case of any
meeting of Holders with respect to the Debentures of any series all or part of
which are represented by a Book-Entry Debenture, only Holders, or their
designated proxies, of record on the record date established pursuant to
Section 13.3 hereof shall be entitled to vote at such meeting. The only
Persons who shall be entitled to be present or to speak at any meeting of
Holders shall be the Persons entitled to vote at such meeting and their counsel
and any representatives of the Trustee and its counsel and any representatives
of the Company and its counsel.
SECTION 13.4 Quorum; Action. The Persons entitled to vote a
majority in principal amount of the Outstanding Debentures of any series shall
constitute a quorum for a meeting of Holders of Debentures of such series;
provided, however, that if any action is to be taken at such meeting with
respect to a consent or waiver which this
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Indenture expressly provides may be given by the Holders of a specified
percentage in aggregate principal amount of Outstanding Debentures of such
series that is less or greater than a majority in principal amount of the
Outstanding Debentures of such series, then, with respect to such action (and
only such action) the Persons entitled to vote such lesser or greater
percentage in principal amount of the Outstanding Debentures of such series
shall constitute a quorum. In the absence of a quorum within 30 minutes of the
time appointed for any such meeting, the meeting shall, if convened at the
request of Holders of Debentures of such series, be dissolved. In any other
case the meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the adjournment of
such adjourned meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 13.2 (a), except that such notice need be
given only once not less than five days prior to the date on which the meeting
is scheduled to be reconvened. Notice of the reconvening of an adjourned
meeting shall state expressly the percentage, as provided above, of the
principal amount of the outstanding Debentures of such series which shall
constitute a quorum. Notwithstanding the foregoing, no meeting of Holders with
respect to Debentures of any series which is represented in whole or in part by
a Book-Entry Debenture, shall be adjourned to a date more than 90 days after
the record date for such meeting unless the Trustee shall send out a new notice
of meeting and establish, in accordance with Section 13.3, a new record date
for Holders entitled to vote at such meeting.
Except as limited by the proviso to Section 9.2, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum
is present as aforesaid may be adopted by the affirmative vote of the Holders
of a majority in principal amount of the Outstanding Debentures of such series;
provided, however, that, except as limited by the proviso to Section 9.2, any
resolution with respect to any consent or waiver which this Indenture expressly
provides may be given by the Holders of a specified percentage in aggregate
principal amount of Outstanding Debentures of such series that is less or
greater than a majority in principal amount of the Outstanding Debentures of
such series may be adopted at a meeting or an adjourned meeting duly convened
and at which a quorum is present as aforesaid only by the affirmative vote of
the Holders of such specified percentage in principal amount of the Outstanding
Debentures of such series.
Any resolution passed or decision taken at any meeting of Holders
of Debentures of any series duly held in accordance with this Section shall be
binding on all the Holders of Debentures of such series and the Coupons
appertaining thereto, whether or not present or represented at the meeting.
SECTION 13.5 Determination of Voting Rights; Conduct and
Adjournment of Meetings. (a) Notwithstanding any other provisions of this
Indenture,
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the Trustee may make such reasonable regulations as it may deem advisable for
any meeting of Holders of Debentures of any series in regard to proof of the
holding of Debentures of such series and of the appointment of proxies and in
regard to the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Debentures of such series shall be proved in the
manner specified in Section 1.4 and the appointment of any proxy shall be
proved in the manner specified in Section 1.4 or by having the signature of the
person executing the proxy witnessed or guaranteed by any trust company, bank
or banker authorized by Section 1.4 to certify to the holding of Bearer
Debentures of such series. Such regulations may provide that written
instruments appointing proxies, regular on their face, may be presumed valid
and genuine without the proof specified in Section 1.4 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Holders of Debentures of such series as provided in Section
13.2(b), in which case the Company or the Holders of Debentures of such series
calling the meeting, as the case may be, shall in like manner appoint a
temporary chairman. A permanent chairman and a permanent secretary of the
meeting shall be elected by vote of the Persons entitled to vote a majority in
principal amount of the Outstanding Debentures of such series represented at
the meeting.
(c) At any meeting each Holder of a Debenture of such series or
proxy shall be entitled to one vote for each $ 1,000 principal amount of the
Outstanding Debentures of such series held or represented by him; provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Debenture challenged as not Outstanding and ruled by the chairman of the
meeting to be not Outstanding. The chairman of the meeting shall have no right
to vote, except as a Holder of a Debenture of such series or proxy.
(d) Any meeting of Holders of Debentures of any series duly called
pursuant to Section 13.2 at which a quorum is present may be adjourned from
time to time by Persons entitled to vote a majority in principal amount of the
Outstanding Debentures of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
SECTION 13.6 Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of Debentures
of any series shall be by written ballots on which shall be subscribed the
signatures of the Holders of Debentures of such series or of their
representatives by proxy and the principal amounts and serial numbers of the
Outstanding Debentures of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
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shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, at least in
duplicate, of the proceedings of each meeting of Holders of Debentures of any
series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 13.2 and, if
applicable, Section 13.4. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
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ARTICLE XIV
CONVERSION OF DEBENTURES
SECTION 14.1 Applicability of Article. The provisions of this
Article shall be applicable to the Debentures of any series which are
convertible into shares of Common Stock of the Company, and the issuance of
such shares of Common Stock upon the conversion of Debentures of such series,
except as otherwise specified as contemplated by Section 3.1 for the Debentures
of such series. The terms and provisions applicable to the conversion of
Debentures of any series into securities of the Company (other than Common
Stock) shall, if applicable, be set forth in an Officers' Certificate or
established in one or more indentures supplemental hereto, prior to the
issuance of Debentures of such series in accordance with Section 3.1.
SECTION 14.2 Exercise of Conversion Privilege. In order to
exercise a conversion privilege, the Holder of a Debenture of any series with
such a privilege shall surrender such Debenture to the Company at the office or
agency maintained for that purpose pursuant to Section 10.2, accompanied by
written notice to the Company that the Holder elects to convert such Debenture
or a specified portion thereof. Such notice shall also state, if different
from the name and address of such Holder, the name or names (with address) in
which the certificate or certificates for shares of Common Stock which shall be
issuable on such conversion shall be issued. Debentures of such series
surrendered for conversion shall (if so required by the Company or the Trustee)
be duly endorsed by or accompanied by instruments of transfer in forms
satisfactory to the Company and the Trustee duly executed by the registered
Holder or its attorney duly authorized in writing. As promptly as practicable
after the receipt of such notice and of any payment required pursuant to a
Board Resolution and, subject to Section 3.1, set forth, or determined in the
manner provided, in an Officers' Certificate, or established in one or more
indentures supplemental hereto setting forth the terms of Debentures and the
surrender of such Debentures in accordance with such reasonable regulations as
the Company may prescribe, the Company shall issue and shall deliver, at the
office or agency at which such Debenture is surrendered, to such Holder or on
its written order, a certificate or certificates for the number of full shares
of Common Stock issuable upon the conversion of such Debenture (or specified
portion thereof), in accordance with the provisions of such Board Resolution,
Officers' Certificate or supplemental indenture, and cash as provided therein
in respect of any fractional share of such Common Stock otherwise issuable upon
such conversion. Such conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which such notice and
such payment, if required, shall have been received in proper order for
conversion by the Company and such Debenture shall have been surrendered as
aforesaid (unless such Holder shall have so surrendered such Debenture and
shall have instructed the Company to effect the
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conversion on a particular date following such surrender and such Holder shall
be entitled to convert such Debenture on such date, in which case such
conversion shall be deemed to be effected immediately prior to the close of
business on such date) and at such time the rights of the Holder of such
Debenture as such Debenture Holder shall cease and the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
of the Company shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares represented thereby.
Except as set forth above and subject to the final paragraph of Section 3.7, no
payment or adjustment shall be made upon any conversion on account of any
interest accrued on the Debentures of such series surrendered for conversion or
on account of any dividends on the Common Stock of the Company issued upon such
conversion.
In the case of any Debenture of any series which is converted in
part only, upon such conversion the Company shall execute and the Trustee shall
authenticate and make available for delivery to or on the order of the Holder
thereof, at the expense of the Company, a new Debenture or Debentures of such
series, of authorized denominations, in aggregate principal amount equal to the
unconverted portion of such Debenture.
SECTION 14.3 No Fractional Shares. No fractional share of
Common Stock of the Company shall be issued upon conversions of Debentures of
any series. If more than one Debenture of such series shall be surrendered for
conversion at one time by the same Holder, the number of full shares which
shall be issuable upon conversion shall be computed on the basis of the
aggregate principal amount of the Debentures of such series (or specified
portions thereof to the extent permitted hereby) so surrendered. If, except
for the provisions of this Section 14.3, any Holder of a Debenture or
Debentures of such series would be entitled to a fractional share of Common
Stock of the Company upon the conversion of such Debenture or Debentures, or
specified portions thereof, the Company shall pay to such Holder an amount in
cash equal to the current market value of such fractional share computed, (a)
if such Common Stock is listed or admitted to unlisted trading privileges on a
national securities exchange, on the basis of the last reported sale price
regular way on such exchange on the last trading day prior to the date of
conversion upon which such a sale shall have been effected, or (b) if such
Common Stock is not at the time so listed or admitted to unlisted trading
privileges on a national securities exchange or market, on the basis of the
average of the bid and asked prices of such Common Stock in the
over-the-counter market, on the last trading day prior to the date of
conversion, as reported by the National Quotation Bureau, Incorporated or
similar organization if the National Quotation Bureau, Incorporated is no
longer reporting such information, or if not so available, the fair market
price as determined by the Board of Directors. For purposes of this Section,
"trading day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
other than any day on which the Common Stock is not traded on the American
Stock Exchange, or if the Common Stock is not traded on the American Stock
Exchange, on the principal exchange or market on which the Common Stock is
traded or quoted.
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SECTION 14.4 Adjustment of Conversion Price. The conversion
price of Debentures of any series that is convertible into Common Stock of the
Company shall be adjusted for any stock dividends, stock splits,
reclassification, combinations or similar transactions in accordance with the
terms of the supplemental indenture or Board Resolutions setting forth the
terms of the Debentures of such series.
Whenever the conversion price is adjusted, the Company shall
compute the adjusted conversion price in accordance with terms of the
applicable Board Resolution or supplemental indenture and shall prepare an
Officers' Certificate setting forth the adjusted conversion price and showing
in reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed at each office or agency maintained for
the purpose of conversion of Debentures of such series pursuant to Section 10.2
and, if different, with the Trustee. The Company shall forthwith cause a
notice setting forth the adjusted conversion price to be mailed, first class
postage prepaid, to each Holder of Debentures of such series at its address
appearing on the Debenture Register and to any conversion agent other than the
Trustee.
SECTION 14.5 Notice of Certain Corporate Actions. In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of its
retained earnings (other than a dividend for which approval of any
shareholders of the Company is required); or
(b) the Company shall authorize the granting to the holders of
its Common Stock of rights, options or warrants to subscribe for or
purchase any shares of capital stock of any class or of any other rights
(other than any such grant for which approval of any shareholders of the
Company is required); or
(c) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of
Common Stock) or of any consolidation, merger or share exchange to which
the Company is a party and for which approval of any shareholders of the
Company is required, or of the sale of all or substantially all of the
assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; then the Company shall cause to be filed with
the Trustee, and shall cause to be mailed to all Holders at their last
addresses as they shall appear in the Debenture Register, at least 20 days
(or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record date hereinafter specified, a notice stating (i) the date
on which a record is to be taken for the purpose of such dividend,
distribution, rights, options or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be
entitled to such
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dividend, distribution, rights, options or warrants are to be determined,
or (ii) the date on which such reclassification, consolidation, merger,
share exchange, sale, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange, sale, dissolution,
liquidation or winding up. If at any time the Trustee shall not be the
conversion agent, a copy of such notice shall also forthwith be filed by
the Company with the Trustee.
SECTION 14.6 Reservation of Shares of Common Stock. The
Company shall at all times reserve and keep available, free from preemptive
rights, out of its authorized but unissued Common Stock or treasury shares, for
the purpose of effecting the conversion of Debentures, the full number of
shares of Common Stock of the Company then issuable upon the conversion of all
outstanding Debentures of any series that has conversion rights.
SECTION 14.7 Payment of Certain Taxes upon Conversion. The
Company will pay any and all taxes that may be payable in respect of the issue
or delivery of shares of its Common Stock on conversion of Debentures pursuant
hereto. The Company shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue and delivery of
shares of its Common Stock in a name other than that of the Holder of the
Debenture or Debentures to be converted, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the Company
the amount of any such tax, or has established, to the satisfaction of the
Company, that such tax has been paid.
SECTION 14.8 Nonassessability. The Company covenants that all
shares of Common Stock which may be issued upon conversion of Debentures will
upon issue in accordance with the terms hereof be duly and validly issued and
fully paid and nonassessable.
SECTION 14.9 Effect of Consolidation or Merger on Conversion
Privilege. Unless otherwise provided as contemplated by Section 3.1 with
respect to Debentures of any series, in case of any consolidation of the
Company with, or merger of the Company into or with any other Person, or in
case of any sale of all or substantially all of the assets of the Company, the
Company or the Person formed by such consolidation or the Person into which the
Company shall have been merged or the Person which shall have acquired such
assets, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Debenture then
outstanding of any series that is convertible into Common Stock shall have the
right, which right shall be the exclusive conversion right thereafter available
to said Holder (until the expiration of the conversion right of such
Debenture), to convert such Debenture into the kind and
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amount of shares of stock or other securities or property (including cash)
receivable upon such consolidation, merger or sale by a holder of the number of
shares of Common Stock into which such Debenture might have been converted
immediately prior to such consolidation, merger or sale, subject to compliance
with the other provisions of this Indenture, such Debenture and such
supplemental indenture. Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in such Debenture. The above provisions of this
Section shall similarly apply to successive consolidations, mergers or sales.
Unless otherwise provided as contemplated by Section 3.1 with respect to
Debentures of any series, it is expressly agreed and understood that anything
in this Indenture to the contrary notwithstanding, if, pursuant to such merger,
consolidation or sale, holders of outstanding shares of Common Stock do not
receive shares of common stock of the surviving corporation but receive other
securities, cash or other property or any combination thereof, Holders of
Debentures shall not have the right to thereafter convert their Debentures into
common stock of the surviving corporation or the corporation which shall have
acquired such assets, but rather, shall have the right upon such conversion to
receive the other securities, cash or other property receivable by a holder of
the number of shares of Common Stock into which the Debentures held by such
Holder might have been converted immediately prior to such consolidation,
merger or sale, all as more fully provided in the first sentence of this
Section 14.9. Anything in this Section 14.9 to the contrary notwithstanding,
the provisions of this Section 14.9 shall not apply to a merger or
consolidation of another corporation with or into the Company pursuant to which
both of the following conditions are applicable: (i) the Company is the
surviving corporation and (ii) the outstanding shares of Common Stock are not
changed or converted into any other securities or property (including cash) or
changed in number or character or reclassified pursuant to the terms of such
merger or consolidation.
As evidence of the kind and amount of shares of stock or other
securities or property (including cash) into which Debentures may properly be
convertible after any such consolidation, merger or sale, or as to the
appropriate adjustments of the conversion prices applicable with respect
thereto, the Trustee shall be furnished with and may accept the certificate or
opinion of an independent certified public accountant with respect thereto;
and, in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely thereon, and shall not be responsible or accountable to any
Holder of Debentures for any provision in conformity therewith or approved by
such independent certified accountant which may be contained in said
supplemental indenture.
SECTION 14.10 Duties of Trustee Regarding Conversion. Neither
the Trustee nor any conversion agent shall at any time be under any duty or
responsibility to any Holder of Debentures of any series that is convertible
into Common Stock to determine whether any facts exist which may require any
adjustment of the conversion price, or with respect to the nature or extent of
any such adjustment when made, or with respect to the method employed, whether
herein or in any supplemental indenture (or
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whether a supplemental indenture need be entered into), any resolutions of the
Board of Directors or written instrument executed by one or more officers of
the Company provided to be employed in making the same. Neither the Trustee
nor any conversion agent shall be accountable with respect to the validity or
value (or the kind or amount) of any shares of Common Stock, or of any
securities or property, which may at any time be issued or delivered upon the
conversion of any Debentures and neither the Trustee nor any conversion agent
makes any representation with respect thereto. Neither the Trustee nor any
conversion agent shall be responsible for any failure of the Company to issue,
transfer or deliver any shares of Common Stock or stock certificates or other
securities or property upon the surrender of any Debenture for the purpose of
conversion or to comply with any of the covenants of the Company contained in
this Article XIV or in the applicable supplemental indenture, resolutions of
the Board of Directors or written instrument executed by one or more duly
authorized officers of the Company. All Debentures delivered for conversion
shall be delivered to the Trustee to be canceled by or at the direction of the
Trustee, which shall dispose of the same as provided in Section 3.9.
SECTION 14.11 Repayment of Certain Funds upon Conversion. Any
funds which at any time shall have been deposited by the Company or on its
behalf with the Trustee or any other paying agent for the purpose of paying the
principal of, and premium, if any, and interest, if any, on any of the
Debentures (including funds deposited for the sinking fund referred to in
Article III hereof) and which shall not be required for such purposes because
of the conversion of such Debentures as provided in this Article XIV shall
after such conversion be repaid to the Company by the Trustee upon the
Company's written request, subject to the final paragraph of Section 3.7
hereof.
ARTICLE XV
SUBORDINATION OF DEBENTURES
SECTION 15.1 Debentures Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Debenture, by the
Holder's acceptance thereof, likewise covenants and agrees, that, to the extent
and in the manner hereinafter set forth in this Article, the indebtedness
represented by the Debentures and the payment of the principal of (and premium,
if any) and interest on each and all of the Debentures are hereby expressly
made subordinate and junior in right of payment to the prior payment in full of
all Senior Indebtedness of the Company, whether outstanding at the date of this
Indenture or thereafter incurred. No provision of this Article shall prevent
the occurrence of any default or Event of Default hereunder.
SECTION 15.2 Payment Over of Proceeds Upon Dissolution, Etc.
Upon any payment by the Company or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any
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dissolution or winding-up or liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due upon all Senior Indebtedness of the Company
shall first be paid in full, or payment thereof provided for in money in
accordance with its terms, before any payment is made by the Company on account
of the principal (and premium, if any) or interest on the Debentures; and upon
any such dissolution or winding-up or liquidation or reorganization, any
payment by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holders of the
Debentures or the Trustee would be entitled to receive from the Company, except
for the provisions of this Article, shall be paid by the Company or by any
receiver, trustee in bankruptcy, liquidation trustee, agent or other Person
making such payment or distribution, or by the Holders of the Debentures or by
the Trustee under the Indenture if received by them or it, directly to the
holders of Senior Indebtedness of the Company (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders, as
calculated by the Company) or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay such Senior Indebtedness
in full, in money or money's worth, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness,
before any payment or distribution is made to the Holders of the Debentures or
to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received by
the Trustee before all Senior Indebtedness of the Company is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, and their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness of
the Company, as the case may be, remaining unpaid to the extent necessary to
pay such Senior Indebtedness in full in money in accordance with its terms,
after giving effect to any concurrent payment or distribution to or for the
benefit of the holders of such Senior Indebtedness.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment which are
subordinated in right of payment to all Senior Indebtedness which may at the
time be outstanding to substantially the same extent as, or to a greater extent
than, the Debentures are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
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Person or the liquidation or dissolution of the Company following the
conveyance or transfer of its properties and assets substantially as an
entirety to another Person upon the terms and conditions set forth in Article
VIII shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of
assets and liabilities of the Company for the purposes of this Section if the
Person formed by such consolidation or into which the Company is merged or the
Person which acquires by conveyance or transfer such properties and assets
substantially as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions set
forth in Article VIII.
SECTION 15.3 Prior Payment to Senior Indebtedness Upon
Acceleration of Debentures. In the event that any Debentures are declared due
and payable before their Stated Maturity, then and in such event the holders of
Senior Indebtedness shall be entitled to receive payment in full of all amounts
due or to become due on or in respect of all Senior Indebtedness or provision
shall be made for such payment in cash, before the Holders of the Debentures
are entitled to receive any payment (including any payment which may be payable
by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Debentures) by the Company on account of the
principal of (or premium, if any) or interest on the Debentures or on account
of the purchase or other acquisition of Debentures; provided, however, that
nothing in this Section shall prevent the satisfaction of any sinking fund
payment in accordance with Article XII by delivering and crediting pursuant to
Section 12.2 Debentures which have been acquired (upon redemption or otherwise)
prior to such declaration of acceleration or which have been converted pursuant
to Article XIV.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Trustee or the Holder of any Debenture prohibited
by the foregoing provisions of this Section, and if such fact shall, at or
prior to the time of such payment, have been made known to the Trustee or, as
the case may be, such Holder, then and in such event such payment shall be paid
over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 14.2 would be applicable.
SECTION 15.4 No Payment When Senior Indebtedness in Default.
In the event and during the continuation of any default by the Company in the
payment of principal, premium, interest or any other payment due on any Senior
Indebtedness of the Company, as the case may be, beyond any applicable grace
period with respect thereto, or in the event that the maturity of any Senior
Indebtedness of the Company, as the case may be, has been accelerated because
of a default, then, in any such case, no payment shall be made by the Company
with respect to the principal (including redemption and sinking fund payments)
of, or premium, if any, or interest on the Debentures until such default is
cured
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or waived or ceases to exist or any such acceleration or demand for payment has
been rescinded.
No payment shall be made with respect to the principal of, or
premium, if any, or interest on the Debentures if a default, other than a
payment default, on the Credit Agreement occurs and is continuing that then
permits the lenders to accelerate its maturity and the Trustee receives a
notice of the default (a "Payment Blockage Notice") from a Representative or
the Company. If the Trustee receives any Payment Blockage Notice, no
subsequent Payment Blockage Notice shall be effective for purposes of this
Section unless and until (a) at least 365 days shall have elapsed since the
initial effectiveness of the immediately prior Payment Blockage Notice, and (b)
all scheduled payments of principal, premium, if any, and interest on the
Debentures that have come due have been paid in full in cash. No nonpayment
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice.
The Company may and shall resume payments on and distributions in
respect of the Debentures upon the earlier of: (x) the date upon which the
default is cured or waived or ceases to exist or (y) 179 days pass after notice
is received if the maturity of the Credit Agreement has not been accelerated,
unless this Section 15.4 otherwise prohibits the payment or distribution at the
time of such payment or distribution.
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee when such payment is prohibited by the
preceding paragraph of this Section 15.4 such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, but only to the
extent that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing within 90 days of
such payment of the amounts then due and owing on the Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of Senior Indebtedness.
SECTION 15.5 Payment Permitted in Certain Situations. Nothing
contained in this Article or elsewhere in this Indenture or in any of the
Debentures shall prevent (a) the Company, at any time except during the
pendency of any dissolution, winding-up, liquidation or reorganization of the
Company, whether voluntary or involuntary or any bankruptcy, insolvency,
receivership or other proceedings of the Company referred to in Section 15.2 or
under the conditions described in Section 15.3 or 15.4, from making payments at
any time of principal of or premium, if any, or interest on the Debentures, or
(b) the application by the Trustee of any money deposited with it hereunder to
the payment of or on account of the principal of, or premium, if any, or
interest on the Debentures or the retention of such payment by the Holders, if,
at the time
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of such application by the Trustee, it did not have knowledge that such payment
would have been prohibited by the provisions of this Article.
SECTION 15.6 Subrogation to Rights of Holders of Senior
Indebtedness. Subject to the payment in full of all Senior Indebtedness or the
provision for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Indebtedness, the rights of the Holders
of Debentures shall be subrogated to the extent of the payments or
distributions made to the holders of such Senior Indebtedness pursuant to the
provisions of this Article (equally and ratably with the holders of
indebtedness of the Company which by its express terms is subordinated to
indebtedness of the Company to substantially the same extent as the Debentures
are subordinated to the Senior Indebtedness and is entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to
receive payments and distributions of cash, property and securities applicable
to the Senior Indebtedness until the principal of (and premium, if any) and
interest on the Debentures shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of
Debentures or the Trustee would be entitled except for the provisions of this
Article, and no payments over pursuant to the provisions of this Article to or
for the benefit of the holders of Senior Indebtedness by Holders of Debentures
or the Trustee, shall, as among the Company, its creditors other than holders
of Senior Indebtedness and the Holders of Debentures, be deemed to be a payment
or distribution by the Company to or on account of the Senior Indebtedness.
SECTION 15.7 Provisions Solely to Define Relative Rights. The
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of Debentures on the one hand and
the holders of Senior Indebtedness on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Debentures is intended to
or shall (a) impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of Debentures, the obligation of the
Company, which is absolute and unconditional (and which, subject to the rights
under this Article of the holders of Senior Indebtedness, is intended to rank
equally with all other general obligations of the Company), to pay to the
Holders of Debentures the principal of (and premium, if any) and interest on
the Debentures as and when the same shall become due and payable in accordance
with their terms; or (b) affect the relative rights against the Company of the
Holders of Debentures and creditors of the Company, as the case may be, other
than the holders of Senior Indebtedness; or (c) prevent the Trustee or the
Holder of any Debenture from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if
any, under this Article of the holders of Senior Indebtedness to receive cash,
property and securities otherwise payable or deliverable to the Trustee or such
Holder.
SECTION 15.8 Trustee to Effectuate Subordination. Each Holder
of a Debenture by such Holder's acceptance thereof authorizes and directs the
Trustee on such
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Holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article and appoints the Trustee
such Holder's attorney-in-fact for any and all such purposes.
SECTION 15.9 No Waiver of Subordination Provisions. No right
of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance
by the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Debentures, without incurring responsibility to the Holders of Debentures and
without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of Debentures to the holders of Senior
Indebtedness do any one or more of the following: (a) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (b) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (c)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (d) exercise or refrain from exercising any rights against
the Company and any other Person.
SECTION 15.10 Notice to Trustee. The Company shall give prompt
written notice to a Responsible Officer of the Trustee of any fact known to the
Company which would prohibit the making of any payment to or by the Trustee in
respect of the Debentures pursuant to the provisions of this Article.
Notwithstanding the provisions of this Article or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee
in respect of the Debentures pursuant to the provisions of this Article, unless
and until a Responsible Officer of the Trustee shall have received written
notice thereof from the Company or a holder or holders of Senior Indebtedness
or from any trustee therefor; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Section 6.2, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall have not received the notice provided for in this
Section at least two Business Days prior to the date upon which by the terms
hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of (or premium, if any) or interest on
any Debentures, then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive
such money and to apply the same to the purposes for
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which they were received, and shall not be affected by any notice to the
contrary that may be received by it within two Business Days prior to such
date.
Subject to the provisions of Section 6.2, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of
any Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
SECTION 15.11 Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee, subject to the provisions of Section
6.2, and the Holders of Debentures shall be entitled to conclusively rely upon
any order or decree entered by any court of competent jurisdiction in which
such insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Trustee or to the Holders of
Debentures, for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of Senior Indebtedness and other
indebtedness of the Company, as the case may be, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article.
SECTION 15.12 Trustee Not Fiduciary for Holders of Senior
Indebtedness. With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of such Senior Indebtedness shall be
read into the Indenture against the Trustee. Except with respect to Section
15.4, the Trustee shall not be deemed to owe any fiduciary duty to the holders
of Senior Indebtedness and shall not be liable to any such holders or creditors
if it shall in good faith pay over or distribute to Holders of Debentures or to
the Company or to any other Person cash, property or securities to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article or
otherwise.
SECTION 15.13 Rights of Trustee as Holder of Senior
Indebtedness, Preservation of Trustee's Rights. The Trustee in its individual
capacity shall be entitled to
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all the rights set forth in this Article with respect to any Senior
Indebtedness which may at any time be held by it, to the same extent as any
other holder of Senior Indebtedness and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 6.6.
SECTION 15.14 Article Applicable to Paying Agents. In case at
any time any Paying Agent other than the Trustee shall have been appointed by
the Company and be then acting hereunder, the term "Trustee" as used in this
Article shall in such case (unless the context otherwise requires) be construed
as extending to and including such Paying Agent within its meaning as fully for
all intents and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee; provided, however, that Section 14.13
shall not apply to the Company or any Affiliate of the Company if it or such
Affiliate acts as Paying Agent.
SECTION 15.15 Certain Conversions Deemed Payment. For the
purposes of this Article only, (a) the issuance and delivery of junior
securities (or cash paid in lieu of fractional shares) upon conversion of
Debentures in accordance with Article XIV, or pursuant to the terms set forth
in an Officers' Certificate or established in one or more indentures
supplemental hereto in accordance with Section 3.1, shall not be deemed to
constitute a payment or distribution on account of the principal of or premium
or interest on Debentures or on account of the purchase or other acquisition of
Debentures, and (b) the payment, issuance or delivery of cash, property or
securities (other than junior securities and cash paid in lieu of fractional
shares) upon conversion of a Debenture shall be deemed to constitute payment on
account of the principal of such Debenture. For the purposes of this Section,
the term "junior securities" means (i) shares of any stock of any class of the
Company and (ii) securities of the Company which are subordinated in right of
payment to all Senior Indebtedness which may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent as, or
to a greater extent than, the Debentures are so subordinated as provided in
this Article. Nothing contained in this Article or elsewhere in this Indenture
or in the Debentures is intended to or shall impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of
Debentures, the right, which is absolute and unconditional, of the Holder of
any Debenture to convert such Debenture in accordance with Article XIV.
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This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed as of the day and year first above written.
DEVON ENERGY CORPORATION
By /s/ J. LARRY NICHOLS
-------------------------------
Name: J. Larry Nichols
Title: President & CEO
THE BANK OF NEW YORK, AS TRUSTEE
By /s/ BYRON MERINO
------------------------------
Name: Byron Merino
Title: Assistant Treasurer
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EXHIBIT 4.8
=======================================
FIRST SUPPLEMENTAL INDENTURE
between
Devon Energy Corporation
and
The Bank of New York
Dated as of July 3, 1996
========================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
DEFINITIONS
SECTION 1.1. Definition of Terms........................................... 2
ARTICLE II
GENERAL TERMS AND CONDITIONS
OF THE CONVERTIBLE DEBENTURES
SECTION 2.1. Designation and Principal Amount.............................. 5
SECTION 2.2. Maturity...................................................... 5
SECTION 2.3. Form and Payment.............................................. 6
SECTION 2.4. Exchange and Registration of Transfer of
Convertible Debentures; Restrictions on
Transfers; Depositary......................................... 6
SECTION 2.5. Interest...................................................... 11
SECTION 2.6. No Satisfaction and Discharge................................. 12
ARTICLE III
REDEMPTION OF THE CONVERTIBLE DEBENTURES
SECTION 3.1. Special Event Redemption...................................... 12
SECTION 3.2. Optional Redemption by Company................................ 13
SECTION 3.3. No Sinking Fund............................................... 14
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period.......................... 14
SECTION 4.2. Notice of Extension........................................... 15
SECTION 4.3. Limitation of Transactions.................................... 16
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ARTICLE V
EXPENSES
SECTION 5.1. Payment of Expenses........................................... 16
SECTION 5.2. Payment Upon Resignation or Removal........................... 17
ARTICLE VI
CONVERSION OF CONVERTIBLE DEBENTURES
SECTION 6.1. Conversion Rights............................................. 17
SECTION 6.2. Conversion Procedures......................................... 18
SECTION 6.3. Conversion Price Adjustments.................................. 20
SECTION 6.4. Merger, Consolidation, or Sale of Assets...................... 25
SECTION 6.5. Notice of Adjustments of Conversion Price..................... 27
SECTION 6.6. Prior Notice of Certain Events................................ 28
SECTION 6.7. Certain Additional Rights..................................... 29
SECTION 6.8. Trustee Not Responsible for Determining
Conversion Price or Adjustments............................... 30
ARTICLE VII
FORM OF CONVERTIBLE DEBENTURE
SECTION 7.1. Form of Convertible Debenture................................. 30
ARTICLE VIII
ORIGINAL ISSUE OF CONVERTIBLE DEBENTURES
SECTION 8.1. Original Issue of Convertible Debentures...................... 46
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Ratification of Indenture; First Supplemental
Indenture Controls............................................ 46
SECTION 9.2. Trustee Not Responsible for Recitals.......................... 46
SECTION 9.3. Governing Law................................................. 46
SECTION 9.4. Separability.................................................. 47
SECTION 9.5. Counterparts.................................................. 47
</TABLE>
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FIRST SUPPLEMENTAL INDENTURE, dated as of July 3, 1996 (the "First
Supplemental Indenture"), between Devon Energy Corporation, an Oklahoma
corporation (the "Company"), and The Bank of New York, as trustee (the
"Trustee") under the Indenture dated as of July 3, 1996 between the Company and
the Trustee (the "Base Indenture" and together with the First Supplemental
Indenture, the "Indenture").
WHEREAS, the Company executed and delivered the Base Indenture to the
Trustee to provide for the future issuance of the Company's unsecured junior
subordinated debt securities to be issued from time to time in one or more
series as might be determined by the Company under the Indenture, in an
unlimited aggregate principal amount which may be authenticated and delivered
as provided in the Base Indenture;
WHEREAS, pursuant to the terms of the Base Indenture, the Company
desires to provide for the establishment of a new series of its Debentures to
be known as its 6 1/2% Convertible Junior Subordinated Debentures (the
"Convertible Debentures"), the form and substance of such Convertible
Debentures and the terms, provisions and conditions thereof to be set forth as
provided in the Base Indenture and this First Supplemental Indenture;
WHEREAS, Devon Financing Trust, a Delaware statutory business trust
(the "Trust"), has offered to Morgan Stanley & Co. Incorporated (the "Initial
Purchaser") in a private placement $130,000,000 ($149,500,000 if the Initial
Purchaser's over-allotment option is exercised) aggregate liquidation amount of
its 6 1/2% Trust Convertible Preferred Securities (the "Convertible Preferred
Securities"), representing undivided beneficial interests in the assets of the
Trust and proposes to invest the proceeds from such offering, together with the
proceeds of the issuance and sale by the Trust to the Company of $4,020,650
($4,623,750, if the Initial Purchaser's option is exercised) aggregate
liquidation amount of its Common Securities, in $134,020,650 ($154,123,750 if
the Initial Purchaser's over-allotment option is exercised) aggregate principal
amount of the Convertible Debentures; and
WHEREAS, the Company has requested that the Trustee execute and
deliver this First Supplemental Indenture and all requirements necessary to
make this First Supplemental Indenture a valid instrument in accordance with
its terms, and to make the Convertible Debentures, when executed by the Company
and authenticated and delivered by the Trustee, the valid obligations of the
Company, have been performed, and the execution and delivery of this First
Supplemental Indenture has been duly authorized in all respects.
NOW THEREFORE, in consideration of the purchase and acceptance of the
Convertible Debentures by the Holders thereof, and for the purpose of setting
forth, as provided in the Base Indenture, the form and substance of the
Convertible Debentures and
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the terms, provisions and conditions thereof, the Company covenants and agrees
with the Trustee as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definition of Terms.
For all purposes of the First Supplemental Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms which are defined in the Base Indenture have the same
meanings when used in this First Supplemental Indenture;
(b) the terms defined in this Article have the meaning assigned to
them in this Article and include the plural as well as the singular;
(c) all other terms used herein which are defined in the Trust
Indenture Act, whether directly or by reference therein, have the meanings
assigned to them therein;
(d) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States of America, and, except as otherwise herein
expressly provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in the United States of America
at the date of such computation;
(e) a reference to a Section or Article is to a Section or Article of
this First Supplemental Indenture;
(f) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this First Supplemental Indenture as a whole and not to
any particular Article, Section or other subdivision;
(g) headings are for convenience of reference only and do not affect
interpretation; and
(h) the following terms have the meanings given to them in the
Declaration: (i) Business Day; (ii) Clearing Agency; (iii) Common Stock; (iv)
Convertible Preferred Security Certificate; (v) Delaware Trustee; (vi)
Dissolution Tax Opinion; (vii) Distribution; (viii) DTC; (ix) Institutional
Trustee; (x) Investment Company Event; (xi) No-Recognition Opinion; (xii)
Non-U.S. Person; (xiii) Placement Agreement; (xiv)
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PORTAL Market; (xv) QIB; (xvi) Rule 144A; (xvii) Regulation S; (xviii) Rule
144(k); (xix) Redemption Tax Opinion; (xx) Regular Trustees; (xxi) Special
Event; and (xxii) Tax Event.
"Additional Interest" shall have the meaning set forth in Section
2.5.
"Applicable Price" means (i) in the event of a Non-Stock Fundamental
Change in which the holders of the Common Stock receive only cash, the amount
of cash received by a holder of one share of Common Stock and (ii) in the event
of any other Fundamental Change, the average of the daily Closing Price for one
share of Common Stock during the 10 Trading Days immediately prior to the
record date for the determination of the holders of Common Stock entitled to
receive cash, securities, property or other assets in connection with such
Fundamental Change or, if there is no such record date, prior to the date upon
which the holders of the Common Stock shall have the right to receive such
cash, securities, property or other assets.
"Closing Price" of any common stock on any day shall mean the last
recorded sale price regular way on such day or, in case no such sale takes
place on such day, the average of the reported closing bid and asked prices
regular way of such common stock, in each case on the AMEX Composite Tape or,
if the common stock is not listed or admitted to trading on such exchange, on
the principal national securities exchange on which such common stock is listed
or admitted to trading, or, if not listed or admitted to trading on any
national securities exchange, the average of the closing bid and asked prices
as furnished by any New York Stock Exchange member firm selected from time to
time by the Board of Directors of the Company for that purpose or, if not so
available in such manner, as otherwise determined in good faith by the Board of
Directors.
"Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) of the consideration received by holders of Common
Stock consists of common stock that, for the 10 Trading Days immediately prior
to such Fundamental Change, has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on The Nasdaq National Market; provided, however, that a Fundamental
Change shall not be a Common Stock Fundamental Change unless either (i) the
Company continues to exist after the occurrence of such Fundamental Change and
the outstanding Convertible Debentures continue to exist as outstanding
Convertible Debentures, or (ii) not later than the occurrence of such
Fundamental Change, the outstanding Convertible Debentures are converted into
or exchanged for debentures of a corporation succeeding to the business of the
Company, which debentures have terms substantially similar to those of the
Convertible Debentures.
"Compounded Interest" shall have the meaning specified in Section
4.1.
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"Convertible Preferred Securities" has the meaning specified in the
recitals to this First Supplemental Indenture.
"Conversion Price" has the meaning set forth in Section 6.1.
"Declaration" means the Amended and Restated Declaration of Trust of
Devon Financing Trust, a Delaware statutory business trust, dated as of July 3,
1996.
"Deferred Interest" has the meaning specified in Section 4.1.
"Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance
with the Declaration, and the Convertible Debentures held by the Institutional
Trustee are to be distributed to the holders of the Trust Securities issued by
the Trust pro rata in accordance with the Declaration.
"Extended Interest Payment Period" has the meaning specified in
Section 4.1.
"Fundamental Change" means the occurrence of any transaction or event
or series of transactions or events pursuant to which all or substantially all
of the Common Stock shall be exchanged for, converted into, acquired for or
shall constitute solely the right to receive cash, securities, property or
other assets (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); provided, however, in the case of any such series of transactions
or events, for purposes of adjustment of the Conversion Price, such Fundamental
Change shall be deemed to have occurred when substantially all of the Common
Stock shall have been exchanged for, converted into or acquired for, or shall
constitute solely the right to receive, such cash, securities, property or
other assets, but the adjustment shall be based upon the consideration that the
holders of Common Stock received in the transaction or event as a result of
which more than 50% of the Common Stock shall have been exchanged for,
converted into or acquired for, or shall constitute solely the right to
receive, such cash, securities, property or other assets.
"Global Debenture" has the meaning specified in Section 2.4.
"Maturity Date" means the date on which the Convertible Debentures
mature and on which the principal shall be due and payable together with all
accrued and unpaid interest thereon including Compounded Interest and
Additional Interest, if any.
"Non Book-Entry Convertible Preferred Securities" has the meaning set
forth in Section 2.4.
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"Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
"Optional Redemption Price" has the meaning specified in Section 3.2.
"Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the daily Closing Price for one share of the
common stock received by holders of Common Stock in such Common Stock
Fundamental Change during the 10 Trading Days immediately prior to the date
fixed for the determination of the holders of Common Stock entitled to receive
such common stock or, if there is no such date, prior to the date upon which
the holders of Common Stock shall have the right to receive such common stock.
"Reference Market Price" initially means $16 1/2 and, in the event of
any adjustment to the Conversion Price other than as a result of a Fundamental
Change, the Reference Market Price shall also be adjusted so that the ratio of
the Reference Market Price to the Conversion Price after giving effect to any
such adjustment shall always be the same as the ratio of the initial Reference
Market Price to the initial Conversion Price.
"Trading Day" shall mean a day on which any securities are traded on
the national securities exchange or quotation system used to determine the
Closing Price.
ARTICLE II
GENERAL TERMS AND CONDITIONS
OF THE CONVERTIBLE DEBENTURES
SECTION 2.1. Designation and Principal Amount.
There is hereby authorized a series of Debentures designated the "6
1/2% Convertible Junior Subordinated Debentures," limited in aggregate
principal amount to $154,123,750, which amount shall be as set forth in any
written order of the Company for the authentication and delivery of Convertible
Debentures pursuant to Section 3.3 of the Base Indenture.
SECTION 2.2. Maturity.
The Maturity Date is June 15, 2026.
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SECTION 2.3. Form and Payment.
Except as provided in Section 2.4, the Convertible Debentures shall
be issued to the Trust in fully registered certificated form without Coupons in
denominations of $50 in principal amount and integral multiples thereof.
Principal and interest on the Convertible Debentures issued in certificated
form will be payable, the transfer of such Convertible Debentures will be
registrable and such Convertible Debentures will be exchangeable for
Convertible Debentures bearing identical terms and provisions at the office or
agency of the Trustee; provided, however, that payment of interest may be made
at the option of the Company by check mailed to the Holder at such address as
shall appear in the Debenture Register. Notwithstanding the foregoing, so long
as the Holder of any Convertible Debentures is the Institutional Trustee, the
payment of the principal of and interest (including Compounded Interest and
Additional Interest, if any) on such Convertible Debentures held by the
Institutional Trustee will be made at such place and to such account as may be
designated by the Institutional Trustee.
SECTION 2.4. Exchange and Registration of Transfer of Convertible Debentures;
Restrictions on Transfers; Depositary.
If distributed to holders of Convertible Preferred Securities in
connection with a Dissolution Event, the Convertible Debentures will be issued
to such holders in the same form as the Convertible Preferred Securities that
such Convertible Debentures replace in accordance with the following
procedures:
(a) So long as Convertible Debentures are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, all
Convertible Debentures that are so eligible may be represented by one or more
Convertible Debentures in global form registered in the name of the Depositary
or the nominee of the Depositary, except as otherwise specified below. The
transfer and exchange of beneficial interests in any such Convertible Debenture
in global form shall be effected through the Depositary in accordance with the
Indenture and the procedures of the Depositary therefor.
Convertible Debentures that are distributed to QIBs in replacement of
Convertible Preferred Securities represented by a global convertible Preferred
Security will be represented by a global Convertible Debenture (the "144A
Global Debenture"). Convertible Debentures that are distributed to Non-U.S.
Persons in replacement of Convertible Preferred Securities represented by a
global Convertible Preferred Security will be represented by a global
Convertible Debenture (the "Regulation S Global Debenture"). Each of the 144A
Global Debenture and the Regulation S Global Debenture shall be referred to
herein as a Global Debenture. Convertible Debentures that are distributed to
QIBs or to Non-U.S. Persons in replacement of Certificated Convertible
Preferred Securities will be represented by definitive Convertible Debentures
as set forth in Section 2.4(b). If Global Debentures are issued, transfers of
interests in the Convertible Debentures between the 144A Global Debenture and
the Regulation S Global Debenture will be made in accordance with the standing
instructions and procedures of the
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Depositary and its participants and the Trustee shall make appropriate
endorsements to reflect increases or decreases in the principal amounts of such
Global Debentures to reflect any such transfers.
Except as provided below, beneficial owners of a Convertible
Debenture in global form shall not be entitled to have certificates registered
in their names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered Holders of such
Convertible Debentures in global form.
(b) Convertible Preferred Securities held in certificated form,
except for certificates representing Convertible Preferred Securities held by
the Depositary or its nominee (or any successor Clearing Agency or its
nominee), shall upon presentation to the Trustee by the Institutional Trustee
or by the holder thereof or by the Institutional Trustee on behalf of such
holders shall be exchanged for Convertible Debentures in fully registered
certificated form of like aggregate principal amount and tenor.
(c) So long as the Convertible Debentures are eligible for book-entry
settlement, and to the extent that Convertible Debentures are held by QIBs or
Non-U.S. Persons, as the case may be, in a Global Debenture, or unless
otherwise required by law, upon any transfer of a definitive Convertible
Debenture to a QIB in accordance with Rule 144A or to a Non-U.S. Person in
accordance with Regulation S, unless otherwise requested by the transferor, and
upon receipt of the definitive Convertible Debenture or Convertible Debentures
being so transferred, together with a certification from the transferor that
the transfer is being made in compliance with Rule 144A or Regulation S, as the
case may be (or other evidence satisfactory to the Trustee), the Trustee shall
make an endorsement on any 144A Global Debenture or any Regulation S Global
Debenture, as the case may be, to reflect an increase in the aggregate
principal amount of the Convertible Debentures represented by such Global
Debenture, and the Trustee shall cancel such definitive Convertible Debenture
or Convertible Debentures in accordance with the standing instructions and
procedures of the Depositary, the aggregate principal amount of Convertible
Debentures represented by such Global Debenture to be increased accordingly;
provided that no definitive Convertible Debenture, or portion thereof, in
respect of which the Company or an Affiliate of the Company held any beneficial
interest shall be included in such Global Debenture until such definitive
Convertible Debenture is freely tradable in accordance with Rule 144(k);
provided further that the Trustee shall, at the written request of the Company,
issue Convertible Debentures in definitive form upon any transfer of a
beneficial interest in the Global Debenture to the Company or any Affiliate of
the Company.
Any Global Debenture may be endorsed with or have incorporated in the
text thereof such legends or recitals or changes not inconsistent with the
provisions of the Indenture as may be required by the Depositary, by the
American Stock Exchange or by the National Association of Securities Dealers,
Inc. in order for the Convertible Debentures to be tradeable on the PORTAL
Market or as may be required for the Convertible
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Debentures to be tradeable on any other market developed for trading of
securities pursuant to Rule 144A or required to comply with any applicable law
or any regulation thereunder or with the rules and regulations of any
securities exchange upon which the Convertible Debentures may be listed or
traded or to conform with any usage with respect thereto, or to indicate any
special limitations or restrictions to which any particular Convertible
Debentures are subject.
(d) Each Convertible Debenture that bears or is required to bear the
legend set forth in this Section 2.4(d) (a "Restricted Security") shall be
subject to the restrictions on transfer provided in the legend set forth in
this Section 2.4(d), unless such restrictions on transfer shall be waived by
the written consent of the Company, and the Holder of each Restricted Security,
by such securityholder's acceptance thereof, agrees to be bound by such
restrictions on transfer. As used in this Section 2.4(d) and in Section 2.4(e),
the terms "transfer" encompasses any sale, pledge, transfer or other
disposition of any Restricted Security.
Prior to the Transfer Restriction Termination Date, any certificate
evidencing a Convertible Debenture shall bear a legend in substantially the
following form, unless otherwise agreed by the Company (with written notice
thereof to the Trustee):
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER
RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL
OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK,
IF ANY, ISSUABLE UPON CONVERSION OR EXCHANGE OF SUCH SECURITY EXCEPT (A)
TO DEVON ENERGY CORPORATION OR ANY SUBSIDIARY THEREOF, (B)
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PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (D) INSIDE THE UNITED
STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE BANK OF NEW YORK, AS TRUSTEE (OR, IF THIS
CERTIFICATE EVIDENCES COMMON STOCK, THE TRANSFER AGENT FOR THE COMMON
STOCK), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR TRANSFER
AGENT), (E) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER
THE SECURITIES ACT OR (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED
HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO
THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH
ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO THE BANK OF NEW YORK, AS TRUSTEE (OR, IF THIS
CERTIFICATE EVIDENCES COMMON STOCK, SUCH HOLDER MUST FURNISH TO THE
TRANSFER AGENT SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT). IF THIS CERTIFICATE DOES
NOT EVIDENCE COMMON STOCK AND THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE BANK OF NEW YORK, AS TRUSTEE,
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS DEVON MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
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TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE
EXPIRATION OF HOLDING PERIOD APPLICABLE TO THE SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.
Following the Transfer Restriction Termination Date or the sale of a
Debenture pursuant to an effective registration statement or Rule 144 (or any
successor provision) under the Securities Act, any Convertible Debenture or
security issued in exchange or substitution therefor (other than (i)
Convertible Debentures acquired by the Company or any Affiliate thereof since
the issue date of the Convertible Preferred Securities and (ii) Common Stock
issued upon the conversion or exchange of any Convertible Debenture described
in clause (i) above) may upon surrender of such Convertible Debenture for
exchange to the security Registrar in accordance with the provisions of this
Section 2.4, be exchanged for a new Convertible Debenture or Convertible
Debentures, of like tenor and aggregate principal amount, which shall not bear
the restrictive legend required by this Section 2.4(d).
Notwithstanding any other provisions of the Indenture (other than the
provisions set forth in this Section 2.4(d)), a Global Debenture may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee to a
successor Depositary or a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust Company to
act as Depositary with respect to the Convertible Debentures in global form.
Initially, the Global Debentures shall be issued to the Depositary, registered
in the name of Cede & Co., as the nominee of the Depositary, and deposited with
the Trustee as custodian for Cede & Co.
If at any time the Depositary for the Global Debentures notifies the
Company that it is unwilling or unable to continue as Depositary for such
Convertible Debentures, the Company may appoint a successor Depositary with
respect to such Convertible Debentures. If a successor Depositary for the
Convertible Debentures is not appointed by the Company within 90 days after the
Company receives such notice, the Company will execute, and the Trustee, upon
receipt of an Officers' Certificate for authentication and delivery of
Convertible Debentures, will authenticate and deliver, Convertible Debentures
in definitive form, in an aggregate principal amount equal to the principal
amount of the Global Debentures, in exchange for the such Global Debentures.
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Definitive Convertible Debentures issued in exchange for all or a
part of a Global Debenture pursuant to this Section 2.4(d) shall be registered
in such names and in such authorized denominations as the Depositary, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such definitive Convertible Debentures to the person in whose names
such definitive Convertible Debentures are so registered.
At such time as all interests in a Global Debenture have been
redeemed, converted, exchanged, repurchased or canceled, such Global Debenture
shall be, upon receipt thereof, canceled by the Trustee in accordance with
standing procedures and instructions of the Depositary. At any time prior to
such cancellation, if any interest in a Global Debenture is exchanged for
definitive Convertible Debentures, redeemed, converted, exchanged, repurchased
by the Company pursuant to Article III or canceled, or transferred for part of
a Global Debenture, the principal amount of such Global Debenture shall, in
accordance with the standing procedures and instructions of the Depositary be
reduced or increased, as the case may be, and an endorsement shall be made on
such Global Debenture by, or at the direction of, the Trustee to reflect such
reduction or increase.
(e) Any Convertible Debenture or Common Stock issued upon the
conversion or exchange of a Convertible Debenture that, prior to the Transfer
Restriction Termination Date, is purchased or owned by the Company or any
Affiliate thereof may not be resold by the Company or such Affiliate unless
registered under the Securities Act or resold pursuant to an exemption from the
registration requirements of the Securities Act in a transaction which results
in such Convertible Debentures or Common Stock, as the case may be, no longer
being "restricted securities" (as defined under Rule 144).
SECTION 2.5. Interest.
(a) Each Convertible Debenture will bear interest at the rate of 6
1/2% per annum (the "Coupon Rate") from July 3, 1996 until the principal
thereof becomes due and payable, and on any overdue principal and (to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the Coupon Rate, compounded quarterly,
payable (subject to the provisions of Article IV) quarterly in arrears on March
15, June 15, September 15 and December 15 of each year (each, an "Interest
Payment Date), commencing on September 15, 1996, to the Person in whose name
such Convertible Debenture or any predecessor Convertible Debenture is
registered, at the close of business on the Regular Record Date for such
interest installment shall be the close of business on the fifteenth day prior
to that Interest Payment Date.
(b) The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. Except as provided in the
following sentence, the amount of interest payable for any period shorter than
a full quarterly period
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for which interest is computed, will be computed on the basis of the actual
number of days elapsed per 30-day month. In the event that any date on which
interest is payable on the Convertible Debentures is not a Business Day, then
payment of interest payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
(c) If, at any time while the Institutional Trustee is the Holder of
any Convertible Debentures, the Trust or the Institutional Trustee is required
to pay any taxes, duties, assessments or governmental charges of whatever
nature (other than withholding taxes) imposed by the United States, or any
other taxing authority, then, in any such case, the Company will pay as
additional interest ("Additional Interest") on the Convertible Debentures held
by the Institutional Trustee, such additional amounts as shall be required so
that the net amounts received and retained by the Trust and the Institutional
Trustee after paying such taxes, duties, assessments or other governmental
charges will be equal to the amounts the Trust and the Institutional Trustee
would have received had no such taxes, duties, assessments or other government
charges been imposed.
SECTION 2.6. No Satisfaction and Discharge.
The Convertible Debentures are not entitled to the benefit of the
Satisfaction and Discharge Provisions of Article IV of the Base Indenture.
ARTICLE III
REDEMPTION OF THE CONVERTIBLE DEBENTURES
SECTION 3.1. Special Event Redemption.
If a Special Event has occurred and is continuing and:
(a) the Company has received a Redemption Tax Opinion;
or
(b) after receiving a Dissolution Tax Opinion, the Regular Trustees
shall have been informed by tax counsel rendering the Dissolution Tax
Opinion that a No-Recognition Opinion cannot be delivered to the Trust,
then, notwithstanding Section 3.2(a) but subject to Section 3.2(b), the Company
shall have the right upon not less than 30 days nor more than 60 days notice to
the Holders of the
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Convertible Debentures to redeem the Convertible Debentures, in whole or in
part, for cash within 90 days following the occurrence of such Tax Event (the
"90-Day Period") at a redemption price equal to 100% of the principal amount to
be redeemed plus any accrued and unpaid interest thereon to the date of such
redemption (the "Redemption Price"), provided that if at the time there is
available to the Company or the Trust the opportunity to eliminate, within the
90-Day Period, the Tax Event by taking some ministerial action ("Ministerial
Action"), such as filing a form or making an election, or pursuing some other
similar reasonable measure which has no adverse effect on the Company, the
Trust or the Holders of the Trust Securities issued by the Trust, the Company
shall pursue such Ministerial Action in lieu of redemption, and, provided,
further, that the Company shall have no right to redeem the Convertible
Debentures while the Trust is pursuing any Ministerial Action pursuant to its
obligations under the Declaration. The Redemption Price shall be paid prior to
12:00 noon, New York time, on the date of such redemption or such earlier time
as the Company determines, provided that the Company shall deposit with the
Trustee an amount sufficient to pay the Redemption Price prior to the
redemption date.
SECTION 3.2. Optional Redemption by Company.
(a) Subject to the provisions of Section 3.2(b) and to the provisions
of Article XI of the Base Indenture, except as otherwise may be specified in
Section 3.1 or elsewhere in this First Supplemental Indenture, the Company
shall have the right to redeem the Convertible Debentures, in whole or in part,
from time to time, on or after June 18, 1999. Any redemption pursuant to this
paragraph will be made upon not less than 30 days nor more than 60 days notice
to the Holders of the Convertible Debentures, at the following prices
(expressed as percentages of the principal amount of the Convertible
Debentures) (the "Optional Redemption Price") together with accrued and unpaid
interest, including Compounded and Additional Interest to, but excluding, the
Redemption Date, if redeemed during the 12-month period beginning June 15:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
1999 104.55%
2000 103.90
2001 103.25
2002 102.60
2003 101.95
2004 101.30
2005 100.65
</TABLE>
and 100% if redeemed on or after June 15. 2006.
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<PAGE> 18
If Convertible Debentures are redeemed on any March 15, June 15,
September 15, or December 15, accrued and unpaid interest shall be payable to
holders of record on the relevant Regular Record Date.
So long as the corresponding Convertible Preferred Securities are
outstanding, the proceeds from the redemption of the Convertible Debentures
will be used to redeem Convertible Preferred Securities.
If the Convertible Debentures are only partially redeemed pursuant to
this Section 3.2, the Convertible Debentures will be selected for redemption by
any method utilized by the Trustee. The Optional Redemption Price, together
with any required interest payment, shall be paid prior to 12:00 noon, New York
time, on the Redemption Date or at such earlier time as the Company determines
provided that the Company shall deposit with the Trustee an amount sufficient
to pay the Optional Redemption Price, together with any required interest
payment, by 10:00 a.m., New York time, on the date such amounts are to be paid.
(b) If a partial redemption of the Convertible Debentures would
result in the delisting of the Convertible Preferred Securities issued by the
Trust from any national securities exchange or other organization on which the
Convertible Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and may only redeem the Convertible
Debentures in whole.
SECTION 3.3. No Sinking Fund.
The Convertible Debentures are not entitled to the benefit of any
sinking fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period.
As long as an Event of Default under Section 5.1(a) of the Base
Indenture shall not have occurred and be continuing, the Company shall have the
right, at any time and from time to time during the term of the Convertible
Debentures, to defer payments of interest by extending the interest payment
period of such Convertible Debentures for a period not exceeding 20 consecutive
quarters (the "Extended Interest Payment Period"), during which Extended
Interest Payment Period no interest shall be due and payable; provided that no
Extended Interest Payment Period may extend beyond the Maturity Date or any
earlier Redemption Date. To the extent permitted by applicable law, interest,
the payment of which has been deferred because of the extension of the interest
payment
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<PAGE> 19
period pursuant to this Section 4.1, will bear interest thereon at the Coupon
Rate compounded quarterly for each quarter of the Extended Interest Payment
Period ("Compounded Interest"). At the end of the Extended Interest Payment
Period, the Company shall pay all interest accrued and unpaid on the
Convertible Debentures, including any Additional Interest and Compounded
Interest (together, "Deferred Interest") that shall be payable to the Holders
of the Convertible Debentures in whose names the Convertible Debentures are
registered in the Debenture Register on the first Regular Record Date after the
end of the Extended Interest Payment Period. Before the termination of any
Extended Interest Payment Period, the Company may further extend such period,
provided that such period together with all such further extensions thereof
shall not exceed 20 consecutive quarters, or extend beyond the Maturity Date or
any earlier Redemption Date. Upon the termination of any Extended Interest
Payment Period and upon the payment of all Deferred Interest then due, the
Company may commence a new Extended Interest Payment Period, subject to the
foregoing requirements. No interest shall be due and payable during an Extended
Interest Payment Period, except at the end thereof, but the Company may prepay
at any time all or any portion of the interest accrued during an Extended
Interest Payment Period.
SECTION 4.2. Notice of Extension.
(a) If the Institutional Trustee is the only registered Holder of the
Convertible Debentures at the time the Company selects an Extended Interest
Payment Period, the Company shall give written notice to the Regular Trustees,
the Institutional Trustee and the Trustee of its selection of such Extended
Interest Payment Period one Business Day before the earlier of (i) the next
succeeding date on which Distributions on the Trust Securities issued by the
Trust are payable, or (ii) the date the Trust is required to give notice of the
record date, or the date such Distributions are payable, to the American Stock
Exchange or other applicable self-regulatory organization or to holders of the
Convertible Preferred Securities issued by the Trust, but in any event at least
one Business Day before such record date.
(b) If the Institutional Trustee is not the only Holder of the
Convertible Debentures at the time the Company selects an Extended Interest
Payment Period, the Company shall give the Holders of the Convertible
Debentures and the Trustee written notice of its selection of such Extended
Interest Payment Period at least 10 Business Days before the earlier of (i) the
next succeeding Interest Payment Date or (ii) the date the Company is required
to give notice of the record or payment date of such interest payment to the
American Stock Exchange or other applicable self-regulatory organization or to
Holders of the Convertible Debentures.
(c) The quarter in which any notice is given pursuant to paragraphs
(a) or (b) of this Section 4.2 shall be counted as one of the 20 consecutive
quarters permitted in the maximum Extended Interest Payment Period permitted
under Section 4.1.
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<PAGE> 20
SECTION 4.3. Limitation of Transactions.
If the Company shall exercise its right to defer payment of interest
as provided in Section 4.1, then (i) the Company shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
(other than (A) purchases or acquisitions of shares of its common stock in
connection with the satisfaction by the Company of its obligations under any
employee benefit plans, (B) as a result of a reclassification of its capital
stock or the exchange or conversion of one class or series of its capital stock
for another class or series of its capital stock or, (C) the purchase of
fractional interests in shares of its capital stock pursuant to the conversion
or exchange provisions of such capital stock or security being converted or
exchanged), (ii) the Company shall not make any payment of interest, principal
or premium, if any, on or repay, repurchase or redeem any debt securities
issued by the Company which rank pari passu with or junior to the Convertible
Debentures and (iii) the Company shall not make any guarantee payments with
respect to the foregoing (other than pursuant to the Trust Securities
Guarantees).
ARTICLE V
EXPENSES
SECTION 5.1. Payment of Expenses.
In connection with the offering, sale and issuance of the Convertible
Debentures to the Institutional Trustee and in connection with the sale of the
Trust Securities by the Trust, the Company, in its capacity as borrower with
respect to the Convertible Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Convertible Debentures, including commissions to the purchasers
payable pursuant to the Placement Agreement and compensation of the Trustee
under the Indenture in accordance with the provisions of Section 6.6 of the
Base Indenture;
(b) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the Trust, the
fees and expenses of the Institutional Trustee and the Delaware Trustee, the
costs and expenses relating to the operation of the Trust, including without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses and
costs and expenses incurred in connection with the acquisition, financing, and
disposition of Trust assets);
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<PAGE> 21
(c) pay all costs and expenses related to the enforcement by the
Institutional Trustee of the rights of the holders of the Convertible Preferred
Securities;
(d) be primarily liable for any indemnification obligations arising
with respect to the Declaration; and
(e) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust.
SECTION 5.2. Payment Upon Resignation or Removal.
Upon termination of this First Supplemental Indenture or the Base
Indenture or the removal or resignation of the Trustee pursuant to Section 6.7
of the Base Indenture, the Company shall pay to the Trustee all amounts accrued
to the date of such termination, removal or resignation. Upon termination of
the Declaration or the removal or resignation of the Delaware Trustee or the
Institutional Trustee, as the case may be, pursuant to Section 5.6 of the
Declaration, the Company shall pay to the Delaware Trustee or the Institutional
Trustee, and their respective counsel, as the case may be, all amounts accrued
to the date of such termination, removal or resignation.
ARTICLE VI
CONVERSION OF CONVERTIBLE DEBENTURES
SECTION 6.1. Conversion Rights.
Subject to and upon compliance with the provisions of this Article
VI, the Convertible Debentures are convertible, at the option of the Holder, at
any time beginning October 1, 1996 through the close of business on June 14,
2026 (or, in the case of Convertible Debentures called for redemption, prior to
the close of business on the Business Day prior to the corresponding Redemption
Date) into fully paid and nonassessable shares of Common Stock of the Company
at an initial conversion rate of 1.6393 shares of Common Stock for each $50 in
aggregate principal amount of Convertible Debentures (equal to a conversion
price of $30.50 per share of Common Stock (the "Conversion Price")), subject to
adjustment as described in this Article VI. A Holder of Convertible Debentures
may convert any portion of the principal amount of the Convertible Debentures
into that number of fully paid and nonassessable shares of Common Stock
obtained by dividing the principal amount of the Convertible Debentures to be
converted by such Conversion Price. All calculations under this Article VI
shall be made to the nearest cent or to the nearest 1/100th of a share, as the
case may be.
17
<PAGE> 22
SECTION 6.2. Conversion Procedures.
(a) In order to convert all or a portion of the Convertible
Debentures, the Holder thereof shall deliver to the Conversion Agent an
irrevocable Notice of Conversion setting forth the principal amount of
Convertible Debentures to be converted, together with the name or names, if
other than the Holder, in which the shares of Common Stock should be issued
upon conversion and, if such Convertible Debentures are definitive Convertible
Debentures, surrender to the Conversion Agent the Convertible Debentures to be
converted, duly endorsed or assigned to the Company or in blank. In addition, a
holder of Convertible Preferred Securities may exercise its right under the
Declaration to convert such Convertible Preferred Securities into Common Stock
by delivering to the Conversion Agent an irrevocable Notice of Conversion
setting forth the information called for by the preceding sentence and
directing the Conversion Agent (i) to exchange such Convertible Preferred
Security for a portion of the Convertible Debentures held by the Trust (at an
exchange rate of $50 principal amount of Convertible Debentures for each
Convertible Preferred Security) and (ii) to immediately convert such
Convertible Debentures, on behalf of such holder, into Common Stock of the
Company pursuant to this Article VI and, if such Convertible Preferred
Securities are in definitive form, surrendering such Convertible Preferred
Securities, duly endorsed or assigned to the Company or in blank. So long as
any Convertible Preferred Securities are outstanding, the Trust shall not
convert any Convertible Debentures except pursuant to a Notice of Conversion
delivered to the Conversion Agent by a holder of Convertible Preferred
Securities.
If a Notice of Conversion is delivered on or after the Regular Record
Date and prior to the subsequent Interest Payment Date, the Holder will be
entitled to receive the interest payable on the subsequent Interest Payment
Date on the portion of Convertible Debentures to be converted notwithstanding
the conversion thereof prior to such Interest Payment Date. However, if a
Redemption Date falls between a Regular Record Date and the subsequent Interest
Payment Date, the Holder will be entitled to receive, on such Interest Payment
Date, the interest accrued to, but excluding, the Redemption Date. Except as
otherwise provided in the first and second sentences of this paragraph, in the
case of any Convertible Debenture which is converted, interest whose Stated
Maturity is after the date of conversion of such Convertible Debenture shall
not be payable, and the Company shall not make nor be required to make any
other payment, adjustment or allowance with respect to accrued but unpaid
interest on the Convertible Debentures being converted, which shall be deemed
to be paid in full. Each conversion shall be deemed to have been effected
immediately prior to the close of business on the day on which the Notice of
Conversion was received (the "Conversion Date") by the Conversion Agent from
the Holder or from a holder of the Convertible Preferred Securities effecting a
conversion thereof pursuant to its conversion rights under the Declaration, as
the case may be. The Person or Persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Stock as of the Conversion Date. As promptly
as practicable on or after the Conversion Date, the Company shall issue and
deliver at the office of the Conversion Agent, unless otherwise directed by the
Holder in the Notice of Conversion, a certificate
18
<PAGE> 23
or certificates for the number of full shares of Common Stock issuable upon
such conversion, together with the cash payment, if any, in lieu of any
fraction of any share to the Person or Persons entitled to receive the same.
The Conversion Agent shall deliver such certificate or certificates to such
Person or Persons.
(b) The Company's delivery upon conversion of the fixed number of
shares of Common Stock into which the Convertible Debentures are convertible
(together with the cash payment, if any, in lieu of fractional shares) shall be
deemed to satisfy the Company's obligation to pay the principal amount at
Maturity of the portion of Convertible Debentures so converted and any unpaid
interest (including Compounded Interest) accrued on such Convertible Debentures
at the time of such conversion.
(c) No fractional shares of Common Stock will be issued as a result
of conversion, but in lieu thereof, the Company shall pay to the Conversion
Agent a cash adjustment in an amount equal to the same fraction of the Closing
Price of such fractional interest on the date on which the Convertible
Debentures were duly surrendered to the Conversion Agent for conversion, or, if
such day is not a Trading Day, on the next Trading Day, and the Conversion
Agent in turn will make such payment, if any, to the Holder of the Convertible
Debentures or the holder of the Convertible Preferred Securities so converted.
(d) In the event of the conversion of any Convertible Debenture in
part only, a new Convertible Debenture or Convertible Debentures for the
unconverted portion thereof will be issued in the name of the Holder thereof
upon the cancellation thereof in accordance with Section 14.2 of the Base
Indenture.
(e) In effecting the conversion transactions described in this
Section 6.2, the Conversion Agent is acting as agent of the holders of
Convertible Preferred Securities (in the exchange of Convertible Preferred
Securities for Convertible Debentures) and as agent of the Holders of
Convertible Debentures (in the conversion of Convertible Debentures into Common
Stock), as the case may be. The Conversion Agent is hereby authorized (i) to
exchange Convertible Debentures held by the Trust from time to time for
Convertible Preferred Securities in connection with the conversion of such
Convertible Preferred Securities in accordance with this Article VI and (ii) to
convert all or a portion of the Convertible Debentures into Common Stock and
thereupon to deliver such shares of Common Stock in accordance with the
provisions of this Article VI and to deliver to the Trust a new Convertible
Debenture or Convertible Debentures for any resulting unconverted principal
amount.
SECTION 6.3. Conversion Price Adjustments.
The Conversion Price shall be adjusted from time to time as follows:
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<PAGE> 24
(a) In case the Company shall, while any of the Convertible
Debentures are outstanding, (i) pay a dividend or make a distribution with
respect to Common Stock in shares of Common Stock, (ii) subdivide outstanding
shares of Common Stock, (iii) combine outstanding shares of Common Stock into a
smaller number of shares or (iv) issue by reclassification of its shares of
Common Stock any shares of capital stock of the Company, the conversion
privilege and the Conversion Price for the Convertible Debentures shall be
adjusted so that the Holder of any Convertible Debenture thereafter surrendered
for conversion shall be entitled to receive the number of shares of capital
stock of the Company which such Holder would have owned immediately following
such action had such Convertible Debenture been converted immediately prior
thereto. An adjustment made pursuant to this subsection (a) shall become
effective immediately after the record date in the case of a dividend or other
distribution and shall become effective immediately after the effective date in
case of a subdivision, combination or reclassification (or immediately after
the record date if a record date shall have been established for such event).
If, as a result of an adjustment made pursuant to this subsection (a), the
Holder of any Convertible Debenture thereafter surrendered for conversion shall
become entitled to receive shares of two or more classes or series of capital
stock of the Company, the Board of Directors (whose determination shall be
conclusive and shall be described in a Board Resolution filed with the Trustee)
shall determine the allocation of the adjusted Conversion Price for the
Convertible Debentures between or among shares of such classes or series of
capital stock.
(b) In case the Company shall, while any of the Convertible
Debentures are outstanding, issue rights or warrants to all holders of its
Common Stock entitling them (for a period expiring within 45 days after the
record date mentioned below) to subscribe for or purchase shares of Common
Stock at a price per share less than the current market price per share of
Common Stock (as determined pursuant to subsection (g) below) on the record
date mentioned below, the Conversion Price for the Convertible Debentures shall
be adjusted so that the same shall equal the price determined by multiplying
the Conversion Price in effect immediately prior to the date of issuance of
such rights or warrants by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding on the date of issuance of such
rights or warrants plus the number of shares which the aggregate offering price
of the total number of shares so offered for subscription or purchase would
purchase at such current market price, and of which the denominator shall be
the number of shares of Common Stock outstanding on the date of issuance of
such rights or warrants plus the number of additional shares of Common Stock
offered for subscription or purchase. Such adjustment shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such rights or warrants. To the extent that no shares of
Common Stock are so delivered after the expiration of such rights or warrants,
the Conversion Price shall be readjusted to the Conversion Price which would
then be in effect if such date fixed for the determination of stockholders
entitled to receive such rights or warrants had not been fixed. For the
purposes of this subsection, the number of shares of Common Stock at any time
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<PAGE> 25
outstanding shall not include shares held in the treasury of the Company. The
Company shall not issue any rights or warrants in respect of shares of Common
Stock held in the treasury of the Company. In case any rights or warrants
referred to in this subsection in respect of which an adjustment shall have
been made shall expire unexercised within 45 days after the same shall have
been distributed or issued by the Company, the Conversion Price shall be
readjusted at the time of such expiration to the Conversion Price that would
have been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
(c) Subject to the last sentence of this subsection (c), in case the
Company shall, by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any class or series of
capital stock, cash or assets or rights or warrants to subscribe for or
purchase any of its securities (excluding any rights or warrants referred to in
subsection (b), any dividend or distribution paid exclusively in cash and any
dividend or distribution referred to in subsection (a) of this Section 6.3),
the Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
subsection (c) by a fraction of which the numerator shall be the current market
price per share (determined as provided in subsection (g)) of the Common Stock
on the date fixed for the payment of such distribution (the "Reference Date")
less the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors), on the Reference Date, of the portion of
the evidences of indebtedness, shares of capital stock, cash and assets so
distributed or of such subscription rights or warrants applicable to one share
of Common Stock and the denominator shall be such current market price per
share of the Common Stock, such reduction to become effective immediately prior
to the opening of business on the day following the Reference Date; provided,
however, that in the event the numerator shall be less than one, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Holder of
Convertible Debentures shall have the right to receive upon conversion the
amount of such distribution such Holder would have received had such Holder
converted each Convertible Debenture immediately prior to the Reference Date.
In the event that no such dividend or distribution is so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such dividend or distribution had not occurred. If the
Board of Directors determines the fair market value of any distribution for
purposes of this subsection (c) by reference to the actual or when issued
trading market for any securities comprising such distribution, it must in
doing so consider the prices in such market over the same period used in
computing the current market price per share of Common Stock (determined as
provided in subsection (g)). For purposes of this subsection (c), any dividend
or distribution that includes shares of Common Stock or rights or warrants to
subscribe for or purchase shares of Common Stock shall be deemed instead to be
(i) a dividend or distribution of the evidences of indebtedness, shares of
capital stock, cash or assets other than such shares of Common
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<PAGE> 26
Stock or such rights or warrants (making any Conversion Price reduction
required by this subsection (c)) immediately followed by (ii) a dividend or
distribution of such shares of Common Stock or such rights or warrants (making
any further Conversion Price reduction required by subsection (a) or (b)),
except (A) the Reference Date of such dividend or distribution as defined in
this subsection (c) shall be substituted as (1) "the record date in the case of
a dividend or other distribution," and (2) "the record date for the
determination of stockholders entitled to receive such rights or warrants" and
(3) "the date fixed for such determination" within the meaning of subsections
(a) and (b) and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed outstanding for purposes of computing any
adjustment of the Conversion Price in subsection (a).
(d) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding any quarterly
cash dividend on Common Stock to the extent that the aggregate cash dividend
per share of Common Stock in any quarter does not exceed the greater of (i) the
amount per share of Common Stock of the next preceding quarterly dividend on
Common Stock to the extent such preceding quarterly dividend did not require an
adjustment of the Conversion Price pursuant to this subsection (d) (as adjusted
to reflect subdivisions or combinations of Common Stock), and (ii) 3.75% of the
current market price per share determined as provided in subsection (g), and
excluding any dividend or distribution in connection with the liquidation,
dissolution or winding-up of the Company), the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this subsection (d) by a fraction of
which the numerator shall be the current market price per share (determined as
provided in subsection (g)) of the Common Stock on the date fixed for the
payment of such distribution less the amount of cash so distributed (and not
excluded as provided above) applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock
(determined as provided in subsection (g)), such reduction to become effective
immediately prior to the opening of business on the day following the date
fixed for the payment of such distribution; provided, however, that in the
event the portion of the cash so distributed applicable to one share of Common
Stock is equal to or greater than the current market price per share (as
defined in subsection (g)) of the Common Stock on the record date mentioned
above, in lieu of the foregoing adjustment, adequate provision shall be made so
that each Holder of shares of Convertible Debentures shall have the right to
receive upon conversion the amount of cash such Holder would have received had
such Holder converted each Convertible Debenture immediately prior to the
record date for the distribution of the cash. If an adjustment is required to
be made pursuant to this subsection (d) as a result of a distribution that is a
quarterly dividend, such adjustment shall be based upon the amount by which
such distribution exceeds the amount of the quarterly cash dividend permitted
to be excluded as provided above. If an adjustment is required to be made
pursuant to this subsection (d) as a result of a distribution that is not a
quarterly dividend, such adjustment shall be based upon the full amount of the
distribution.
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<PAGE> 27
In the event that no such dividend or distribution is so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such Record Date had not been fixed.
(e) In case a tender or exchange offer (other than an odd-lot offer)
made by the Company or any Subsidiary of the Company for all or any portion of
the Company's Common Stock shall expire and such tender or exchange offer shall
involve the payment by the Company or such subsidiary of consideration per
share of Common Stock having a fair market value (as determined in good faith
by the Board of Directors, whose determination shall be conclusive and
described in a resolution of the Board of Directors) at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended) that exceeds the Closing Price
of the Common Stock on the Trading Day next succeeding the Expiration Time, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
subsection (e) by a fraction (which shall not be greater than one) of which the
numerator shall be the number of shares of Common Stock outstanding (including
any tendered or exchanged shares) at the Expiration Time multiplied by the
Closing Price of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator shall be the sum of (i) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged
and not withdrawn as of the Expiration Time (the shares deemed so accepted, up
to any such maximum, being referred to as the "Purchased Shares") and (ii) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) at the Expiration Time and the Closing Price of the Common Stock on the
Trading Day next succeeding the Expiration Time, such reduction to become
retroactively effective immediately prior to the opening of business on the day
following the Expiration Time.
(f) In case a tender or exchange offer made by a Person other than
the Company or any Subsidiary of the Company for all or any portion of the
Common Stock shall expire and such tender or exchange offer shall involve the
payment by a Person other than the Company or any Subsidiary of the Company of
consideration per share of Common Stock having a fair market value (as
determined in good faith by the Board of Directors, whose determination shall
be conclusive and described in a resolution of the Board of Directors) at the
applicable Expiration Time that exceeds the Closing Price of the Common Stock
on the Trading Day next succeeding the applicable Expiration Time in which as
of the closing date of the offer the Board of Directors of the Company is not
recommending rejection of the offer, the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subsection (f) by a fraction (which shall not be
greater than one) of which the
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<PAGE> 28
numerator shall be the number of shares of Common Stock outstanding (including
any tendered or exchanged shares) at the Expiration Time multiplied by the
Closing Price of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator shall be the sum of (i) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged
and not withdrawn as of the Expiration Time (the shares deemed so accepted, up
to any such maximum, being referred to as the "Purchased Shares") and, (ii) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) at the Expiration Time and the Closing Price of the Common Stock on the
Trading Day next succeeding the Expiration Time, such reduction to become
retroactively effective immediately prior to the opening of business on the day
following the Expiration Time; provided, however, that the reduction of the
Conversion Price contemplated by this subsection (f) will only be made if the
tender offer or exchange offer is made for an amount which increases that
Person's ownership of Common Stock to more than 25% of the total shares of
Common Stock outstanding and provided, further, that the reduction of the
Conversion Price contemplated by this subsection (f) will not be made if as of
the close of the offer, the offering documents with respect to such offer
disclose a plan or an intention to cause the Company to engage in a
consolidation or merger of the Company or a sale of all or substantially all of
the assets of the Company.
(g) For the purpose of any computation under subsection (b), (c) or
(d), the current market price per share of Common Stock on any date in question
shall be deemed to be the average of the daily Closing Prices for the ten
Trading Day period ending on the earlier of the day in question and, if
applicable, the day before the "ex" date with respect to the issuance or
distribution requiring such computation; provided, however, that if more than
one event occurs that would require an adjustment pursuant to subsections (a)
through (f), inclusive, the Board of Directors may make such adjustments to the
Closing Prices during such ten Trading Day period as it deems appropriate to
effectuate the intent of the adjustments in this Section 7.3, in which case any
such determination by the Board of Directors shall be set forth in a Board
Resolution and shall be conclusive. For purposes of this paragraph, the term
"ex" date, (1) when used with respect to any issuance or distribution, means
the first date on which the Common Stock trades regular way on the American
Stock Exchange or on such successor securities exchange as the Common Stock may
be listed or in the relevant market from which the Closing Prices were obtained
without the right to receive such issuance or distribution, and (2) when used
with respect to any tender or exchange offer means the first date on which the
Common Stock trades regular way on such securities exchange or in such market
after the Expiration Time of such offer.
(h) The Company may make such reductions in the Conversion Price, in
addition to those required by subsections (a) through (f), as the Board of
Directors considers to be advisable to avoid or diminish any income tax to
holders of Common
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<PAGE> 29
Stock or rights to purchase Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes. The Company from time to time may reduce the
Conversion Price by any amount for any period of time if the period is at least
twenty (20) days, the reduction is irrevocable during the period, and the Board
of Directors shall have made a determination that such reduction would be in
the best interest of the Company, which determination shall be conclusive.
Whenever the Conversion Price is reduced pursuant to the preceding sentence,
the Company shall mail to Holders of record of the Convertible Debentures a
notice of the reduction at least 15 days prior to the date the reduced
Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period it will be in effect.
(i) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Conversion Price; provided, however, that any adjustments which by reason of
this subsection (i) are not required to be made shall be carried forward and
taken into account in determining whether any subsequent adjustment shall be
required.
(j) If any action would require adjustment of the Conversion Price
pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value to the Holder of Convertible Debentures.
SECTION 6.4. Merger, Consolidation, or Sale of Assets.
(a) In the event that the Company shall be a party to any transaction
(including without limitation (i) any recapitalization or reclassification of
the Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination of the Common Stock), (ii) any consolidation of the Company with,
or merger of the Company into, any other Person, any merger of another Person
into the Company (other than a merger which does not result in a
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company), (iii) any sale or transfer of all or
substantially all of the assets of the Company or (iv) any compulsory share
exchange) pursuant to which either shares of Common Stock shall be converted
into the right to receive other securities, cash or other property, or, in the
case of a sale or transfer of all or substantially all of the assets of the
Company, the holders of Common Stock shall be entitled to receive other
securities, cash or other property, then lawful provision shall be made as part
of the terms of such transaction whereby the Holder of each Convertible
Debenture then outstanding shall have the right thereafter to convert such
Convertible Debenture only into:
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<PAGE> 30
(A) in the case of any such transaction that does not constitute a
Common Stock Fundamental Change and subject to funds being legally
available for such purpose under applicable law at the time of such
conversion, the kind and amount of the securities, cash or other property
that would have been receivable upon such recapitalization,
reclassification, consolidation, merger, sale, transfer or share exchange
by a holder of the number of shares of Common Stock issuable upon
conversion of such Convertible Debenture immediately prior to such
recapitalization, reclassification, consolidation, merger, sale, transfer
or share exchange, after giving effect, in the case of any Non-Stock
Fundamental Change (as defined below), to any adjustment in the Conversion
Price in accordance with clause (i) of subsection (c) of this Section 6.4;
and
(B) in the case of any such transaction that constitutes a Common
Stock Fundamental Change, common stock of the kind received by holders of
Common Stock as a result of such Common Stock Fundamental Change in an
amount determined in accordance with clause (ii) of subsection (c) of this
Section 6.4.
(b) The company or the Person formed by such consolidation or
resulting from such merger or which acquired such assets or which acquires the
Company's shares, as the case may be, shall make provision in its certificate
or articles of incorporation or other constituent document to establish such
right. Such certificate or articles of incorporation or other constituent
document shall provide for adjustments which, for events subsequent to the
effective date of such certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article VI. The above provisions shall
similarly apply to successive transactions of the foregoing type.
(c) Notwithstanding any other provision of this Section 6.4 to the
contrary, if any Fundamental Change occurs, then the Conversion Price in effect
will be adjusted immediately after such Fundamental Change as follows:
(i) in the case of a Non-Stock Fundamental Change, the Conversion
Price of the Convertible Debentures immediately following such Non-Stock
Fundamental Change shall be the lower of (A) the Conversion Price in
effect immediately prior to such Non-Stock Fundamental Change, but after
giving effect to any other prior adjustments effected pursuant Section
6.3, and (B) the product of (1) the greater of the Applicable Price and
the then applicable Reference Market Price and (2) a fraction, the
numerator of which is $50 and the denominator of which is (x) the amount
of the Optional Redemption Price set forth in Section 3.2 for $50 in
principal amount of Convertible Debentures if the redemption date were the
date of such Non-Stock Fundamental Change (or, for the twelve-month
periods commencing June 15, 1996, June 15, 1997 and June 15, 1998, the
product of 106.50%, 105.85% and 105.20% respectively, times $50) plus (y)
any then-
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<PAGE> 31
accrued and unpaid interest on $50 principal amount of Convertible
Debentures; and
(ii) in the case of a Common Stock Fundamental Change, the Conversion
Price of the Convertible Debentures immediately following such Common
Stock Fundamental Change shall be the Conversion Price in effect
immediately prior to such Common Stock Fundamental Change, but after
giving effect to any other prior adjustments effected pursuant to Section
6.3, multiplied by a fraction, the numerator of which is the Purchaser
Stock Price and the denominator of which is the Applicable Price;
provided, however, that in the event of a Common Stock Fundamental Change
in which (A) 100% of the value of the consideration received by a holder
of Common Stock is common stock of the successor, acquiror or other third
party (and cash, if any, paid with respect to any fractional interests in
such common stock resulting from such Common Stock Fundamental Change) and
(B) all of the Common Stock shall have been exchanged for, converted into
or acquired for, common stock of the successor, acquiror or other third
party (and any cash with respect to fractional interests), the Conversion
Price of the Convertible Debentures immediately following such Common
Stock Fundamental Change shall be the Conversion Price in effect
immediately prior to such Common Stock Fundamental Change multiplied by a
fraction, the numerator of which is one (1) and the denominator of which
is the number of shares of common stock of the successor, acquiror or
other third party received by a holder of one share of Common Stock as a
result of such Common Stock Fundamental Change.
SECTION 6.5. Notice of Adjustments of Conversion Price.
Whenever the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price and shall
prepare a certificate signed by the Chief Financial Officer or the Treasurer of
the Company setting forth the adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed with the Trustee and the transfer agent
for the Convertible Preferred Securities and the Convertible Debentures; and
(b) a notice stating the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as practicable be
mailed by the Company to all record holders of Convertible Preferred Securities
and the Convertible Debentures at their last addresses as they appear upon the
transfer books of the Company and the Trust.
SECTION 6.6. Prior Notice of Certain Events.
In case:
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<PAGE> 32
(a) the Company shall (i) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in shares
of Common Stock or (B) a dividend payable in cash that would not require an
adjustment pursuant to Section 6.3(c) or (d) or (ii) authorize a tender or
exchange offer that would require an adjustment pursuant to Section 6.3(e);
(b) the Company shall authorize the granting to all holders of Common
Stock of rights or warrants to subscribe for or purchase any shares of stock of
any class or series or of any other rights or warrants;
(c) of any reclassification of Common Stock (other than a subdivision
or combination of the outstanding Common Stock, or a change in par value, or
from par value to no par value, or from no par value to par value), or of any
consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company shall be required, or of the sale or
transfer of all or substantially all of the assets of the Company or of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall (i) if any Convertible Preferred Securities are
outstanding, cause to be filed with the transfer agent for the Convertible
Preferred Securities, and shall cause to be mailed to the holders of record of
the Convertible Preferred Securities, at their last addresses as they shall
appear upon the stock transfer books of the Trust or (ii) shall cause to be
mailed to all Holders at their last addresses as they shall appear in the
Debenture Register, at least 15 days prior to the applicable record or
effective date hereinafter specified, a notice stating (A) the date on which a
record (if any) is to be taken for the purpose of such dividend, distribution,
rights or warrants or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined or (B) the date on which
such reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no
failure to mail such notice or any defect therein or in the mailing thereof
shall affect the validity of the corporate action required to be specified in
such notice).
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<PAGE> 33
SECTION 6.7. Certain Additional Rights.
In case the Company shall, by dividend or otherwise, declare or make
a distribution on the Common Stock referred to in Section 6.3 (c) or 6.3(d)
(including, without limitation, dividends or distributions referred to in the
last sentence of Section 6.3(e)), the Holder of the Convertible Debentures,
upon the conversion thereof subsequent to the close of business on the date
fixed for the determination of stockholders entitled to receive such
distribution and prior to the effectiveness of the Conversion Price adjustment
in respect of such distribution, shall also be entitled to receive for each
share of Common Stock into which the Convertible Debentures are converted, the
portion of the shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash and assets so distributed
applicable to one share of Common Stock; provided, however, that, at the
election of the Company (whose election shall be evidenced by a resolution of
the Board of Directors) with respect to all Holders so converting, the Company
may, in lieu of distributing to such Holder any portion of such distribution
not consisting of cash or securities of the Company, pay such Holder an amount
in cash equal to the fair market value thereof (as determined in good faith by
the Board of Directors, whose determination shall be conclusive and described
in a resolution of the Board of Directors). If any conversion of Convertible
Debentures described in the immediately preceding sentence occurs prior to the
payment date for a distribution to holders of Common Stock which the Holder of
Convertible Debentures so converted is entitled to receive in accordance with
the immediately preceding sentence, the Company may elect (such election to be
evidenced by a resolution of the Board of Directors) to distribute to such
Holder a due bill for the shares of Common Stock, rights, warrants, evidences
of indebtedness, shares of capital stock, cash or assets to which such Holder
is so entitled, provided, that such due bill (a) meets any applicable
requirements of the principal national securities exchange or other market on
which the Common Stock is then traded and (b) requires payment or delivery of
such shares of Common Stock, rights, warrants, evidences of indebtedness,
shares of capital stock, cash or assets no later than the date of payment or
delivery thereof to holders of shares of Common Stock receiving such
distribution.
SECTION 6.8. Trustee Not Responsible for Determining Conversion Price or
Adjustments.
Neither the Trustee nor any Conversion Agent shall at any time be
under any duty or responsibility to any Holder of any Convertible Debenture to
determine whether any facts exist which may require any adjustment of the
Conversion Price, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed, or whether this
supplemental indenture need be entered into. Neither the Trustee nor any
Conversion Agent shall be accountable with respect to the validity or value (or
the kind of account) of any shares of Common Stock or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Convertible Debenture; and neither the Trustee nor any Conversion Agent
makes any
29
<PAGE> 34
representation with respect thereto. Neither the Trustee nor any Conversion
Agent shall be responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property upon the surrender of any
Convertible Debenture for the purpose of conversion.
ARTICLE VII
FORM OF CONVERTIBLE DEBENTURE
SECTION 7.1. Form of Convertible Debenture.
The Convertible Debentures and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the following
forms:
[(FORM OF FACE OF CONVERTIBLE DEBENTURE)]
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT THE FOLLOWING
- -- THIS DEBENTURE IS A BOOK-ENTRY DEBENTURE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS DEBENTURE IS EXCHANGEABLE FOR CONVERTIBLE
DEBENTURES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS DEBENTURE (OTHER THAN A TRANSFER OF THIS DEBENTURE AS A WHOLE
BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE
REGISTERED EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
UNLESS THIS DEBENTURE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
DEBENTURE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
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<PAGE> 35
No. CUSIP NO.
---------- ----------
DEVON ENERGY CORPORATION
6 1/2% CONVERTIBLE JUNIOR SUBORDINATED DEBENTURE
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY
IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION
OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY
UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL
OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK, IF
ANY, ISSUABLE UPON CONVERSION OR EXCHANGE OF SUCH SECURITY EXCEPT (A) TO DEVON
ENERGY CORPORATION OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (D) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE BANK OF NEW YORK, AS
TRUSTEE (OR, IF THIS CERTIFICATE EVIDENCES COMMON STOCK, THE TRANSFER AGENT FOR
THE COMMON STOCK), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED
HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR TRANSFER
AGENT), (E) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT OR (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH
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<PAGE> 36
ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE BANK OF NEW YORK, AS
TRUSTEE (OR, IF THIS CERTIFICATE EVIDENCES COMMON STOCK, SUCH HOLDER MUST
FURNISH TO THE TRANSFER AGENT SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT). IF THIS CERTIFICATE DOES NOT
EVIDENCE COMMON STOCK AND IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE BANK OF NEW YORK, AS TRUSTEE, SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS DEVON MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K)
UNDER THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION
S UNDER THE SECURITIES ACT.
Devon Energy Corporation, an Oklahoma corporation (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to, The Bank of New
York, as Institutional Trustee for Devon Financing Trust or registered assigns,
the principal sum of one-hundred thirty-four million twenty thousand, six
hundred fifty Dollars ($134,020,650)(1) on June 15, 2026, and to pay interest on
said principal sum from July 3, 1996, or from the most recent interest payment
date (each such date, an "Interest Payment Date") to which interest has been
paid or duly provided for, quarterly (subject to deferral as set forth herein)
in arrears on March 15, June 15, September 15, and December 15 of each year
commencing September 15, 1996, at the rate of 6 1/2% per annum until the
principal hereof shall have become due and payable, and on any overdue
principal and premium, if any, and (without
- ---------
(1) In the case of a Global Debenture the bracketed text will be replaced
with the following: "principal amount set forth on Schedule A hereto".
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<PAGE> 37
duplication and to the extent that payment of such interest is enforceable
under applicable law) on any overdue installment of interest at the same rate
per annum compounded quarterly. The amount of interest payable on any Interest
Payment Date shall be computed on the basis of a 360-day year of twelve 30-day
months. Except as provided in the following sentence, the amount of interest
payable for any period shorter than a full quarterly period for which interest
is computed, will be computed on the basis of the actual number of days elapsed
per 30-day month. In the event that any date on which interest is payable on
this Convertible Debenture is not a Business Day, then payment of interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture (referred to on the
reverse hereof) be paid to the person in whose name this Convertible Debenture
(or one or more Predecessor Debentures, as defined in said Indenture) is
registered on the Regular Record Date for such interest installment, which
shall be the close of business on the fifteenth day prior to such Interest
Payment Date unless otherwise provided in the Indenture. Any such interest
installment not punctually paid or duly provided for shall forthwith cease to
be payable to the registered Holders on such Regular Record Date and may be
paid to the Person in whose name this Convertible Debenture (or one or more
Predecessor Debentures) is registered at the close of business on a special
record date to be fixed by the Trustee for the payment of such defaulted
interest, notice whereof shall be given to the registered Holders of the
Convertible Debentures not less than 10 days prior to such special record date,
or may be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Convertible Debentures may
be listed, and upon such notice as may be required by such exchange, all as
more fully provided in the Indenture. The principal of (and premium, if any)
and the interest on this Convertible Debenture shall be payable at the office
or agency of the Trustee maintained for that purpose in any coin or currency of
the United States of America that at the time of payment is legal tender for
payment of public and private debts; provided, however, that payment of
interest may be made at the option of the Company by check mailed to the
registered Holder at such address as shall appear in the Debenture Register.
Notwithstanding the foregoing, so long as the Holder of this Convertible
Debenture is the Institutional Trustee, the payment of the principal of (and
premium, if any) and interest on this Convertible Debenture will be made at
such place and to such account as may be designated by the Institutional
Trustee.
The indebtedness evidenced by this Convertible Debenture is, to the
extent provided in the Indenture, subordinate and junior in right of payment to
the prior payment in full of all Senior Indebtedness, and this Convertible
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Convertible Debenture, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b)
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<PAGE> 38
authorizes and directs the Trustee on his or her behalf to take such action as
may be necessary or appropriate to acknowledge or effectuate the subordination
so provided and (c) appoints the Trustee his or her attorney-in-fact for any
and all such purposes. Each Holder hereof, by his or her acceptance hereof,
hereby waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Indebtedness,
whether now outstanding or hereafter incurred, and waives reliance by each such
holder upon said provisions.
This Convertible Debenture shall not be entitled to any benefit under
the Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.
The provisions of this Convertible Debenture are continued on the
reverse side hereof and such continued provisions shall for all purposes have
the same effect as though fully set forth at this place.
34
<PAGE> 39
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
DEVON ENERGY CORPORATION
By:
---------------------------------
Name:
Title
Attest:
By:
----------------------------
Name:
Title:
35
<PAGE> 40
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Convertible Debentures of the series of
Convertible Debentures described in the within-mentioned Indenture.
Dated:
THE BANK OF NEW YORK,
as Trustee
By
------------------------
Authorized Signatory
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<PAGE> 41
[FORM OF REVERSE OF DEBENTURE]
This Convertible Debenture is one of a duly authorized series of
Debentures of the Company (herein sometimes referred to as the "Debentures"),
specified in the Indenture, all issued or to be issued in one or more series
under and pursuant to an Indenture dated as of July 3, 1996, duly executed and
delivered between the Company and The Bank of New York, as Trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture dated as of
July 3, 1996, between the Company and the Trustee (the Indenture as so
supplemented, the "Indenture"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of the Convertible Debentures. By the
terms of the Indenture, the Debentures are issuable thereunder in series that
may vary as to amount, date of maturity, rate of interest and in other respects
as provided in the Indenture. This series of Debentures is limited in aggregate
principal amount as specified in said First Supplemental Indenture and herein
sometimes referred to as the "Convertible Debentures."
Because of the occurrence and continuation of a Special Event, in
certain circumstances, this Convertible Debenture may become due and payable at
the principal amount specified on the face hereof together with any interest
accrued thereon (the "Redemption Price"). The Redemption Price shall be paid
prior to 12:00 noon, New York City time, on the date of such redemption or at
such earlier time as the Company determines. The Company shall have the right
to redeem this Convertible Debenture at the option of the Company, upon not
less than 30 nor more than 60 days notice, without premium or penalty, in whole
or in part at any time on or after June 18, 1999 (an "Optional Redemption") at
the following prices (expressed as percentages of the principal amount of the
Convertible Debentures) (the "Optional Redemption Price") together with accrued
and unpaid interest, including Additional Interest and Compounded Interest to,
but excluding, the redemption date, if redeemed during the 12-month period
beginning June 15:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
1999 104.55%
2000 103.90
2001 103.25
2002 102.60
2003 101.95
2004 101.30
2005 100.65
</TABLE>
and 100% if redeemed on or after June 15, 2006.
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<PAGE> 42
If Convertible Debentures are redeemed on any March 15, June 15,
September 15, or December 15, accrued and unpaid interest shall be payable to
holders of record on the relevant record date.
So long as the corresponding Convertible Preferred Securities are
outstanding, the proceeds from the redemption of any of the Convertible
Debentures will be used to redeem Convertible Preferred Securities.
If the Convertible Debentures are only partially redeemed by the
Company pursuant to an Optional Redemption, the Convertible Debentures will be
redeemed pro rata or by lot or by any other method utilized by the Trustee;
In the event of redemption of this Convertible Debenture in part
only, a new Convertible Debenture or Convertible Debentures of this series for
the unredeemed portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Convertible Debentures
may be declared, and upon such declaration shall become, due and payable, in
the manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures of each series affected at the
time outstanding, as defined in the Indenture, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying in any manner the rights of the Holders
of the Debentures of such series; provided, however, that no such supplemental
indenture shall (a) extend the fixed maturity of any Debenture of any series,
or reduce the principal amount thereof, or reduce the rate or extend the time
of payment of interest thereon, or reduce any premium payable upon the
redemption thereof, or make any change that adversely affects the right to
convert any Debenture of any series or make any change in the subordination
provisions that adversely affects the rights of any Holders of any Debenture of
any series, without the consent of the Holder of each Debenture so affected, or
(b) reduce the aforesaid percentage of Debentures of such series, the Holders
of which are required to consent to any such supplemental indenture, without
the consent of the Holders of each Debenture of any series then outstanding and
affected thereby. The Indenture also contains provisions permitting the Holders
of a majority in aggregate principal amount of the Debentures of any series at
the time outstanding affected thereby, on behalf of all of the Holders of the
Debentures of such series, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to such series, and its consequences, except a
38
<PAGE> 43
default in the payment of the principal of or premium, if any, or interest on
any Debentures of such series or a failure to convert any Debentures of such
series in accordance with its terms upon an election by the Holders thereof.
Any such consent or waiver by the registered Holder of this Convertible
Debenture (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such Holder and upon all future Holders and owners of this
Convertible Debenture and of any Convertible Debenture issued in exchange
therefor or in place hereof (whether by registration of transfer or otherwise),
irrespective of whether or not any notation of such consent or waiver is made
upon this Convertible Debenture.
No reference herein to the Indenture and no provision of this
Convertible Debenture or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of
and premium, if any, and interest on this Convertible Debenture at the time and
place and at the rate and in the money herein prescribed.
As long as an Event of Default under Section 5.1(a) of the Indenture
shall not have occurred and be continuing, the Company shall have the right at
any time during the term of the Convertible Debentures and from time to time to
extend the interest payment period of such Convertible Debentures for up to 20
consecutive quarters (an "Extended Interest Payment Period"), at the end of
which period the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Convertible
Debentures to the extent that payment of such interest is enforceable under
applicable law). Before the termination of any such Extended Interest Payment
Period, the Company may further extend such Extended Interest Payment Period,
provided that such Extended Interest Payment Period together with all such
further extensions thereof shall not exceed 20 consecutive quarters. At the
termination of any such Extended Interest Payment Period and upon the payment
of all accrued and unpaid interest and any additional amounts then due, the
Company may commence a new Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations
therein set forth, this Convertible Debenture is transferable by the registered
Holder hereof on the Debenture Register of the Company, upon surrender of this
Convertible Debenture for registration of transfer at the office or agency of
the Trustee in the City and State of New York accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company or
the Trustee duly executed by the registered Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Convertible Debentures of
authorized denominations and for the same aggregate principal amount and series
will be issued to the designated transferee or transferees. No service charge
will be made for any such transfer, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
relation thereto.
39
<PAGE> 44
Prior to due presentment for registration of transfer of this
Convertible Debenture, the Company, the Trustee, any paying agent and the
Debenture Registrar may deem and treat the registered holder hereof as the
absolute owner hereof (whether or not this Convertible Debenture shall be
overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the Debenture Registrar) for the purpose of receiving payment
of or on account of the principal hereof and premium, if any, and interest due
hereon and for all other purposes, and neither the Company nor the Trustee nor
any paying agent nor any Debenture Registrar shall be affected by any notice to
the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Convertible Debenture, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.
The Holder of any Convertible Debenture has the right, exercisable at
any time beginning October 1, 1996 through the close of business (New York
time) on June 14, 2026 (or, in the case of a Convertible Debenture called for
redemption, prior to the close of business on the Business Day prior to the
corresponding redemption date), to convert the principal amount thereof (or any
portion thereof that is an integral multiple of $50) into shares of Common
Stock at the initial conversion rate of 1.6393 shares of Common Stock for each
Convertible Debenture (equivalent to a Conversion Price of $30.50 per share of
Common Stock), subject to adjustment under certain circumstances.
To convert a Convertible Debenture, a Holder must (a) complete and
sign a conversion notice substantially in the form attached hereto, (b)
surrender the Convertible Debenture to a Conversion Agent, (c) furnish
appropriate endorsements or transfer documents if required by the Conversion
Agent and (d) pay any transfer or similar tax, if required. Upon conversion, no
adjustment or payment will be made for interest or dividends, but if any Holder
surrenders a Convertible Debenture for conversion on or after the Regular
Record Date for the payment of an installment of interest and prior to the
opening of business on the next Interest Payment Date, then, notwithstanding
such conversion, the interest payable on such Interest Payment Date will be
paid to the registered Holder of such Convertible Debenture on such Regular
Record Date. In such event, such Convertible Debenture, when surrendered for
conversion, need not be accompanied by payment of an amount equal to the
interest payable on such Interest Payment Date on the portion so converted.
However, if a Redemption Date falls between a Regular Record Date and the
subsequent Interest Payment Date, the Holder will be entitled to receive, on
such Redemption Date, the interest accrued to, but excluding, the
40
<PAGE> 45
Redemption Date. The number of shares issuable upon conversion of a Convertible
Debenture is determined by dividing the principal amount of the Convertible
Debenture converted by the Conversion Price in effect on the Conversion Date.
No fractional shares will be issued upon conversion but a cash adjustment will
be made for any fractional interest. The outstanding principal amount of any
Convertible Debenture shall be reduced by the portion of the principal amount
thereof converted into shares of Common Stock.
The Convertible Debentures of this series are issuable only in
registered form without Coupons in denominations of $50 and any integral
multiple thereof.(2) This Global Debenture is exchangeable for Convertible
Debentures in definitive form only under certain limited circumstances set
forth in the Indenture. Convertible Debentures of this series so issued are
issuable only in registered form without Coupons in denominations of $50 and
any integral multiple thereof.(3) As provided in the Indenture and subject to
certain limitations therein set forth, Convertible Debentures of this series
are exchangeable for a like aggregate principal amount of Convertible
Debentures of this series of a different authorized denomination, as requested
by the Holder surrendering the same.
All terms used in this Convertible Debenture that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE
AND THE CONVERTIBLE DEBENTURES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF.
- --------
(2) This text will appear in the case of registered definitive
certificates issued to Institutional Accredited Investors.
(3) This text will appear in the case of a Global Debenture.
41
<PAGE> 46
[FORM OF ELECTION TO CONVERT]
ELECTION TO CONVERT
To: Devon Energy Corporation
The undersigned owner of this Convertible Debenture hereby
irrevocably exercises the option to convert this Convertible Debenture, or the
portion below designated, into Common Stock of DEVON ENERGY CORPORATION in
accordance with the terms of the Indenture referred to in this Convertible
Debenture, and directs that the shares issuable and deliverable upon
conversion, together with any check in payment for fractional shares, be issued
in the name of and delivered to the undersigned, unless a different name has
been indicated in the assignment below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.
Date: ,
-------------- ----
in whole Portions of Convertible Debenture to be
converted ($50 or integral multiples-thereof):
$
----------
-------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or Other
Identifying Number
-------------------------------
-------------------------------
-------------------------------
Signature Guarantee:(4)
-----
- --------
(4) Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Conversion Agent, which requirements
include membership of participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program" as
may be determined by the Conversion Agent in addition to, or in
substitution for, STAMP, all in accordance with the Securities and
Exchange Act of 1934, as amended.
42
<PAGE> 47
ASSIGNMENT
[FORM OF ASSIGNMENT FOR, CONVERTIBLE DEBENTURES
THAT ARE NOT GLOBAL DEBENTURES]
For value received ___________________ hereby sell(s),
assign(s) and transfer(s) unto__________________________
(Please insert Social security or other taxpayer
identification number of assignee.)
the within Security and hereby irrevocably constitutes and appoints
______________ attorney to transfer the said Convertible Debenture on the books
of the Company, with full power of substitution in the premises.
In connection with any transfer of the within Convertible Debenture occurring
prior to the Transfer Restriction Termination Date, the undersigned confirms
that such Security is being transferred:
---
--- To Devon Energy Corporation or a subsidiary
thereof; or
---
--- Pursuant to and in compliance with Rule 144A under
the Securities Act of 1933, as amended; or
---
--- To an Institutional Accredited Investor pursuant
to and in compliance with the Securities Act of
1933, as amended; or
---
--- Pursuant to and in compliance with Regulation S
under the Securities Act of 1933, as amended; or
---
--- Pursuant to and in compliance with Rule 144 under
the Securities Act of 1933, as amended;
43
<PAGE> 48
and unless the box below is checked, the undersigned confirms that such
Security is not being transferred to an "affiliate" of the Company as defined
in Rule 144 under the Securities Act of 1933, as amended (an "Affiliate"):
---
--- The transferee is an Affiliate of the Company.
Dated:
-----------------------------
--------------------------
--------------------------
Signature(s)
Signature(s) must be
guaranteed by a commercial
bank or trust company or a
member firm of a major
stock exchange.
- ----------------------------------
Signature Guarantee
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of this Security in every particular without
alteration or enlargement or any change whatever.
44
<PAGE> 49
[FORM OF SCHEDULE FOR ENDORSEMENTS ON GLOBAL DEBENTURES
TO REFLECT CHANGES IN PRINCIPAL AMOUNT]
Schedule A
Changes to Principal Amount of Global Debentures
<TABLE>
<CAPTION>
================================================================================================================================
Principal Amount of
Securities by which
this Global Security
Is To Be Reduced or
Increased, and Remaining Principal
Reason for Reduction Amount of this Notation
Date or Increase Global Security Made by
- -------- -------------------- ------------------- --------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- -------- -------------------- ------------------- ---------
- --------------------------------------------------------------------------------------------------------------------------------
- -------- -------------------- ------------------- ---------
- --------------------------------------------------------------------------------------------------------------------------------
- -------- -------------------- ------------------- ---------
- --------------------------------------------------------------------------------------------------------------------------------
- -------- -------------------- ------------------- ---------
- --------------------------------------------------------------------------------------------------------------------------------
- -------- -------------------- ------------------- ---------
- --------------------------------------------------------------------------------------------------------------------------------
- -------- -------------------- ------------------- ---------
- --------------------------------------------------------------------------------------------------------------------------------
- -------- -------------------- ------------------- ---------
- --------------------------------------------------------------------------------------------------------------------------------
- -------- -------------------- ------------------- ---------
================================================================================================================================
</TABLE>
45
<PAGE> 50
ARTICLE VIII
ORIGINAL ISSUE OF CONVERTIBLE DEBENTURES
SECTION 8.1. Original Issue of Convertible Debentures.
Convertible Debentures in the aggregate principal amount of up to
$154,123,750 may, upon execution of this First Supplemental Indenture, be
executed by the Company and delivered to the Trustee for authentication, and
the Trustee shall thereupon authenticate and make available for delivery said
Convertible Debentures to or upon the written order of the Company, signed by
its Chairman, its Executive Vice President, its President, or any Vice
President and its Treasurer or an Assistant Treasurer, without any further
action by the Company.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Ratification of Indenture; First Supplemental Indenture Controls.
The Indenture, as supplemented by this First Supplemental Indenture,
is in all respects ratified and confirmed, and this First Supplemental
Indenture shall be deemed part of the Indenture in the manner and to the extent
herein and therein provided. The provisions of this First Supplemental
Indenture shall supersede the provisions of the Indenture to the extent the
Indenture is inconsistent herewith.
SECTION 9.2. Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
First Supplemental Indenture.
SECTION 9.3. Governing Law.
This First Supplemental Indenture and each Debenture shall be deemed
to be a contract made under the internal laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of said State.
46
<PAGE> 51
SECTION 9.4. Separability.
In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Convertible Debentures shall for any reason be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
First Supplemental Indenture or of the Convertible Debentures, but this First
Supplemental Indenture and the Convertible Debentures shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.
SECTION 9.5. Counterparts.
This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
47
<PAGE> 52
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed on the date or dates indicated in
the acknowledgements and as of the day and year first above written.
DEVON ENERGY CORPORATION
By /s/ J. LARRY NICHOLS
----------------------------------
Name: J. Larry Nichols
Title: President & CEO
THE BANK OF NEW YORK,
as Trustee
By /s/ BYRON MERINO
----------------------------------
Name: Byron Merino
Title: Assistant Treasurer
48
<PAGE> 1
EXHIBIT 4.11
====================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
Devon Financing Trust
Dated as of July 3, 1996
====================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation.................................. 4
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................................ 6
SECTION 2.2 Lists of Holders................................................ 6
SECTION 2.3 Reports by the Preferred Guarantee Trustee...................... 7
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee................. 7
SECTION 2.5 Evidence of Compliance with Conditions Precedent................ 7
SECTION 2.6 Events of Default; Waiver....................................... 8
SECTION 2.7 Event of Default; Notice........................................ 8
SECTION 2.8 Conflicting Interests........................................... 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee............ 8
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee................... 10
SECTION 3.3 Not Responsible for Recitals or Issuance of Preferred
Securities Guarantee............................................ 13
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee: Eligibility........................ 13
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Guarantee Trustee............................................... 14
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee....................................................... 14
SECTION 5.2 Waiver of Notice and Demand..................................... 15
SECTION 5.3 Obligations Not Affected........................................ 15
SECTION 5.4 Rights of Holders............................................... 16
SECTION 5.5 Guarantee of Payment............................................ 16
SECTION 5.6 Subrogation..................................................... 16
SECTION 5.7 Independent Obligations......................................... 17
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions...................................... 17
SECTION 6.2 Subordination................................................... 17
ARTICLE VII
TERMINATION
SECTION 7.1 Termination..................................................... 18
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation..................................................... 18
SECTION 8.2 Indemnification................................................. 19
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.......................................... 19
SECTION 9.2 Amendments...................................................... 19
SECTION 9.3 Notices......................................................... 20
SECTION 9.4 Benefit......................................................... 20
SECTION 9.5 Governing Law................................................... 21
</TABLE>
ii
<PAGE> 4
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY
IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION
OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY
UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL
OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO DEVON ENERGY
CORPORATION OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (D) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE BANK OF NEW YORK, AS
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (E) OUTSIDE THE UNITED
STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (F) PURSUANT TO
THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE
SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO THE SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE
144(K) UNDER THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.
<PAGE> 5
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"),
dated as of July 3, 1996, is executed and delivered by Devon Energy
Corporation, an Oklahoma corporation (the "Guarantor"), and The Bank of New
York, as trustee (the "Preferred Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Preferred Securities (as
defined herein) of Devon Financing Trust, a Delaware statutory business trust
(the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of July 3, 1996, among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof up to 2,990,000 preferred securities, having an
aggregate liquidation amount of up to $149,500,000 designated the 6 1/2% Trust
Convertible Preferred Securities.
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth
herein.
WHEREAS, as of the date hereof, the Guarantor is also executing and
delivering a guarantee agreement (the "Common Securities Guarantee") in
substantially identical terms to this Preferred Securities Guarantee for the
benefit of the holders of the Common Securities (as defined herein), except
that if an Event of Default (as defined in the Indenture), has occurred and is
continuing, the rights of holders of the Common Securities to receive Guarantee
Payments under the Common Securities Guarantee are subordinated to the rights
of Holders of Preferred Securities to receive Guarantee Payments under this
Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
2
<PAGE> 6
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) Capitalized terms used in this Preferred Securities Guarantee
but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) terms defined in the Declaration as at the date of execution of
this Preferred Securities Guarantee have the same meaning when
used in this Preferred Securities Guarantee unless otherwise
defined in this Preferred Securities Guarantee;
(c) a term defined anywhere in this Preferred Securities Guarantee
has the same meaning throughout;
(d) all references to "the Preferred Securities Guarantee" or "this
Preferred Securities Guarantee" are to this Preferred Securities
Guarantee as modified, supplemented or amended from time to
time;
(e) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Preferred Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Preferred Securities Guarantee, unless
otherwise defined in this Preferred Securities Guarantee or
unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice versa.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person provided, however, that the Authorized Officer signing an
Officers' Certificate given pursuant to Section 314(a)(4) of the Trust
Indenture Act shall be the principal executive, financial or accounting officer
of such Person.
"Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee
Trustee shall, at any particular time, be principally administered, which
office at the date of execution of this Agreement is located at 101 Barclay
Street, Floor 21 West, New York, New York 10286.
3
<PAGE> 7
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent
not paid or made by the Issuer: (i) any accrued and unpaid Distributions (as
defined in the Declaration) or Liquidated Damages that are required to be paid
on such Preferred Securities to the extent the Issuer shall have funds
available therefor, (ii) the redemption price (the "Redemption Price"), and all
accrued and unpaid Distributions to the date of redemption to the extent the
Issuer has funds available therefor, with respect to any Preferred Securities
called for redemption by the Issuer, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Issuer (other than in connection
with the conversion of all of the Trust Securities into the Guarantor's common
stock or the distribution of Debentures to the Holders in exchange for
Preferred Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid Distributions on
the Preferred Securities to the date of payment, to the extent the Issuer shall
have funds available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer
(in either case, the "Liquidation Distribution"). If an Event of Default (as
defined in the Indenture) has occurred and is continuing, the rights of holders
of the Common Securities to receive payments under the Common Securities
Guarantee Agreement are subordinated to the rights of Holders of Preferred
Securities to receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of July 3, 1996, among the
Guarantor (the "Debenture Issuer") and The Bank of New York, as trustee, as
supplemented by the First Supplemental Indenture dated as of July 3, 1996,
among the Debenture Issuer and the Bank of New York, as trustee.
"Majority in liquidation amount of the Preferred Securities" means,
except as provided in the terms of the Convertible Preferred Securities, or
except as provided by the Trust Indenture Act, a vote by Holder(s), voting
separately as a class, of more than 50% of the
4
<PAGE> 8
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Preferred
Securities.
"Preferred Guarantee Trustee" means The Bank of New York, until a
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice president, any assistant vice president,
any assistant secretary, the treasurer, any assistant treasurer or other
officer of the Corporate Trust Office of the Preferred Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers, and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Securities" means the Common Securities and the Preferred
Securities.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) Upon its public offering pursuant to the registration
requirements of the Securities Act, this Preferred Securities Guarantee will be
subject to the provisions of the Trust Indenture Act that will be required to
be part of this Preferred Securities Guarantee and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders
(a) The Guarantor shall provide the Preferred Guarantee Trustee with
a list, in such form as the Preferred Guarantee Trustee may reasonably require,
of the names and
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addresses of the Holders ("List of Holders") as of such date, (i) within 1
Business Day after January 1 and June 30 of each year, and (ii) at any other
time within 30 days of receipt by the Guarantor of a written request for a List
of Holders as of a date no more than 14 days before such List of Holders is
given to the Preferred Guarantee Trustee provided, that the Guarantor shall not
be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Preferred
Guarantee Trustee by the Guarantor. The Preferred Guarantee Trustee may destroy
any List of Holders previously given to it on receipt of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
Within 60 days after May 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders such reports as are required by Section
313 of the Trust Indenture Act if any, in the form and in the manner provided
by Section 313 of the Trust Indenture Act. The Preferred Guarantee Trustee
shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as are required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
Delivery of such reports, information and documents to the Preferred
Guarantee Trustee is for informational purposes only and the Preferred
Guarantee Trustee's receipt of such shall not constitute constructive notice of
any information contained therein, including the Guarantor's compliance with
any of its covenants hereunder (as to which the Preferred Guarantee Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee that relate to any of the matters set forth
in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
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SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default actually known to a
Responsible Officer of the Preferred Guarantee Trustee, unless such defaults
have been cured before the giving of such notice, provided, that, the Preferred
Guarantee Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Preferred Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received written notice thereof, or a Responsible Officer of the Preferred
Guarantee Trustee charged with the administration of the Declaration shall have
obtained actual knowledge thereof.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders and the Preferred
Guarantee Trustee shall not transfer this Preferred Securities Guarantee to any
Person except a Holder exercising his or her rights pursuant to Section 5.4(b)
or to a Successor Preferred Guarantee Trustee on acceptance by such Successor
Preferred Guarantee Trustee of its appointment to act as Successor Preferred
Guarantee Trustee. The right, title and interest of the Preferred Guarantee
Trustee shall automatically vest in any Successor Preferred Guarantee Trustee,
and such vesting and succession of title shall be effective whether or not
conveyancing documents
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have been executed and delivered pursuant to the appointment of such Successor
Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of
the Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a Responsible Officer
of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Preferred
Securities Guarantee, and shall use the same degree of care and skill in its
exercise thereof as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express provisions of this
Preferred Securities Guarantee, and the Preferred Guarantee Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Preferred
Securities Guarantee, and no implied covenants or obligations shall
be read into this Preferred Securities Guarantee against the
Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Preferred Guarantee Trustee and conforming to the
requirements of this Preferred Securities Guarantee; but in the case
of any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Preferred Guarantee
Trustee, the Preferred Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Preferred Securities Guarantee;
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(ii) the Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee, unless it shall be proved that the Preferred
Guarantee Trustee was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
in liquidation amount of the Preferred Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee, or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred
Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if the
Preferred Guarantee Trustee shall have reasonable grounds for believing
that the repayment of such funds or liability is not reasonably assured to
it under the terms of this Preferred Securities Guarantee or indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely, and shall
be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Preferred Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Preferred Securities
Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or omitting any
action hereunder, the Preferred Guarantee Trustee (unless other evidence
is herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Guarantor.
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(iv) The Preferred Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or re-registration thereof).
(v) The Preferred Guarantee Trustee may consult with counsel of its
selection, and the advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion. Such counsel may be counsel to
the Guarantor or any of its Affiliates and may include any of its
employees. The Preferred Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of this Preferred
Securities Guarantee from any court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Preferred
Securities Guarantee at the request or direction of any Holder, unless
such Holder shall have provided to the Preferred Guarantee Trustee such
security and indemnity, reasonably satisfactory to the Preferred Guarantee
Trustee, against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Preferred Guarantee Trustee's agents,
nominees or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Preferred Guarantee Trustee; provided
that, nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Preferred Guarantee Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in
it by this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Preferred Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or by
or through agents, nominees, custodians or attorneys, and the Preferred
Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders and the signature of the Preferred
Guarantee Trustee or its agents alone shall be sufficient and effective to
perform any such action. No third party shall be required to inquire as to
the authority of the Preferred Guarantee Trustee to so
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act or as to its compliance with any of the terms and provisions of this
Preferred Securities Guarantee, both of which shall be conclusively
evidenced by the Preferred Guarantee Trustee's or its agent's taking such
action.
(x) Whenever in the administration of this Preferred Securities
Guarantee the Preferred Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Preferred Guarantee Trustee (i) may
request instructions from the Holders of a Majority in liquidation amount
of the Preferred Securities, (ii) may refrain from enforcing such remedy
or right or taking such other action until such instructions are received,
and (iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(xi) The Preferred Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, and the Preferred Guarantee Trustee shall not
be responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder.
(xii) The Preferred Securities Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Preferred Securities Guarantee.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, or
in which the Preferred Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Preferred Securities
Guarantee
The recitals contained in this Preferred Securities Guarantee shall
be taken as the statements of the Guarantor, and the Preferred Guarantee
Trustee does not assume any responsibility for their correctness. The Preferred
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Preferred Securities Guarantee.
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ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee: Eligibility
(a) There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by
federal, state, territorial or District of Columbia authority.
If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then, for
the purposes of this Section 4.1(a)(ii), the combined capital
and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee Trustee
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Preferred Guarantee Trustee and delivered to the
Guarantor.
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(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee
and delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery of an instrument of resignation or removal, the Preferred
Guarantee Trustee resigning or being removed may petition any court of
competent jurisdiction for appointment of a Successor Preferred Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all
amounts accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before
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proceeding against the Guarantor, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution,
Liquidated Damages or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Preferred Securities (other
than an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution, Liquidated Damages or other sum payable that results
from the extension of any interest payment period on the Debentures);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the intent
of this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
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SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce such
Preferred Securities Guarantee, any Holder of Preferred Securities may
institute a legal proceeding directly against the Guarantor to enforce the
Preferred Guarantee Trustee's rights under this Preferred Securities Guarantee,
without first instituting a legal proceeding against the Issuer, the Preferred
Guarantee Trustee or any other person or entity. The Guarantor waives any right
or remedy to require that any action be brought first against the Issuer or any
other person or entity before proceeding directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee of payment
and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Preferred Securities
Guarantee; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under
this Preferred Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Preferred Securities Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
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ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Preferred Securities remain outstanding, if there
shall have occurred an Event of Default or an event of default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of Common Stock in connection with the
satisfaction by the Guarantor of its obligations under any employee benefit
plans, (ii) as a result of a reclassification of the Guarantor's capital stock
or the exchange or conversion of one class or series of the Guarantor's capital
stock for another class or series of the Guarantor's capital stock or, (iii)
the purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock of the
Guarantor or the security being converted or exchanged) or make any guarantee
payments with respect to the foregoing, (b) the Guarantor shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees) issued by the Guarantor which
rank pari passu with or junior to the Debentures and (c) the Guarantor shall
not make any guarantee payments with respect to the foregoing (other than
pursuant to this guarantee).
SECTION 6.2 Subordination
This Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to all other liabilities of the Guarantor, (ii) pari passu with the
most senior preferred or preference stock now or hereafter issued by the
Guarantor and with any guarantee now or hereafter entered into by the Guarantor
in respect of any preferred or preference stock of any Affiliate of the
Guarantor, and (iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guarantee shall terminate upon (i) full
payment of the Redemption Price of all Preferred Securities, (ii) upon the
distribution of the Guarantor's common stock to all of the Holders in respect
of the conversion of the Preferred Securities into the Guarantor's common stock
or upon the distribution of the Debentures to the Holders of all of the
Preferred Securities or (iii) upon full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Issuer. Notwithstanding
the
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foregoing, this Preferred Securities Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any Holder must restore
payment of any sums paid under the Preferred Securities or under this Preferred
Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage, liability, expense or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith in accordance
with this Preferred Securities Guarantee and in a manner that such Indemnified
Person reasonably believed to be within the scope of the authority conferred on
such Indemnified Person by this Preferred Securities Guarantee or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters
the Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Guarantor, including information, opinions, reports
or statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The obligation to indemnify as set forth in this Section
8.2 shall survive the termination of this Preferred Securities Guarantee.
When the Preferred Guarantee Trustee incurs expenses or renders
services in connection with an Event of Default specified in Section 5.1(5) or
Section 5.1(6) of the Indenture, the expenses (including the reasonable charges
and expenses of its counsel) and the
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compensation for services are intended to constitute expenses of administration
under any applicable federal or state bankruptcy, insolvency or other similar
law.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Preferred Securities Guarantee may only be amended with the prior approval of
the Holders of at least a Majority in liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus accrued
and unpaid Distributions to the date upon which the voting percentages are
determined) of all the outstanding Preferred Securities. The provisions of
Section 12.2 of the Declaration with respect to meetings of Holders apply to
the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities Guarantee shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
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(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities):
Devon Energy Corporation
20 North Broadway
Suite 1500
Oklahoma City, Oklahoma 73102-8260
Attn: Corporate Secretary
(c) If given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.
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THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and
year first above written.
DEVON ENERGY CORPORATION, as Guarantor
By: /s/ J. LARRY NICHOLS
-----------------------------------
Name: J. Larry Nichols
Title: President & CEO
THE BANK OF NEW YORK, as Preferred
Guarantee Trustee
By: /s/ BYRON MERINO
-----------------------------------
Name: Byron Merino
Title: Assistant Treasurer
<PAGE> 1
EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of July 3, 1996 by and among Devon Energy Corporation, an
Oklahoma corporation ("Devon"), Devon Financing Trust, a special purpose
business trust formed under the laws of the State of Delaware (the "Trust"),
and Morgan Stanley & Co. Incorporated (the "Initial Purchaser") pursuant to
the Placement Agreement, dated as of June 27, 1996 (the "Placement Agreement"),
among Devon, the Trust and the Initial Purchaser. In order to induce the
Initial Purchaser to enter into the Placement Agreement, Devon and the Trust
have agreed to provide the registration rights set forth in this Agreement.
The execution of this Agreement is a condition to the closing under the
Placement Agreement.
Devon and the Trust agree with the Initial Purchaser, (i) for
its benefit as Initial Purchaser and (ii) for the benefit of the holders from
time to time of the Registrable Securities (including the Initial Purchaser)
(each of the foregoing a "Holder" and together the "Holders"), as follows:
Section 1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Placement
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
Affiliate: "Affiliate" means, with respect to any specified
person, (i) any other person directly or indirectly controlling or controlled
by, or under direct or direct common control with, such specified person or
(ii) any officer or director of such other person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a person means the possession, direct
or indirect, of the power (whether or not exercised) to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise.
Applicable Conversion Price: The Applicable Conversion Price
as of any date of determination means the Conversion Price, as may be adjusted
from time to time, in effect as of such date of determination or, if no
Convertible Debentures are then outstanding, the Conversion Price that would be
in effect were Convertible Debentures then outstanding.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to close.
<PAGE> 2
Common Stock: The shares of common stock, $0.10 par value per
share, of Devon and any other shares of common stock as may constitute "Common
Stock" for purposes of the Indenture, including the Underlying Common Stock.
Conversion Price: Conversion Price shall have the meaning
assigned such term in Section 6.1 of the Indenture.
Convertible Debentures: The 6 1/2% Convertible Junior
Subordinated Debentures of Devon to be purchased by the Trust pursuant to the
Debenture Purchase Agreement dated July 3, 1996 between Devon and the Trust.
Convertible Preferred Securities: the 6 1/2% Trust Convertible
Preferred Securities of the Trust.
Damages Accrual Period: See Section 2(e) hereof.
Damages Payment Date: Each payment date under the Declaration,
in the case of Convertible Preferred Securities, each Interest Payment Date (as
defined in the Indenture), in the case of Convertible Debentures, and each
September 15, December 15, March 15 and June 15, in the case of Underlying
Common Stock.
Declaration: the Amended and Restated Declaration of Trust
dated as of July 3, 1996 of the Trust.
Deferral Period: See Section 2(d)(ii) hereof.
Effectiveness Period: The period commencing with the date
hereof and ending on the date that all Registrable Securities have ceased to be
Registrable Securities.
Event: See Section 2(e) hereof.
Event Termination Date: See Section 2(e), hereof.
Event Date: See Section 2(e) hereof.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
Filing Date: See Section 2(a) hereof.
Guarantee: The guarantee by Devon of the Convertible Preferred
Securities pursuant to the Preferred Securities Guarantee Agreement dated as of
the date hereof.
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<PAGE> 3
Holder: See the second paragraph of this Agreement.
Indenture: The Indenture, dated as of July 3, 1996, between
Devon and The Bank of New York, as trustee, pursuant to which the Convertible
Debentures are being issued, as amended by the First Supplemental Indenture
dated July 3, 1996 between Devon and The Bank of New York, as trustee.
Initial Purchaser: Morgan Stanley & Co. Incorporated.
Initial Shelf Registration: See Section 2(a) hereof.
Losses: See Section 6 hereof.
Notice Holder: See Section 2(d)(i) hereof.
Placement Agreement: See the first paragraph of this
Agreement.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any amendment or prospectus
supplement, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Registrable Securities: The Convertible Preferred Securities,
the Guarantee, the Convertible Debentures and the Underlying Common Stock,
whether or not such securities have been converted or exchanged, and at all
times subsequent to any such conversion or exchange, and any security issued
with respect thereto upon any stock dividend, split or similar event until, in
the case of any such security, (i) it is effectively registered under the
Securities Act and disposed of in accordance with the Registration Statement
covering its offering and sale, (ii) it is saleable by the Holder thereof
pursuant to Rule 144(k) or (iii) it is sold to the public pursuant to Rule 144
and, as a result of the event or circumstance described in any of the foregoing
clauses (i) through (iii), the legends with respect to transfer restrictions
required under the Declaration and the Indenture are removed or removable in
accordance with the terms of the Declaration or the Indenture, as the case may
be.
Registration Expenses: See Section 5 hereof.
Registration Statement: Any registration statement of Devon
or the Trust which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration
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<PAGE> 4
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Restricted Securities: As this term is defined in Rule 144.
Rule 144: Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations promulgated by the SEC thereunder.
Selling Period: See Section 2(d)(i) hereof.
Shelf Registration: See Section 2(a) hereof.
Special Counsel: Davis Polk & Wardwell or such other
successor counsel as shall be specified by the Holders of a majority of the
Registrable Securities, the fees and expenses of which will be paid by Devon
pursuant to Section 5 hereof.
Subsequent Shelf Registration: See Section 2(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The Bank of New York (or any successor entity), the
Institutional Trustee under the Declaration, or in the event the Convertible
Debentures are distributed to holders of the Convertible Preferred Securities
upon dissolution of the Trust, the Trustee under the Indenture.
Underlying Common Stock: The Common Stock of Devon into which
the Convertible Debentures are convertible.
Section 2. Shelf Registration.
(a) Shelf Registration. Devon and the Trust shall
prepare and file with the SEC, as soon as practicable but in any event within
ninety (90) days after the latest date of original issuance of the Convertible
Preferred Securities (the "Filing Date"), a
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<PAGE> 5
Registration Statement for an offering to be made on a delayed or continuous
basis pursuant to Rule 415 of the Securities Act (a "Shelf Registration")
registering the resale from time to time by Holders thereof of all of the
Registrable Securities (the "Initial Shelf Registration"). The Initial Shelf
Registration shall be on Form S-3 or another appropriate form permitting
registration of such Registrable Securities for resale by such Holders in the
manner or manners designated by them. Devon and the Trust shall use their best
efforts to cause the Initial Shelf Registration to become effective under the
Securities Act as promptly as is practicable and to keep the Initial Shelf
Registration continuously effective under the Securities Act until the end of
the Effectiveness Period.
(b) If the Initial Shelf Registration or any Subsequent
Shelf Registration, as defined below, ceases to be effective for any reason at
any time during the Effectiveness Period (other than because all Registrable
Securities shall have ceased to be Registrable Securities), Devon and the Trust
shall use their best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall within thirty (30)
days of such cessation of effectiveness amend the Shelf Registration in a
manner reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional Shelf Registration covering all of
the Registrable Securities (a "Subsequent Shelf Registration"). If a
Subsequent Shelf Registration is filed, Devon and the Trust shall use their
best efforts to cause the Subsequent Shelf Registration to become effective as
promptly as is practicable after such filing and to keep such Registration
Statement continuously effective until the end of the Effectiveness Period.
(c) Devon and the Trust shall supplement and amend the
Shelf Registration if required by the rules, regulations or instructions
applicable to the registration form used by Devon and the Trust for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
the Initial Purchaser or by the Trustee on behalf of the Holders of the
Registrable Securities covered by such Registration Statement.
(d) Each Holder of Registrable Securities agrees that if
such Holder wishes to sell its Registrable Securities pursuant to a Shelf
Registration and related Prospectus, it will do so only in accordance with this
Section 2(d). Each Holder of Registrable Securities agrees to give written
notice to Devon and the Trust at least three (3) Business Days prior to any
intended distribution of Registrable Securities under the Shelf Registration,
which notice shall specify the date on which such Holder intends to begin such
distribution and any information with respect to such Holder and the intended
distribution of Registrable Securities by such Holder required to amend or
supplement the Registration Statement with respect to such intended
distribution of Registrable Securities by such Holder. As promptly as is
practicable after the date such notice is provided, and in any event within two
(2) Business Days after such date, Devon and the Trust shall either:
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<PAGE> 6
(i) (A) prepare and file with the Commission a
post-effective amendment to the Shelf Registration or a supplement to the
related Prospectus or a supplement or amendment to any document incorporated
therein by reference or file any other required document so that such
Registration Statement will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and so that, as thereafter
delivered to purchasers of the Registrable Securities being sold thereunder,
such Prospectus will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; (B) provide the Holders of the Registrable Securities who
gave such notice copies of any documents filed pursuant to Section 2(d)(i)(A);
and (C) inform each such Holder that Devon and the Trust have complied with its
obligations in Section 2(d)(i)(A) (or that, if Devon and the Trust have filed a
post-effective amendment to the Shelf Registration which has not yet been
declared effective, Devon and the Trust will notify each such Holder to that
effect, will use their best efforts to secure the effectiveness of such
post-effective amendment and will immediately notify each such Holder pursuant
to Section 2(d)(i)(A) hereof when the amendment has become effective); each
Holder who has given notice of intention to distribute such Holder's
Registrable Securities in accordance with Section 2(d) hereof (a "Notice
Holder") will sell all or any or such Registrable Securities pursuant to the
Shelf Registration and related Prospectus only during the 45-day period
commencing with the date on which Devon and the Trust gives notice, pursuant to
Section 2(d)(i)(A), that the Registration Statement and Prospectus may be used
for such purpose (such 45-day period is referred to as a "Selling Period"); the
Notice Holders will not sell any Restricted Securities pursuant to such
Registration Statement or Prospectus after such Selling Period without giving a
new notice of intention to sell pursuant to Section 2(d) hereof and receiving a
further notice from Devon and the Trust pursuant to Section 2(d)(i)(A) hereof;
or
(ii) in the event (A) of the happening of any
event of the kind described in Section 2(e)(ii), 2(e)(iii) or 2(e)(iv) hereof
or (B) that, in the judgment of Devon, it is advisable to suspend use of the
Prospectus for a discrete period of time due to pending material corporate
developments or similar material events that have not yet been publicly
disclosed and as to which Devon believes public disclosure will be prejudicial
to Devon or the Trust, Devon shall deliver a certificate in writing, signed by
its Chief Executive Officer or Chief Financial Officer, to the Notice Holders
and the Special Counsel to the effect of the foregoing and, upon receipt of
such certificate, each such Notice Holder's Selling Period will not commence
until such Notice Holder's receipt of copies of the supplemented or amended
Prospectus provided for in Section 2(d)(i)(A) hereof, or until it is advised in
writing by Devon and the Trust that the Prospectus may be used, and has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus. Devon and the Trust
will use their best efforts to ensure that the use of the Prospectus may be
resumed,
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<PAGE> 7
and the Selling Period will commence, as promptly as is practicable and, in the
case of a pending development or event referred to in Section 2(d)(ii)(B)
hereof, as soon as the earlier of (x) public disclosure of such pending
material corporate development or similar material event or (y) in the judgment
of Devon, public disclosure of such material corporate development or similar
material event would not be prejudicial to Devon or the Trust. Notwithstanding
the foregoing, Devon and the Trust shall not under any circumstances be
entitled to exercise their right under this Section 2(d)(ii) to defer the
commencement of a Selling Period more than one (1) time in any three (3) month
period or two (2) times in any twelve (12) month period, and the period during
which a Selling Period is suspended shall not exceed thirty (30) days unless
Devon and the Trust shall deliver to such Notice Holders a second notice to the
effect set forth above, which shall have the effect of extending the period
during which such Selling Period is deferred by up to an additional thirty (30)
days, or such shorter period of time as is specified in such second notice;
provided that the period during which a Selling Period is deferred, a "Deferred
Period," shall not exceed sixty (60) days in any twelve (12) month period.
(e) The parties hereto agree that the Holders of Registrable Securities
will suffer damages, and that it would not be feasible to ascertain the extent
of such damages with precision, if (i) the Initial Shelf Registration has not
been filed on or prior to the Filing Date, (ii) prior to the end of the
Effectiveness Period, the SEC shall have issued a stop order suspending the
effectiveness of the Shelf Registration or proceedings have been initiated with
respect to the Shelf Registration under Section 8(d) or 8(e) of the Securities
Act, (iii) the aggregate number of days in any one Deferral Period exceeds the
number permitted pursuant to Section 2(d)(ii) hereof or (iv) the number of
Deferral Periods exceeds the number permitted pursuant to Section 2(d)(ii)
hereof (each of the events of a type described in any of the foregoing clauses
(i) through (iv) are individually referred to herein as an "Event," and the
Filing Date in the case of clause (i), the date on which the effectiveness of
the Shelf Registration has been suspended or proceedings with respect to the
Shelf Registration under Section 8(d) or 8(e) of the Securities Act have been
commenced in the case of clause (ii), the date on which the duration of a
Deferral Period exceeds the number of days permitted by Section 2(d)(ii) hereof
in the case of clause (iii), and the date of the commencement of a Deferral
Period that causes the limit on the number of Deferral Periods under Section
2(d)(ii) hereof to be exceeded in the case of clause (iv), being referred to
herein as an "Event Date"). Events shall be deemed to continue until the
"Event Termination Date," which shall be the following dates with respect to
the respective types of Events: the date the Initial Registration Statement is
filed in the case of an Event of the type described in clause (i), the date
that all stop orders suspending effectiveness of the Shelf Registration have
been removed and the proceedings initiated with respect to the Shelf
Registration under Section 8(d) or (e) of the Securities Act have terminated,
as the case may be, in the case of Events of the types described in clause
(ii), termination of the Deferral Period which caused the limit on the duration
of a Deferred Period set forth in Section 2(d)(ii) to be exceeded in the case
of the commencment of an Event of the type described in clause (iii), and
termination of the
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<PAGE> 8
Deferral Period the commencement of which caused the number of Deferral Periods
permitted by Section 2(d)(ii) to be exceeded in the case of Events of the type
described in clause (iv).
Accordingly, upon the occurrence of any Event and until such
time as there are no Events that have occurred and are continuing (a "Damages
Accrual Period"), commencing on the Event Date on which such Damages Accrual
Period began, Devon agrees to pay, as liquidated damages, and not as a penalty,
an additional amount (the "Liquidated Damages Amount"): (A) (i) to each Holder
of (x) a Convertible Preferred Security or (y) in the event that the
Convertible Debentures are distributed to holders of Convertible Preferred
Securities upon dissolution of the Trust in accordance with the Declaration, a
Convertible Debenture (in each case that is a Notice Holder), accruing at a
rate equal to one-quarter of one percent per annum (25 basis points) on an
amount equal to the liquidation amount of such Convertible Preferred Security
or principal amount of such Convertible Debenture, as the case may be, held by
such Notice Holder and (ii) to each Holder of Underlying Common Stock that is
a Notice Holder, accruing at a rate equal to one-quarter of one percent per
annum (25 basis points) calculated on an amount equal to the product of (x) the
Applicable Conversion Price as of the Business Day immediately prior to the
applicable Damages Payment Date times (y) the number of shares of Common Stock
that are Registrable Securities held by such Notice Holder; and (B) if the
Damages Accrual Period continues for in excess of thirty (30) days, from and
after the end of such thirty (30) day period until the applicable Event
Termination Date, (i) to each Holder of a (x) Convertible Preferred Security or
(y) in the event that the Convertible Debentures are distributed to holders of
Convertible Preferred Securities upon dissolution of the Trust in accordance
with the Declaration, a Convertible Debenture (in each case whether or not a
Notice Holder), accruing at a rate equal to one-quarter of one percent per
annum (25 basis points) on an amount equal to the liquidation amount of such
Convertible Preferred Security or principal amount of such Convertible
Debenture, as the case may be, held by such Holder and (ii) to each Holder of
Underlying Common Stock (whether or not a Notice Holder), accruing at a rate
equal to one-quarter of one percent per annum (25 basis points) calculated on
an amount equal to the product of (x) the Applicable Conversion Price as of the
Business Day immediately prior to the applicable Damages Payment Date times
(y) the number of shares of Common Stock that are Registrable Securities held
by such Holder. Notwithstanding the foregoing, no Liquidated Damages Amounts
shall accrue (1) under clause (A) of the preceding sentence during any period
for which Liquidated Damages Amounts accrue under clause (B) of the foregoing
sentence as to any Registrable Security from and after the earlier of (x) the
date such security is no longer a Registrable Security, and (y) expiration of
the Effectiveness Period. Notwithstanding the foregoing, no Damages Accrual
Period with respect to any Event described in clause (ii) of paragraph 2(e)
shall commence unless and until a Holder or Holders has given notice in
accordance with Section 2(d) hereof. The rate of accrual of the Liquidated
Damages Amount with respect to any period shall not exceed the rate
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provided for in this paragraph notwithstanding the occurrence of multiple
concurrent Events.
Devon shall pay the liquidated damages due on any Convertible
Preferred Security, Convertible Debenture or Underlying Common Stock by
depositing with the Trustee, in trust for the benefit of the Holders of
Convertible Preferred Securities, Convertible Debentures or Underlying Common
Stock, as the case may be, entitled thereto, at least one (1) Business Day
prior to the applicable Damages Payment Date, sums sufficient to pay the
liquidated damages accrued or accruing from and including the last preceding
Damages Payment Date to, but not including, such Damages Payment Date. The
Liquidated Damages Amount due shall be payable on each Damages Payment Date to
the Holders of Registrable Securities entitled thereto holding such Registrable
Securities on the record date for such Damages Payment Date; provided that
accrued Liquidated Damages Amounts shall be paid on the applicable redemption
date upon the redemption of any Convertible Debenture or Convertible Preferred
Security (to the extent accrued with respect to such Convertible Debenture or
Convertible Preferred Security). The Trustee shall be entitled, on behalf of
the Notice Holders and the Holders of Convertible Preferred Securities,
Convertible Debentures or Underlying Common Stock, to seek any available remedy
for the enforcement of this Agreement, including for the payment of such
liquidated damages. Notwithstanding the foregoing, the parties agree that the
sole damages payable for a violation of the terms of this Agreement with
respect to which liquidated damages are expressly provided shall be such
liquidated damages. Nothing shall preclude a Notice Holder or Holder of
Registrable Securities from pursuing or obtaining specific performance or other
equitable relief with respect to this Agreement.
All of Devon's obligations set forth in this Section 2(e)
which are outstanding with respect to any Registrable Security at the time such
security ceases to be a Registrable Security shall survive until such time as
all such obligations with respect to such security have been satisfied in full
(notwithstanding termination of the Agreement pursuant to Section 9(o)).
The parties hereto agree that the liquidated damages provided
for in this Section 2(e) constitute a reasonable estimate of the damages that
may be incurred by Holders of Registrable Securities (other than the Initial
Purchaser) by reason of the failure of the Shelf Registration to be filed or
declared effective or unavailable (absolutely or as a practical matter) for
effecting resales of Registrable Securities in accordance with the provisions
hereof.
Section 3. Registration Procedures. In connection with the
registration obligations of Devon and the Trust under Section 2 hereof, Devon
and the Trust shall effect such registrations to permit the sale of the
Registrable Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto Devon and the Trust shall as
expeditiously as possible:
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<PAGE> 10
(a) Prepare and file with the SEC a Registration
Statement on any appropriate form under the Securities Act available for the
sale of the Registrable Securities by the Holders thereof in accordance with
the intended method or methods of distribution thereof, and use their best
efforts to cause each such Registration Statement to become effective and
remain effective as provided herein; provided, that before filing any such
Registration Statement or Prospectus or any amendments or supplements thereto
(other than documents that would be incorporated or deemed to be incorporated
therein by reference and that Devon or the Trust is required by applicable
securities laws or stock exchange requirements to file) Devon and the Trust
shall furnish to the Initial Purchaser and the Special Counsel of such
offering, if any, copies of all such documents proposed to be filed, which
documents will be subject to the review of the Initial Purchaser and the
Special Counsel, and Devon and the Trust shall not file any such Registration
Statement or amendment thereto or any Prospectus or any supplement thereto
(other than such documents which, upon filing, would be incorporated or deemed
to be incorporated by reference therein and that Devon or the Trust is required
by applicable securities laws or stock exchange requirements to file) to which
the Initial Purchaser or the Special Counsel shall reasonably object in writing
within two (2) full Business Days.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable
period specified in Section 2; cause the related Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the sellers thereof set forth in such Registration Statement
as so amended or such Prospectus as so supplemented.
(c) Promptly notify the Notice Holders, and, following
the giving of notice pursuant to Section 2(d), the Initial Purchaser and the
Special Counsel promptly, and (if requested by any such person) confirm such
notice in writing, (i) when a Prospectus, any Prospectus supplement, a
Registration Statement or a post-effective amendment to a Registration
Statement has been filed with the SEC, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the SEC or any other federal or state governmental
authority for amendments or supplements to a Registration Statement or related
Prospectus or for additional information, (iii) of the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of a Registration Statement or the initiation or threatening
of any proceedings for that purpose, (iv) of the receipt by Devon or the Trust
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose,
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(v) of the existence of any fact or happening of any event which makes any
statement of a material fact in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue or which would require the making of any changes in the
Registration Statement or Prospectus in order that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case
of the Prospectus, it will not contain any untrue statement of a material fact
or omit to state any material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and (vi) of
the determination by Devon that a post-effective amendment to a Registration
Statement would be appropriate.
(d) Use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement, or the lifting
of any suspension of the qualification (or exemption from qualification) of any
of the Registrable Securities for sale in any jurisdiction, at the earliest
possible moment.
(e) If reasonably requested by the Initial Purchaser, the
Special Counsel, or the Holders of a majority of the Registrable Securities
being sold, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to a Registration Statement such information as the
Initial Purchaser, the Special Counsel, or such Holders, in connection with any
offering of Registrable Securities, agree should be included therein as
required by applicable law, and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment as promptly as is
practicable after Devon and the Trust have received notification of the matters
to be incorporated in such Prospectus supplement or post-effective amendment;
provided, that Devon and the Trust shall not be required to take any actions
under this Section 3(e) that are not, in the reasonable opinion of counsel for
Devon, in compliance with applicable law.
(f) Furnish to each selling Holder, the Special Counsel
and the Initial Purchaser, without charge, at least one (1) conformed copy of
the Registration Statement and any amendment thereto, including financial
statements but excluding schedules, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits (unless requested in writing
by such Holder, counsel or Initial Purchaser).
(g) Deliver to each selling Holder, the Special Counsel
and the Initial Purchaser in connection with any offering of Registrable
Securities, without charge, as many copies of the Prospectus or Prospectuses
relating to such Registrable Securities (including each preliminary prospectus)
and any amendment or supplement thereto as such persons may reasonably request;
and Devon and the Trust hereby consent to the use of such Prospectus or each
amendment or supplement thereto by each of the selling Holders
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<PAGE> 12
of Registrable Securities in connection with any offering and sale of the
Registrable Securities covered by such Prospectus or any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable
Securities, to register or qualify or cooperate with the selling Holders and
the Special Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder reasonably
requests in writing; keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the applicable Registration Statement; provided, that
neither Devon nor the Trust will be required to (i) qualify generally to do
business in any jurisdiction where it is not then so qualified or (ii) take any
action that would subject it to general service of process in suits or to
taxation in any such jurisdiction where it is not then so subject.
(i) Cause the Registrable Securities covered by the
applicable Registration Statement to be registered with or approved by such
other governmental agencies or authorities within the United States (except as
may be required solely as a consequence of the nature of such selling Holder,
in which case Devon and the Trust will cooperate in all reasonable respects
with the filing of such Registration Statement and the granting of such
approvals) as may be necessary to enable the selling Holder or Holders thereof
to consummate the disposition of such Registrable Securities.
(j) During any Selling Period (other than during a
Deferral Period), immediately upon the existence of any fact or the occurrence
of any event as a result of which a Registration Statement shall contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, or a Prospectus shall contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, promptly prepare and file a post-
effective amendment to each Registration Statement or a supplement to the
related Prospectus or any document incorporated therein by reference or file
any other required document (such as a Current Report on Form 8-K) that would
be incorporated by reference into the Registration Statement so that the
Registration Statement shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and so that the
Prospectus will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, and, in the case of a
post-
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<PAGE> 13
effective amendment to a Registration Statement, use their best efforts to
cause it to become effective as promptly as is practicable.
(k) Enter into such agreements and take all such other
actions in connection therewith in order to expedite or facilitate the
disposition of such Registrable Securities and in such connection (i) make such
representations and warranties, subject to the ability of Devon and the Trust
to do so, to the Holders of such Registrable Securities with respect to the
business of Devon and its subsidiaries and the Trust, the Registration
Statement, Prospectus and documents incorporated by reference or deemed
incorporated by reference, if any, in each case, in form, substance and scope
as shall be reasonably satisfactory to the Special Counsel and the Holders of a
majority of the Registered Securities being sold, and (ii) deliver such
documents and certificates as may be reasonably requested by the Holders of a
majority of the Registrable Securities being sold and the Special Counsel to
evidence the continued validity of the representations and warranties of Devon
and its subsidiaries and the Trust made pursuant to clause (i) above. The plan
of distribution of the Registration Statement and the Prospectus included
therein shall permit resales of Registrable Securities to be made by selling
securityholders through brokers and dealers. However, neither Devon nor the
Trust will be obligated hereunder to pay the costs and expenses of opinions of
counsel of such selling securityholders, or accountants' "cold comfort" letters
and neither the officers and directors of Devon nor the trustees of the Trust
will be obligated hereunder to participate in marketing efforts on behalf of
such selling securityholders.
(l) If requested in connection with a disposition of
Registrable Securities pursuant to a Registration Statement, make available for
inspection by a representative of the Holders of Registrable Securities being
sold, and any Special Counsel or accountant retained by such selling Holders,
financial and other records, pertinent corporate documents and properties of
Devon and the Trust and its subsidiaries, and cause the executive officers,
directors and employees of the Company and its subsidiaries to supply all
information reasonably requested by any such representative, Special Counsel or
accountant in connection with such disposition; subject to reasonable
assurances by each such person that such information will only be used in
connection with matter relating to such Registration Statement.
(m) Comply with all applicable rules and regulations of
the SEC and make generally available to its securityholders earning statements
(which need not be audited) satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) commencing on the first day of the first fiscal quarter of Devon
commencing after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
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<PAGE> 14
(n) Cooperate with the selling Holders of Registrable
Securities to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such denominations and
registered in such names as the Holders may request.
(o) Provide a CUSIP number for all Registrable Securities
not later than the effective date of the Registration Statement and provide the
Trustee and the transfer agent for the Common Stock with printed certificates
for the Registrable Securities which are in a form eligible for deposit with
the Depositary Trust Company.
(p) Cause all Underlying Common Stock covered by the
Registration Statement to be listed on each securities exchange or quotation
system on which Devon's Common Stock is then listed no later than the date the
Registration Statement is declared effective and, in connection therewith, to
the extent applicable, to make such filings under the Exchange Act (e.g., the
filing of a Registration Statement on Form 8-A) and to have such filings
declared effective thereunder.
(q) Cooperate and assist in any filings required to be
made with the National Association of Securities Dealers, Inc.
Section 4. Holder's Obligations. Each Holder agrees, by
acquisition of the Registrable Securities, that no Holder of Registrable
Securities shall be entitled to sell any of such Registrable Securities
pursuant to a Registration Statement or to receive a Prospectus relating
thereto, unless such Holder has furnished Devon and the Trust with the notice
required pursuant to Section 2(d) hereof (including the information required to
accompany such notice) and, promptly after the request by Devon and the Trust,
such other information regarding such Holder and the distribution of such
Registrable Securities as Devon and the Trust may from time to time reasonably
request. Devon and the Trust may exclude from such registration the
Registrable Securities of any Holder who does not furnish such information
provided above for so long as such information is not so furnished. Each
Holder of Registrable Securities as to which any Registration Statement is
being effected agrees promptly to furnish to Devon and the Trust all
information required to be disclosed in order to make the information
previously furnished to Devon and the Trust by such Holder not misleading. Any
sale of any Registrable Securities by any Holder shall constitute a
representation and warranty by such Holder that the information relating to
such Holder and its plan of distribution is as set forth in the Prospectus
delivered by such Holder in connection with such disposition, that such
Prospectus does not as of the time of such sale contain any untrue statement of
a material fact relating to such Holder or its plan of distribution and that
such Prospectus does not as of the time of such sale omit to state any material
fact relating to such Holder or its plan of distribution necessary to make the
statements in such Prospectus, in the light of the circumstances under which
they were made, not misleading.
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Section 5. Registration Expenses. Subject to Section 3(k)
hereof, all fees and expenses incident to the performance by Devon and the
Trust of or compliance with this Agreement shall be borne by Devon whether or
not any of the Registration Statements become effective. Such fees and
expenses shall include, without limitation, (i) all registration and filing
fees (including, without limitation, fees and expenses (x) with respect to
filings required to be made with the National Association of Securities
Dealers, Inc. and (y) of compliance with federal and state securities or Blue
Sky laws (including, without limitation, fees and disbursements of Special
Counsel in connection with Blue Sky qualifications of the Registrable
Securities under the laws of such jurisdictions as the Holders of a majority of
the Registrable Securities being sold may designate), (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities in a form eligible for deposit with The Depositary Trust
Company and of printing prospectuses if the printing of prospectuses is
requested by the Special Counsel or the Holders of a majority of the
Registrable Securities included in any Registration Statement), (iii)
messenger, telephone and delivery expenses, (iv) reasonable fees and
disbursements of counsel for Devon and the Trust and the Special Counsel in
connection with the Shelf Registration (provided that Devon shall not be liable
for the fees and expenses of more than one separate firm for all parties
participating in any transaction hereunder), and (v) Securities Act liability
insurance obtained by Devon in its sole discretion. In addition, Devon shall
pay the internal expenses of Devon and the Trust (including, without
limitation, all salaries and expenses of officers and employees performing
legal or accounting duties), the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the Underlying Common Stock
and the fees and expenses of any person, including special experts, retained by
Devon or the Trust. Notwithstanding the provisions of this Section 5, each
seller of Registrable Securities shall pay all registration expenses to the
extent Devon is prohibited by applicable Blue Sky laws from paying for or on
behalf of such seller of Registrable Securities.
Section 6. Indemnification.
(a) Indemnification by Devon. Devon shall indemnify and
hold harmless each Holder and each person, if any, who controls any Holder
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act) from and against all losses, liabilities, claims, damages and
expenses (including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action or
claim) (collectively, "Losses"), arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such Losses arise out of or based upon the information relating to
any Holder furnished to Devon in writing by such Holder expressly for use
therein; provided, that Devon shall not be liable to any Holder of
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<PAGE> 16
Registrable Securities (or any person controlling such Holder) to the extent
that any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
preliminary prospectus if either (A) (i) such Holder failed to send or deliver
a copy of the Prospectus with or prior to the delivery of written confirmation
of the sale by such Holder to the person asserting the claim from which such
Losses arise and (ii) the Prospectus would have corrected such untrue statement
or alleged untrue statement or such omission or alleged omission, or (B) (x)
such untrue statement or alleged untrue statement, omission or alleged omission
is corrected in an amendment or supplement to the Prospectus and (y) having
previously been furnished by or on behalf of Devon or the Trust with copies of
the Prospectus as so amended or supplemented, such Holder thereafter fails to
deliver such Prospectus as so amended or supplemented, with or prior to the
delivery of written confirmation of the sale of a Registrable Security to the
person asserting the claim from which such Losses arise. Devon shall also
indemnify each broker-dealer participating in the offering and sale of
Registrable Securities and each person who controls such person (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
to the same extent and with the same limitations as provided above with respect
to the indemnification of the Holders of Registrable Securities.
(b) Indemnification by Holder of Registrable Securities.
Each Holder agrees severally and not jointly to indemnify and hold harmless
Devon and the Trust, Devon's directors, Devon's officers who sign a
Registration Statement, the trustees of the Trust, and each person, if any, who
controls Devon or the Trust (within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act), from and against all losses
arising out of or based upon any untrue statement of a material fact contained
in any Registration Statement, Prospectus or preliminary prospectus or arising
out of or based upon any omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information relating to such Holder so furnished in writing by
such Holder to Devon and the Trust expressly for use in such Registration
Statement or Prospectus. In no event shall the liability of any selling Holder
of Registrable Securities hereunder be greater in amount than the dollar amount
of the proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of
the indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
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<PAGE> 17
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for (a) the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Holders and all
persons, if any, who control any Holder within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act, and (b) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
Devon and the Trust, Devon's directors, Devon's officers who sign a
Registration Statement, the trustees of the Trust and each person, if any, who
controls Devon or the Trust within the meaning of either such Section, and that
all such fees and expenses shall be reimbursed as they are incurred. In the
case of any such separate firm for Devon and the Trust, and such directors,
officers, trustees and control persons of Devon or the Trust, such firm shall
be designated in writing by Devon. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after receipt
by such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) Contribution. To the extent that the indemnification
provided for in this Section 6 is unavailable to an indemnified party under
Section 6(a) or 6(b) hereof in respect of any Losses or is insufficient to hold
such indemnified party harmless, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such Losses, (i) in
such proportion as is appropriate to reflect the relative benefits received by
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<PAGE> 18
the indemnifying party or parties on the one hand and the indemnified party or
parties on the other hand or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the indemnifying party or parties on the one hand
and of the indemnified party or parties on the other hand in connection with
the statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. Benefits received by Devon and the Trust
shall be deemed to be equal to the total net proceeds from the initial
placement (before deducting expenses) of the Convertible Preferred Securities
pursuant to the Placement Agreement. Benefits received by any Holder shall be
deemed to be equal to the value of receiving Registrable Securities that are
registered under the Securities Act. The relative fault of the Holders on the
one hand and Devon and the Trust on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Holders or by Devon or the
Trust and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Holders'
respective obligations to contribute pursuant to this paragraph are several in
proportion to the respective number of Registrable Securities they have sold
pursuant to a Registration Statement, and not joint.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation or by any other method or allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the Losses referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding this
Section 6(d), an indemnifying party that is a selling Holder of Registrable
Securities shall not be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Securities sold by
such indemnifying party and distributed to the public were offered to the
public exceeds the amount of any damages which such indemnifying party has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The indemnity, contribution and expense reimbursement
obligations of Devon and the Trust hereunder shall be in addition to any
liability Devon or the Trust may otherwise have hereunder, under the Placement
Agreement or otherwise. The provisions of this Section 6 shall survive,
notwithstanding any transfer of the Registrable Securities by any Holder or any
termination of this Agreement.
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The indemnity and contribution provisions contained in this
Section 6 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Holder or any person controlling any Holder, or Devon or the Trust,
Devon's officers or Devon's directors or the trustees of the Trust or any
person controlling Devon or the Trust and (iii) the sale of any Registrable
Securities by any Holder.
Section 7. Information Requirements.
(a) Devon and the Trust shall file the reports required
to be filed by it under the Securities Act and the Exchange Act, and if at any
time Devon or the Trust is not required to file such reports, it will, upon the
request of any Holder of Registrable Securities, make publicly available other
information so long as necessary to permit sales of Registrable Securities
pursuant to Rule 144 and Rule 144A under the Securities Act. Devon and the
Trust further covenant that they will cooperate with any Holder of Registrable
Securities and take such further reasonable action as any Holder of Registrable
Securities may reasonably request (including, without limitation, making such
reasonable representations as any such Holder may reasonably request), all to
the extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 and Rule 144A under the Securities Act.
Upon the request of any Holder of Registrable Securities, each of Devon and the
Trust shall deliver to such Holder a written statement as to whether it has
complied with such filing requirements. Notwithstanding the foregoing, nothing
in this Section 7 shall be deemed to require Devon or the Trust to register any
of its securities (other than the Common Stock) under any section of the
Exchange Act.
(b) Devon and the Trust shall file the reports required
to be filed by it under the Exchange Act and shall comply with all other
requirements set forth in the instructions to Form S-3 in order to allow it to
be eligible to file registration statements on Form S-3.
Section 8. Submission to Jurisdiction. Devon and the Trust
irrevocably consent and agree, for the benefit of the Holders, that any legal
action, suit or proceeding against it with respect to its obligations,
liabilities or any other matter arising out of or in connection with this
Agreement may be brought in the courts of the State of New York or the courts
of the United States located in The City of New York and hereby irrevocably
consents and submits to the non-exclusive jurisdiction of each such court in
personam, generally and unconditionally, with respect to any such action, suit
or proceeding for itself and in respect of its properties, assets and revenues.
Each of Devon and the Trust has irrevocably designated, appointed and
empowered C T Corporation System, as its designee, appointee and agent to
receive, accept and acknowledge for and on its behalf, and its properties,
assets and revenues,
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service of any and all legal process, summons, notices and documents which may
be served in any such action, suit or proceeding referred to in the preceding
paragraph of this Section 8 brought in any United States or State court that
may be made on such designee, appointee and agent in accordance with legal
procedures prescribed for such courts. Said designation and appointment shall
be irrevocable until the end of the Effectiveness Period, provided, however,
that if for any reason such designee, appointee and agent hereunder shall cease
to be available to act as such, Devon and the Trust agrees to designate a new
designee, appointee and agent in The City of New York on the terms and for the
purposes of this Section 8 satisfactory to the Initial Purchaser. Each of
Devon and the Trust further hereby irrevocably consents and agrees to the
service of any and all legal process, summons, notices and documents out of any
of the aforesaid courts in any such action, suit, or proceeding by serving a
copy thereof upon the relevant agent for service of process referred to in this
Section 8 (whether or not the appointment of such agent shall for any reason
prove to be ineffective or such agent shall accept or acknowledge such service)
or by mailing copies thereof by registered or certified air mail, postage
prepaid, to each of Devon and the Trust at its address specified in or
designated pursuant to Section 9 of this Agreement. The Company agrees that
the failure of such designee, appointee and agent to give any notice of such
service to it shall not impair or affect in any way the validity of such
service or any judgment rendered in any action or proceeding based thereon.
Nothing herein shall in any way be deemed to limit the ability of the Notice
Holders or the Holders of the Registrable Securities, to serve any such legal
process, summons, notices and documents in any other manner permitted by
applicable law or to obtain jurisdiction over Devon or the Trust or bring
actions, suits or proceedings against Devon or the Trust in such other
jurisdictions, and in such manner, as may be permitted by applicable law. Each
of Devon and the Trust hereby irrevocably and unconditionally waives, to the
fullest extent permitted by law, any objection which it may now, or until the
end of the Effectiveness Period, have to the laying of venue or any of the
aforesaid actions, suits or proceedings arising out of or in connection with
this Agreement brought in the United States Federal courts located in The City
of New York or the courts of the State of New York and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
The provisions of this Section 8 shall survive any termination of this
Agreement, in whole or in part.
Section 9. Miscellaneous.
(a) Remedies. In the event of a breach by Devon or the
Trust of its obligations under this Agreement, each Holder of Registrable
Securities, in addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement, provided, that the sole damages payable for a
violation of the terms of this Agreement for which liquidated
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damages are expressly provided pursuant to Section 2(e) hereof shall be such
liquidated damages. Each of Devon and the Trust agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby further agrees
that, in the event of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would be adequate.
(b) No Conflicting Agreements. Neither Devon nor the
Trust has, as of the date hereof, nor shall, on or after the date of this
Agreement, enter into any agreement with respect to its securities which
conflicts with the rights granted to the Holders of Registrable Securities in
this Agreement. Each of Devon and the Trust represents and warrants that the
rights granted to the Holders of Registrable Securities hereunder do not in any
way conflict with the rights granted to the Holders of the Devon's or the
Trust's securities under any other agreements.
(c) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless Devon and the Trust have obtained
the written consent of Holders of a majority of the then outstanding Underlying
Common Stock constituting Registrable Securities (with Holders of Convertible
Preferred Securities deemed to be the Holders, for purposes of this Section,
of the number of outstanding shares of Underlying Common Stock into which such
Debentures are convertible or exchangeable). Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders of Registrable Securities
whose securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect the rights of other Holders of
Registrable Securities may be given by Holders of at least a majority of the
Registrable Securities being sold by such Holders; provided, that the
provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing and shall be
deemed given (i) when made, if made by hand delivery, (ii) upon confirmation,
if made by telecopier or (iii) one (1) business day after being deposited with
a reputable next-day courier, postage prepaid, to the parties as follows
(provided that with respect to any notice of intention to sell given by a
Holder to Devon and the Trust pursuant to Section 2(d) hereof in accordance
with this Section 9(d) which is given on or after December 24 of any year and
on or prior to January 1 of the next year, such notice shall only be deemed
given upon the earlier of actual receipt of such notice by Devon and the Trust
or the first Business Day next succeeding such January 1):
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(w) if to a Holder of Registrable Securities, at
the most current address given by such Holder to Devon and the
Trust in accordance with the provisions of Section 9(e);
(x) if to Devon, to:
Devon Energy Corporation
20 North Broadway
Suite 1500
Oklahoma City, Oklahoma 73102-8260
Attention: Marian Moon
Telecopy No.: (405) 552-4550
(y) if to the Trust, to:
Devon Financing Trust
c/o Devon Energy Corporation
20 North Broadway
Suite 1500
Oklahoma City, Oklahoma 73102-8260
Attention: Marian Moon
Telecopy No.: (405) 552-4550
; and
(z) if to the Special Counsel, to:
Davis Polk & Wardwell
450 Lexington
New York, New York
Attention: John M. Brandow
Telecopy No.: (212) 450-4800
or to such other address as such person may have furnished to
the other persons identified in this Section 9(d) in writing
in accordance herewith.
(e) Owner of Registrable Securities. Devon and the Trust
will maintain, or will cause its registrar and transfer agent to maintain, a
register with respect to the Registrable Securities in which all transfers of
Registrable Securities of which the Company has received notice will be
recorded. Devon and the Trust may deem and treat the person in whose name
Registrable Securities are registered in such register of Devon and the Trust
as the owner thereof for all purposes, including, without limitation, the
giving of notices under this Agreement.
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<PAGE> 23
(f) Approval of Holders. Whenever the consent or
approval of Holders of a specified percentage of Registrable Securities is
required hereunder, Registrable Securities held by Devon, the Trust or their
respective affiliates (as such term is defined in Rule 405 under the Securities
Act) (other than the Initial Purchaser or subsequent Holders of Registrable
Securities if such subsequent Holders are deemed to be such affiliates solely
by reason of their holdings of such Registrable Securities) shall not be
counted in determining whether such consent or approval was given by the
Holders of such required percentage.
(g) Successors and Assigns. Any person who purchases any
Registrable Securities from an Initial Purchaser shall be deemed, for purposes
of this Agreement, to be an assignee of such Initial Purchaser. This Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties and shall inure to the benefit of and be binding upon each
Holder of any Registrable Securities.
(h) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
(k) Severability. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated thereby, and the parties hereto
shall use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
(l) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and the
registration rights granted by Devon and the Trust
23
<PAGE> 24
with respect to the Registrable Securities sold pursuant to the Placement
Agreement. Except as provided in the Placement Agreement, there are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein, with respect to the registration rights granted by the
Company with respect to the Registrable Securities. This Agreement supersedes
all prior agreements and undertakings among the parties with respect to such
registration rights.
(m) Attorneys' Fees. In any action or proceeding brought
to enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the
court, shall be entitled to recover reasonable attorneys' fees in addition to
any other available remedy.
(n) Further Assurances. Each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things reasonably necessary, proper or
advisable under applicable law, and execute and deliver such documents and
other papers, as may be required to carry out the provisions of this Agreement
and the other documents contemplated hereby and consummate and make effective
the transactions contemplated hereby.
(o) Termination. This Agreement and the obligations of
the parties hereunder shall terminate upon the end of the Effectiveness Period,
except for any liabilities or obligations under Sections 4, 5 or 6 hereof and
the obligations to make payments of and provide for liquidated damages under
Section 2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each of which shall remain in effect in accordance with
their terms.
24
<PAGE> 25
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
DEVON ENERGY CORPORATION
By: /s/ J. LARRY NICHOLS
---------------------------------------
Name: J. Larry Nichols
Title: President & CEO
DEVON FINANCING TRUST
By: /s/ J. LARRY NICHOLS
---------------------------------------
Name: J. Larry Nichols
Title: Regular Trustee
Solely as trustee and not in his
individual capacity
Accepted as of the date first
above written,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ CANDICE KOEDERITZ
-------------------------------
Name: Candice Koederitz
Title: Managing Director
<PAGE> 1
EXHIBIT 12.1
DEVON ENERGY CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
THREE
MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------------------------------------------------------ MARCH 31,
1991 1992 1993 1994 1995 1996
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Earnings (loss) before income taxes
and cumulative effect of change in
accounting principle per
consolidated statements of
operations......................... $(21,144,443) 19,485,817 25,960,772 21,356,711 25,621,899 9,743,926
Add:
Interest expense................... 2,208,782 2,644,063 3,421,742 5,438,911 7,051,142 2,481,156
Estimated interest factor of
operating lease payments......... 177,165 153,384 162,518 173,923 182,129 52,634
------------ ----------- ----------- ----------- ----------- -----------
Earnings (loss), as adjusted(A)...... $(18,758,496) 22,283,264 29,545,032 26,969,545 32,855,170 12,277,716
============ =========== =========== =========== =========== ===========
Fixed charges:
Interest costs incurred............ 2,208,782 2,644,063 3,421,742 5,438,911 7,051,142 2,461,156
Estimated interest factor of
operating lease payments......... 177,165 153,384 162,518 173,923 182,129 52,634
------------ ----------- ----------- ----------- ----------- -----------
Total fixed charges(B)............... $ 2,385,947 2,797,447 3,584,260 5,612,834 7,233,271 2,533,790
============ =========== =========== =========== =========== ===========
Radio of earnings to fixed
charges(A)/(B)..................... -- 7.97 8.24 4.80 4.54 4.85
============ =========== =========== =========== =========== ===========
Amount of fixed charges in excess of
earnings(B-A)...................... $ 21,144,443 -- -- -- -- --
============ =========== =========== =========== =========== ===========
</TABLE>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AS ADJUSTED FOR THE CONVERTIBLE PREFERRED SECURITIES OFFERING
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
<S> <C> <C>
Earnings as adjusted (as calculated above)(1)..................... $32,855,170 12,277,716
=========== ===========
Fixed charges (as shown above).................................... 7,233,271 2,533,790
Reduction of interest expense as a result of use of funds received
from Convertible Preferred Securities issued to retire long-term
debt............................................................ (6,475,748) (2,306,459)
Distribution requirements on the Convertible Preferred
Securities...................................................... 9,717,500 2,429,375
Amortization of costs incurred in connection with the Convertible
Preferred Securities offering................................... 166,167 41,542
----------- -----------
Fixed charges adjusted for the Convertible Preferred Securities
offering........................................................ $10,641,190 2,698,248
=========== ===========
Ratio of earnings to fixed charges adjusted for the Convertible
Preferred Securities offering................................... 3.09 4.55
=========== ===========
</TABLE>
- ---------------
(1) Earnings for the year 1995 do not include assumed interest earnings on the
excess of funds received from the issuance of the Convertible Preferred
Securities above the average long-term debt outstanding during the year.
Such excess was approximately $47.4 million.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Devon Energy Corporation:
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus. Our
report covering the 1993 consolidated financial statements of Devon refers to a
change in the method of accounting for income taxes.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Oklahoma City, Oklahoma
August 8, 1996
<PAGE> 1
EXHIBIT 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
------------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
------------------------------
DEVON ENERGY CORPORATION
(Exact name of obligor as specified in its charter)
Oklahoma 73-1474008
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
20 North Broadway
Suite 1500
Oklahoma City, Oklahoma 73102-8260
(Address of principal executive offices) (Zip code)
------------------------------
6 1/2 Convertible Junior Subordinated Debentures
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE
24 OF THE COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
- 2 -
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration
Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
- 3 -
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 8th day of August, 1996.
THE BANK OF NEW YORK
By: /s/ MICHAEL WHITE
---------------------------
Name: Michael White
Title: Assistant Treasurer
- 4 -
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business
March 31, 1996, published in accordance with a call made by the
Federal Reserve Bank of this District pursuant to the provisions of
the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 2,461,550
Interest-bearing balances .......... 835,563
Securities:
Held-to-maturity securities ........ 802,064
Available-for-sale securities ...... 2,051,263
Federal funds sold in domestic of-
fices of the bank:
Federal funds sold ................... 3,885,475
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................27,820,159
LESS: Allowance for loan and
lease losses ..............509,817
LESS: Allocated transfer risk
reserve......................1,000
Loans and leases, net of unearned
income, allowance, and reserve 27,309,342
Assets held in trading accounts ...... 837,118
Premises and fixed assets (including
capitalized leases) ................ 614,567
Other real estate owned .............. 51,631
Investments in unconsolidated
subsidiaries and associated
companies .......................... 225,158
Customers' liability to this bank on
acceptances outstanding ............ 800,375
Intangible assets .................... 436,668
Other assets ......................... 1,247,908
-----------
Total assets ......................... $41,558,682
===========
LIABILITIES
Deposits:
In domestic offices ................ $18,851,327
Noninterest-bearing .......7,102,645
Interest-bearing .........11,748,682
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 10,965,604
Noninterest-bearing ..........37,855
Interest-bearing .........10,927,749
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ............ 1,224,886
Securities sold under agreements
to repurchase .................... 29,728
Demand notes issued to the U.S.
Treasury ........................... 118,870
Trading liabilities .................. 673,944
Other borrowed money:
With original maturity of one year
or less .......................... 2,713,248
With original maturity of more than
one year ......................... 20,780
Bank's liability on acceptances exe-
cuted and outstanding .............. 803,292
Subordinated notes and debentures .... 1,022,860
Other liabilities .................... 1,590,564
-----------
Total liabilities .................... 38,015,103
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 2,078,197
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 3,197
Cumulative foreign currency transla-
tion adjustments .................. ( 5,765)
-----------
Total equity capital ................ 3,543,579
-----------
Total liabilities and equity
capital ........................... $41,558,682
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of
the above-named bank do hereby declare that this Report of
Condition has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of
this Report of Condition and declare that it has been examined by
us and to the best of our knowledge and belief has been prepared
in conformance with the instructions issued by the Board of
Governors of the Federal Reserve System and is true and correct.
)
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
<PAGE> 1
EXHIBIT 25.2
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
------------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
------------------------------
DEVON FINANCING TRUST
(Exact name of obligor as specified in its charter)
Delaware 73-6294711
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
20 North Broadway
Suite 1500
Oklahoma City, Oklahoma 73102-8260
(Address of principal executive offices) (Zip code)
------------------------------
Convertible Preferred Securities
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE
24 OF THE COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
- 2 -
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
- 3 -
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 8th day of August, 1996.
THE BANK OF NEW YORK
By: /s/ ROBERT F. MCINTYRE
-------------------------------
Name: Robert F. McIntyre
Title: Vice President
- 4 -
<PAGE> 1
EXHIBIT 25.3
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
------------------------
DEVON ENERGY CORPORATION
(Exact name of obligor as specified in its charter)
Oklahoma 73-1474008
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
20 North Broadway
Suite 1500
Oklahoma City, Oklahoma 73102-8260
(Address of principal executive offices) (Zip code)
------------------------
Preferred Securities Guarantee of Devon Financing Trust
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
- -----------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------
<TABLE>
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE
24 OF THE COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
- 2 -
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
- 3 -
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 8th day of August, 1996.
THE BANK OF NEW YORK
By: /S/MICHAEL WHITE
------------------------
Name: MICHAEL WHITE
Title: ASSISTANT TREASURER
- 4 -
<PAGE> 5
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 2,461,550
Interest-bearing balances .......... 835,563
Securities:
Held-to-maturity securities ........ 802,064
Available-for-sale securities ...... 2,051,263
Federal funds sold in domestic of-
fices of the bank:
Federal funds sold ................... 3,885,475
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................27,820,159
LESS: Allowance for loan and
lease losses ..............509,817
LESS: Allocated transfer risk
reserve......................1,000
Loans and leases, net of unearned
income, allowance, and reserve 27,309,342
Assets held in trading accounts ...... 837,118
Premises and fixed assets (including
capitalized leases) ................ 614,567
Other real estate owned .............. 51,631
Investments in unconsolidated
subsidiaries and associated
companies .......................... 225,158
Customers' liability to this bank on
acceptances outstanding ............ 800,375
Intangible assets .................... 436,668
Other assets ......................... 1,247,908
-----------
Total assets ......................... $41,558,682
===========
LIABILITIES
Deposits:
In domestic offices ................ $18,851,327
Noninterest-bearing .......7,102,645
Interest-bearing .........11,748,682
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 10,965,604
Noninterest-bearing ..........37,855
Interest-bearing .........10,927,749
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ............ 1,224,886
Securities sold under agreements
to repurchase .................... 29,728
Demand notes issued to the U.S.
Treasury ........................... 118,870
Trading liabilities .................. 673,944
Other borrowed money:
With original maturity of one year
or less .......................... 2,713,248
With original maturity of more than
one year ......................... 20,780
Bank's liability on acceptances exe-
cuted and outstanding .............. 803,292
Subordinated notes and debentures .... 1,022,860
Other liabilities .................... 1,590,564
-----------
Total liabilities .................... 38,015,103
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 2,078,197
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 3,197
Cumulative foreign currency transla-
tion adjustments .................. ( 5,765)
-----------
Total equity capital ................ 3,543,579
-----------
Total liabilities and equity
capital ........................... $41,558,682
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith ) ..................................................
