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EXHIBIT 2
STOCK RIGHTS AND RESTRICTIONS AGREEMENT
STOCK RIGHTS AND RESTRICTIONS AGREEMENT, dated as of December 31, 1996,
between DEVON ENERGY CORPORATION, an Oklahoma corporation ("Devon"), and
XXXX-XxXXX CORPORATION, a Delaware corporation ("Xxxx-XxXxx").
RECITALS:
A. As of the Effective Date (as defined below) and after giving effect to
the Closing (as defined below), Xxxx-XxXxx will be the record and Beneficial
Owner (as defined below) of 9,954,000 Voting Shares (as defined below) (together
with any additional Voting Shares which Xxxx-XxXxx may from time to time own of
record or Beneficially Own, the "Shares"), consisting of common stock, par value
$.10 per share, of Devon (the "Common Stock"), representing 30.9695% of the
outstanding Voting Shares and 26.1938% of the Fully Diluted Shares (as
defined below) as of the Effective Date and after giving effect to the Closing.
B. As of the Effective Date and after giving effect to the Closing, the
number of directors constituting the whole Board of Directors of Devon is nine
(9) and the following persons are the Xxxx-XxXxx Designees (as defined below):
Xxxx X. Xxxxxxx, Xxx X. XxXxxxxx and Xxxxxxxx X. Xxxxxx.
C. The Boards of Directors of Devon and Xxxx-XxXxx deem it advisable to
establish certain rights and restrictions with respect to the Shares.
ACCORDINGLY, premises considered, the parties have entered into this
Agreement.
1. DEFINITIONS. For purposes of this Agreement, the following terms have
the meanings indicated:
(a) "Acquiring Person" shall have the meaning assigned to such term in
the Rights Plan, as in effect on the date hereof.
(b) "Affiliate" shall have the meaning assigned to such term in Rule
12b-2 under the Exchange Act, as in effect on the date hereof; provided
that, for purposes of this Agreement, neither Xxxx-XxXxx nor any Affiliate
of Xxxx-XxXxx shall be deemed to be an Affiliate of Devon.
(c) "Applicable Percentage" shall mean, for the period from the date
hereof until the second anniversary of the date hereof, 26.1938% and,
thereafter, 31.1938%, subject, in each case, to adjustment in accordance
with Section 2.4(d)(i)(A).
(d) "Beneficially Own" shall have the meaning assigned to such term in
Rule 13d-3 under the Exchange Act, as in effect on the date hereof.
"Beneficial Owner" and "Beneficial Ownership" shall have correlative
meanings.
(e) "Business Combination Transaction" shall mean a merger,
consolidation, Share Acquisition (as defined below), recapitalization or
other transaction in which Devon is a constituent corporation or to which
Devon is a party, and pursuant to which the Voting Shares are exchanged for
cash, securities or other property, or a sale of all or substantially all
of the assets of Devon and its Subsidiaries taken as a whole; provided that
none of the following shall be deemed a Business Combination Transaction
for purposes of this Agreement: (i) a merger, consolidation, Share
Acquisition, recapitalization or other transaction in which the Beneficial
Ownership of the capital stock of Devon or the surviving corporation
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of the transaction (or of the ultimate parent of Devon or of such surviving
corporation) immediately after the consummation of such transaction is
substantially the same as the Beneficial Ownership of the capital stock of
Devon immediately prior to the consummation of the transaction or (ii) a
merger (A) in which Devon is the surviving corporation, (B) in which all
Voting Shares immediately prior to the consummation of such merger remain
outstanding immediately after the consummation thereof, (C) as a result of
the consummation of which no Person will Beneficially Own a majority of the
Fully Diluted Shares and (D) following the consummation of which the
Continuing Directors will represent a majority of the Board of Directors of
Devon.
(f) "Closing" shall have the meaning assigned to such term in the
Merger Agreement.
(g) "Common Stock" shall have the meaning set forth in paragraph A of
this Agreement.
(h) "Continuing Director" shall mean (i) any member of the Board of
Directors of Devon, while such person is a member of such Board of
Directors, (A) who is not an Acquiring Person, or an Affiliate or Associate
(each as defined in the Rights Plan as in effect on the date hereof) of an
Acquiring Person or a representative or nominee of an Acquiring Person or
of any such Affiliate or Associate, and (B) who (1) was a member of the
Board of Directors of Devon prior to the Effective Time or (2) is
recommended or elected to the Board of Directors by a majority of the
Continuing Directors to fill a vacancy arising as a result of an increase
in the number of directors of Devon occurring after the date hereof, and
(ii) any successor of a Continuing Director, while such successor is a
member of the Board of Directors of Devon, who is not an Acquiring Person,
or an Affiliate or Associate of an Acquiring Person or a representative or
nominee of an Acquiring Person or of any such Affiliate or Associate and is
recommended or elected to succeed the Continuing Director by a majority of
the Continuing Directors. Notwithstanding anything to the contrary in this
definition, for purposes of this Agreement, the Xxxx-XxXxx Designees shall
not be considered Continuing Directors.
(i) "Current Market Price" shall mean, as of any date of
determination, with respect to Voting Shares or any other security to be
valued hereunder (the Voting Shares and/or such other security, the
"Valuation Securities"):
(i) if the Valuation Securities are listed or admitted to trading
on a national securities exchange, the closing price on such exchange's
consolidated or composite tape reporting transactions thereon (or any
successor composite tape reporting transactions on national securities
exchanges) or, if such a composite tape shall not be in use or shall not
report transactions in the Valuation Securities, the last reported sales
price regular way on the principal national securities exchange on which
the Valuation Securities are listed or admitted to trading (which shall
be the national securities exchange on which the greatest number of
Valuation Securities has been traded during the 20 consecutive trading
days preceding the date of determination), or, if there is no
transaction on any such day in any such situation, the mean of the bid
and asked prices on such day; or
(ii) if the Valuation Securities are not listed or admitted to
trading on any such exchange, the closing price, if reported, or, if the
closing price is not reported, the average of the closing bid and asked
prices, as reported by the automated quotation system of the National
Association of Securities Dealers, Inc. or a similar source selected
from time to time by Devon for this purpose; or
(iii) if all of the prices referred to in clauses (i) and (ii) are
unavailable, including because the Valuation Securities are not traded
on a national securities exchange, an automated quotation system of the
National Association of Securities Dealers, Inc. or a similar source,
the Current Market Price shall be deemed to be the value of the
Valuation Securities as determined by agreement between Devon and
Xxxx-XxXxx or, if Devon and Xxxx-XxXxx are unable to agree, by an
investment banking firm of national reputation selected by Xxxx-XxXxx
with the consent of a majority of the Continuing Directors, which
consent shall not be unreasonably withheld. Any determination of the
value of the Valuation Securities shall be made within three business
days of the date of selection of the investment banking firm. The costs
and expenses of any such investment banking firm shall be borne by
Devon.
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(j) "Devon" shall have the meaning set forth in the first paragraph of
this Agreement.
(k) "Distribution Date" shall have the meaning assigned to such term
in the Rights Plan, as in effect on the date hereof.
(l) "Effective Date" shall have the meaning assigned to such term in
the Merger Agreement.
(m) "Equity Market Capitalization" shall mean, with respect to any
Person in connection with the commencement of an exchange offer, the amount
determined by multiplying (i) the number of outstanding "equity securities"
(as defined in Section 3 of the Exchange Act) of such Person required to be
registered pursuant to Section 12 of the Exchange Act at the time of the
determination by (ii) the Current Market Price of such equity securities at
such time of determination.
(n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, as in effect from time to time.
(o) "Exchangeable Security" shall mean a security of any type,
including but not limited to debt, equity, warrants or other rights, issued
by Xxxx-XxXxx at any time after the second anniversary of this Agreement
and which includes or represents the right to acquire Voting Shares from
Xxxx-XxXxx upon exchange, conversion or exercise thereof.
(p) "Fully Diluted Shares" shall mean, at any time, the sum of (i) the
Voting Shares then outstanding plus (ii) the number of Voting Shares
reserved for issuance or issuable in connection with the exercise, exchange
or conversion of employee stock options or securities of Devon then
outstanding which are exercisable or exchangeable for Voting Shares or are
convertible into Voting Shares.
(q) "Merger Agreement" shall mean the Agreement and Plan of Merger
dated October , 0000 xxxxx Xxxxx, Xxxxx Energy Corporation (Nevada),
Xxxx-XxXxx, Xxxx-XxXxx Oklahoma Corporation and Xxxx-XxXxx Sub, Inc.
(r) "Person" shall mean any individual, firm, partnership,
association, group (as such term is defined in Section 13(d)(3) of the
Exchange Act, as in effect on the date hereof), corporation, trust,
business trust or other entity and includes any successor (by merger or
otherwise) of any such entity.
(s) "Public Offering" shall mean a firm commitment underwritten public
offering pursuant to a registration statement which has been declared
effective by the SEC under the Securities Act.
(t) "Qualified Tender Offer" shall mean a tender or exchange offer for
Voting Shares (i) that is for more than 50% of the then outstanding Voting
Shares, (ii) that is for a price per Voting Share at least 10% greater than
the average of the Current Market Prices of the Voting Shares determined
for each of the 10 consecutive trading days ending on the last full trading
day prior to the date of the public announcement of such tender or exchange
offer, (iii) the Tender Offer Statement on Schedule 14D-1 filed by the
Person making such tender or exchange offer for which discloses that such
Person has available to it, or will have available to it upon consummation
of such tender or exchange offer, the consideration to be paid or exchanged
in such tender or exchange offer for the Voting Shares tendered therein,
and (iv) in the case of an exchange offer, (A) in which the Person making
such exchange offer has, as of the date of commencement of such exchange
offer, an Equity Market Capitalization equal to or greater than the Equity
Market Capitalization of Devon, or (B) if the Equity Market Capitalization
of such Person is less than the Equity Market Capitalization of Devon,
which otherwise is a credible exchange offer.
(u) "Rights" shall mean, at any time, the rights to purchase capital
stock of Devon issued under the Rights Plan.
(v) "Rights Plan" shall mean the Rights Agreement dated as of April
17, 1995 between Devon and The First National Bank of Boston, as rights
agent, as amended, supplemented or otherwise modified from time to time,
and any successor agreement or plan to which Devon shall be a party.
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(w) "Rule 144" shall mean Rule 144 adopted by the SEC under the
Securities Act, or any successor rule.
(x) "SEC" shall mean the Securities and Exchange Commission.
(y) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, as in effect from time to time.
(z) "Share Acquisition" shall mean a share acquisition under Section
1090.1 of the Oklahoma General Corporation Act (or any successor provision
of the Oklahoma General Corporation Act).
(aa) "Subsidiary" shall mean, with respect to any Person, any other
Person of which at least a majority of the voting power of the voting
equity securities or voting equity interest is owned, directly or
indirectly, by such Person.
(ab) "Xxxx-XxXxx" shall have the meaning set forth in the first
paragraph hereof; provided, however, that the term "Xxxx-XxXxx" shall
include Xxxx-XxXxx and its Affiliates unless the context otherwise
requires.
(ac) "Xxxx-XxXxx Designees" shall have the meaning set forth in
Section 2.3(b) hereof.
(ad) "Transfer" shall have the respective meanings set forth in
Section 2.5 hereof.
(ae) "Voting Shares" shall mean the Common Stock and any other
securities of Devon having voting power under ordinary circumstances with
respect to the election of directors of Devon.
2. SHARE RIGHTS AND RESTRICTIONS.
2.1 Limitation on Certain Business Combination Transactions. (a) Except as
otherwise permitted by this Agreement, Xxxx-XxXxx agrees that Xxxx-XxXxx shall
not, during the period from the date of this Agreement until its termination,
engage in any Business Combination Transaction with Devon, unless such Business
Combination Transaction shall have been approved by a majority of the Continuing
Directors.
(b) Except as otherwise permitted by this Agreement, Xxxx-XxXxx agrees that
Xxxx-XxXxx shall not, during the period from the date of this Agreement until
its termination, (i) request or solicit any Person (A) to make a tender or
exchange offer for Voting Shares or (B) to make a proposal for a Business
Combination Transaction, or (ii) make any proposal, written or oral, to Devon,
the Board of Directors of Devon or the shareholders of Devon with respect to a
Business Combination Transaction, a tender offer or exchange offer for Voting
Shares, or a liquidation of Devon, which proposal would be required by
applicable law to be publicly disclosed, unless, in either case referred to in
clause (i) or (ii) above, a majority of the Continuing Directors shall have
requested Xxxx-XxXxx to take such action.
(c) In the event that Xxxx-XxXxx shall receive any proposal from any Person
with respect to any matter referred to in Section 2.1(b), either with respect to
a proposal to be made by Xxxx-XxXxx or such other Person, Xxxx-XxXxx shall
immediately notify Devon thereof.
(d) In the event that Xxxx-XxXxx shall receive any proposal from any Person
to acquire Voting Shares from Xxxx-XxXxx which would exceed 5% of the
outstanding Voting Shares, Xxxx-XxXxx shall immediately notify Devon; provided
that Xxxx-XxXxx shall not be required to provide such notice if the proposal is
in connection with a Transfer permitted under Section 2.5 hereof.
2.2 [Intentionally omitted.]
2.3 Devon Board of Directors. (a) From and after the date hereof until the
termination of this Agreement, the number of directors constituting the Board of
Directors of Devon shall not be decreased to a number less than six (6), without
the prior written consent of Xxxx-XxXxx.
(b) From and after the date hereof until the termination of this Agreement,
in connection with each election of directors of Devon, whether at an annual or
special meeting, Devon will nominate in accordance with its procedures for the
nomination of directors as provided in its by-laws and applicable law, a number
of persons designated by Xxxx-XxXxx (all such persons who, at any time, are or
were designated by Xxxx-
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XxXxx for purposes of this Agreement are referred to herein as the "Xxxx-XxXxx
Designees") such that, after giving effect to the election of such persons to
the Board of Directors of Devon, the number of Xxxx-XxXxx Designees then serving
on the Board of Directors of Devon shall equal the product (rounded to the
nearest whole number, but, in any event, not less than one) of (i) the total
number of directors constituting the entire Board of Directors multiplied by
(ii) the lesser of (A) 36% and (B) the percentage that the aggregate number of
Voting Shares owned by Xxxx-XxXxx (determined without regard to Shares acquired
as permitted by Section 2.4(d)(i)(B) hereof) bears to the total number of Voting
Shares then outstanding (such lesser percentage, the "Director Percentage").
(c) If at any time the Director Percentage shall decrease so that
Xxxx-XxXxx would be entitled to designate fewer directors than are currently
serving as Xxxx-XxXxx Designees, Xxxx-XxXxx shall cause one or more of the
Xxxx-XxXxx Designees serving as Devon directors to resign so that the percentage
of the board of directors consisting of Xxxx-XxXxx Designees does not exceed the
Director Percentage. Further, upon termination of this Agreement in accordance
with its terms, Xxxx-XxXxx shall cause all Xxxx-XxXxx Designees then serving as
directors of Devon to resign immediately.
(d) (i) In the event that any Xxxx-XxXxx Designee shall cease to serve as a
director for any reason (other than as set forth in Section 2.3(c)), the vacancy
resulting thereby shall be filled by the remaining directors of the Company in
accordance with its Certificate of Incorporation, by-laws and applicable law by
a new Xxxx-XxXxx Designee and such new Xxxx-XxXxx Designee shall thereafter
serve until the expiration of the term of the Xxxx-XxXxx Designee replaced by
such new Xxxx-XxXxx Designee.
(ii) If there shall exist at any time any vacancy or vacancies on the Board
of Directors of Devon as a result of any increase in the number of directors
that constitutes the entire Board of Directors of Devon, which the directors of
Devon then in office intend to fill in accordance with Devon's Certificate of
Incorporation, by-laws and applicable law, Xxxx-XxXxx shall be entitled to
designate one or more persons as Xxxx-XxXxx Designees to fill such vacancy or
vacancies if and to the extent necessary so that, after giving effect to the
filling of such vacancy or vacancies, the number of Xxxx-XxXxx Designees then
serving on the Board of Directors of Devon shall equal the Director Percentage.
Devon agrees to take all actions appropriate or necessary to ensure that any
Xxxx-XxXxx Designees designated pursuant to the preceding sentence are appointed
to the Board of Directors to fill any such vacancy or vacancies filled by the
Board of Directors of Devon as provided in the preceding sentence.
(e) Notwithstanding anything to the contrary contained herein, no
Xxxx-XxXxx Designee may be a person who previously has been a director of Devon
and was properly removed for cause from the Board of Directors of Devon or a
person who has been convicted of a felony or a crime involving moral turpitude.
(f) The Xxxx-XxXxx Designees will be furnished with all information that is
provided to all other directors of Devon (in their capacities as such) at the
same time as such information is furnished to such other directors (in their
capacities as such).
(g) Xxxx-XxXxx shall cause all Xxxx-XxXxx Designees serving as directors of
Devon to comply with the retirement policies of Devon as in effect on the date
hereof or as hereafter amended or modified from time to time by the Board of
Directors of Devon or its shareholders; provided that no such amendment or
modification shall be binding upon Xxxx-XxXxx or the Xxxx-XxXxx Designees unless
at least one Xxxx-XxXxx Designee shall have voted in favor of such amendment or
modification at the meeting, or in the action in lieu of a meeting, of the Board
of Directors of Devon at or in which it is considered.
2.4 Limitation on Acquisition of Additional Shares by Xxxx-XxXxx. (a)
Except as permitted by any of Section 2.4(b), (c) or (d), from and after the
date hereof until the termination of this Agreement, Xxxx-XxXxx shall not
acquire Beneficial Ownership of any Voting Shares, other than the Voting Shares
Beneficially Owned by Xxxx-XxXxx as of the Effective Time and after giving
effect to the Closing, without the prior written consent of a majority of the
Continuing Directors.
(b) Xxxx-XxXxx may purchase Voting Shares, or securities exercisable or
exchangeable for Voting Shares or convertible into Voting Shares, in market,
private or other transactions (including without limitation brokerage
transactions involving the solicitation of seller's orders and block trades off
the American Stock
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Exchange or any other national securities exchange on which the Voting Shares
are then listed) or in public offerings of Voting Shares (including Public
Offerings of Voting Shares); provided that, after giving effect to any such
purchase, Xxxx-XxXxx shall not Beneficially Own more than the Applicable
Percentage of the Fully Diluted Shares; provided, further, that in no event
shall Xxxx-XxXxx acquire Beneficial Ownership of additional Voting Shares which
would, based on the then most recent information contained in documents filed by
Devon or Xxxx-XxXxx pursuant to Section 13(a), 13(c), 13(e), 14 or 15(d) of the
Exchange Act, reduce the number of shares of Common Stock held by Persons other
than Xxxx-XxXxx, Xxxxx or any Affiliate of either Xxxx-XxXxx or Devon to less
than 15,000,000, unless such acquisition of Beneficial Ownership by Xxxx-XxXxx
is necessary in order that, after giving effect thereto, Xxxx-XxXxx shall
Beneficially Own 20% of the Fully Diluted Shares.
(c) Xxxx-XxXxx may acquire Beneficial Ownership of Voting Shares without
regard to the Applicable Percentage of the Fully Diluted Shares if any Person
(other than Xxxx-XxXxx, Xxxxx or any Affiliate of Xxxx-XxXxx or Devon) shall
have commenced a tender or exchange offer for Voting Shares (i) that is
recommended or approved by a majority of the Continuing Directors, (ii) with
respect to which a majority of the Continuing Directors has taken a position
contemplated by Rule 14e-2(a)(2) under the Exchange Act, (iii) with respect to
which a majority of the Continuing Directors has resolved to redeem the Rights
or has amended the Rights Plan so that the Person making such tender or exchange
offer will not become an Acquiring Person or trigger a Distribution Date, or
(iv) that is a Qualified Tender Offer and in connection with which (A) a final
and non-appealable court order has declared the Rights Plan invalid or
inapplicable, or required that the Rights issued under the Rights Plan be
redeemed, and (B) the Person making such Qualified Tender Offer will be
permitted under applicable law to accept for payment or exchange the Voting
Shares tendered in such Qualified Tender Offer.
(d) (i) Notwithstanding anything to the contrary in this Agreement,
Xxxx-XxXxx shall not be deemed to be in violation of this Section 2.4 if its
Beneficial Ownership of Voting Shares exceeds the Applicable Percentage of the
Fully Diluted Shares as a result of (A) an acquisition by Devon or any of its
Affiliates of Voting Shares then outstanding, or securities then outstanding
exercisable or exchangeable for Voting Shares or convertible into Voting Shares,
or a recapitalization by Devon, or any other transaction or action by Devon, or
any expiration or termination of the right to exercise, exchange or convert
securities exercisable or exchangeable for Voting Shares or convertible into
Voting Shares, which, in any such case, by reducing the number of Fully Diluted
Shares, increases Xxxx-XxXxx'x Beneficial Ownership of the Fully Diluted Shares
to more than the Applicable Percentage, and, in the event of any such reduction
in the number of Fully Diluted Shares as provided in this Section 2.4(d)(i)(A),
the Applicable Percentage shall thereafter be deemed to have been increased to
the percentage of the Fully Diluted Shares Beneficially Owned by Xxxx-XxXxx
after giving effect to such reduction, provided that, in the case of any such
increase in Xxxx-XxXxx'x Beneficial Ownership of the Fully Diluted Shares due to
an expiration or termination of the right to exercise, exchange or convert
securities exercisable or exchangeable for Voting Shares or convertible into
Voting Shares pursuant to this clause (A), Xxxx-XxXxx shall, to the extent
permitted by Rule 144, Transfer a number of Shares (or securities of Devon
exercisable or exchangeable for or convertible into a number of Voting Shares)
as promptly as is commercially reasonable so that, following such Transfer,
Xxxx-XxXxx shall Beneficially Own a number of Voting Shares not in excess of the
Applicable Percentage immediately prior to such reduction in the number of Fully
Diluted Shares and, following each such Transfer, the Applicable Percentage
shall be reduced to the percentage of the Fully Diluted Shares then Beneficially
Owned by Xxxx-XxXxx, and, provided, further, that Xxxx-XxXxx shall not be
required to Transfer Shares (or such securities) pursuant to the immediately
preceding proviso at any time when it would be required to pay any profit
realized upon such Transfer to Devon pursuant to Section 16(b) under the
Exchange Act, or (B) a transaction whereby, directly or indirectly, control of
(by merger, tender offer or otherwise), or all or substantially all of the
assets of, any Person is transferred to Xxxx-XxXxx or any of its Subsidiaries
(an "Acquisition Transaction"), provided that, in the case of clause (B) above,
Xxxx-XxXxx shall comply with the provisions of Section 2.4(d)(ii), except that
Xxxx-XxXxx shall not be obligated to comply with Section 2.4(d)(ii), and any
Voting Shares the Beneficial Ownership of which is acquired by Xxxx-XxXxx in an
Acquisition Transaction shall not be deemed to violate this Agreement, solely to
the extent that such Voting Shares were held by the other Person that is a party
to such Acquisition Transaction as part of the assets of a pension plan
maintained by such other Person
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for the benefit of its employees and retirees, and, provided, further, that, in
the case of clause (B) above, the ownership of Voting Shares by the Person in
the Acquisition Transaction is incidental to the conduct of an active trade or
business other than investing in securities and in no event shall such Person
own more than 1,000,000 Voting Shares. For purposes hereof, "control" means the
possession, directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management policies of a Person, including
the power to direct or cause the direction of the disposition of the assets of
such Person.
(ii) (A) No later than five business days following the consummation of an
Acquisition Transaction which results in Xxxx-XxXxx Beneficially Owning more
than the Applicable Percentage of the Fully Diluted Shares, Xxxx-XxXxx shall
provide written notice (the "Offer Notice") to Devon offering Devon the right
(the "Purchase Right"), exercisable in whole or in part, to purchase a number of
Shares (such Shares, the "Purchase Right Shares") equal to the difference
between (1) the number of Shares minus (2) the product, rounded to the nearest
whole Voting Share, of the Applicable Percentage multiplied by the Fully Diluted
Shares, at a price per Purchase Right Share equal to the average of the Current
Market Prices of the Voting Shares determined for each of the 10 consecutive
trading days ending on the last full trading day prior to the date of the Offer
Notice (the "Purchase Price"). Devon shall have five business days from the date
of its receipt of the Offer Notice to provide written notice to Xxxx-XxXxx of
its exercise of the Purchase Right (the "Exercise Notice"). The Exercise Notice
shall indicate the number of Purchase Right Shares with respect to which Devon
exercises the Purchase Right (such number of Purchase Right Shares, the "Sale
Shares"). If the Exercise Notice shall not have been delivered to Xxxx-XxXxx
within five business days from the date of Devon's receipt of the Offer Notice
or if Devon shall have delivered to Xxxx-XxXxx written notice that it is not
exercising the Purchase Right, then Devon will be deemed not to have exercised
the Purchase Right. If Devon exercises the Purchase Right by delivery to
Xxxx-XxXxx of an Exercise Notice as provided above, then, on the fifth business
day after the receipt by Xxxx-XxXxx of such Exercise Notice, Devon shall
purchase from Xxxx-XxXxx, and Xxxx-XxXxx shall sell to Devon, the Sale Shares.
At the closing of any such purchase and sale, Xxxx-XxXxx shall deliver to Devon
a certificate or certificates representing the Sale Shares, duly endorsed for
transfer or accompanied by a stock power or powers duly executed in blank,
against delivery by Devon to Xxxx-XxXxx of the aggregate Purchase Price for the
Sale Shares, by wire transfer in immediately available funds. Any exercise of
the Purchase Right as provided in this Section 2.4(d)(ii)(A) shall be
irrevocable and shall constitute a commitment by Devon to purchase from
Xxxx-XxXxx, and by Xxxx-XxXxx to sell to Devon, the Sale Shares at the Purchase
Price per Sale Share. Notwithstanding anything to the contrary contained in this
Section 2.4(d)(ii)(A), if the Current Market Price is required to be determined
pursuant to clause (iii) of the definition thereof and, on or prior to the fifth
business day after Devon's receipt of the Offer Notice, the Current Market Price
shall not have been so determined, then the time period for the delivery of the
Exercise Notice shall be extended until such time as the Current Market Price
shall have been so determined.
(B) If Devon shall not have exercised the Purchase Right in accordance with
Section 2.4(d)(ii)(A) or shall have exercised the Purchase Right in part, then,
to the extent permitted by Rule 144, Xxxx-XxXxx shall Transfer the Purchase
Right Shares then held by it as promptly as is commercially reasonable; provided
that Xxxx-XxXxx shall not be required to Transfer Purchase Right Shares under
this Section 2.4(d)(ii)(B) at any time when it would be required to pay any
profit realized upon such Transfer to Devon pursuant to Section 16(b) under the
Exchange Act.
2.5 Restrictions on Transfer. From and after the date hereof until the
termination of this Agreement, Xxxx-XxXxx shall not sell, transfer or otherwise
convey (when used as a verb, "Transfer" and, any sale, transfer or other
conveyance, a "Transfer") Beneficial Ownership of any Shares (including Shares
subject to Exchangeable Securities), without the prior written consent of a
majority of the Continuing Directors, which consent shall not be unreasonably
withheld, except that, in any event, any of the following shall be permitted:
(a) a Transfer in accordance with Rule 144;
(b) a Transfer in a Public Offering or in a public offering (other
than a Public Offering) made pursuant to a registration statement which has
been declared effective by the SEC under the Securities Act (any such
Public Offering or public offering, a "Registered Transaction"); provided,
however, that, in
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connection with any such Registered Transaction, Xxxx-XxXxx shall obtain
from the managing underwriter of such Public Offering or from each broker
through which such public offering is made, as the case may be, a
commitment to use its reasonable best efforts to make a broad public
distribution of the Shares (including an indirect distribution of Shares as
a result of a distribution of Exchangeable Securities) to be Transferred in
such Registered Transaction. The managing underwriter or broker, as the
case may be, will be advised that, for purposes of this Agreement, a "broad
public distribution" means a distribution such that no Person is allocated
for purchase in such Registered Transaction:
(i) a number of Shares in excess of (A) 14.9% of the Voting Shares
(after giving effect to the offering of the Shares and any other
securities being offered by Devon concurrently therewith in such
Registered Offering) or (B) in the case of a Public Offering, in excess
of 20% of the number of Shares being offered in such Public Offering,
provided that, in the case of this clause (B), Shares allocated for
purchase by a mutual fund, a pension fund or an investment advisers
(which investment adviser shall be registered under the Investment
Advisers Act of 1940, as amended) for any mutual fund or pension fund
shall be disregarded;
(ii) a number or amount of Exchangeable Securities which would
represent the right to acquire in excess of 14.9% of the Voting Shares;
or
(iii) any combination of (i) and (ii) above;
(c) a Transfer to a direct or indirect Subsidiary of Xxxx-XxXxx;
(d) a Transfer to Devon or a to a direct or indirect Subsidiary of
Devon (pursuant to a tender offer or otherwise);
(e) a Transfer pursuant to a merger, consolidation or Share
Acquisition, in which Devon is a constituent corporation;
(f) a Transfer made as a pro rata dividend or distribution to the
holders of the common stock of Xxxx-XxXxx; or
(g) a Transfer to any Person (other than Xxxx-XxXxx, Xxxxx or any
Affiliate of Xxxx-XxXxx or Devon) who shall have commenced a tender or
exchange offer for Voting Shares (i) that is recommended or approved by a
majority of the Continuing Directors, (ii) with respect to which a majority
of the Continuing Directors has taken a position contemplated by Rule
14e-2(a)(2) under the Exchange Act, (iii) with respect to which a majority
of the Continuing Directors has resolved to redeem the Rights or has
amended the Rights Plan so that the Person making such tender or exchange
offer will not become an Acquiring Person or trigger a Distribution Date,
or (iv) that is a Qualified Tender Offer and in connection with which (A) a
final and non-appealable court order has declared the Rights Plan invalid
or inapplicable, or required that the Rights issued under the Rights Plan
be redeemed, and (B) the Person making such Qualified Tender Offer will be
permitted under applicable law to accept for payment or exchange the Voting
Shares tendered in such Qualified Tender Offer.
2.6 Voting for Directors. Xxxx-XxXxx agrees to vote all of the Shares in
favor of the Devon Board of Director's nominees for election to the Board of
Directors; provided that, in connection with any such vote, the provisions of
Section 2.3(b) shall have been complied with.
2.7 Right to Participate in Certain Issuances by Devon. (a) Devon shall
not issue any security exercisable or exchangeable for or convertible into
Voting Shares, other than employee stock options ("Devon Convertible
Securities"), whether in a public or private offering for cash, unless Devon
shall have first complied with, in the case of an issuance other than pursuant
to Public Offering, the provisions of Section 2.7(b) or, in the case of a Public
Offering, the provisions of Section 2.7(c).
(b) If Devon determines to issue any Devon Convertible Security in a public
offering or otherwise, other than in a Public Offering, then Devon shall provide
written notice of such determination to Xxxx-XxXxx, which notice shall include
all the terms of such issuance and shall offer to Xxxx-XxXxx the right to
purchase, at the same price and on the same terms as Devon proposes to issue
such Devon Convertible Security to others
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(or, if Devon proposes to issue such Devon Convertible Security other than for
cash, at a cash price equal to the value of the consideration for which Devon
proposes to issue such Devon Convertible Security, such value to be determined
by agreement between Devon or Xxxx-XxXxx, or if the parties are unable to agree,
by an investment banking firm or other asset valuation firm of national
reputation selected by Xxxx-XxXxx with the consent of a majority of the
Continuing Directors, which consent shall not be unreasonably withheld, the cost
of which shall be borne by Devon) a number or amount of the Devon Convertible
Securities proposed to be issued that represents the right to acquire upon
exercise, exchange or conversion of such Devon Convertible Securities a number
of Voting Shares equal to the Applicable Percentage (the "Offer Notice"). If
Xxxx-XxXxx determines to accept the offer contained in the Offer Notice,
Xxxx-XxXxx shall deliver a written notice to Devon indicating its acceptance
within 10 days after its receipt of the Offer Notice, which notice shall
indicate whether Xxxx-XxXxx has accepted such offer in whole or in part, and, if
accepted in part, the number or amount of Devon Convertible Securities as to
which such offer has been accepted (an "Acceptance Notice"). Any acceptance of
the offer contained in an Offer Notice by delivery of an Acceptance Notice shall
be irrevocable and shall constitute a commitment by Xxxx-XxXxx to purchase from
Devon, and by Devon to sell to Xxxx-XxXxx, the number or amount of Devon
Convertible Securities covered by such Acceptance Notice upon the terms
contained in the Offer Notice.
(c) If Devon determines to issue any Devon Convertible Security in a Public
Offering, then Devon shall provide written notice of such determination to
Xxxx-XxXxx no later than the time that Devon commences the process to make such
Public Offering, which notice shall include the proposed size and other terms of
such issuance, to the extent then known, the name or names of the managing
underwriter for such Public Offering, if then known and the date when it is
proposed that such Public Offering will be made, and shall cause the
underwriters of such Public Offering to offer to Xxxx-XxXxx the right to
purchase from the underwriters of such Public Offering, at the public offering
price set forth on the cover page of the prospectus or prospectus supplement for
such Public Offering, a number or amount of the Devon Convertible Securities
proposed to be issued that represents the right to acquire upon exercise,
exchange or conversion of such Devon Convertible Securities a number of Voting
Shares equal to the Applicable Percentage.
3. STOCK CERTIFICATES AND OTHER RESTRICTIONS.
3.1 Endorsement of Certificates. (a) All certificates representing Shares
shall, subject to Section 3.1(c), bear the following legend:
"THIS CERTIFICATE IS SUBJECT TO THE PROVISIONS OF A STOCK RIGHTS AND
RESTRICTIONS AGREEMENT BETWEEN DEVON ENERGY CORPORATION AND XXXX-XxXXX
CORPORATION DATED AS OF DECEMBER 31, 1996. A COPY OF SUCH AGREEMENT IS ON
FILE AT THE PRINCIPAL BUSINESS OFFICE OF DEVON ENERGY CORPORATION."
(b) All certificates representing Shares shall, subject to Section 3.1(c),
bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE CONVEYED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO RULE 144 UNDER THE ACT,
UNLESS THE COMPANY SHALL HAVE BEEN FURNISHED WITH AN OPINION OF COUNSEL,
WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR DEVON ENERGY
CORPORATION, THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED."
(c) After such time as either of the legends set forth in Sections 3.1(a)
and (b) is no longer required hereunder (including without limitation as a
result of the termination of this Agreement in accordance with its terms) or if
the securities represented by a certificate have been registered under the
Securities Act pursuant to an effective registration statement or are to be sold
pursuant to Rule 144, or if the Company shall have been furnished with an
opinion of counsel, which opinion shall be reasonably satisfactory to counsel
for Devon, that registration under the Securities Act is not required, as the
case may be, then, in any such event, upon the
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Page 23 of 36 Pages
request of Xxxx-XxXxx, Xxxxx shall cause such certificate or certificates to be
exchanged for a certificate or certificates that do not bear any legend.
3.2 Improper Transfer. Any attempt by Xxxx-XxXxx or its Affiliates to
Transfer any Shares other than in accordance with this Agreement shall be null
and void and neither Devon nor any transfer agent for such securities shall be
required to give any effect to such attempted Transfer in its stock records.
4. GENERAL PROVISIONS.
4.1 Representations and Warranties. (a) Devon represents and warrants to
Xxxx-XxXxx that (i) Devon is a corporation duly organized, validly existing and
in good standing under the laws of the State of Oklahoma and has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder, (ii) the execution and delivery of this Agreement by
Devon and the consummation by Devon of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Devon and
no other corporate proceedings on the part of Devon are necessary to authorize
this Agreement or any of the transactions contemplated hereby, and (iii) this
Agreement has been duly executed and delivered by Devon and constitutes a valid
and binding obligation of Devon, and, assuming this Agreement constitutes a
valid and binding obligation of Xxxx-XxXxx, is enforceable against Devon in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance and similar laws affecting
creditors' rights generally from time to time and to general principles of
equity.
(b) Xxxx-XxXxx represents and warrants to Devon that (i) Xxxx-XxXxx is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder, (ii) the execution
and delivery of this Agreement by Xxxx-XxXxx and the consummation by Xxxx-XxXxx
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Xxxx-XxXxx and no other corporate
proceedings on the part of Xxxx-XxXxx are necessary to authorize this Agreement
or any of the transactions contemplated hereby, and (iii) this Agreement has
been duly executed and delivered by Xxxx-XxXxx and constitutes a valid and
binding obligation of Xxxx-XxXxx, and, assuming this Agreement constitutes a
valid and binding obligation of Devon, is enforceable against Xxxx-XxXxx in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance and similar laws affecting
creditors' rights generally from time to time and to general principles of
equity.
4.2 Amendment and Modification; Waiver of Compliance. This Agreement may
be amended or waived only by written instrument duly executed by the parties. In
the event of the amendment or modification of this Agreement in accordance with
its terms, the Board of Directors of Devon shall adopt any amendment to the
by-laws of Devon that may be required as a result of such amendment or
modification to this Agreement, and, if required, shall propose any amendment to
the Certificate of Incorporation that may be required as a result of such
amendment or modification to this Agreement to the Devon shareholders entitled
to vote thereon at a meeting duly called and held for such purpose, and shall
recommend that the Devon shareholders vote in favor of such amendment to the
Certificate of Incorporation.
4.3 Injunctive Relief. Each of the parties hereto hereby acknowledges that
in the event of a breach by any of them of any material provision of this
Agreement, the aggrieved party may be without an adequate remedy of law. Each of
the parties therefore agrees that in the event of a breach of any material
provision of this Agreement the aggrieved party may elect to institute and
prosecute proceedings in any court of competent jurisdiction to enforce specific
performance or to enjoin the continuing breach of such provision, as well as to
obtain damages for breach of this Agreement. By seeking or obtaining any such
relief, the aggrieved party will not be precluded from seeking or obtaining any
other relief to which it may be entitled in equity or at law.
4.4 Bylaws. At all times while this Agreement shall be in effect, Devon
shall cause its Bylaws to conform to the provisions of this Agreement, including
by causing its Bylaws to be amended.
4.5 No Amendment of Rights Plan. Devon's Board of Directors shall not
adopt any Rights Plan or amend the Rights Plan as in effect on the date hereof
without the approval of a majority of the Xxxx-XxXxx
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Designees then on the Board of Directors of Devon, unless such Rights Plan or
amendment would not adversely affect the rights or interests of Xxxx-XxXxx or
its Affiliates.
4.6 Limitation on Reductions of Public Float by Devon. Devon shall not
take any action, including without limitation an acquisition by Devon or any of
its Affiliates of Voting Shares then outstanding, or a recapitalization by
Devon, which would reduce the number of shares of Common Stock held by Persons
other than Xxxx-XxXxx, Xxxxx or any Affiliate of either Xxxx-XxXxx or Devon to
less than 15,000,000, without the prior written consent of Xxxx-XxXxx.
4.7 Governing Law. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of Oklahoma, without regard to the principles of conflicts of law thereof.
4.8 Termination. (a) This Agreement may be terminated:
(i) by the mutual written consent of the parties hereto;
(ii) by Xxxx-XxXxx or Devon if Xxxx-XxXxx shall have become the
Beneficial Owner of less than 5% of the Voting Shares;
(iii) by Xxxx-XxXxx if any Person (other than Xxxx-XxXxx or any
Affiliate) shall have proposed to Devon a Business Combination Transaction
and a majority of the Continuing Directors shall have approved such
proposal or shall have retained (or authorized Devon to retain) the
services of an investment banking firm and shall have instructed such
investment banking firm to solicit indications of interest with respect to
a Business Combination Transaction; provided that, if a proposal with
respect to a Business Combination Transaction referred to in this clause
(iii) shall have been terminated or withdrawn by the Person who made such
proposal and Xxxx-XxXxx shall have withdrawn, terminated or permitted to
expire any tender or exchange offer or proposal with respect to a Business
Combination Transaction made by Xxxx-XxXxx, then the provisions of this
Agreement shall thereafter be reinstated (without liability to any party
for any failure to have complied with the terms and provisions of this
Agreement during the period when it shall have been terminated in
accordance with this Section 4.8(a)(iii)) and this Agreement shall
thereafter continue in full force and effect in accordance with its terms.
(iv) by Xxxx-XxXxx if (A) any Person other than Xxxx-XxXxx or its
Affiliates shall have acquired Beneficial Ownership of 15% or more of the
Voting Shares at a time when the Rights Plan is in effect and a majority of
the Continuing Directors shall have approved such acquisition or otherwise
taken action so that such acquisition would not result in such Person
becoming an Acquiring Person, or triggering a Distribution Date, under the
Rights Plan or (B) any Person other than Xxxx-XxXxx or its Affiliates shall
have acquired Beneficial Ownership of 20% or more of the Voting Shares at a
time when the Rights Plan is not in effect, and, in any event referred to
in clause (A) or (B) above, such Person shall not have entered into an
agreement with Devon containing restrictions and other provisions at least
as favorable to Devon as those contained in this Agreement;
(v) by Xxxx-XxXxx if the Continuing Directors shall not constitute a
majority of the Board of Directors of Devon; or
(vi) by Xxxx-XxXxx if Devon shall have materially breached any
provision of this Agreement and Xxxx-XxXxx shall have delivered a written
notice of such breach to Devon; provided that, if such material breach is
reasonably susceptible of cure and Devon shall proceed diligently to cure
such material breach, then this Agreement shall not be terminated unless
such material breach shall not have been cured on or prior to the fifth day
after the delivery of written notice by Xxxx-XxXxx to Devon that Devon has
materially breached this Agreement.
(b) Unless this Agreement shall have been earlier terminated as provided in
Section 4.8(a), this Agreement shall terminate twenty-one years from and after
the death of the last survivor of J. Xxxxx Xxxxxxx and Xxxx X. Xxxxxxx.
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4.9 Notices. All notices, requests, demands or other communications
required or permitted by this Agreement shall be in writing and effective when
received, and delivery shall be made personally or by registered or certified
mail, return receipt requested, postage prepaid, or overnight courier or
confirmed facsimile transmission, addressed as follows:
(a) If to Devon:
Devon Energy Corporation
00 Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: J. Xxxxx Xxxxxxx, President
and Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
McAfee & Xxxx
A Professional Corporation
00xx Xxxxx, Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) If to Xxxx-XxXxx:
Xxxx-XxXxx Corporation
Xxxx-XxXxx Center
X.X. Xxx 00000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Vice President and General Counsel
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
4.10 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
4.11 Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof. This Agreement shall not
be assigned by operation of law or otherwise.
4.12 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
4.13 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
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4.14 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
DEVON ENERGY CORPORATION
By: /s/ J. XXXXX XXXXXXX
--------------------------------
Name: J. Xxxxx Xxxxxxx
Title: President and Chief Executive Officer
XXXX-XxXXX CORPORATION
By: /s/ XXXX X. XXXXXXX
--------------------------------
Name: Xxxx X. Xxxxxxx
Title: President and Chief Operating Officer
