STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT dated as of May 25, 2000 is by and between
Devon Energy Corporation, a Delaware corporation (the "Company"), and Santa Xx
Xxxxxx Corporation, a Delaware corporation (the "Grantee").
RECITALS
The Grantee, the Company and Merger Co., a Delaware corporation wholly
owned by the Company ("Merger Co."), propose to enter into the Merger Agreement
providing, among other things, for the Merger pursuant to the Merger Agreement
of Merger Co. with and into the Grantee, which shall be the surviving entity.
As a condition and inducement to the Grantee's willingness to enter
into the Merger Agreement, the Grantee has requested that the Company agree, and
the Company has agreed, to grant the Grantee the Option.
The Board of Directors of the Company has approved and adopted the
Merger Agreement, the Merger and this Agreement and has recommended approval of
the Merger Agreement by the holders of Devon Common Stock (as defined in the
Merger Agreement).
The Board of Directors of the Grantee has approved and adopted the
Merger Agreement, the Merger and this Agreement and has recommended approval of
the Merger Agreement by the holders of Santa Xx Xxxxxx Common Stock (as defined
in the Merger Agreement).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, the Company and the Grantee agree as follows:
1. CAPITALIZED TERMS. Those capitalized terms used but not defined herein that
are defined in the Merger Agreement are used herein with the same meanings as
ascribed to them therein; PROVIDED, HOWEVER, that, as used in this Agreement,
"Person" shall have the meaning specified in Sections 3(a)(9) and 13(d)(3) of
the Exchange Act. Those capitalized terms used in this Agreement that are not
defined in the Merger Agreement are defined in Annex A hereto and are used
herein with the meanings ascribed to them therein.
2. THE OPTION.
(a) GRANT OF OPTION. Subject to the terms and conditions set forth
herein, the Company hereby grants to the Grantee an irrevocable option to
purchase, out of the authorized but unissued Devon Common Stock, 16,501,054
shares of Devon Common Stock (as adjusted as set forth herein) (the "Option
Shares"), at the Exercise Price.
(b) EXERCISE PRICE. The exercise price (the "Exercise Price") per
Option Share shall be the Current Market Price per share of Devon Common Stock
on the date of this Agreement.
(c) TERM. The Option shall either (i) be exercisable at any time and
from time to time following the occurrence of an Exercise Event described in
subsection (i) of the definition of an Exercise Event and remain in full force
and effect for one year thereafter, or (ii) be exercisable at any time and from
time to time following the occurrence of an Exercise Event described in
subsection (ii) of the definition of an Exercise Event and remain in full force
and effect for one year thereafter (the "Option Term"). This Option shall
terminate on the earliest to occur of (i) the failure of Grantee to exercise the
Option prior to the termination of the Option Term, (ii) the Effective Time,
(iii) Grantee's written notice of termination of this Agreement to the Company,
and (iv) termination of the Merger Agreement in accordance with its terms under
circumstances in which the Option does not and could not, through the passage of
time or in conjunction with subsequent events, become exercisable in accordance
with the preceding sentence.
(d) EXERCISE OF OPTION.
(i) The Grantee may exercise the Option, in whole or in part,
at any time and from time to time during the Option Term. Notwithstanding the
expiration of the Option Term, the Grantee shall be entitled to purchase those
Option Shares with respect to which it has exercised the Option in accordance
with the terms hereof prior to the expiration of the Option Term.
(ii) If the Grantee wishes to exercise the Option, it shall
send a written notice (an "Exercise Notice") (the date of which being herein
referred to as the "Notice Date") to the Company specifying (i) the total number
of Option Shares it intends to purchase pursuant to such exercise and (ii) a
place and a date (the "Closing Date") not earlier than three Business Days nor
later than 15 Business Days from the Notice Date for the closing of the purchase
and sale pursuant to the Option (the "Closing").
(iii) If the Closing cannot be effected by reason of the
application of any Law, Regulation or Order, the Closing Date shall be extended
to the tenth Business Day following the expiration or termination of the
restriction imposed by such Law, Regulation or Order; PROVIDED HOWEVER, that
during this extended period, notwithstanding any prior Exercise Notice, Grantee
shall be entitled to rescind such Exercise Notice and shall not be obligated to
purchase any Option Shares in connection with such exercise upon written notice
to such effect to the Company. Without limiting the foregoing, if prior
notification to, or Authorization of, any Governmental Authority is required in
connection with the purchase of such Option Shares by virtue of the application
of such Law, Regulation or Order, the Grantee and, if applicable, the Company
shall promptly file the required notice or application for Authorization and the
Grantee, with the cooperation of the Company, shall expeditiously process the
same.
(e) PAYMENT AND DELIVERY OF CERTIFICATES.
(i) At each Closing, the Grantee shall pay to the Company in
immediately available funds by wire transfer to a bank account designated by the
Company an amount equal to the Exercise Price multiplied by the number of Option
Shares to be purchased on such Closing Date. Alternatively, the Grantee may
elect to purchase Option Shares issuable, and pay some or all of the aggregate
Exercise Price payable, upon an exercise of the Option by surrendering a portion
of the Option with respect to such number of Option Shares as is determined by
dividing
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(i) the aggregate Exercise Price payable in respect of the number of Option
Shares being purchased in such manner by (ii) the excess of the Current Market
Price per share of Devon Common Stock as of the last trading day preceding the
date Grantee delivers its Exercise Notice over the per share Exercise Price.
(ii) At each Closing, simultaneously with the delivery of
immediately available funds as provided above, the Company shall deliver to the
Grantee a certificate or certificates representing the Option Shares to be
purchased at such Closing, which Option Shares shall be duly authorized, validly
issued, fully paid and nonassessable and free and clear of all Liens, and the
Grantee shall deliver to the Company its written agreement that the Grantee will
not offer to sell or otherwise dispose of such Option Shares in violation of
applicable Law or the provisions of this Agreement.
(f) CERTIFICATES. Certificates for the Option Shares delivered at each
Closing shall be endorsed with a restrictive legend that shall read
substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
A new certificate or certificates evidencing the same number of shares
of the Devon Common Stock will be issued to the Grantee in lieu of the
certificate bearing the above legend, and such new certificate shall not bear
such legend if the Grantee shall have delivered to the Company a copy of a
letter from the staff of the Commission, or an opinion of counsel in form and
substance reasonably satisfactory to the Company and its counsel, to the effect
that such legend is not required for purposes of the Securities Act.
(g) If at the time of issuance of any Devon Common Stock pursuant to
any exercise of the Option, the Company shall have issued any share purchase
rights or similar securities to holders of Devon Common Stock, then each Option
Share purchased pursuant to the Option shall also include rights with terms
substantially the same as and at least as favorable to the Grantee as those
issued to other holders of Devon Common Stock.
3. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in the outstanding shares of Devon
Common Stock by reason of a stock dividend, stock split, split-up, merger,
consolidation, recapitalization, combination, conversion, exchange of shares,
extraordinary or liquidating dividend or similar transaction which would have
the effect of diluting the Grantee's rights hereunder, the type and number of
shares or securities purchasable upon the exercise of the Option and the
Exercise Price shall be adjusted appropriately, and proper provision will be
made in the agreements governing such transaction, so that the Grantee will
receive upon exercise of the Option the number and class of shares or other
securities or property that Grantee would have received in respect of the Option
Shares had the Option been exercised immediately prior to such event or the
record date therefor, as applicable. In no event shall the number of shares of
Devon Common Stock subject to the Option exceed 19.9% of the number of shares of
Devon Common Stock issued and outstanding at the time of exercise.
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(b) Without limiting the foregoing, whenever the number of Option
Shares purchasable upon exercise of the Option is adjusted as provided in this
Section 3, the Exercise Price shall be adjusted by multiplying the Exercise
Price by a fraction, the numerator of which is equal to the number of Option
Shares purchasable prior to the adjustment and the denominator of which is equal
to the number of Option Shares purchasable after the adjustment.
(c) Without limiting the parties' relative rights and obligations under
the Merger Agreement, if the Company enters into an agreement to consummate a
Business Combination Transaction, then, and in each such case, the agreement
governing such transaction will make proper provision so that the Option will,
upon the consummation of any such transaction and upon the terms and conditions
set forth herein, be converted into, or exchanged for, an option with identical
terms appropriately adjusted to acquire the number and class of shares or other
securities or property that Grantee would have received in respect of Option
Shares had the Option been exercised immediately prior to such consolidation,
merger, sale or transfer or the record date therefor, as applicable, and will
make any other necessary adjustments and the Company shall take such steps in
connection with such consolidation, merger, liquidation or other such
transaction as may be reasonably necessary to assure that the provisions hereof
shall thereafter apply as nearly as possible to any securities or property
thereafter deliverable upon exercise of the Option.
4. REPURCHASE AT THE OPTION OF GRANTEE.
(a) At the request of the Grantee made at any time and from time to
time after the occurrence of an Exercise Event and prior to 120 days after the
expiration of the Option Term (the "Put Period"), the Company (or any successor
thereto) shall, at the election of the Grantee (the "Put Right"), repurchase
from the Grantee (i) that portion of the Option relating to all or any part of
the Unexercised Option Shares (or as to which the Option has been exercised but
the Closing has not occurred) and (ii) all or any portion of the Option Shares
of Devon Common Stock purchased by the Grantee upon exercise of the Option (or
any portion thereof) and with respect to which the Grantee then has ownership.
The date on which the Grantee exercises its rights under this Section 4 is
referred to as the "Put Date." Such repurchase shall be at an aggregate price
(the "Put Consideration") equal to the sum of:
(i) the aggregate Exercise Price paid by the Grantee for any
Option Shares which the Grantee owns and as to which the Grantee is exercising
the Put Right;
(ii) the excess, if any, of (x) the Applicable Price per share
of Devon Common Stock over (y) the Exercise Price paid by the Grantee for each
Option Share as to which the Grantee is exercising the Put Right, multiplied
by the number of such Option Shares; and
(iii) the excess, if any, of (x) the Applicable Price per
share of Devon Common Stock over (y) the Exercise Price, multiplied by the
number of Unexercised Option Shares as to which the Grantee is exercising the
Put Right.
(b) If the Grantee exercises its rights under this Section 4, the
Company shall, within five Business Days after the Put Date, pay the Put
Consideration to the Grantee in immediately available funds, and the Grantee
shall surrender to the Company the Option or portion of the
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Option and the certificates evidencing the Option Shares of Devon Common Stock
purchased thereunder. The Grantee shall warrant to the Company that, immediately
prior to the repurchase thereof pursuant to this Section 4, the Grantee had sole
record and Beneficial Ownership of the Option or such Option Shares, or both, as
the case may be, and that the Option or such shares, or both, as the case may
be, were then held free and clear of all Liens.
(c) If the Option has been exercised, in whole or in part, as to any
Option Shares subject to the Put Right but the Closing thereunder has not
occurred, the payment of the Put Consideration shall, to that extent, render
such exercise null and void.
(d) Notwithstanding any provision to the contrary in this Agreement,
the Grantee may not exercise its rights pursuant to this Section 4 in a manner
that would result in Total Profit of more than the Profit Cap; PROVIDED,
HOWEVER, that nothing in this sentence shall limit the Grantee's ability to
exercise the Option in accordance with its terms.
(e) To the extent that the Company is prohibited under applicable Law
from repurchasing the portion of the Option or the Option Shares pursuant to
this Section 4, the Company shall immediately so notify Grantee and thereafter
deliver, from time to time, to Grantee the portion of the Put Consideration that
it is no longer prohibited from delivering, within five Business Days after the
date on which the Company is no longer so prohibited; PROVIDED, HOWEVER, that if
the Company at any time after the Put Date is prohibited under applicable Law
from delivering to Grantee the full amount of the Put Consideration, Grantee may
rescind the exercise of the Put Right, whether in whole, in part or to the
extent of the prohibition, and, to the extent rescinded, no part of the amounts,
terms or the rights with respect to the Option or Put Right shall be changed or
affected as if such Put Right was not exercised. The Company shall use its
reasonable best efforts to obtain all required regulatory and legal approvals
and to file any required notices to permit Grantee to exercise its Put Right and
shall use its reasonable best efforts to avoid or cause to be rescinded or
rendered inapplicable any prohibition on the Company's repurchase of the Option
or the Option Shares.
5. REGISTRATION RIGHTS.
(a) The Company shall, if requested by the Grantee at any time and from
time to time during the Registration Period, as expeditiously as practicable,
prepare, file and cause to be made effective up to two registration statements
under the Securities Act if such registration is required in order to permit the
offering, sale and delivery of any or all shares of Devon Common Stock or other
securities that have been acquired by or are issuable to the Grantee upon
exercise of the Option in accordance with the intended method of sale or other
disposition stated by the Grantee, including, at the sole discretion of the
Company, a "shelf" registration statement under Rule 415 under the Securities
Act or any successor provision, and the Company shall use all reasonable efforts
to qualify such shares or other securities under any applicable state securities
laws. The Company shall use all reasonable efforts to cause each such
registration statement to become effective, to obtain all consents or waivers of
other parties that are required therefor and to keep such registration statement
effective for such period not in excess of 180 days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sale or other disposition. The obligations of the Company hereunder
to file a registration statement and to maintain its effectiveness may be
suspended for one or more periods of time not
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exceeding 60 days in the aggregate if the Board of Directors of the Company
shall have determined in good faith that the filing of such registration or the
maintenance of its effectiveness would require disclosure of nonpublic
information that would materially and adversely affect the Company. For purposes
of determining whether two requests have been made under this Section 5, only
requests relating to a registration statement that has become effective under
the Securities Act and pursuant to which the Grantee has disposed of all shares
covered thereby in the manner contemplated therein shall be counted.
(b) The Registration Expenses shall be for the account of the Company;
PROVIDED, HOWEVER, that the Company shall not be required to pay any
Registration Expenses with respect to such registration if the registration
request is subsequently withdrawn at the request of the Grantee unless the
Grantee agrees to forfeit its right to request one registration.
(c) The Grantee shall provide all information reasonably requested by
the Company for inclusion in any registration statement to be filed hereunder.
If during the Registration Period the Company shall propose to register under
the Securities Act the offering, sale and delivery of Devon Common Stock for
cash for its own account or for any other stockholder of the Company pursuant to
a firm underwriting, it shall, in addition to the Company's other obligations
under this Section 5, allow the Grantee the right to participate in such
registration provided that the Grantee participates in the underwriting;
PROVIDED, HOWEVER, that, if the managing underwriter of such offering advises
the Company in writing that in its opinion the number of shares of Devon Common
Stock requested to be included in such registration exceeds the number that can
be sold in such offering, the Company shall, after fully including therein all
securities to be sold by the Company or, if such registration relates to Devon
Common Stock of any other stockholder of the Company being registered pursuant
to a demand registration, all securities to be sold by such other stockholder,
include the shares requested to be included therein by Grantee pro rata (based
on the number of shares intended to be included therein) with the shares
intended to be included therein by Persons other than the Company or, in the
case of a demand registration of a Company stockholder, with the shares intended
to be included therein by the Company or other Company stockholders.
(d) In connection with any offering, sale and delivery of Devon Common
Stock pursuant to a registration statement effected pursuant to this Section 5,
the Company and the Grantee shall provide each other and each underwriter of the
offering with customary representations, warranties and covenants, including
covenants of indemnification and contribution.
6. PROFIT LIMITATION.
(a) Notwithstanding any other provision of this Agreement, in no event
shall the Grantee's Total Profit exceed the Profit Cap and, if it otherwise
would exceed such amount, the Grantee, at its sole election, shall either (i)
deliver to the Company for cancellation Option Shares previously purchased by
Grantee, (ii) pay cash or other consideration to the Company, (iii) reduce the
amount of the fee payable to Grantee under Section 8.5 of the Merger Agreement
or (iv) undertake any combination thereof, so that the Grantee's Total Profit
shall not exceed the Profit Cap after taking into account the foregoing actions.
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(b) Notwithstanding any other provision of this Agreement, this Stock
Option may not be exercised for a number of Option Shares that would, as of the
Notice Date, result in a Notional Total Profit of more than the Profit Cap, and,
if the Notional Total Profit associated with exercise of the Option otherwise
would exceed the Profit Cap, the Grantee, at its sole option, may increase the
Exercise Price for that number of Option Shares set forth in the Exercise Notice
so that the Notional Total Profit shall not exceed the Profit Cap; PROVIDED,
HOWEVER, that nothing in this sentence shall restrict any exercise of the Option
otherwise permitted by this Section 6(b) on any subsequent date at the Exercise
Price set forth in Section 2(b) if such exercise would not then be restricted
under this Section 6(b).
7. LISTING. If the Devon Common Stock or any other securities then subject to
the Option are then listed on the American Stock Exchange ("AMEX") or any other
national securities exchange, or on the Nasdaq National Market, the Company,
upon the occurrence of an Exercise Event, will promptly file an application to
list on the AMEX or such other securities exchange the shares of the Devon
Common Stock or other securities then subject to the Option and will use all
reasonable efforts to cause such listing application to be approved as promptly
as practicable.
8. REPLACEMENT OF AGREEMENT. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, the Company will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement shall constitute an additional
contractual obligation of the Company, whether or not the Agreement so lost,
stolen, destroyed or mutilated shall at any time be enforceable by anyone.
9. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided in the Merger Agreement or
as otherwise expressly provided herein, each of the parties hereto shall bear
and pay all costs and expenses incurred by it or on its behalf in connection
with the transactions contemplated hereunder, including fees and expenses of its
own financial consultants, investment bankers, accountants and counsel.
(b) WAIVER AND AMENDMENT. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits of such provision.
This Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(c) ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARY; SEVERABILITY. Except
as otherwise set forth in the Merger Agreement, this Agreement (including the
Merger Agreement and the other documents and instruments referred to herein and
therein) (i) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof and (ii) is not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
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(d) 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 materially
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 transactions contemplated hereby are fulfilled to the extent possible.
(e) GOVERNING Law. This Agreement shall be governed by, and construed
in accordance with, the Laws of the State of Delaware, regardless of the Laws
that might otherwise govern under applicable principles of conflicts of law.
(f) DESCRIPTIVE HEADINGS. The descriptive headings contained herein are
for convenience or reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses or sent by electronic
transmission to the telecopier number specified below:
If to the Company to:
Devon Energy Corporation
00 Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attn: J. Xxxxx Xxxxxxx
with a copy to:
McAfee & Xxxx
00xx Xxxxx, Xxx Xxxxxxxxxx Xxxxxx
000 Xxxxx Xxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxxx
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If to Grantee to:
Santa Xx Xxxxxx Corporation
000 Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxx
with a copy to:
Xxxxxxx & Xxxxx L.L.P.
0000 Xxxxx Xxxxx
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: G. Xxxxxxx X'Xxxxx
(h) COUNTERPARTS. This Agreement and any amendments hereto may be
executed in counterparts, each of which shall be deemed an original and all of
which taken together shall constitute but a single document.
(i) ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder or under the Option shall be sold, assigned or
otherwise disposed of or transferred by either of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party, except that the Grantee may assign this Agreement to a wholly owned
Subsidiary of the Grantee; PROVIDED, HOWEVER, that no such assignment shall have
the effect of releasing the Grantee from its obligations hereunder. Subject to
the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
(j) FURTHER ASSURANCES. If the Grantee exercises the Option or any
portion thereof, the Company and the Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(k) SPECIFIC PERFORMANCE. The parties hereto hereby acknowledge and
agree that the failure of any party to this Agreement to perform its agreements
and covenants hereunder will cause irreparable injury to the other party to this
Agreement for which damages, even if available, will not be an adequate remedy.
Accordingly, each of the parties hereto hereby consents to the granting of
equitable relief (including specific performance and injunctive relief) by any
court of competent jurisdiction to enforce any party's obligations hereunder.
The parties further agree to waive any requirement for the securing or posting
of any bond in connection with the obtaining of any such equitable relief and
that this provision is without prejudice to any other rights that the parties
hereto may have for any failure to perform this Agreement.
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IN WITNESS WHEREOF, the Company and the Grantee have caused
this Stock Option Agreement to be signed by their respective officers thereunto
duly authorized, all as of the day and year first written above.
DEVON ENERGY CORPORATION
By: /s/ J. Xxxxx Xxxxxxx
-------------------------------------------
Name: J. Xxxxx Xxxxxxx
Title: President and Chief Executive Officer
SANTA XX XXXXXX CORPORATION
By: /s/ Xxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Executive Officer
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ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Stock Option Agreement shall have
the meanings set forth below unless the context shall otherwise require:
"Agreement" shall mean this Stock Option Agreement.
"Applicable Price" means the highest of (i) the highest
purchase price per share paid pursuant to a third party's tender or exchange
offer made for shares of Devon Common Stock after the date hereof and on or
prior to the Put Date, (ii) the price per share to be paid by any third Person
for shares of Devon Common Stock pursuant to an agreement for a Business
Combination Transaction entered into on or prior to the Put Date, and (iii) the
Current Market Price. If the consideration to be offered, paid or received
pursuant to either of the foregoing clauses (i) or (ii) shall be other than in
cash, the value of such consideration shall be determined in good faith by an
independent nationally recognized investment banking firm jointly selected by
the Grantee and the Company, which determination shall be conclusive for all
purposes of this Agreement.
"Authorization" shall mean any and all permits, licenses,
authorizations, orders certificates, registrations or other approvals granted by
any Governmental Authority.
"Beneficial Ownership," "Beneficial Owner" and "Beneficially
Own" shall have the meanings ascribed to them in Rule 13d-3 under the Exchange
Act.
"Business Combination Transaction" shall mean (i) a
consolidation, exchange of shares or merger of the Company with any Person,
other than the Grantee or one of its Subsidiaries, and, in the case of a merger,
in which the Company shall not be the continuing or surviving corporation, (ii)
a merger of the Company with a Person, other than the Grantee or one of its
Subsidiaries, in which the Company shall be the continuing or surviving
corporation but the then outstanding shares of Devon Common Stock shall be
changed into or exchanged for stock or other securities of the Company or any
other Person or cash or any other property or the shares of Devon Common Stock
outstanding immediately before such merger shall after such merger represent
less than 50% of the common shares and common share equivalents of the Company
outstanding immediately after the merger or (iii) a sale, lease or other
transfer of all or substantially all the assets of the Company to any Person,
other than the Grantee or one of its Subsidiaries.
"Business Day" shall mean a day other than Saturday, Sunday or
a federal holiday.
"Closing" shall have the meaning ascribed to such term in
Section 2 herein.
"Closing Date" shall have the meaning ascribed to such term in
Section 2 herein.
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"Court" shall mean any court or arbitration tribunal of the
United States, any foreign country or any domestic or foreign state, and any
political subdivision thereof, and shall include the European Court of Justice.
"Current Market Price" shall mean, as of any date, the average
of the closing prices (or, if such securities should not trade on any trading
day, the average of the bid and asked prices therefor on such day) of the Devon
Common Stock as reported on the American Stock Exchange during the ten
consecutive trading days ending on (and including) the trading day immediately
prior to such date or, if the shares of Devon Common Stock are not quoted
thereon, on The Nasdaq National Market or, if the shares of Devon Common Stock
are not quoted thereon, on the principal trading market (as defined in
Regulation M under the Exchange Act) on which such shares are traded as reported
by a recognized source during such ten Business Day period.
"Exercise Event" shall mean (i) any of the events giving rise
to the obligation of the Company to pay the $103,000,000 fee under Section
8.5(b) of the Merger Agreement or (ii) the event giving rise to the obligation
to pay the $56,650,000 fee under Section 8.5(b) of the Merger Agreement after an
event giving rise to the obligation to pay the $46,350,000 fee under Section
8.5(b) of the Merger Agreement has already occurred.
"Exercise Notice" shall have the meaning ascribed to such term
in Section 2(d) herein.
"Exercise Price" shall have the meaning ascribed to such term
in Section 2 herein.
"Governmental Authority" shall mean any governmental agency or
authority (other than a Court) of the United States, any foreign country, or any
domestic or foreign state, and any political subdivision thereof, and shall
include any multinational authority having governmental or quasi-governmental
powers.
"Law" shall mean all laws, statutes and ordinances of the
United States, any state of the United States, any foreign country, any foreign
state and any political subdivision thereof, including all decisions of Courts
having the effect of law in each such jurisdiction.
"Lien" shall mean any mortgage, pledge, security interest,
adverse claim, encumbrance, lien or charge of any kind (including any agreement
to give any of the foregoing), any conditional sale or other title retention
agreement, any lease in the nature thereof or the filing of or agreement to give
any financing statement under the Laws of any jurisdiction.
"Merger Agreement" shall mean that certain Agreement and Plan
of Merger dated as of the date hereof by and among the Company, Merger Co. and
Grantee.
"Notice Date" shall have the meaning ascribed to such term in
Section 2 herein.
"Notional Total Profit" shall mean, with respect to any number
of Option Shares as to which the Grantee may propose to exercise the Option, the
Total Profit determined as of the date of the Exercise Notice assuming that the
Option were exercised on such date for such number of Option Shares and assuming
such Option Shares, together with all other Option
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Shares held by the Grantee and its Affiliates as of such date, were sold for
cash at the closing market price for the Devon Common Stock as of the close of
business on the preceding trading day (less customary brokerage commissions) and
including all amounts theretofore received or concurrently being paid to the
Grantee pursuant to clauses (i), (ii) and (iii) of the definition of Total
Profit.
"Option" shall mean the option granted by the Company to
Grantee pursuant to Section 2 herein.
"Option Shares" shall have the meaning ascribed to such term
in Section 2 herein.
"Option Term" shall have the meaning ascribed to such term in
Section 2 herein.
"Order" shall mean any judgment, order or decree of any Court
or Governmental Authority, federal, foreign, state or local, of competent
jurisdiction.
"Profit Cap" shall mean $103,000,000.
"Put Consideration" shall have the meaning ascribed to such
term in Section 4 herein.
"Put Date" shall have the meaning ascribed to such term in
Section 4 herein.
"Put Period" shall have the meaning ascribed to such term in
Section 4 herein.
"Put Right" shall have the meaning ascribed to such term in
Section 4 herein.
"Registration Expenses" shall mean the expenses associated
with the preparation and filing of any registration statement pursuant to
Section 5 herein and any sale covered thereby (including any fees related to
blue sky qualifications and filing fees in respect of the National Association
of Securities Dealers, Inc.), but excluding underwriting discounts or
commissions or brokers' fees in respect to shares to be sold by the Grantee and
the fees and disbursements of the Grantee's counsel.
"Registration Period" shall mean the period of two years
following the first exercise of the Option by the Grantee.
"Regulation" shall mean any rule or regulation of any
Governmental Authority having the effect of Law or of any rule or regulation of
any self-regulatory organization, such as the American Stock Exchange.
"Total Profit" shall mean the aggregate (before income taxes)
of the following: (i) all amounts received by the Grantee or concurrently being
paid to the Grantee pursuant to Section 4 for the repurchase of all or part of
the unexercised portion of the Option, (ii) (A) the amounts received by the
Grantee or concurrently being paid to the Grantee pursuant to the sale of Option
Shares (or any other securities into which such Option Shares are converted or
exchanged), including sales made to the Company or pursuant to a registration
statement under the Securities Act or any exemption therefrom, less (B) the
Grantee's purchase price for such
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Option Shares (or, in the case of a cashless exercise, the aggregate Exercise
Price of the Option Shares purchased by cashless exercise) and (iii) all amounts
received by the Grantee from the Company or concurrently being paid to the
Grantee pursuant to Section 8.5 of the Merger Agreement less (iv) any payments
made pursuant to Section 6(a)(ii) herein.
"Unexercised Option Shares" shall mean, from and after the
Exercise Date until the expiration of the Option Term, those Option Shares as to
which the Option remains unexercised from time to time.
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