AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 4, 2002
REGISTRATION NO. 333-83156
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DEVON ENERGY CORPORATION DELAWARE 73-1567067
DEVON FINANCING TRUST II DELAWARE 73-6324936
DEVON FINANCING CORPORATION, U.L.C. NOVA SCOTIA NOT APPLICABLE
Exact name of registrant State or other jurisdiction of IRS Employer
as specified in its charter incorporation or organization Identification Number
20 NORTH BROADWAY
OKLAHOMA CITY, OKLAHOMA 73102-8260
(405) 235-3611
(Address, including zip code, and telephone number,
including area code, of registrants' principal executive offices)
J. LARRY NICHOLS COPY TO:
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF SCOTT J. DAVIS
EXECUTIVE OFFICER DAVID A. SCHUETTE
DEVON ENERGY CORPORATION MAYER, BROWN, ROWE & MAW
20 NORTH BROADWAY 190 SOUTH LASALLE STREET
OKLAHOMA CITY, OKLAHOMA 73102-8260 CHICAGO, ILLINOIS 60603-3441
(405) 235-3611 (312) 782-0600
(Name, address, including zip code, and
telephone
number, including area code, of agent for
service)
Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective.
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 interest
reinvestment plans, 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(c)
under the Securities Act, 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. [ ]
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS 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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. Devon
Energy Corporation, Devon Financing Trust II and Devon Financing Corporation,
U.L.C. may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 4, 2002
PROSPECTUS
$1,500,000,000
DEVON ENERGY CORPORATION
COMMON STOCK, PREFERRED STOCK,
DEBT SECURITIES, STOCK PURCHASE AGREEMENTS
AND STOCK PURCHASE UNITS
DEVON FINANCING TRUST II
TRUST PREFERRED SECURITIES
GUARANTEED BY DEVON ENERGY CORPORATION
DEVON FINANCING CORPORATION, U.L.C.
DEBT SECURITIES
GUARANTEED BY DEVON ENERGY CORPORATION
By this prospectus, Devon Energy Corporation may offer, from time to time,
in one or more series: common stock; preferred stock; debt securities; stock
purchase agreements and stock purchase units. Devon Financing Trust II may, from
time to time, issue its trust preferred securities guaranteed by Devon Energy
Corporation and Devon Financing Corporation, U.L.C. may, from time to time,
issue its debt securities guaranteed by Devon Energy Corporation. The securities
offered by this prospectus will have a maximum aggregate offering price of
$1,500,000,000. We will provide more specific information regarding these
securities in supplements to this prospectus. You should read this prospectus
and any supplement carefully before investing. In particular, you should read
the risk factors beginning on page 4.
We, Devon Financing Trust II and Devon Financing Corporation, U.L.C. may
sell these securities to or through underwriters, to other purchasers and/or
through agents. The supplements to this prospectus will specify the names of and
arrangements with any underwriters or agents.
Neither the Securities and Exchange Commission nor any state securities
commissions has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
---------------------
, 2002
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. You should not assume that the information provided by
this prospectus is accurate as of any date other than the date on the front of
this prospectus.
TABLE OF CONTENTS
PAGE
----
ABOUT THIS PROSPECTUS....................................... i
SUMMARY..................................................... 1
RISK FACTORS................................................ 4
USE OF PROCEEDS............................................. 8
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS........................................... 9
DESCRIPTION OF CAPITAL STOCK................................ 9
DESCRIPTION OF UNDESIGNATED PREFERRED STOCK................. 11
DESCRIPTION OF DEBT SECURITIES.............................. 12
DESCRIPTION OF TRUST PREFERRED SECURITIES................... 30
DESCRIPTION OF TRUST PREFERRED SECURITIES GUARANTEES........ 37
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND UNITS........... 39
BOOK-ENTRY SECURITIES....................................... 39
PLAN OF DISTRIBUTION........................................ 41
LEGAL MATTERS............................................... 42
EXPERTS..................................................... 42
WHERE YOU CAN FIND MORE INFORMATION......................... 43
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS................................................ 44
ABOUT THIS PROSPECTUS
This prospectus may not be used to sell securities unless it is accompanied
by a prospectus supplement.
This prospectus is part of a registration statement we, Devon Financing
Trust II and Devon Financing Corporation, U.L.C. filed with the SEC utilizing a
shelf registration process. Under this shelf registration process, we, Devon
Financing Trust II and Devon Financing Corporation, U.L.C. may sell the
securities described in this prospectus in one or more offerings up to a total
dollar amount of $1,500,000,000.
This prospectus provides you with a general description of the securities
we may offer. Each time we, Devon Financing Trust II or Devon Financing
Corporation, U.L.C. sell offered securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may include additional risk factors or other
special considerations applicable to those securities. The prospectus supplement
may also add, update or change information contained in this prospectus. If
there is any inconsistency between the information in this prospectus and any
prospectus supplement, you should rely on the information in the prospectus
supplement. You should read both this prospectus and any prospectus supplement
together with additional information described under "Where You Can Find More
Information."
In this prospectus, the terms "Devon," "we," "us" and "our" generally mean
Devon Energy Corporation, a Delaware corporation, and its consolidated
subsidiaries.
Unless otherwise indicated, all dollar amounts in this prospectus are
expressed in U.S. dollars.
i
SUMMARY
You should read the following summary together with the more detailed
information contained in this prospectus and the other information incorporated
by reference into this prospectus.
DEVON
OVERVIEW
Devon is an independent energy company engaged primarily in oil and gas
exploration, development and production, and in the acquisition of producing
properties. Devon currently ranks among the five largest U.S. based independent
oil and gas companies in terms of oil and natural gas reserves, oil and natural
gas production, equity market capitalization and enterprise value (meaning total
equity market capitalization plus long-term debt). As of December 31, 2001,
Devon owned proved oil and natural gas reserves of 1.6 billion barrels of oil
equivalent. Approximately 56% of these reserves were natural gas and 44% oil and
natural gas liquids. North American proved reserves accounted for 80% of Devon's
total reserves and were weighted 64% to natural gas.
On January 24, 2002, Devon acquired Mitchell Energy & Development Corp.
("Mitchell"). Mitchell was a large independent exploration and production
company headquartered in Houston. At December 31, 2001, Mitchell had
approximately 390 million barrels of oil equivalent of proved reserves. All of
Mitchell's proved reserves were located in the United States, primarily in
Texas, and were approximately 70% natural gas. Mitchell also owned and operated
six natural gas processing plants and over 9,000 miles of natural gas gathering
pipelines.
DEVON FINANCING TRUST II
Devon Financing Trust II is a statutory trust formed under Delaware law
pursuant to its Declaration of Trust, also known as its trust agreement and its
Certificate of Trust filed with the Delaware Secretary of State. We will execute
an amended and restated trust agreement for Devon Financing Trust II, which will
state the terms and conditions for Devon Financing Trust II to issue and sell
its trust common and trust preferred securities.
Devon owns, directly or indirectly, all the trust common securities, which
have an aggregate liquidation value equal to at least 3% of the total capital of
Devon Financing Trust II. The trust preferred securities will represent the
remaining percentage of Devon Financing Trust II's total capitalization. The
trust common securities will have terms substantially equal to, and will rank
equal in priority of payment with, the trust preferred securities. However, if
Devon defaults on the debt securities owned by Devon Financing Trust II or
another event of default under the trust agreement occurs, then, so long as the
default continues, cash distributions and liquidation, redemption and other
amounts payable or deliverable on the securities of the Trust must be paid or
delivered to holders of the trust preferred securities before the holders of the
trust common securities. Devon Financing Trust II may not borrow money, issue
debt, exchange mortgages or pledge any of its assets. The trust preferred
securities will be guaranteed by Devon as described in this prospectus and the
applicable prospectus supplement.
Devon Financing Trust II exists for the exclusive purpose of:
- issuing the trust common and trust preferred securities representing
undivided beneficial interests in the assets of the Trust;
- investing the gross proceeds of the trust common and trust preferred
securities in Devon's debt securities; and
- engaging only in those other activities necessary or incidental thereto.
1
Unless otherwise specified in the applicable prospectus supplement, the
following five trustees will conduct Devon Financing Trust II's business and
affairs:
- three of Devon's employees, officers or affiliates, as administrative
trustees;
- The Bank of New York, a New York banking corporation, as property
trustee; and
- The Bank of New York (Delaware), an affiliate of The Bank of New York, as
Delaware trustee.
The Bank of New York also serves as the indenture trustee for purposes of
compliance with the provisions of the Trust Indenture Act of 1939, the guaranty
trustee under Devon's guarantee in favor of the holders of trust preferred
securities and debt trustee under the indenture related to Devon's debt
securities. The property trustee holds title to Devon's debt securities for the
benefit of the holders of the trust common and trust preferred securities. The
property trustee has the power to exercise all rights, powers and privileges
under the indenture as holder of Devon's debt securities. In addition, the
property trustee maintains exclusive control of a segregated, non-interest
bearing bank account to hold all payments made in respect of Devon's debt
securities for the benefit of the holders of the trust common and trust
preferred securities. The property trustee makes payments of distributions and
payments on liquidation, redemption and otherwise to the holders of the trust
common and trust preferred securities out of funds from the bank account. Devon,
as a direct or an indirect holder of all trust common securities, has a right to
appoint, remove or replace any administrative trustee and to increase or
decrease the number of administrative trustees. Devon pays all fees and expenses
related to Devon Financing Trust II and this offering of the trust preferred
securities.
The rights of the holders of Devon's trust preferred securities, including
economic rights, rights to information and voting rights, are set forth in the
trust agreement and the Delaware Business Trust Act. The trust agreement, the
indenture and the Devon guarantee also incorporate by reference terms of the
Trust Indenture Act. The trust agreement, the indenture and Devon's guarantee
will be qualified under the Trust Indenture Act.
DEVON FINANCING CORPORATION, U.L.C.
Devon Financing Corporation, U.L.C. is an unlimited liability company under
the Companies Act of Nova Scotia, Canada organized on September 12, 2001. Devon
Financing Corporation, U.L.C. is a wholly owned finance subsidiary of Devon
Energy Corporation (Oklahoma), which in turn is a wholly owned subsidiary of
Devon. Devon Financing Corporation, U.L.C. is a holding company whose only
business is to access bank and capital markets on behalf of the Canadian
subsidiaries of Devon. Otherwise, Devon Financing Corporation, U.L.C. conducts
no independent business and owns no property. Devon Financing Corporation,
U.L.C. will issue debt securities which will be guaranteed by Devon. Devon
Financing Corporation, U.L.C.'s registered office is located at 1959 Upper Water
Street, Suite 800, Halifax, Nova Scotia, B3J 2X2.
THE OFFERING
The descriptions of the securities contained in this prospectus, together
with the applicable prospectus supplements, summarize all the material terms and
provisions of the various types of securities that we, Devon Financing Trust II
and Devon Financing Corporation, U.L.C. may offer. The particular terms of the
securities offered by any prospectus supplement will be described in that
prospectus supplement. If indicated in the applicable prospectus supplement, the
terms of the securities may differ from the terms summarized below. The
prospectus supplement will also contain information, where applicable, about
material U.S. federal income tax considerations relating to the securities, and
the securities exchange, if any, on which the securities will be listed.
2
We may sell from time to time, in one or more offerings, or issue in
connection with any securities exchangeable for our securities:
- common stock and related rights;
- preferred stock;
- debt securities; and/or
- stock purchase agreements for the purchase of common stock or preferred
stock and stock purchase units.
Devon Financing Trust II may offer and sell, from time to time, trust
preferred securities guaranteed by Devon and Devon Financing Corporation, U.L.C.
may offer and sell, from time to time, debt securities guaranteed by Devon.
In this prospectus, we refer to the common stock and related rights,
preferred stock, debt securities, trust preferred securities and debt securities
guaranteed by Devon and stock purchase agreements for the purchase of common
stock or preferred stock and stock purchase units collectively as "securities."
If we issue securities at a discount from their original stated principal
amount, then, for purpose of calculating the total dollar amount of all
securities issued under this prospectus, we will treat the initial offering
price of the securities as the total original principal amount of the
securities.
RISK FACTORS
See "Risk Factors," immediately following this summary, for a discussion of
certain factors relating to us and our business. Additional risk factors
relating to the investment in our, Devon Financing Trust II's and Devon
Financing Corporation, U.L.C.'s securities will be included in supplements to
this prospectus.
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Our, Devon Financing Trust II's and Devon Financing Corporation, U.L.C.'s
principal executive offices are located at 20 North Broadway, Oklahoma City,
Oklahoma 73102-8260 and the telephone number at that location is (405) 235-3611.
3
RISK FACTORS
You should carefully consider the following factors, in addition to the
other information contained or incorporated by reference in this prospectus,
before deciding to invest in Devon's, Devon Financing Trust II's or Devon
Financing Corporation, U.L.C.'s securities.
DEVON DEPENDS UPON PAYMENTS FROM ITS SUBSIDIARIES
Devon is a holding company and conducts substantially all of its operations
through subsidiaries. Devon's principal sources of cash are external financings,
dividends and advances from its subsidiaries, investments, payments by
subsidiaries for services rendered and interest payments from subsidiaries on
cash advances. The amount of cash and income available to Devon from its
subsidiaries largely depends upon each subsidiary's earnings and operating
capital requirements. The terms of some of those subsidiaries' borrowing
arrangements limit payments and transfer of funds. In addition, the ability of
those subsidiaries to make any payments or transfer funds will depend on the
subsidiaries' earnings, business and tax considerations and legal restrictions.
Failure to receive adequate cash and income from its subsidiaries could
jeopardize Devon's ability to make payments on debt securities issued by Devon,
including those held by Devon Financing Trust II, or to satisfy Devon's
guarantee of any debt securities of Devon Financing Corporation, U.L.C.
CLAIMS OF HOLDERS OF THE DEBT SECURITIES OF DEVON AND DEVON FINANCING
CORPORATION, U.L.C. RANK JUNIOR TO THOSE OF CREDITORS OF DEVON'S SUBSIDIARIES
Devon's obligations under its own debt securities and its guarantee of the
debt securities of Devon Financing Corporation, U.L.C. will rank equally with
its other outstanding unsecured and unsubordinated obligations. However, as a
result of the holding company structure of Devon, the debt securities of Devon
and Devon's guarantee of Devon Financing Corporation, U.L.C.'s obligations will
effectively rank junior to all existing and future debt, trade payables and
other liabilities of the subsidiaries of Devon. Any right of Devon and its
creditors to participate in the assets of any of Devon's subsidiaries upon any
liquidation or reorganization of any subsidiary will be subject to the prior
claims of that subsidiary's creditors, including trade creditors, except to the
extent that Devon may be a creditor of the subsidiary.
DEVON'S DEBT LEVEL MAY LIMIT ITS FINANCIAL FLEXIBILITY
As of December 31, 2001, Devon had approximately $6.6 billion of total debt
and a total debt to capital ratio of 60% as calculated under the provisions of
Devon's revolving credit facilities and its $3 billion credit facility. After
giving effect to the financing of the cash portion of the Mitchell acquisition,
as of December 31, 2001, Devon would have had approximately $8.6 billion of
total debt and a total debt to total capital ratio of 59%. Devon may also incur
additional debt in the future, including in connection with other acquisitions.
The level of Devon's debt could have several important effects on Devon's future
operations, including, among others:
- a significant portion of Devon's cash flow from operations will be
dedicated to the payment of principal and interest on the debt and will
not be available for other purposes;
- rating agencies may view Devon's debt level negatively;
- covenants contained in Devon's existing debt arrangements, including
those contained in Devon's $3 billion senior unsecured credit facility
that was used to finance a portion of the acquisition of Anderson
Exploration Ltd. ("Anderson") and the cash portion of the Mitchell
acquisition, will require Devon to meet financial tests that may affect
Devon's flexibility in planning for and reacting to changes in its
business, including possible acquisition opportunities;
- Devon's ability to obtain additional financing for working capital,
capital expenditures, acquisitions, general corporate and other purposes
may be limited;
4
- Devon may be at a competitive disadvantage to similar companies that have
less debt; and
- Devon's vulnerability to adverse economic and industry conditions may
increase.
DEVON MAY NOT SUCCEED AT DIVESTING ASSETS OR MAY FAIL TO DO SO ON FAVORABLE
TERMS
Devon intends to divest certain assets and use the proceeds from those
divestitures to repay indebtedness. Devon may be unable to effect those
divestitures or may be able to make those divestitures only on unfavorable
terms. This may result in Devon being unable to reduce its indebtedness to the
extent desired, which may result in higher than expected financing costs and
limit Devon's financial flexibility in the future.
DEVON'S OFFSHORE OPERATIONS ARE EXPOSED TO THE ADDITIONAL RISK OF TROPICAL
WEATHER DISTURBANCES
Some of our production and reserves are located offshore in the Gulf of
Mexico. Operations in this area are subject to tropical weather disturbances.
Some of these disturbances can be severe enough to cause substantial damage to
facilities and possibly interrupt production. In accordance with customary
industry practices, Devon maintains insurance against some, but not all, of
these risks. Losses could occur for uninsurable or uninsured risks or in amounts
in excess of existing insurance coverage. We cannot assure you that Devon will
be able to maintain adequate insurance in the future at rates it considers
reasonable or that any particular types of coverage will be available. An event
that is not fully covered by insurance could have a material adverse effect on
Devon's financial position and results of operations.
WE ARE SUBJECT TO UNCERTAINTIES OF FOREIGN OPERATIONS
We have significant international operations in South America, Azerbaijan,
Canada, Southeast Asia and West Africa. Local political, economic and other
uncertainties may adversely affect these operations. These uncertainties
include:
- general strikes and civil unrest, such as those that occurred in
Argentina and Indonesia;
- the risk of war, acts of terrorism, expropriation, forced renegotiation
or modification of existing contracts;
- import and export regulations in China, Brazil, Egypt and other
countries;
- taxation policies, including royalty and tax increases and retroactive
tax claims, and investment;
- transportation regulations and tariffs;
- exchange controls, currency fluctuations, devaluation or other activities
that limit or disrupt markets and restrict payments or the movement of
funds, such as in Brazil and Argentina;
- laws and policies of the United States affecting foreign trade including
trade sanctions applicable to Azerbaijan;
- the possibility of being subject to exclusive jurisdiction of foreign
courts in connection with legal disputes relating to license to operate
and concession rights in countries where Devon currently operates;
- the possible inability to subject foreign persons to the jurisdiction of
courts in the United States; and
- difficulties in enforcing Devon's rights against a governmental agency
because of the doctrine of sovereign immunity and foreign sovereignty
over international operations in China and elsewhere.
5
DEVON MAY INCUR A TAX LIABILITY FOR A PRIOR PENNZENERGY TRANSACTION AS A RESULT
OF THE 1999 MERGER OF DEVON WITH PENNZENERGY
On August 17, 1999, we completed a merger with PennzEnergy Company. If
PennzEnergy's distribution to its stockholders of the stock of Pennzoil-Quaker
State Company in December 1998 was to be considered part of a plan or series of
related transactions that includes the merger of Devon with PennzEnergy, Devon
would recognize gain under Section 355(e) of the Internal Revenue Code. Any
transaction within a four-year period beginning two years before the
distribution is presumed to be a part of such a plan. We cannot assure you we
will be able to overcome this presumption. We currently estimate Devon's
potential tax liability, if it cannot overcome this presumption, to be $16
million in additional tax for 1998 and the elimination of approximately $183
million in net operating loss carryovers.
REPORTED OIL, NATURAL GAS AND PLANT NATURAL GAS LIQUIDS RESERVE DATA AND FUTURE
NET REVENUE ESTIMATES ARE UNCERTAIN
Estimates of reserves are projections based on engineering data, projected
future rates of production and the timing of future expenditures. Devon's
estimates of its proved oil, natural gas and plant natural gas liquids reserves
and projected future net revenue are based on reserve reports that Devon
prepares and on the reports of independent consulting petroleum engineers that
it hires for that purpose. The process of estimating oil, natural gas and plant
natural gas liquids reserves requires substantial judgment, resulting in
imprecise determinations, particularly for new discoveries. Different reserve
engineers may make different estimates of reserve quantities and related revenue
based on the same data. Future performance that deviates significantly from the
reserve reports could have a material adverse effect on Devon's financial
position and results of operations.
PRODUCT PRICES ARE VOLATILE, AND LOW PRICES CAN ADVERSELY IMPACT RESULTS
The results of operations of Devon are highly dependent on the prices of
and demand for natural gas, oil and natural gas liquids. Historically, the
markets for natural gas, oil and natural gas liquids have been volatile and are
likely to continue to be volatile in the future. Accordingly, the prices
received by Devon for natural gas, oil and natural gas liquids production depend
on numerous factors beyond its control. These factors include, among other
things:
- the level of ultimate consumer product demand;
- governmental regulations and taxes;
- the price and availability of alternative fuels;
- the level of imports and exports of natural gas, oil and natural gas
liquids; and
- the overall economic environment.
Any significant decline in prices for natural gas, oil and natural gas
liquids, as has occurred from time to time in the past, could have a material
adverse effect on Devon's financial condition, results of operations and
quantities of reserves recoverable on an economic basis. Should the oil and gas
industry experience significant price declines or other adverse market
conditions, Devon may not be able to generate sufficient cash flows from
operations to meet its obligations, including those under the securities and
make planned capital expenditures.
DEVON HAS CHARTER AND OTHER PROVISIONS THAT MAY MAKE IT DIFFICULT TO CAUSE A
CHANGE OF CONTROL
Some provisions of Devon's certificate of incorporation and bylaws and of
the Delaware General Corporation Law, as well as Devon's stockholder rights
plan, may make it difficult for stockholders to cause a change of control of
Devon and replace incumbent management. These provisions include:
- a classified board, the members of which serve staggered three-year terms
and may be removed by stockholders only for cause;
6
- a prohibition on stockholders calling special meetings and acting by
written consent; and
- rights issued under its rights plan, which would "flip in" if a hostile
bidder acquired 15% of Devon's common stock.
THERE ARE RISKS RELATING TO THE ACQUISITIONS OF ANDERSON AND MITCHELL
DEVON MAY NOT BE ABLE TO INTEGRATE THE OPERATIONS OF DEVON, ANDERSON AND
MITCHELL SUCCESSFULLY
The acquisitions will present challenges to management, including the
integration of the operations, technologies and personnel of Devon, Anderson and
Mitchell. For example, the addition of Mitchell substantially increased the
midstream business (i.e., gas processing and similar activities) of Devon.
Devon's acquisition of Anderson presents similar integration challenges,
significantly increasing Devon's Canadian operations. Moreover, the simultaneous
integration of Devon, Anderson and Mitchell into one combined company will
necessarily involve more risk than if only two companies were being integrated.
The acquisitions also include other risks commonly associated with similar
transactions, including unanticipated liabilities, unanticipated costs and
diversion of management's attention. Any difficulties that Devon encounters in
the transition and integration processes could have an adverse effect on the
revenue, level of expenses and operating results of Devon. Devon may also
experience operational interruptions or the loss of key employees, customers or
suppliers. As a result, Devon may not realize any of the anticipated benefits of
the acquisitions.
MITCHELL'S SIGNIFICANT INVESTMENT IN THE BARNETT SHALE IN NORTH TEXAS MAY NOT
GENERATE THE BENEFITS EXPECTED BY DEVON
Devon believes that a significant portion of Mitchell's value and future
potential was tied to its assets in the Barnett Shale in North Texas. To the
extent that these assets do not generate the return expected of them, the
benefits to Devon of its acquisition of Mitchell will be reduced.
DEVON MAY NOT REALIZE THE ACCRETION TO VARIOUS FINANCIAL MEASUREMENTS THAT IT
EXPECTS TO RESULT FROM THE ACQUISITIONS
Devon expects its acquisition of Mitchell to be accretive to its reserves
per share, production per share and cash margin (i.e., revenue less cash
expenses) per share on a pro forma basis to varying degrees, although the
combination of both Anderson and Mitchell with Devon is expected to be dilutive
to earnings per share in the near term. However, Devon's acquisition of Mitchell
may not be accretive to Devon's reserves per share, production per share, cash
margin per share or earnings per share for any future periods. It is possible
that Devon's acquisition of Anderson or Mitchell may, in fact, prove to be
dilutive to Devon's actual per share results in the future, and it is possible
that Devon's acquisition of Anderson and Mitchell together will prove to be
dilutive to Devon's earnings per share beyond the near term. Future events and
conditions which could reduce or eliminate such accretion or cause such dilution
include, among other things, adverse changes in:
- energy market conditions;
- commodity prices for natural gas, oil and natural gas liquids;
- maintenance and growth of production levels;
- anticipated reserve levels;
- future operating results;
- competitive conditions;
- the effectiveness of technologies;
- the availability of capital resources;
- laws and regulations affecting the energy business;
7
- capital expenditure obligations; and
- general economic conditions.
AFTER ACQUIRING MITCHELL, DEVON HAS SIGNIFICANT ASSETS LOCATED IN NORTH TEXAS,
WHICH COULD HEIGHTEN ITS EXPOSURE TO REGULATORY AND ENVIRONMENTAL ISSUES
Most of Mitchell's assets were located near large population centers in
North Texas. This means that Devon will be particularly sensitive to regulatory
or environmental issues relating to these large population centers, which could
adversely affect Devon's operating results.
DEVON MAY NOT ACHIEVE THE BENEFITS THAT DEVON EXPECTS FROM ANDERSON'S
PROPERTIES LOCATED IN CANADA'S NORTHERN FRONTIER AREA IF A SUFFICIENT GAS
PIPELINE IS NOT BUILT TO SERVE THAT AREA
Currently, there is no gas pipeline to deliver to market the amount of
natural gas that Devon expects from Anderson's properties located in Canada's
Northern Frontier area, sometimes referred to as "North of 60." Plans to build a
gas pipeline that would enable Devon to deliver natural gas from North of 60 to
southern markets have been under consideration for nearly 30 years, but no
construction has begun to date. In 1977, Canada and the United States executed a
Transit Pipeline Agreement that provided specific requirements for the Alaska
Natural Gas Transmission System, a proposed natural gas pipeline which would
extend from Alaska through Canada to the United States. The Transit Pipeline
Agreement was documented in the Alaskan Natural Gas Transportation Act which was
ratified by the U.S. Congress in the late 1970's. Approvals to build the
pipeline were obtained by Foothills Pipe Lines, Ltd, which was owned 50% by
Westcoast Energy Inc. and 50% by TransCanada Pipelines, Ltd. However, the
pipeline has not been built and there is considerable discussion occurring
within the United States and Canada about what requirements will be necessary
for a pipeline to transport gas from Alaska and/or the MacKenzie Delta/Beaufort
Sea area through Canada to the United States. Whether such a gas pipeline will
be built and, if built, the timing of its construction and the gas pipeline's
location and capacity are uncertain and depend on a number of factors that are
beyond Devon's control, including:
- the overall economic environment;
- political concerns, including relations between Canada and the United
States and relations among Canadian provinces and territories;
- possible legislative and regulatory changes in both Canada and the United
States; and
- related environmental risks and issues.
If a gas pipeline with sufficient capacity to deliver natural gas from
North of 60 to southern markets is not built, Devon will not achieve the
benefits that Devon expects from its North of 60 properties.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying prospectus supplement, we and
Devon Financing Corporation, U.L.C. expect to use the net proceeds from the sale
of our respective securities for general corporate purposes, which may include,
among other things:
- the repayment of outstanding indebtedness;
- working capital;
- capital expenditures; and
- acquisitions.
The precise amount and timing of the application of such proceeds will
depend upon our funding requirements and the availability and cost of other
funds. Devon Financing Trust II will use all proceeds from the sale of trust
common and trust preferred securities to purchase Devon debt securities.
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RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The ratio of earnings to combined fixed charges and preferred stock
dividends for each of the periods set forth below has been completed on a
consolidated basis and should be read in conjunction with Devon's consolidated
financial statements, including the accompanying notes thereto, incorporated by
reference in this prospectus.
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------
2001 2000 1999 1998 1997 1996
------------- ---- ---- ---- ---- ----
Ratio of earnings to combined fixed
charges and preferred stock
dividends.......................... 8.87 7.39 N/A N/A N/A 3.91
In the years 1999, 1998 and 1997, earnings were insufficient to cover
combined fixed charges and preferred stock dividends by $205.3 million, $362.0
million and $346.0 million, respectively.
Our ratios of earnings to combined fixed charges and preferred stock
dividends were computed based on:
- "earnings," which consist of earnings before income taxes, plus fixed
charges;
- "fixed charges," which consist of interest expense, including the
amortization of costs relating to the indebtedness and the amortization
of premiums recorded, distributions on preferred securities of subsidiary
trusts, amortization of costs relating to the offering of the preferred
securities of subsidiary trusts, and the estimated portion of rental
expense attributable to interest; and
- "preferred stock dividends," which consist of the amount of pre-tax
earnings required to pay dividends on the outstanding preferred stock.
DESCRIPTION OF CAPITAL STOCK
GENERAL
Devon's authorized capital stock consists of:
- 400,000,000 shares of common stock, par value $0.10 per share,
- 4,500,000 shares of preferred stock, par value $1.00 per share, and
- one share of special voting stock, par value $0.10 per share.
As of January 31, 2002, there were 153,809,040 shares of common stock and
one share of special voting stock outstanding. There are 1,500,000 shares of
6.49% cumulative preferred stock presently issued and outstanding.
COMMON STOCK
Holders of common stock will be entitled to receive dividends out of
legally available funds when and if declared by the Devon board. Subject to the
rights of the holders of any outstanding shares of preferred stock, holders of
shares of common stock will be entitled to cast one vote for each share held of
record on all matters submitted to a vote of stockholders. They will not be
entitled to cumulative voting rights for the election of directors. Except
pursuant to Devon's rights agreement, the shares of common stock have no
preemptive, conversion or other rights to subscribe for or purchase any
securities of Devon. Upon liquidation or dissolution of Devon, the holders of
shares of 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 common stock are fully paid and
nonassessable.
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PREFERRED STOCK
The preferred stock may be issued in one or more series. Our board may
establish attributes of any series, including the designation and number of
shares in the series, dividend rates (cumulative or noncumulative), voting
rights, redemptions, conversion or preference rights, and any other rights and
qualifications, preferences and limitations or restrictions on shares of a
series. The issuance of preferred stock may have the effect of delaying,
deferring or preventing a change in control of Devon without any vote or action
by the stockholders and may adversely affect the voting and other rights of the
holders of shares of common stock. The specific terms of a particular series of
preferred stock will be described in a certificate of designation relating to
that series.
Series A Junior Participating Preferred Stock. We have designated
2,000,000 shares of preferred stock as series A junior participating preferred
stock in connection with Devon's rights agreement.
6.49% Cumulative Preferred Stock, Series A. Devon issued 1,500,000 shares
of 6.49% cumulative preferred stock, series A, to holders of PennzEnergy's 6.49%
cumulative preferred stock, series A. The series A preferred stock ranks senior
to our common stock and our series A junior participating preferred stock as to
payment of dividends and distribution of assets upon our dissolution,
liquidation or winding up. The series A preferred stock is not convertible into,
or exchangeable for, other securities or property.
The series A preferred stock has a liquidation preference of $100 per
share, plus accrued and unpaid dividends. Holders of the shares are entitled to
receive cumulative cash dividends payable quarterly at an annual rate of $6.49
per share, when, as and if declared by the board.
Generally, holders of the series A preferred stock do not have any voting
rights. However, if we fail to pay the equivalent of six quarterly dividends
payable on the series A preferred stock or any other stock ranking on a parity
with the series A preferred stock, then we will increase the size of our board
of directors by two members. The holders of the series A preferred stock, along
with the holders of shares of any other series of preferred stock upon which
like voting rights have been conferred, voting as a single class together, will
have the right to vote for the two additional directors. This voting right
continues until we have paid all past dividends on the applicable preferred
stock.
So long as any shares of any series A preferred stock remain outstanding,
Devon will not, without the affirmative vote of the holders of at least 66 2/3%
of the outstanding shares of series A preferred stock:
- authorize, create or issue any capital stock of Devon ranking, as to
payment of dividends or distribution of assets upon our dissolution,
liquidation, or winding up, prior to the series A preferred stock, or
reclassify any authorized capital stock of Devon into any such shares of
such capital stock or issue any obligation or security convertible into
or evidencing the right to purchase any such shares of capital stock; or
- amend, alter or repeal the certificate of designations for the series A
preferred stock, or the certificate of incorporation of Devon, whether by
merger, consolidation or otherwise, so as to adversely affect the powers,
preferences or special rights of the series A preferred stock.
No adverse effect shall be deemed to result if the series A preferred stock
is converted or exchanged in a merger or consolidation into preferred stock of
the corporation surviving the merger or consolidation or of the corporation
issuing any securities into which common stock is converted or exchanged in the
transaction if the powers, preferences and rights of the preferred stock are not
different in an adverse respect from those of the series A preferred stock.
Similarly, any increase in the amount of authorized common stock, preference
common stock or preferred stock, or any increase or decrease in the number of
shares of any series of preference common stock or preferred stock or the
authorization, creation and issuance of other classes or series of common stock
or other stock, in each case ranking on a parity with or junior to the shares of
series A preferred stock with respect to the payment of dividends and
distributions upon dissolution, liquidation or winding up, shall not be deemed
to adversely affect the powers, preferences or special rights of the series A
preferred stock.
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Devon has the option to redeem the series A preferred stock on or after
June 2, 2008, in whole or in part, at a redemption price of $100 per share, plus
accrued and unpaid dividends to the redemption date. If full cumulative
dividends for prior dividend periods of the series A preferred stock have not
been paid or set apart for payment, then the series A preferred stock may not be
redeemed in part and we may not purchase or acquire any shares of the series A
preferred stock otherwise than pursuant to a purchase or exchange offer made on
the same terms to all holders of series A preferred stock.
SPECIAL VOTING STOCK
One share of special voting stock, par value $0.10 per share, is authorized
for issuance by Devon and is outstanding. Except as otherwise required by law or
Devon's certificate of incorporation, the special voting share possesses a
number of votes equal to the number of outstanding exchangeable shares, from
time to time, not owned by Devon or any entity controlled by Devon for all
matters submitted to a vote of our stockholders. The holders of shares of common
stock and the holder of the special voting share will vote together as a single
class on all matters. In the event of a liquidation event, all outstanding
exchangeable shares will automatically be exchanged for shares of Devon common
stock, and the holder of the special voting share will not be entitled to
receive any assets of Devon available for distribution to our stockholders. The
holder of the special voting share is not entitled to receive dividends.
However, the holders of the related exchangeable shares are entitled to receive
dividends, which are the same as dividends declared on Devon's common stock.
When the special voting share has no votes attached to it because there are no
exchangeable shares outstanding not owned by Devon or an entity controlled by
Devon, the special voting share will be canceled. Our wholly owned subsidiary,
Northstar Energy Corporation, has 2,067,330 exchangeable shares outstanding.
ANTI-TAKEOVER AND OTHER PROVISIONS
Rights Agreement. Under our rights agreement, holders of shares of common
stock have one right for each share of common stock that they hold. The
certificates representing outstanding shares of common stock also evidence one
right for each share. Initially, the rights trade with the shares of common
stock. Holders of exchangeable shares will receive one right with each share of
common stock they receive upon exchange of their exchangeable shares. If events
generally associated with an unsolicited takeover attempt of Devon or
transactions involving a change of control occur, including an acquisition or a
tender or exchange offer that would result in a bidder acquiring 15% or more of
Devon's voting securities, the rights will be distributed, will become
exercisable and will trade separately from the shares of common stock.
The rights will have anti-takeover effects. They will cause substantial
dilution to any person or group that attempts to acquire Devon in a manner that
causes the rights to become exercisable. We believe, however, that the rights
should not affect any prospective offeror willing to negotiate with the Devon
board or interfere with any merger or other business combination approved by the
Devon board. The Devon board may redeem the rights for $0.01 per right. The
Devon board may amend the terms of the rights agreement without the consent of
the Devon stockholders or the holders of the rights.
Classified Board. Devon's Certificate of Incorporation and Bylaws contain
provisions for a staggered board of directors with only one-third of the board
standing for election each year. Shareholders may only remove directors for
cause. A staggered board makes it more difficult for shareholders to change the
majority of directors.
DESCRIPTION OF UNDESIGNATED PREFERRED STOCK
This summary of the undesignated preferred stock discusses terms and
conditions that we expect will apply to all series of the preferred stock that
may be offered under this prospectus. The applicable prospectus supplement will
describe the particular terms of each series of preferred stock actually
offered. If indicated in the prospectus supplement, the terms of any series may
differ from the terms described below.
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The following description, together with the applicable prospectus
supplements, summarizes all the material terms and provisions of any preferred
stock being offered by this prospectus. It does not restate the terms and
provisions in their entirety. We urge you to read our charter and any applicable
certificate of designation that we may file because they, and not this
description, define the rights of any holders of preferred stock. We have
incorporated by reference our charter as an exhibit to the registration
statement that includes this prospectus. We will incorporate by reference as an
exhibit to the registration statement the form of any certificate of designation
before the additional issuance of any series of preferred stock.
We expect the prospectus supplement for any preferred stock that we
actually offer pursuant to this prospectus to include some or all of the
following terms:
- the designation of the series of preferred stock;
- the number of shares of preferred stock offered, the liquidation
preference per share and the offering price of the preferred stock;
- the dividend rate or rates of the shares, the method or methods of
calculating the dividend rate or rates, the dates on which dividends, if
declared, will be payable, and whether or not the dividends are to be
cumulative and, if cumulative, the date or dates from which dividends
shall be cumulative;
- the amounts payable on shares of the preferred stock in the event of our
voluntary or involuntary liquidation, dissolution or winding up;
- the redemption rights and price or prices, if any, for the shares of
preferred stock;
- the terms, and the amount, of any sinking fund or analogous fund
providing for the purchase or redemption of the shares of preferred
stock;
- any restrictions on our ability to make payments on any of our capital
stock if dividend or other payments are not made on the preferred stock;
- any voting rights granted to the holders of the shares of preferred stock
in addition to those required by Delaware law or our certificate of
incorporation;
- whether the shares of preferred stock will be convertible into shares of
our common stock or any other class of our capital stock, and, if
convertible, the conversion price or prices, and any adjustment or other
terms and conditions upon which the conversion shall be made;
- whether we have elected to offer depositary shares with respect to the
series of preferred stock;
- any other rights, preferences, restrictions, limitations or conditions
relative to the shares of preferred stock permitted by Delaware law or
our certificate of incorporation;
- any listing of the preferred stock on any securities exchange; and
- the federal income tax considerations applicable to the preferred stock.
Subject to our charter and to any limitations imposed by any then
outstanding preferred stock, we may issue additional series of preferred stock,
at any time or from time to time, with such powers, preferences, rights and
qualifications, limitations or restrictions as our board of directors
determines, and without further action of the stockholders, including holders of
our then outstanding preferred stock, if any.
DESCRIPTION OF DEBT SECURITIES
The following description of the debt securities sets forth certain general
terms and provisions of the debt securities to which this prospectus and any
prospectus supplement may relate. The particular terms of any series of debt
securities and the extent to which the general provisions may apply to a
particular series of debt securities will be described in a prospectus
supplement relating to that series. Devon may issue senior debt securities or
subordinated debt securities and Devon Financing Corporation, U.L.C. may issue
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debt securities, in each case, under indentures with a trustee. Some of the debt
securities that Devon Financing Corporation, U.L.C. may issue may include
additional principal amounts of 6.875% notes due September 30, 2011 and 7.875%
debentures due September 30, 2031. The 6.875% notes and the 7.875% debentures,
are described below under "Description of the Outstanding Devon Financing
Corporation, U.L.C. Debt Securities". Unless otherwise noted, the remainder of
this section applies to those debt securities of Devon Financing Corporation,
U.L.C. that it may issue other than 6.875% notes and 7.875% debentures.
We have summarized selected provisions of the indentures below. The summary
is not complete. Devon senior debt securities are to be issued under an
indenture (the "Devon senior indenture"), the form of which is filed as an
exhibit to this registration statement of which this prospectus forms a part.
Devon subordinated debt securities are to be issued under an indenture (the
"Devon subordinated indenture"), the form of which is filed as an exhibit to
this registration statement of which this prospectus forms a part. Devon
Financing Corporation, U.L.C. debt securities are to be issued under an
indenture (the "Devon Financing indenture"), the form of which is filed as an
exhibit to this registration statement of which this prospectus forms a part.
The Devon senior indenture, the Devon subordinated indenture and the Devon
Financing indenture are sometimes referred to herein, collectively, as the
"indentures" and each, individually, as an "indenture." You should read the
indentures for provisions that may be important to you.
Because we have included only a summary of the indenture terms, you must
read the indentures in full to understand every detail of the terms of the debt
securities.
The indentures will not limit the amount of debt securities we may issue
under them, and will provide that additional debt securities of any series may
be issued up to the aggregate principal amount that we authorize from time to
time. We may also issue debt securities pursuant to the indentures in
transactions that are exempt from the registration requirements of securities
laws. We will not consider those debt securities in determining the aggregate
amount of securities issued under this prospectus.
Unless otherwise indicated in the applicable prospectus supplement, we will
issue the debt securities in denominations of $1,000 or integral multiples of
$1,000.
Principal and any premium and interest in respect of the debt securities
will be payable, and the debt securities will be transferable, at the corporate
trust office of the trustee, unless we specify otherwise in the applicable
prospectus supplement. At our option, however, we may pay interest by mailing
checks to the registered holders of the debt securities at their registered
addresses.
We will describe any special U.S. federal income tax and other
considerations relating to debt securities in the applicable prospectus
supplement.
GENERAL
The prospectus supplement relating to the particular series of debt
securities being offered will specify the amounts, prices and terms of those
debt securities. These terms may include:
- the designation, aggregate principal amount and authorized denominations
of the debt securities;
- the date or dates on which the debt securities will mature;
- the percentage of the principal amount at which the debt securities will
be issued;
- the date on which the principal of the debt securities will be payable;
- whether the debt securities will be issued as registered securities,
bearer securities or a combination of the two;
- whether the debt securities will be issued in the form of one or more
global securities and whether such global securities will be issued in a
temporary global form or permanent global form;
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- the currency or currencies or currency unit or units of two or more
currencies in which debt securities are denominated, for which they may
be purchased, and in which principal and any premium and interest is
payable;
- if the currency or currencies or currency unit or units for which debt
securities may be purchased or in which principal and any premium
interest may be paid is at our election or at the election of a
purchaser, the manner in which an election may be made and its terms;
- the annual rate or rates, which may be fixed or variable, or the method
of determining the rate or rates at which the debt securities will bear
any interest, whether by remarketing, auction, formula or otherwise;
- the date or dates from which any interest will accrue and the date or
dates on which such interest will be payable;
- a description of any provisions providing for redemption, exchange or
conversion of the debt securities at our option, at holder's option or
otherwise, and the terms and provisions of such a redemption, exchange or
conversion;
- information with respect to book-entry procedures relating to global debt
securities;
- any sinking fund terms;
- whether and under what circumstances we will pay "additional amounts," as
defined in the indenture, on the debt securities to any holder; the term
"interest," as used in this prospectus, includes any additional amounts;
- any events of default or covenants of Devon with respect to the debt
securities of a certain series that are different from those described in
this prospectus;
- whether and under what circumstances any covenants in the indenture shall
be subject to covenant defeasance;
- any deletions from, or modifications or additions to, the provisions of
the indenture relating to satisfaction and discharge in respect of the
debt securities;
- any index or other method used to determine the amount of payments of
principal of and any premium and interest on the debt securities; and
- any other specific terms of the debt securities.
We are not obligated to issue all debt securities of any one series at the
same time. The debt securities of any one series may not bear interest at the
same rate or mature on the same date.
If we sell any of the debt securities for foreign currencies or foreign
currency units or if the principal of, or any premium or interest on, any series
of debt securities is payable in foreign currencies or foreign currency units,
we will describe the restrictions, elections, tax consequences, specific terms
and other information with respect to those debt securities and such foreign and
other information with respect to those debt securities and such foreign
currencies or foreign currency units in the applicable prospectus supplement.
Except as may be described in the applicable prospectus supplement, the
indenture will not limit our ability to incur indebtedness or afford holders of
debt securities protection in the event of a decline in our credit quality or if
we are involved in a takeover, recapitalization or highly leveraged or similar
transaction. The prospectus supplement relating to the particular series of debt
securities, to the extent not otherwise described in this prospectus, will
include any information with respect to any deletions from, modifications of or
additions to the covenants or events of default described below and contained in
the indenture, including any addition of a covenant or other provision providing
event risk or similar protection.
Unless otherwise indicated in the applicable prospectus supplement, Devon's
obligation to pay the principal of, and any premium and interest on, its senior
debt securities will be unsecured and will rank
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equally with all of Devon's other unsecured unsubordinated indebtedness.
Similarly, unless otherwise indicated in the applicable prospectus supplement,
Devon Financing Corporation, U.L.C.'s obligation to pay the principal of, and
any premium and interest on, its debt securities will be unsecured and will rank
equally with all of Devon Financing Corporation, U.L.C.'s other unsecured
unsubordinated indebtedness.
Devon will fully and unconditionally guarantee the due and punctual payment
of the principal of, premium, if any, additional amounts, if any, and interest
on the debt securities and any other obligations of Devon Financing Corporation,
U.L.C. under the debt securities when and as they become due and payable,
whether at maturity, upon redemption, by acceleration or otherwise, if Devon
Financing Corporation, U.L.C. is unable to satisfy these obligations. Devon's
guarantee of Devon Financing Corporation, U.L.C.'s obligations under its debt
securities will be an unsecured and unsubordinated obligation of Devon and will
rank equally with all of its other unsecured and unsubordinated obligations. The
guarantee provides that, in the event of a default in payment by Devon Financing
Corporation, U.L.C. on its debt securities, the holders of the debt securities
may institute legal proceedings directly against Devon to enforce the guarantee
without first proceeding against Devon Financing Corporation, U.L.C.
INTEREST RATES AND DISCOUNTS
The debt securities will earn interest at a fixed or floating rate or rates
for the period or periods of time specified in the applicable prospectus
supplement. Unless otherwise specified in the applicable prospectus supplement,
the debt securities will bear interest on the basis of a 360-day year consisting
of twelve 30-day months.
We may sell debt securities at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate that at the time of
issuance is below market rates. We will describe federal income tax consequences
and special considerations that apply to any series in the applicable prospectus
supplement.
EXCHANGE, REGISTRATION AND TRANSFER
Unless otherwise specified, debt securities of any series will be
exchangeable for other debt securities of the same series and of like aggregate
principal amount and tenor in different authorized denominations.
You may present debt securities for registration of transfer, together with
a duly executed form of transfer, at the office of the security registrar or at
the office of any transfer agent designated by us for that purpose with respect
to any series of debt securities and referred to in the applicable prospectus
supplement. This may be done without service charge but upon payment of any
taxes and other governmental charges as described in the indenture. The security
registrar or the transfer agent will effect the transfer or exchange upon being
satisfied with the documents of title and identity of the person making the
request. If a prospectus supplement refers to any transfer agents initially
designated by us with respect to any series of debt securities in addition to
the security registrar, we may at any time rescind the designation of any of
those transfer agents or approve a change in the location through which any of
those transfer agents acts. We may at any time designate additional transfer
agents with respect to any series of debt securities.
In the event of any redemption, we will not be required to:
- execute, register the transfer of or exchange debt securities of any
series during a period beginning at the opening of business;
- 15 days before any selection of debt securities of that series to be
redeemed and ending at the close of business on the day of mailing of the
relevant notice of redemption; or
- execute, register the transfer of or exchange any debt security, or
portion thereof, called for redemption, except the unredeemed portion of
any debt security being redeemed in part.
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PAYMENT AND PAYING AGENTS
Unless we specify otherwise in the applicable prospectus supplement, we
will pay the principal of, and any premium and interest on, debt securities at
the office of the paying agent or paying agents that we designate at various
times. However, at our option, we may make interest payments by check mailed to
the address, as it appears in the security register, of the person entitled to
the payments. Unless we specify otherwise in the applicable prospectus
supplement, we will make payment of any installment of interest on debt
securities to the person in whose name that debt security is registered at the
close of business on the regular record date for such interest.
Unless we specify otherwise in the applicable prospectus supplement, the
Corporate Trust Office of the trustee in New York, New York, will be designated:
- as our sole paying agent for payments with respect to debt securities
that are issuable solely as registered securities; and
- as our paying agent in New York, New York, for payments with respect to
debt securities, subject to the limitation described above in the case of
bearer securities, that are issuable solely as bearer securities or as
both registered securities and bearer securities.
We will name any paying agents outside the United States and any other
paying agents in the United States initially designated by us for the debt
securities in the applicable prospectus supplement. We may at any time designate
additional paying agents or rescind the designation of any paying agent or
approve a change in the office through which any paying agent acts. However, if
debt securities of a series are issuable solely as registered securities, we
will be required to maintain a paying agent in each place of payment for that
series.
All monies we pay to a paying agent for the payment of principal of, and
any premium and interest on, any debt security or coupon that remains unclaimed
at the end of two years after becoming due and payable will be repaid to us.
After that time, the holder of the debt security or coupon will look only to us
for payments out of those repaid amounts.
GLOBAL SECURITIES
The debt securities of a series may be issued in whole or in part in the
form of one or more global certificates that we will deposit with a depository
identified in the applicable prospectus supplement. Global securities may be
issued in either registered or bearer form and in either temporary or permanent
form. Unless and until it is exchanged in whole or in part for the individual
debt securities it represents, a global security may not be transferred except
as a whole:
- by the applicable depositary to a nominee of the depositary;
- by any nominee to the depositary itself or another nominee; or
- by the depositary or any nominee to a successor depositary or any nominee
of the successor.
We will describe the specific terms of the depositary arrangement with
respect to a series of debt securities in the applicable prospectus supplement.
We anticipate that the following provisions will generally apply to depositary
arrangements.
When we issue a global security in registered form, the depositary for the
global security or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts of the individual debt
securities represented by that global security to the accounts of participants
that have accounts with the depositary. Those accounts will be designated by the
dealers, underwriters or agents with respect to the underlying debt securities
or by us if those debt securities are offered and sold directly by us. Ownership
of beneficial interests in a global security will be limited to participants or
persons that may hold interests through participants. For interests of
participants, ownership of beneficial interests in the global security will be
shown on records maintained by the applicable depositary or its nominee. For
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interests of persons other than participants, that ownership information will be
shown on the records of participants. Transfer of that ownership will be
effected only through those records.
The laws of some states require that certain purchasers of securities take
physical delivery of securities in definitive form. These limits and laws may
impair your ability to transfer beneficial interests in a global security.
As long as the depositary for a global security, or its nominee, is the
registered owner of that global security, the depositary or nominee will be
considered the sole owner or holder of the debt securities represented by the
global security for all purposes under the applicable indenture. Except as
provided below, owners of beneficial interests in a global security:
- will not be entitled to have any of the underlying debt securities
registered in their names;
- will not receive or be entitled to receive physical delivery of any of
the underlying debt securities in definitive form; and
- will not be considered the owners or holders under the indenture relating
to those debt securities.
We will make payments of principal of, and any premium and interest on,
individual debt securities represented by a global security registered in the
name of a depositary or its nominee to the depositary or its nominee as the
registered owner of the global security representing such debt securities.
Neither we, the trustee, any paying agent nor the registrar for the debt
securities will be responsible for any aspect of the records relating to or
payments made by the depositary or any participants on account of beneficial
interests of the global security.
We expect that the depositary or its nominee, upon receipt of any payment
of principal, premium or interest relating to a permanent global security
representing any series of debt securities, immediately will credit
participants' accounts with the payments. Those payments will be credited in
amounts proportional to the respective beneficial interests of the participants
in the principal amount of the global security as shown on the records of the
depositary or its nominee. We also expect that payments by participants to
owners of beneficial interests in the global security held through those
participants will be governed by standing instructions and customary practices.
This is now the case with securities held for the accounts of customers in
bearer form or registered in "street name." Those payments will be the sole
responsibility of those participants.
If the depositary for a series of debt securities is at any time unwilling,
unable or ineligible to continue as depositary and we do not appoint a successor
depositary within 90 days, we will issue individual debt securities of that
series in exchange for the global security or securities representing that
series. In addition, we may at any time in our sole discretion determine not to
have any debt securities of a series represented by one or more global
securities. In that event, we will issue individual debt securities of that
series in exchange for the global security or securities. Further, if we
specify, an owner of a beneficial interest in a global security may, on terms
acceptable to us, the trustee and the applicable depositary, receive individual
debt securities of that series in exchange for those beneficial interests. The
foregoing is subject to any limitations described in the applicable prospectus
supplement. In that instance, the owner of the beneficial interest will be
entitled to physical delivery of individual debt securities equal in principal
amount to the beneficial interest and to have the debt securities registered in
its name. Those individual debt securities will be issued in denominations,
unless we specify otherwise, of $1,000 or integral multiples of $1,000.
For a description of the depositary arrangements for global securities held
by The Depository Trust Company, also known as DTC, see "Book-Entry Securities."
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EVENTS OF DEFAULT
Unless otherwise specified in the applicable prospectus supplement, any one
of the following events will constitute an "event of default" under the
indentures with respect to the debt securities of any series issued under the
indentures:
- if we fail to pay any interest on any debt security of that series when
due, and the failure continues for 30 days;
- if we fail to pay principal of or any premium on the debt securities of
that series when due and payable, either at maturity or otherwise;
- if we fail to perform or we breach any of our other covenants or
warranties in the applicable indentures or in the debt securities of that
series, other than a covenant or warranty included in the applicable
indenture solely for the benefit of a series of securities other than the
debt securities of that series, and that breach or failure continues for
60 days (subject to extension under certain circumstances for another 120
days) after written notice as provided in the applicable indenture;
- certain events of bankruptcy, insolvency or reorganization involving us
or certain of our subsidiaries; and
- any other event of default provided with respect to the debt securities
of that series.
If an event of default with respect to the debt securities of any series,
other than an event of default described in the item above pertaining to certain
events of bankruptcy, insolvency or reorganization, occurs and is continuing,
either the trustee or the holders of at least 25% in aggregate principal amount
of the outstanding debt securities of that series may declare the principal
amount of, and any premium and interest on, the debt securities of that series
to be due and payable immediately. At any time after a declaration of
acceleration has been made, but before a judgment or decree for payment of money
has been obtained by the trustee, and subject to applicable law and certain
other provisions of the applicable indentures the holders of a majority in
aggregate principal amount of the debt securities of that series may, under
certain circumstances, rescind and annul such acceleration. If an event of
default occurs due to default in the performance of any other of the covenants
and warranties applicable to all outstanding debt securities or pertaining to
certain events of bankruptcy, insolvency or reorganization, and the event of
default is continuing, either the trustee or the holders of not less than 25% in
principal amount of all debt securities then outstanding (considered as one
class), may declare the principal amount of, and any premium and interest on,
all debt securities to be due and payable immediately. There is no automatic
acceleration, even in the event of our bankruptcy, insolvency or reorganization.
Within 90 days after the occurrence of any event of default under the
indentures with respect to the debt securities of any series issued under that
indenture, the trustee must transmit notice of the event of default to the
holders of the debt securities of that series unless the event of default has
been cured or waived. The trustee may withhold the notice, however, except in
the case of a payment default, if and so long as the board of directors, the
executive committee or a trust committee of directors or responsible officers of
the trustee has in good faith determined that the withholding of the notice is
in the interest of the holders of debt securities of that series.
If an event of default occurs and is continuing with respect to the debt
securities of any series, the trustee may in its discretion proceed to protect
and enforce its rights and the rights of the holders of debt securities of that
series by all appropriate judicial proceedings.
Subject to the duty of the trustee during any default to act with the
required standard of care, the trustee is under no obligation to exercise any of
its rights or powers under the indenture at the request or direction of any of
the holders of debt securities issued under that indenture, unless the holders
offer the trustee reasonable indemnity. Subject to indemnifying the trustee, and
subject to applicable law and certain other provisions of the indenture, the
holders of a majority in aggregate principal amount of the outstanding debt
securities of a series issued under that indenture may direct the time, method
and place
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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 debt
securities of that series.
DEFEASANCE
Unless the applicable prospectus supplement provides otherwise, any debt
securities, or portion of the principal amount of the debt securities, will be
deemed to have been paid for purposes of the applicable indentures, and, at our
election, our entire indebtedness with respect to the debt securities, or
portion thereof, will be deemed to have been satisfied and discharged, if: we
have irrevocably deposited with the trustee or any paying agent other than us,
in trust money, certain eligible obligations, as defined in the applicable
indentures, or a combination of the two, sufficient to pay principal of and any
premium and interest due and to become due on the debt securities or portions
thereof.
The applicable prospectus supplement will describe, if applicable, our
ability to be released from any of our covenant obligations under the
indentures.
MODIFICATION AND WAIVER
The trustee and we may, without the consent of holders, modify or waive
provisions of each indenture for certain purposes, including, among other
things, curing ambiguities and maintaining the qualification of the applicable
indenture under the Trust Indenture Act. The trustee and we may modify or waive
certain provisions of each indenture with the consent of the holders of not less
than a majority in aggregate principal amount of the debt securities of each
series issued under that indenture affected by the modification or waiver.
However, the provisions of any indenture may not be waived or modified without
the consent of the holders of each debt security affected thereby if the
modification or waiver would:
- change the stated maturity of the principal of, or any installment of
principal of or interest on, any debt security issued under that
indenture;
- reduce the principal amount of, or interest on, any debt security issued
under the indenture, or change the method of calculating the interest on,
or reduce any premium payable upon the redemption of, any such debt
security;
- change the coin or currency (or other property) in which any debt
security issued under that indenture or any premium or any interest on
that debt security or any additional amounts with respect to that debt
security is payable;
- impair the right to institute suit for the enforcement of any payment on
or after the stated maturity of any debt securities issued under that
indenture or, in the case of redemption, on or after the redemption date;
- reduce the percentage and principal amount of the outstanding debt
securities, the consent of the holders of which is required under that
indenture in order to take certain actions;
- modify any of the provisions of Sections 12.02, 6.07 and 8.13 of the
forms of debt securities indenture relating to modifying the indenture,
waiving certain covenants and waiving past defaults, respectively.
The holders of at least a majority in aggregate principal amount of
outstanding debt securities of any series issued under an indenture may, on
behalf of the holders of all debt securities of that series, waive our
compliance with certain restrictive provisions of that indenture. The holders of
not less than a majority in aggregate principal amount of debt securities of any
series issued under one of the indentures may, on behalf of all holders of debt
securities of that series, waive any past default and its consequences under
that indenture with respect to the debt securities of that series, except:
- a payment default with respect to debt securities of that series; or
- a default of a covenant or provision of that indenture that cannot be
modified or amended without the consent of the holder of the debt
securities of that series.
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CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge into, or convey, transfer or lease our
properties and assets substantially as an entirety to, any person (as defined in
the forms of debt securities indenture) unless:
- the entity formed by the consolidation or into which we are merged, or
the person which acquires by conveyance or transfer, or which leases,
substantially all of our properties and assets:
(a) is organized and validly existing under the laws of the United
States, any domestic jurisdiction or the District of Columbia and, in the
case of Devon Financing Corporation, U.L.C., Canada or any province
thereof; and
(b) expressly assumes our obligations on the debt securities and under
the applicable indenture;
- immediately after the transaction becomes effective, no event of default,
and no event that would become an event of default, will have occurred
and be continuing; and
- we have delivered to the trustee an officer's certificate and opinion of
counsel as provided in the applicable indentures.
In addition, Devon Financing Corporation, U.L.C. may assign its obligations
under its debt securities and the indenture relating to those debt securities to
Devon or any other wholly owned subsidiary of Devon organized under the laws of
the United States, any state thereof, the District of Columbia, Canada or any
province thereof, at any time, provided that the assignee agrees to be bound by
the terms of the debt securities and the indenture relating to those debt
securities and that Devon's full and unconditional guarantee remains in full
force and effect if the assignee is not Devon.
COVENANTS
Unless otherwise specified in the prospectus supplement, the following
covenants will apply to the senior debt securities issued by Devon and any debt
securities issued by Devon Financing Corporation, U.L.C. Various capitalized
terms used within this "Covenants" subsection are defined at the end of this
subsection.
LIENS
Neither Devon nor any of its Restricted Subsidiaries may incur, issue,
assume or guarantee any Debt that is secured by a Mortgage on any Principal
Property or on any shares of stock or Indebtedness of any Restricted Subsidiary
of Devon, without first effectively providing that the securities (together
with, if Devon so determines, any other indebtedness of Devon or its Restricted
Subsidiaries that is not subordinate in right of payment to the prior right of
payment in full of the securities) will be secured equally and ratably with, or
prior to, the incurred, issued, assumed or guaranteed secured Debt, for so long
as this secured Debt remains so secured.
This limitation on the incurrence, issuance, assumption or guarantee of any
Debt secured by a Mortgage will not apply to, and there will be excluded from
any secured Debt in any computation under this covenant, Debt secured by:
- Mortgages existing at the date of the indenture;
- Mortgages on property of, or on any shares of stock or Indebtedness of,
any entity existing at the time the entity is merged into or consolidated
with Devon or becomes a Restricted Subsidiary of Devon;
- Mortgage in favor of Devon or any of its Restricted Subsidiaries;
- Mortgages on property, shares of stock or Indebtedness:
- existing at the time of acquisition thereof, including acquisitions
through merger, consolidation or other reorganization;
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- to secure the payment of all or any part of the purchase price thereof
or construction thereon; or
- to secure any Debt incurred prior to, at the time of, or within one year
after the later of the acquisition, the completion of construction or
the commencement of full operation of the property or within one year
after the acquisition of the shares or Indebtedness for the purpose of
financing all or any part of the purchase price thereof or construction
thereon;
provided that, if a commitment for the financing is obtained prior to or
within this one-year period, the applicable Mortgage will be deemed to be
included in this clause whether or not the Mortgage is created within this
one-year period;
- Mortgages in favor of the United States, any state thereof, Canada, or
any province thereof, or any department, agency or instrumentality or
political subdivision of any of the foregoing, or in favor of any other
country or any political subdivision thereof;
- Mortgages on minerals or geothermal resources in place, or on related
leasehold or other property interests, that are incurred to finance
development, production or acquisition costs, including, but not limited
to, Mortgages securing advance sale obligations;
- Mortgages on equipment used or usable for drilling, servicing or
operating oil, gas, coal or other mineral properties or geothermal
properties;
- Mortgages required by any contract or statute in order to permit Devon or
any of its subsidiaries to perform any contract or subcontract made with
or at the request of the United States, any state thereof, Canada, any
province thereof, or in favor of any other country or any political
subdivision thereof, or any department, agency or instrumentality of any
of the foregoing;
- any Mortgage resulting from the deposit of moneys or evidence of
indebtedness in trust for the purpose of defeasing Debt of Devon or any
of its Restricted Subsidiaries or secured Debt of Devon or any of its
Restricted Subsidiaries the net proceeds of which are used, substantially
concurrent with the funding thereof, and taking into consideration, among
other things, required notices to be given to the holders of the
outstanding securities in connection with the refunding, refinancing or
repurchase thereof, and the required corresponding durations thereof, to
refund, refinance or repurchase all of the outstanding securities,
including the amount of all accrued interest thereon and reasonable fees
and expenses and premiums, if any, incurred by Devon or any of its
Restricted Subsidiaries in connection therewith; and
- any extension, renewal or replacement, or successive extensions, renewals
or replacements, of any Mortgage referred to in the foregoing clauses of
this covenant, so long as the extension, renewal or replacement Mortgage
is limited to all or a part of the same property, including any
improvements on the property, shares of stock or Indebtedness that
secured the Mortgage so extended, renewed or replaced.
Notwithstanding anything mentioned above, Devon and any one or more of its
Restricted Subsidiaries may incur, issue, assume or guarantee Debt secured by
Mortgages that would otherwise be subject to the above restrictions if the
aggregate amount of the Debt secured by the Mortgages, together with the
outstanding principal amount of all other secured Debt of Devon and its
Restricted Subsidiaries that would otherwise be subject to the above
restrictions, does not exceed 10% of Consolidated Net Tangible Assets.
The following transactions shall not be deemed to create Debt secured by a
Mortgage:
- the sale or other transfer of oil, gas, coal or other minerals in place
for a period of time until, or in an amount such that, the transferee
will realize therefrom a specified amount of money, however determined,
or a specified amount of oil, gas, coal or other minerals, or the sale or
other transfer of any other interest in property of the character
commonly referred to as an oil, gas, coal or other mineral payment or a
production payment, and including, in any case, overriding royalty
interests, net profit interests, reversionary interests and carried
interests and other similar burdens on production; and
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- the sale or other transfer by Devon or any of its Restricted Subsidiaries
of properties to a partnership, joint venture or other entity whereby
Devon or the Restricted Subsidiary would retain partial ownership of the
properties.
DEFINITIONS
"Consolidated Net Tangible Assets" means, calculated as of the date of the
financial statements for the most recently ended fiscal quarter or fiscal year,
as applicable, prior to the date of determination, the aggregate amount of
assets of Devon, less applicable reserves and other properly deductible items
but including investments in non-consolidated entities, after deducting
therefrom:
- all current liabilities, excluding any portion thereof constituting
Funded Debt by reason of being renewable or extendible at the option of
the obligor beyond 12 months from the date of determination; and
- all goodwill, trade names, trademarks, patents, unamortized debt discount
and expenses and other like intangibles, all as set forth on a
consolidated balance sheet of Devon and computed in accordance with
accounting principles generally accepted in the United States.
"Debt" means indebtedness for money borrowed.
"Funded Debt" means all Debt of Devon or any of its subsidiaries for money
borrowed which is not by its terms subordinated in right of payment to the prior
payment in full of the securities or to Devon's full and unconditional guarantee
in respect thereof, as applicable, having a maturity of more than 12 months from
the date as of which the amount thereof is to be determined or having a maturity
of fewer than 12 months but by its terms being:
- renewable or extendible beyond 12 months from such date at the option of
the obligor; or
- issued in connection with a commitment by a bank or other financial
institution to lend so that the indebtedness is treated as though it had
a maturity in excess of 12 months pursuant to accounting principles
generally accepted in the United States.
"Indebtedness" means Debt and the deferred purchase price of property or
assets purchased.
"Mortgage" means and includes any mortgage, pledge, lien, security
interest, conditional sale or other title retention agreement or other similar
encumbrance.
"Offshore" means the lands beneath the navigable waters of the U.S. or
Canada, or the continental shelf of the U.S. or Canada.
"Principal Property" means any oil, gas or mineral producing property, or
any refining, processing, smelting or manufacturing facility located in the
U.S., Canada or Offshore, other than:
- property employed in transportation, distribution or marketing;
- information and electronic data processing equipment; or
- any property that, in the opinion of the Board of Directors of Devon, is
not materially important to the total business conducted by Devon and its
subsidiaries as an entirety.
"Restricted Subsidiary" means Devon Financing Corporation, U.L.C. and any
other subsidiary of Devon:
- a substantial portion of the property of which is located, or a
substantial portion of the business of which is carried on, within the
U.S., Canada or Offshore;
- that owns or leases under a capital lease any Principal Property; and
- that has Stockholders' Equity exceeding 2% of Consolidated Net Tangible
Assets.
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"Stockholders' Equity" means, with respect to any corporation, partnership,
joint venture, association, joint stock company, limited liability company,
unlimited liability company, trust, unincorporated organization or government,
or any agency or political subdivision thereof, stockholders' equity, as
computed in accordance with accounting principles generally accepted in the U.S.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
The following applies only in the event Devon Financing Trust II holds debt
securities.
To the extent that any action under any debt securities held by Devon
Financing Trust II is entitled to be taken by the holders of at least a
specified percentage of those debt securities, and unless otherwise specified in
the applicable prospectus supplement, holders of the trust preferred securities
issued by Devon Financing Trust II may take action if the action is not taken by
the property trustee of Devon Financing Trust II. Notwithstanding the foregoing,
if an event of default under those debt securities has occurred and is
continuing and is attributable either to:
- the failure of Devon to pay the principal of, or any premium or interest
on, those debt securities on the due date; or
- the failure by Devon to deliver the required securities or other rights
upon an appropriate conversion or exchange right election, if any,
- and an event of default has occurred and is continuing under the
applicable trust agreement, a holder of the related trust preferred
securities may institute a direct action.
A "direct action" is a legal proceeding directly against Devon for
enforcement of payment to the holder of trust preferred securities issued by
Devon Financing Trust II of the principal of or any premium or interest on the
debt securities held by that trust having a principal amount equal to the
liquidation amount of those trust preferred securities held by that holder or
for enforcement of any conversion or exchange rights, as the case may be. Devon
may not amend an indenture to remove the foregoing right to bring a direct
action without the prior written consent of the holders of all of the trust
preferred securities outstanding that have an interest in the related debt
securities. Notwithstanding any payments made to a holder of trust preferred
securities by Devon in connection with a direct action, Devon will remain
obligated to pay the principal of, and any premium and interest on, the related
debt securities, and Devon will be subrogated to the rights of the holders of
those trust preferred securities with respect to payments on the trust preferred
securities to the extent of any payments made by Devon to the holder in any
direct action.
The holders of the trust preferred securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the related debt securities unless an event of
default has occurred and is continuing under the applicable trust agreement. See
"Description of Trust Preferred Securities -- Events of Default; Notice" below.
DESCRIPTION OF THE OUTSTANDING DEVON FINANCING CORPORATION, U.L.C. DEBT
SECURITIES
The 6.875% Notes due September 30, 2011 and the 7.875% Debentures due
September 30, 2031 of Devon Financing Corporation, U.L.C. were issued under an
indenture dated as of October 3, 2001, among Devon Financing Corporation,
U.L.C., Devon and JP Morgan Chase Bank (f/k/a The Chase Manhattan Bank), as
trustee. References in this subsection to the "indenture" mean that indenture, a
copy of which is filed as an exhibit to the registration statement of which this
prospectus is a part. The 6.875% notes and the 7.875% debentures of Devon
Financing Corporation, U.L.C., which we refer to in this prospectus as the
"notes" and the "debentures," respectively, each constitute a separate series of
securities under the indenture. Any additional principal amounts of those notes
or debentures that are offered by this prospectus will have terms identical to
those of the outstanding notes or debentures, as the case may be, and will,
together with the outstanding notes or debentures, as the case may be,
constitute a single series of securities under the indenture.
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The notes and the debentures are unsecured and unsubordinated obligations
of Devon Financing Corporation, U.L.C. and rank equally with other outstanding
unsecured and unsubordinated indebtedness of Devon Financing Corporation, U.L.C.
The obligations of Devon Financing Corporation, U.L.C. under the notes and
debentures are fully and unconditionally guaranteed by Devon. The indenture
contains no restrictions on the amount of additional indebtedness that Devon
Financing Corporation, U.L.C. may issue or that Devon may guarantee under the
indenture in the future.
TERMS AND CONDITIONS OF THE NOTES AND THE DEBENTURES
Interest on the notes and the debentures began to accrue on October 3, 2001
at the rate of:
- 6.875% per annum for the notes due September 30, 2011; and
- 7.875% per annum for the debentures due September 30, 2031.
Interest is payable semiannually on March 30 and September 30 of each year,
beginning March 30, 2002, to the person in whose names the notes or the
debentures are registered at the close of business on the preceding March 15 and
September 15, respectively. Interest on the notes and the debentures is computed
on the basis of a 360-day year comprised of twelve 30-day months.
- The 6.875% notes are limited initially to $1,750,000,000 in aggregate
principal amount and will mature on September 30, 2011.
- The 7.875% debentures are limited initially to $1,250,000,000 in
aggregate principal amount and will mature on September 30, 2031.
Without the consent of the holders of the notes or the debentures, Devon
Financing Corporation, U.L.C. may issue and Devon may guarantee additional notes
or debentures under the indenture having the same ranking and the same interest
rate, maturity and other terms as either series of securities. Any additional
notes or debentures will, together with the securities of the applicable series,
constitute a single series of securities under the indenture. No additional
notes or debentures may be issued or guaranteed if an event of default has
occurred with respect to either series of the securities.
GUARANTEE
Devon has fully and unconditionally guaranteed the due and punctual payment
of the principal of, premium, if any, additional amounts, if any, and interest
on the notes and the debentures and any other obligations of Devon Financing
Corporation, U.L.C. under the notes and the debentures when and as they become
due and payable, whether at maturity, upon redemption, by acceleration or
otherwise, if Devon Financing Corporation, U.L.C. is unable to satisfy these
obligations. Devon's guarantee of the obligations of Devon Financing
Corporation, U.L.C. under the notes and the debentures is an unsecured and
unsubordinated obligation of Devon and ranks equally with all of Devon's other
unsecured and unsubordinated obligations. The guarantee provides that, in the
event of a default in payment by Devon Financing Corporation, U.L.C. on the
notes or the debentures, the holders of the notes or the debentures may
institute legal proceedings directly against Devon to enforce the guarantee
without first proceeding against Devon Financing Corporation, U.L.C.
OPTIONAL REDEMPTION
The notes and the debentures are redeemable by Devon Financing Corporation,
U.L.C., in whole or in part, at any time at a redemption price equal to the
greater of:
- 100% of the principal amount of the notes or the debentures then
outstanding to be redeemed; or
- the sum of the present values of the remaining scheduled payments of
principal and interest thereon (exclusive of the interest accrued to the
date of redemption) computed by discounting such payments to the
redemption date on a semiannual basis, assuming a 360-day year consisting
of twelve 30-day months, at a rate equal to the sum of 30 basis points
plus the adjusted treasury rate,
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as that term is generally used in the industry, on the third business day
prior to the redemption date, as calculated by an independent investment
banker.
Devon Financing Corporation, U.L.C. will mail notice of redemption at least
30 days but not more than 60 days before the applicable redemption date to each
holder of the notes or the debentures to be redeemed. If Devon Financing
Corporation, U.L.C. elects to redeem the notes or the debentures in part, the
trustee will select the notes or the debentures to be redeemed in a fair and
appropriate manner.
Upon the payment of the redemption price, premium, if any, additional
amounts, if any, plus accrued and unpaid interest, if any, to the date of
redemption, interest will cease to accrue on and after the applicable redemption
date on the notes or the debentures or portions thereof called for redemption.
OPTIONAL REDEMPTION FOR CHANGES IN CANADIAN WITHHOLDING TAXES
The notes and the debentures will be subject to redemption by Devon
Financing Corporation, U.L.C. in whole, but not in part, at the option of Devon
Financing Corporation, U.L.C. and at any time, on not fewer than 30 nor more
than 60 days prior written notice, at 100% of their principal amount, plus
accrued and unpaid interest, if any, up to, but not including, the redemption
date, in the event that either Devon Financing Corporation, U.L.C., Devon or any
other obligor under the notes or the debentures, as the case may be, has become,
or would become, obligated to pay, on the next date on which any amount would be
payable with respect to the notes or the debentures, any additional amounts
relating to any present or future tax, duty, levy, impost, assessment or other
governmental charge imposed or levied by or on behalf of Canada or any of its
provinces or territories or by any authority or agency therein having power to
tax, and provided that the obligation to pay additional amounts results from a
change in the taxing laws and/or regulations of Canada that is announced or
becomes effective on or after October 3, 2001.
Provided, however:
- no notice of redemption will be given earlier than 60 days prior to the
earliest date on which Devon Financing Corporation, U.L.C., Devon or any
other obligor under the notes or the debentures, as the case may be,
would be obligated to pay any of these additional amounts if a payment
with respect to the notes or the debentures were then due;
- at the time any redemption notice is given, the obligation to pay these
additional amounts must remain in effect through the redemption date; and
- Devon Financing Corporation, U.L.C. cannot avoid paying the additional
amounts by taking reasonable measures available to Devon Financing
Corporation, U.L.C. that Devon Financing Corporation, U.L.C. determines
would not have an adverse impact on Devon Financing Corporation, U.L.C.
Prior to any redemption of the notes or the debentures under these
provisions, Devon Financing Corporation, U.L.C. will deliver to the trustee or
any paying agent an officer's certificate stating that Devon Financing
Corporation, U.L.C. is entitled to effect the redemption and setting forth a
statement of facts showing that the conditions precedent to the right of
redemption have occurred.
COVENANT LIMITING LIENS
Pursuant to the indenture under which the notes and the debentures were
issued, Devon has agreed to comply with the provisions described above under
"Covenants."
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CONSOLIDATION, MERGER, CONVEYANCE OF ASSETS
The indenture provides, in general, that neither Devon Financing
Corporation, U.L.C. nor Devon will consolidate with or merge into any other
entity or convey, transfer or lease its properties and assets substantially as
an entirety to any person, unless:
- the entity formed by the consolidation or into which Devon Financing
Corporation, U.L.C. or Devon are merged, or the person who acquires the
assets, shall be organized under the laws of the United States, any state
thereof, or the District of Columbia and, in the case of Devon Financing
Corporation, U.L.C., Canada or any province thereof, and expressly
assumes Devon Financing Corporation, U.L.C.'s or Devon's obligations
under the indenture, the notes, the debentures and the guarantee; and
- immediately after giving effect to that type of transaction, no event of
default, and no event that, after notice or lapse of time or both, would
become an event of default, shall have happened and be continuing.
In addition, Devon Financing Corporation, U.L.C. may assign its obligations
under the notes and the debentures and the indenture to Devon or any other
wholly owned subsidiary of Devon organized under the laws of the United States,
any state thereof, the District of Columbia, Canada or any province thereof, at
any time, provided that the assignee agrees to be bound by the terms of the
notes, the debentures and the indenture and that Devon's full and unconditional
guarantee remains in full force and effect if the assignee is not Devon.
SINKING FUND
Devon Financing Corporation, U.L.C. is not required to make sinking fund
payments with respect to the notes or the debentures.
MODIFICATION OF THE INDENTURE
Modifications and amendments of the indenture may be made by Devon
Financing Corporation, U.L.C., Devon and the trustee with the consent of the
holders of a majority in principal amount of the outstanding notes or debentures
affected thereby; provided, however, that no such modification or amendment may,
without the consent of the holder of each outstanding note or debenture affected
thereby:
- extend the final maturity of the principal of any of the notes or the
debentures;
- reduce the principal amount of any of the notes or the debentures;
- reduce the rate or extend the time of payment of interest or additional
amounts, if any, on any of the notes or the debentures;
- reduce any amount payable on redemption of any of the notes or the
debentures;
- change the currency in which the principal of or interest on any of the
notes or the debentures is payable;
- impair the right to institute suit for the enforcement of any payment on
any of the notes or the debentures when due; or
- make any change in the percentage in principal amount of the notes or the
debentures, the consent of the holders of which is required for any such
modification.
Without the consent of any holder of outstanding notes or debentures, Devon
Financing Corporation, U.L.C. may amend or supplement the indenture and each
series of securities:
- to cure any ambiguity or inconsistency; or
- to make other provisions that do not adversely affect the rights of any
holder of outstanding notes or debentures.
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The holders of a majority in principal amount of the outstanding securities
of either series may, on behalf of the holders of all securities of that series,
waive any past default under the indenture with respect to that series, except a
default in the payment of the principal of, premium, if any, additional amounts,
if any, or interest on any security of that series or in respect of a provision
which under the indenture cannot be modified or amended without the consent of
the holder of each outstanding security of that series affected.
EVENTS OF DEFAULT
In general, the indenture defines an event of default with respect to the
securities of either series as being a:
(1) default in payment of any principal or premium, if any, on the
securities of that series, either at maturity, upon any redemption, by
declaration or otherwise;
(2) default for 30 days in payment of any interest or additional
amounts, if any, on the securities of that series;
(3) default for 90 days after written notice from the trustee or
holders of at least 25% in principal amount of the outstanding securities
of that series in the observance or performance of any covenant in the
securities or the indenture other than if the events of default described
in this clause (3) are the result of changes in accounting principles
generally accepted in the U.S.;
(4) default in the payment of any principal of Devon Financing
Corporation, U.L.C.'s or Devon's Funded Debt outstanding in an aggregate
principal amount in excess of $50 million at the stated final maturity
thereof or the occurrence of any other default the effect of which is to
cause the stated final maturity of this Funded Debt to be accelerated, and
if:
- the default in payment is not cured within 60 days after written
notice of the default from the trustee or holders of at least 25% in
principal amount of the outstanding securities of that series; or
- the acceleration is not rescinded or annulled or the default that
caused the acceleration is not cured within 60 days after written
notice of the default from the trustee or holders of at least 25% in
principal amount of the outstanding securities of that series;
(5) an event of bankruptcy, insolvency or reorganization involving
Devon Financing Corporation, U.L.C. or Devon;
(6) failure to keep Devon's full and unconditional guarantee in place.
If an event of default with respect to securities of either series at the
time outstanding shall occur and be continuing, either the trustee or the
holders of at least 25% in principal amount of the outstanding securities of
such series may declare the principal amount of all securities of that series to
be due and payable immediately. However, any time after a declaration of
acceleration with respect to securities of either series has been made, but
before judgment or decree based on such acceleration has been obtained, the
holders of a majority in principal amount of outstanding securities of that
series may, under some circumstances, rescind and annul such acceleration.
The majority holders, however, may not annul or waive a continuing default
in payment of principal of, premium, if any, additional amounts, if any, or
interest on the notes or the debentures.
The indenture provides that the holders of the notes and the debentures
will indemnify the trustee before the trustee exercises any of its rights or
powers under the indenture. This indemnification is subject to the trustee's
duty to act with the required standard of care during a default. The holders of
a majority
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in aggregate principal amount of the outstanding securities of either series
affected may direct the time, method and place of:
- the conduct of any proceeding for any remedy available to the trustee; or
- the exercise of any trust or power conferred on the trustee.
This right of the holders of the notes and the debentures is, however,
subject to the provisions in the indenture providing for the indemnification of
the trustee and other specified limitations.
In general, the indenture provides that holders of either series of the
securities may institute an action against Devon Financing Corporation, U.L.C.,
Devon or any other obligor under the securities under the indenture only if the
following four conditions are fulfilled:
- the holder previously has given to the trustee written notice of default
and the default continues;
- the holders of at least 25% in principal amount of the securities of that
series issued under the indenture and then outstanding have both
requested the trustee to institute such action and offered the trustee
reasonable indemnity;
- the trustee has not instituted this action within 60 days of receipt of
such request; and
- the trustee has not received direction inconsistent with such written
request by the holders of a majority in principal amount of the
securities of such series then outstanding.
The above four conditions do not apply to actions by holders of the notes
or the debentures under the indenture against Devon Financing Corporation,
U.L.C., Devon or any other obligor under the securities for payment of principal
of, premium, if any, additional amounts, if any, or interest on or after the due
date provided, if any. The indenture contains a covenant that Devon Financing
Corporation, U.L.C., Devon and any other obligor under the notes and the
debentures will file annually with the trustee a certificate of no default or a
certificate specifying any default that exists.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Devon Financing Corporation, U.L.C. may discharge or defease its
obligations under the indenture as set forth below.
Under terms satisfactory to the trustee, Devon Financing Corporation,
U.L.C. may discharge certain obligations to holders of the securities of either
series that have not already been delivered to the trustee for cancellation. The
notes or the debentures, as the case may be, must also:
- have become due and payable;
- be due and payable by their terms within one year; or
- be scheduled for redemption by their terms within one year.
Devon Financing Corporation, U.L.C. may discharge the notes or the
debentures by irrevocably depositing an amount certified to be sufficient to pay
at maturity, or upon redemption, the principal, premium, if any, additional
amounts, if any, and interest on the notes or debentures, as the case may be.
Devon Financing Corporation, U.L.C. may make the deposit in cash or U.S.
Government Obligations, as defined in the indenture.
Devon Financing Corporation, U.L.C. may also, upon satisfaction of the
conditions listed below, discharge particular obligations to holders of any of
the notes or the debentures at any time. This is referred to as a defeasance.
Under terms satisfactory to the trustee, Devon Financing Corporation, U.L.C. may
be released with respect to any outstanding notes or debentures from the
obligations imposed by sections 3.07 and 4.01 of the indenture. These sections
contain the covenants described above limiting liens and consolidations, mergers
and conveyances of assets. Also under terms satisfactory to the trustee, Devon
Financing Corporation, U.L.C. may no longer be required to comply with these
sections without the
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creation of an event of default. This is typically referred to as covenant
defeasance. Defeasance or covenant defeasance may be effected by Devon Financing
Corporation, U.L.C. only if, among other things:
- Devon Financing Corporation, U.L.C. irrevocably deposits with the trustee
cash or U.S. Government Obligations as trust funds in an amount certified
to be sufficient to pay at maturity or upon redemption the principal of,
premium, if any, additional amounts, if any, and interest on all
outstanding notes and debentures; and
- Devon Financing Corporation, U.L.C. delivers to the trustee an opinion of
counsel to the effect that the holders of the notes and debentures will
not recognize income, gain or loss for United States federal income tax
purposes as a result of defeasance or covenant defeasance. This opinion
must further state that these holders will be subject to United States
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if the defeasance or covenant
defeasance had not occurred. In the case of a defeasance, this opinion
must be based on a ruling of the Internal Revenue Service or a change in
United States federal income tax law occurring after the date of the
indenture, since this result would not occur under current tax law.
PAYMENT OF ADDITIONAL AMOUNTS
Unless otherwise required by Canadian law, neither Devon Financing
Corporation, U.L.C. nor Devon will deduct or withhold from payments made with
respect to the notes or the debentures or the guarantee on account of any
present or future taxes, duties, levies, imposts, assessments or governmental
charges of whatever nature imposed or levied by or on behalf of any political
subdivisions or taxing authorities in Canada having the power to tax. In the
event that either Devon Financing Corporation, U.L.C. or Devon is required to
withhold or deduct on account of any Canadian taxes due from any payment made
under or with respect to the notes or the debentures or the guarantee, as the
case may be, Devon Financing Corporation, U.L.C. or Devon, as the case may be,
will pay additional amounts so that the net amount received by each holder of
notes or debentures will equal the amount that the holder would have received if
the Canadian taxes had not been required to be withheld or deducted. The amounts
that Devon Financing Corporation, U.L.C. or Devon are required to pay to
preserve the net amount receivable by the holders of the notes and the
debentures are referred to as "additional amounts."
Additional amounts will not be payable with respect to a payment made to a
holder of the notes or the debentures to the extent:
- that any Canadian taxes would not have been so imposed but for the
existence of any present or former connection between the holder and
Canada or a province or territory of Canada, other than the mere receipt
of the payment, acquisition, ownership or disposition of the notes or the
debentures or the exercise or enforcement of rights under the notes, the
debentures, the guarantee or the indenture;
- of any estate, inheritance, gift, sales, transfer or personal property
taxes imposed with respect to the notes or the debentures, except
described below or as otherwise provided in the indenture;
- that any such Canadian taxes would not have been imposed but for the
presentation of the notes or the debentures, where presentation is
required, for payment on a date more than 30 days after the date on which
the payment became due and payable or the date on which payment thereof
is duly provided for, whichever is later, except to the extent that the
beneficiary or holder thereof would have been entitled to additional
amounts had the notes or the debentures been presented for payment on any
date during such 30-day period; or
- that the holder would not be liable or subject to such withholding or
deduction of Canadian taxes but for the failure to make a valid
declaration of non-residence or other similar claim for exemption, if:
29
- the making of the declaration or claim is required or imposed by
statute, treaty, regulation, ruling or administrative practice of the
relevant taxing authority as a precondition to an exemption from, or
reduction in, the relevant taxes; and
- at least 60 days prior to the first payment date with respect to which
Devon Financing Corporation, U.L.C. or Devon shall apply this clause,
Devon Financing Corporation, U.L.C. or Devon shall have notified all
holders of the notes and the debentures in writing that they shall be
required to provide this declaration or claim.
Devon Financing Corporation, U.L.C. and Devon will also:
- withhold or deduct such Canadian taxes as required;
- remit the full amount of taxes deducted or withheld to the relevant
taxing authority in accordance with all applicable laws;
- use reasonable efforts to obtain from each relevant taxing authority
imposing the taxes certified copies of tax receipts evidencing the
payment of any taxes deducted or withheld; and
- upon request, make available to the holders of the notes and the
debentures, within 60 days after the date the payment of any taxes
deducted or withheld is due pursuant to applicable law, certified copies
of tax receipts evidencing such payment by Devon Financing Corporation,
U.L.C. or Devon and, notwithstanding Devon Financing Corporation,
U.L.C.'s or Devon's efforts to obtain the receipts, if the same are not
obtainable, other evidence of such payments.
In addition, Devon Financing Corporation, U.L.C. or Devon will pay any
stamp, issue, registration, documentary or other similar taxes and duties,
including interest, penalties and additional amounts with respect thereto,
payable in Canada or the United States or any political subdivision or taxing
authority of or in the foregoing with respect to the creation, issue, offering,
enforcement, redemption or retirement of the notes or the debentures or the
guarantee.
CONCERNING THE TRUSTEE
The trustee under the indenture for the notes and the debentures is one of
a number of banks with which Devon and its subsidiaries maintains ordinary
banking relationships and with which Devon and its subsidiaries maintains credit
facilities.
GOVERNING LAW
The indenture, the notes, the debentures and the guarantee are governed by,
and will be construed in accordance with, the laws of the State of New York.
DESCRIPTION OF TRUST PREFERRED SECURITIES
Devon Financing Trust II will issue under its trust agreement only one
series of trust preferred securities, which will represent beneficial interests
in Devon Financing Trust II. The trust agreement is subject to, and governed by,
the Trust Indenture Act. This summary of certain terms and provisions of the
trust preferred securities and the trust agreement is subject to, and is
qualified in its entirety by reference to, all of the provisions of the trust
preferred securities and the trust agreement, including the definitions of
certain terms, and those made a part of the trust agreement by the Trust
Indenture Act. A form of trust agreement is, and the terms and conditions of
trust securities and forms thereof will be, filed as exhibits to the
registration statement that includes this prospectus.
Devon Financing Trust II will describe the specific terms of the trust
preferred securities it is offering in the applicable prospectus supplement,
including:
- the designation, number and purchase price and liquidation amount, if
any, of the trust preferred securities;
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- the annual distribution rate, or method of calculation of the
distribution rate, for the trust preferred securities and, if applicable,
any interest deferral provisions;
- whether the distributions on the trust preferred securities will be
cumulative and, if so, the dates from which and upon which distributions
will accumulate and be payable and the record dates;
- the liquidation amount per trust preferred security that will be paid out
of the assets of Devon Financing Trust II to the holders upon voluntary
or involuntary dissolution, winding-up and liquidation;
- the obligation or right, if any, of Devon Financing Trust II to purchase
or redeem its trust preferred securities, whether pursuant to a sinking
fund or otherwise, and the price or prices at which, the date or dates on
which or period or periods within which and the terms and conditions upon
which, it will or may purchase or redeem, in whole or in part, the trust
preferred securities pursuant to its obligation or right to purchase or
redeem;
- the terms and conditions, if any, upon which the trust preferred
securities may be converted or exchanged, in addition to the
circumstances described herein, into other securities or rights, or a
combination of the foregoing;
- the obligation or right, if any, of Devon, Devon Financing Trust II or
any other party to liquidate Devon Financing Trust II and any terms and
conditions of such liquidation;
- the voting rights, if any, of the holders;
- if applicable, any securities exchange upon which the trust preferred
securities will be listed;
- if applicable, a description of any remarketing, auction or other similar
arrangements;
- whether the trust preferred securities are issuable in book-entry only
form and, if so, the identity of the depositary and disclosure relating
to the depositary arrangements; and
- any other rights, preferences, privileges, limitations or restrictions of
the trust preferred securities consistent with the trust agreement or
with applicable law, which may differ from those described herein.
Devon Financing Trust II will also describe certain material United States
federal income tax considerations applicable to any offering of trust preferred
securities in the applicable prospectus supplement.
If indicated in the applicable prospectus supplement, the terms of Devon
Financing Trust II may differ from the terms summarized below.
GENERAL
The trust preferred securities of Devon Financing Trust II will rank
equally, and Devon Financing Trust II will make payments on the trust preferred
securities proportionately with the trust common securities of Devon Financing
Trust II except as described under "-- Subordination of Trust Common
Securities." Devon Financing Trust II will use the proceeds from the sale of
trust preferred securities and trust common securities to purchase a total
principal amount of debt securities of Devon equal to the total liquidation
amount of such trust preferred securities and trust common securities. The
property trustee of Devon Financing Trust II will hold legal title to the debt
securities for the benefit of the holders of the related trust securities. In
addition, Devon will execute a guarantee for the benefit of the holders of the
related trust preferred securities. The guarantees will not guarantee payment of
distributions or amounts payable on redemption of the trust preferred securities
or liquidation of Devon Financing Trust II when the trust does not have funds
legally available for payment. See "Description of Trust Preferred Securities
Guarantees."
The revenue of Devon Financing Trust II available for distribution to
holders of its trust preferred securities will be limited to payments under the
related debt securities that Devon Financing Trust II
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purchased with the proceeds from the sale of its trust securities. If Devon
fails to make a required payment in respect of those debt securities, Devon
Financing Trust II will not have sufficient funds to make the related payments,
including distributions, in respect of its trust preferred securities.
SUBORDINATION OF TRUST COMMON SECURITIES
Devon Financing Trust II will pay distributions on, and the applicable
redemption price of, the trust securities it issues equally among its trust
preferred securities and its trust common securities based on their respective
liquidation amounts; provided, however, if on any distribution date or
redemption date an event of default under the debt securities held by Devon
Financing Trust II has occurred and is continuing, Devon Financing Trust II will
not pay any distribution on, or applicable redemption price of, any of its trust
common securities, and will not make any other payment on account of the
redemption, liquidation or other acquisition of the trust common securities,
unless payment in full in cash of all accumulated distributions on all of the
outstanding trust preferred securities of Devon Financing Trust II for all
distribution periods terminating on or before the redemption, liquidation or
other acquisition, or in the case of payment of the applicable redemption price,
the full amount of the redemption price, will have been made or provided for.
The property trustee will apply all available funds first to the payment in full
in cash of all distributions on, or the applicable redemption price of, the
trust preferred securities issued by Devon Financing Trust II then due and
payable.
Until any event of default under the trust agreement for Devon Financing
Trust II has been cured, waived or otherwise eliminated, the property trustee
will act solely on behalf of the holders of the trust preferred securities of
Devon Financing Trust II and not on behalf of Devon as the direct or indirect
trust common securities owner, and only the holders of the trust preferred
securities issued by Devon Financing Trust II will have the right to direct the
property trustee to act on their behalf.
EVENTS OF DEFAULT; NOTICE
The occurrence of an event of default under the debt securities held by
Devon Financing Trust II will constitute an event of default under the trust
agreement for Devon Financing Trust II. Within 90 business days after the
occurrence of an event of default actually known to the property trustee, the
property trustee will transmit notice of that event of default to the holders of
the trust preferred securities of Devon Financing Trust II, unless the event of
default shall have been cured or waived.
For a discussion of the limited circumstances in which holders of trust
preferred securities may bring a direct action against Devon, see "Description
of Debt Securities -- Enforcement of Certain Rights by Holders of Trust
Preferred Securities." The applicable prospectus supplement may describe
additional events of default under the trust agreement.
REMOVAL OF TRUSTEES
Unless an event of default under the debt securities held by Devon
Financing Trust II has occurred and is continuing, Devon, as the direct or
indirect owner of trust common securities of Devon Financing Trust II, may
remove the property trustee, the Delaware trustee and the administrative
trustees at any time prior to the issuance of any securities. If an event of
default under the debt securities held by Devon Financing Trust II has occurred
and is continuing, only the holders of a majority in liquidation amount of the
outstanding trust preferred securities of Devon Financing Trust II may remove
and replace the property trustee and the Delaware trustee for Devon Financing
Trust II at such time. In no event will the holders of the trust preferred
securities have the right to vote to appoint, remove or replace the
administrative trustees, which voting rights are vested exclusively in Devon as
the direct or indirect trust common securities owner. No resignation or removal
of a trustee, and no appointment of a successor trustee, will be effective until
the acceptance of appointment by the successor trustee in accordance with the
provisions of the applicable trust agreement.
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MERGER OR CONSOLIDATION OF PROPERTY OR DELAWARE TRUSTEES
Any corporation or other person into which the property trustee or the
Delaware trustee may be merged or converted or with which it may be
consolidated, or any corporation or other person resulting from any merger,
conversion or consolidation to which the property trustee or the Delaware
trustee will be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the property trustee or the Delaware
trustee, will be the successor of the property trustee or the Delaware trustee
under the trust agreement, provided that the corporation or other person will be
otherwise qualified and eligible and promptly notifies Devon.
MERGERS, CONVERSIONS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF DEVON
FINANCING TRUST II
Devon Financing Trust II may not merge with or into, convert into,
consolidate, amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets in their entirety or substantially in their entirety to
any corporation or other person, except for the sole purpose of changing its
domicile and as described below or as otherwise described in the applicable
prospectus supplement. Devon Financing Trust II may, at the request of Devon, as
sponsor, with the consent of the administrative trustees but without the consent
of the holders of its trust preferred securities, the Delaware Trustee or the
property trustee, merge with or into, convert into, consolidate, amalgamate, or
be replaced by or convey, transfer or lease its properties and assets in their
entirety or substantially in their entirety to a trust organized as such under
the laws of any state of the United States; provided, that:
- the successor entity either:
- expressly assumes all of the obligations of Devon Financing Trust II
with respect to the trust securities of Devon Financing Trust II, or
- substitutes for the trust securities of Devon Financing Trust II other
securities having substantially the same terms as those trust
securities, so long as the successor securities rank the same as the
trust securities with respect to distributions and payments upon
liquidation, redemption, repayment and otherwise;
- Devon expressly appoints a trustee of the successor entity possessing
substantially the same powers and duties as the property trustee with
respect to the debt securities held by Devon Financing Trust II;
- the merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the trust securities,
including any successor securities, of Devon Financing Trust II or the
debt securities held by Devon Financing Trust II to be downgraded by any
nationally recognized statistical rating organization;
- the merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the trust securities,
including any successor securities, of Devon Financing Trust II in any
material respect, other than any dilution of the holders' interests in
the new entity;
- the successor entity has a purpose substantially identical to that of
Devon Financing Trust II;
- prior to the merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, Devon has received an opinion
from independent counsel to Devon Financing Trust II experienced in these
matters to the effect that:
- the merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the trust securities,
including any successor securities, of Devon Financing Trust II in any
material respect, other than any dilution of the holders' interests in
the new entity,
33
- following the merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither Devon Financing
Trust II nor the successor entity, if any, will be required to register
as an investment company under the Investment Company Act of 1940, as
amended, and
- following the merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, Devon Financing Trust II or
the successor entity, as the case may be, will continue to be classified
a grantor trust for United States federal income tax purposes;
- Devon or any permitted successor or assignee directly or indirectly owns
all of the common securities of the successor entity and guarantees the
obligations of the successor entity under the successor securities at
least to the extent provided by the applicable guarantee; and
- the property trustee has received our officer's certificate and an
opinion of counsel, each to the effect that all conditions precedent to
the transaction as set forth in the trust agreement have been satisfied.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided below and under "Description of Trust Preferred
Securities -- Mergers, Conversions, Consolidations, Amalgamations or
Replacements of Devon Financing Trust II" and "Description of Trust Preferred
Securities Guarantees -- Amendments and Assignment" and as otherwise required by
law and the trust agreement or specified in the applicable prospectus
supplement, the holders of trust preferred securities will have no voting
rights.
Devon, the property trustee, the Delaware trustee and the administrative
trustees may amend from time to time the trust agreement for Devon Financing
Trust II, without the consent of the holders of the trust securities of Devon
Financing Trust II:
- to cure any ambiguity, correct or supplement any provisions in the trust
agreement that may be inconsistent with any other provision;
- to add to the covenants, restrictions or obligations of the sponsor; or
- to conform to any change in the Investment Company Act or the Trust
Indenture Act or to ensure Devon Financing Trust II will be classified
for United States federal income tax purposes as a grantor trust;
provided, however, that in the first bullet above, the modification will not
adversely affect in any material respect the interests of the holders of the
trust securities issued by Devon Financing Trust II.
Without the consent of each holder of trust securities issued by Devon
Financing Trust II affected by the following amendments, the trust agreement for
Devon Financing Trust II may not be amended to:
- change the distribution rate, or manner of calculation of the
distribution rate, amount, timing or currency or otherwise adversely
affect the method of any required payment;
- change its purpose;
- authorize the issuance of any additional beneficial interests;
- change the conversion, exchange, repayment or redemption provisions, if
any;
- change the conditions precedent for Devon to elect to dissolve Devon
Financing Trust II and distribute the debt securities held by Devon
Financing Trust II to the holders of the trust securities, if applicable;
- change the liquidation, distribution or other provisions relating to the
distribution of amounts payable upon the dissolution and liquidation of
Devon Financing Trust II;
- affect the limited liability of any holder of its trust securities; or
34
- restrict the right of a holder of its trust securities to institute suit
for the enforcement of any required payment on or, if applicable, after
the due date therefor or for the conversion or exchange of the trust
securities in accordance with their terms.
So long as the property trustee holds any debt securities for Devon
Financing Trust II, the property trustee, the Delaware trustee and the
administrative trustees for Devon Financing Trust II will not:
- direct the time, method and place of conducting any proceeding for any
remedy available to the indenture trustee, or execute any trust or power
conferred on the property trustee, with respect to those debt securities;
- waive certain past defaults under the applicable indenture;
- exercise any right to rescind or annul a declaration of acceleration of
the maturity of the principal of those debt securities; or
- consent to any amendment, modification or termination of the applicable
indenture for those debt securities, where consent is required;
without, in each case, obtaining the prior approval of the holders of a majority
in liquidation amount of all outstanding trust preferred securities of Devon
Financing Trust II; provided, however, where a consent under the applicable
indenture would require the consent of each holder of those debt securities
affected thereby, the property trustee will not consent without the prior
approval of each holder of the trust preferred securities issued by Devon
Financing Trust II. The property trustee, the Delaware trustee and the
administrative trustees may not revoke any action previously authorized or
approved by a vote of the holders of trust preferred securities except by
subsequent vote of the holders. The property trustee will notify each holder of
trust preferred securities of any notice of default with respect to the
applicable debt securities. In addition to obtaining approvals of holders of
trust preferred securities referred to above, prior to taking any of the
foregoing actions, the property trustee, the Delaware trustee and the
administrative trustees will obtain an opinion of counsel experienced in these
matters to the effect Devon Financing Trust II will not be classified as other
than a grantor trust for United States federal income tax purposes on account of
such action.
Holders of trust preferred securities may give any required approval at a
meeting of the holders convened for this purpose or by written consent without
prior notice. A notice of any meeting at which holders of trust preferred
securities are entitled to vote will be given to each holder of record of trust
preferred securities in the manner set forth in the trust agreement.
Notwithstanding that holders of trust preferred securities are entitled to
vote or consent under any of the circumstances referred to above, any trust
preferred securities that are owned by Devon or any affiliate of Devon will, for
purposes of this vote or consent, be treated as if they were not outstanding.
GLOBAL TRUST PREFERRED SECURITIES
Unless otherwise specified in the applicable prospectus supplement, trust
preferred securities will be represented by one or more global certificates
deposited with, or on behalf of, DTC, or other depositary identified in the
prospectus supplement, or a nominee of DTC or other depositary, in each case for
credit to an account of a participant in DTC or other depositary. The identity
of the depositary and the specific terms of the depositary arrangements with
respect to the trust preferred securities to be represented by one or more
global certificates will be described in the applicable prospectus supplement.
However, unless otherwise specified in the applicable prospectus supplement, DTC
will be the depositary and the depositary arrangements described with respect to
the debt securities and the applicable indenture will apply to such trust
preferred securities and the applicable indenture to the trust agreement as
well. See "Description of Debt Securities -- Global Securities" and "Book-Entry
Securities."
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PAYMENT AND PAYING AGENT
Devon Financing Trust II will make payments in respect of any global
certificate representing trust preferred securities to Cede & Co., as nominee of
DTC or other applicable depositary or its nominee, which will credit the
relevant accounts at DTC or other depositary on the applicable payment dates.
Devon Financing Trust II will make payments in respect of trust preferred
securities in certificated form by check mailed to the address of the holder
entitled thereto as the address will appear on the register.
The paying agent will initially be the property trustee and any co-paying
agent chosen by the property trustee and acceptable to the administrative
trustees and Devon. The paying agent will be permitted to resign as paying agent
upon 30 days prior written notice to the property trustee, the administrative
trustees and Devon. In the event that the property trustee will no longer be the
paying agent, the administrative trustees will appoint a successor, which will
be a bank or trust company acceptable to the administrative trustees and Devon,
to act as paying agent.
REGISTRAR AND TRANSFER AGENT
The property trustee will act as registrar and transfer agent for the trust
preferred securities.
Registration of transfers of trust preferred securities will be effected
without charge by or on behalf of Devon Financing Trust II, but upon payment of
any tax or other governmental charges that may be imposed in connection with any
transfer or exchange. Devon Financing Trust II will not be required to register
or cause to be registered the transfer of its trust preferred securities after
they have been converted, exchanged, repaid, redeemed or called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee, other than during the occurrence and continuance of
an event of default under the trust agreement, will undertake to perform only
the duties that are specifically set forth in the trust agreement and, during
the continuance of an event of default, must exercise the same degree of care
and skill as a prudent person would exercise or use in the conduct of his or her
own affairs. Subject to the foregoing, the property trustee will not be under
any obligation to exercise any of the powers vested in it by the trust agreement
at the request of any holder of the related trust securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby and it receives legal opinions as required under the
trust agreement.
MISCELLANEOUS
The administrative trustees are authorized and directed to conduct the
affairs of and to operate Devon Financing Trust II in such a way that:
- Devon Financing Trust II will not be deemed to be an investment company
required to be registered under the Investment Company Act;
- Devon Financing Trust II will be classified as a grantor trust for United
States federal income tax purposes; and
- the debt securities held by Devon Financing Trust II will be treated as
indebtedness of Devon for United States federal income tax purposes.
Devon and the administrative trustees are authorized to take any action not
inconsistent with applicable law, the certificate of trust of Devon Financing
Trust II or its trust agreement that the administrative trustees determine in
their discretion to be necessary or desirable for those purposes, as long as
that action does not materially adversely affect the interests of the holders of
the related trust securities.
Holders of trust preferred securities will not have any preemptive or
similar rights.
Devon Financing Trust II may not borrow money, issue debt, execute
mortgages or pledge any of its assets.
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DESCRIPTION OF TRUST PREFERRED SECURITIES GUARANTEES
Devon will execute and deliver a guarantee concurrently with the issuance
by Devon Financing Trust II of its trust preferred securities for the benefit of
the holders, from time to time, of those trust preferred securities. That
guarantee will be held for those holders by a guarantee trustee. Devon will
qualify each of the guarantees as an indenture under the Trust Indenture Act.
The guarantees will be subject to, and governed by, the Trust Indenture Act.
This summary of certain terms and provisions of a guarantee does not purport to
be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of each guarantee, including the definitions of terms and
those made a part of each guarantee by the Trust Indenture Act. If indicated in
the applicable prospectus supplement, the terms of a particular guarantee may
differ from the terms discussed below.
GENERAL
Devon will irrevocably agree to pay in full, to the extent set forth
herein, the guarantee payments to the holders of the related trust preferred
securities, as and when due, regardless of any defense, right of set-off or
counterclaim that Devon Financing Trust II may have or assert. The following
payments constitute guarantee payments with respect to trust preferred
securities and, to the extent not paid by or on behalf of Devon Financing Trust
II, will be subject to the guarantee:
- any accrued and unpaid distributions required to be paid on the trust
preferred securities, to the extent that Devon Financing Trust II has
funds legally available therefor;
- the redemption or repayment price, if any are specified in the trust
agreement; including all accrued and unpaid distributions to the date of
redemption with respect to the trust preferred securities called for
redemption or repayment, to the extent that Devon Financing Trust II has
funds legally available therefor; or
- upon a voluntary or involuntary dissolution and liquidation of Devon
Financing Trust II, other than in connection with the distribution of the
debt securities to holders of its trust preferred securities in exchange
for its trust preferred securities, if applicable, the lesser of:
- the amounts due upon the dissolution and liquidation of Devon Financing
Trust II, to the extent that it has funds legally available therefor,
and
- the amount of assets of Devon Financing Trust II remaining available for
distribution to holders of its trust preferred securities after
satisfaction of liabilities to its creditors as required by applicable
law.
Devon's obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts by Devon to the holders of trust preferred
securities entitled to those payments or by causing Devon Financing Trust II to
pay those amounts to the holders.
If the trust preferred securities are exchangeable or convertible into
other securities, Devon will also irrevocably agree to cause Devon Financing
Trust II to deliver to holders of the trust preferred securities those other
securities in accordance with the applicable exchange or conversion provisions.
Devon will, through the guarantee, the applicable trust agreement, the
related debt securities and the applicable indenture, taken together, fully,
irrevocably and unconditionally guarantee all of Devon Financing Trust II's
obligations under its trust preferred securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes a guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
of Devon Financing Trust II's obligations under its trust preferred securities.
RANKING
Unless otherwise specified in the applicable prospectus supplement, each
guarantee will constitute an unsecured obligation of Devon and will rank equal
to the debt securities held by Devon Financing Trust II.
37
Devon Financing Trust II's trust agreement will provide that each holder of
trust preferred securities by acceptance of the trust preferred securities
agrees to the terms of the related guarantee, including any subordination
provisions.
The guarantees will not limit the amount of secured or unsecured debt,
including indebtedness under the indentures, that may be incurred by Devon or
any of its subsidiaries.
GUARANTEE OF PAYMENT
Each guarantee will constitute a guarantee of payment and not of
collection. This means that the guaranteed party may institute a legal
proceeding directly against Devon to enforce its rights under a guarantee
without first instituting a legal proceeding against any other person or entity.
A guarantee will not be discharged except by payment of the related guarantee
payments in full to the extent not paid by Devon Financing Trust II or upon
distribution of the debt securities held by Devon Financing Trust II to the
holders of the its trust preferred securities.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the trust preferred securities, in which case no
approval will be required, a guarantee may not be amended without the prior
approval of the holders of a majority of the liquidation amount of the
outstanding trust preferred securities covered by that guarantee. The manner of
obtaining any approval will be as set forth under "Description of Trust
Preferred Securities -- Voting Rights; Amendment of Trust Agreement." All
guarantees and agreements contained in a guarantee will bind the successors,
assigns, receivers, trustees and representatives of Devon and will inure to the
benefit of the holders of the related trust preferred securities then
outstanding.
EVENTS OF DEFAULT
An event of default under a guarantee will occur upon the failure of Devon
to perform any of its payment or other obligations under that guarantee,
provided that, except with respect to a default in respect of any guarantee
payment, Devon has received notice of the default and has not cured the default
within 90 days of receipt of a notice of default. The holders of a majority in
liquidation amount of the trust preferred securities covered by a guarantee will
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 that guarantee
or to direct the exercise of any trust or power conferred upon the guarantee
trustee under that guarantee.
If the guarantee trustee fails to enforce a guarantee, any holder of the
related trust preferred securities may institute a legal proceeding directly
against Devon to enforce its rights under that guarantee without first
instituting a legal proceeding against Devon Financing Trust II, the guarantee
trustee or any other person or entity.
TERMINATION
A guarantee will terminate and be of no further force and effect upon full
payment of the applicable redemption price of the trust preferred securities,
upon full payment of all amounts due upon the dissolution and liquidation of
Devon Financing Trust II or upon the conversion or exchange of all trust
preferred securities, in each case, if applicable, whether upon distribution of
the applicable debt securities to the holders of the trust preferred securities
or otherwise. A guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of trust preferred securities must
restore payment of any sums paid under those trust preferred securities or the
related guarantee.
GOVERNING LAW
The guarantees will be governed by and construed in accordance with the
laws of the State of New York.
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INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, other than during the occurrence and continuance of
a default by Devon in performance of a guarantee, will undertake to perform only
the duties that are specifically set forth in that guarantee and, during the
continuance of that default, must exercise the same degree of care and skill as
a prudent person would exercise or use in the conduct of his or her own affairs.
Subject to the foregoing, the guarantee trustee will not be under any obligation
to exercise any of the powers vested in it by a guarantee at the request of any
holder of the related trust preferred securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that it might incur.
RIGHTS UPON DISSOLUTION
Unless the debt securities held by Devon Financing Trust II are distributed
to holders of the trust preferred securities, upon any voluntary or involuntary
dissolution and liquidation of Devon Financing Trust II, after satisfaction of
the liabilities of its creditors as required by applicable law, the holders of
those trust securities will be entitled to receive, out of assets held by Devon
Financing Trust II, the liquidation distribution in cash. Upon any voluntary or
involuntary liquidation or bankruptcy of Devon, the property trustee, as holder
of the debt securities, would be a creditor of Devon.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND UNITS
We may issue stock purchase contracts, representing contracts entitling or
obligating holders to purchase from Devon, and Devon to sell to the holders, or
for Devon to issue in exchange for other securities, a specified number of
shares of common stock or preferred stock at a future date or dates or on the
occurrence of certain events. The price or exchange rate per share of common
stock or preferred stock may be fixed at the time the contracts are issued or
may be determined by reference to a specific formula set forth in the contracts.
The stock purchase contracts may be issued separately or as a part of units,
which are referred to in this prospectus as "stock purchase units," consisting
of a stock purchase contract and the following:
- senior debt securities or subordinated debt securities of Devon;
- debt obligations of third parties, including U.S. Treasury securities;
- trust preferred securities of Devon Financing Trust II; or
- any combination of the foregoing.
The stock purchase contracts may require Devon to make periodic payments to
the holders of the stock purchase units or vice versa, and such payments may be
unsecured or prefunded on some basis. The stock purchase contracts may require
holders to secure their obligations thereunder in a specified manner, and in
certain circumstances Devon may deliver newly issued prepaid stock purchase
contracts, which are referred to as "prepaid securities," upon release to a
holder of any collateral securing such holder's obligations under the original
contract.
The applicable prospectus supplement will describe the terms of any stock
purchase contracts or units and, if applicable, prepaid securities. The
description in the prospectus supplement will not purport to be complete and
will be qualified in its entirety by reference to the contracts, the collateral
arrangements and depositary arrangements, if applicable, relating to such
contracts or units and, if applicable, the prepaid securities and the document
pursuant to which such prepaid securities will be issued.
BOOK-ENTRY SECURITIES
Unless otherwise specified in the applicable prospectus supplement, we will
issue securities, other than our common stock, to investors in the form of one
or more book-entry certificates registered in the name of a depository or a
nominee of a depository. Unless otherwise specified in the applicable prospectus
supplement, the depository will be DTC. We have been informed by DTC that its
nominee will be
39
Cede & Co. Accordingly, Cede is expected to be the initial registered holder of
all securities that are issued in book-entry form.
No person that acquires a beneficial interest in securities issued in book-
entry form will be entitled to receive a certificate representing those
securities, except as set forth in this prospectus or in the applicable
prospectus supplement. Unless and until definitive securities are issued under
the limited circumstances described below, all references to actions by holders
or beneficial owners of securities issued in book-entry form will refer to
actions taken by DTC upon instructions from its participants, and all references
to payments and notices to holders or beneficial owners will refer to payments
and notices to DTC or Cede, as the registered holder of such securities.
DTC has informed us that it is:
- a limited-purpose trust company organized under New York banking laws;
- a "banking organization" within the meaning of the New York banking laws;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- a "clearing agency" registered under the Securities Exchange Act.
DTC has also informed us that it was created to:
- hold securities for "participants;" and
- facilitate the computerized settlement of securities transactions among
participants through computerized electronic book-entry changes in
participants' accounts, thereby eliminating the need for the physical
movement of securities certificates.
Participants have accounts with DTC and include securities brokers and
dealers, banks, trust companies and clearing corporations. Indirect access to
the DTC system also is available to indirect participants such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Persons that are not participants or indirect participants but desire to
buy, sell or otherwise transfer ownership of or interests in securities may do
so only through participants and indirect participants. Under the book-entry
system, beneficial owners may experience some delay in receiving payments, as
payments will be forwarded by our agent to Cede, a nominee for DTC. These
payments will be forwarded to DTC's participants, which thereafter will forward
them to indirect participants or beneficial owners. Beneficial owners will not
be recognized by the applicable registrar, transfer agent, trustee or depositary
as registered holders of the securities entitled to the benefits of the
certificate, the indenture or any deposit agreement. Beneficial owners that are
not participants will be permitted to exercise their rights as an owner only
indirectly through participants and, if applicable, indirect participants.
Under the current rules and regulations affecting DTC, DTC will be required
to make book-entry transfers of securities among participants and to receive and
transmit payments to participants. Participants and indirect participants with
whom beneficial owners of securities have accounts are also required by these
rules to make book-entry transfers and receive and transmit such payments on
behalf of their respective account holders.
Because DTC can act only on behalf of participants, who in turn act only on
behalf of other participants or indirect participants, and on behalf of certain
banks, trust companies and other persons approved by it, the ability of a
beneficial owner of securities issued in book-entry form to pledge those
securities to persons or entities that do not participate in the DTC system may
be limited due to the unavailability of physical certificates for the
securities.
40
DTC has advised us that it will take any action permitted to be taken by a
registered holder of any securities under the certificate, the indenture or any
deposit agreement only at the direction of one or more participants to whose
accounts with DTC the securities are credited.
According to DTC, it has provided information with respect to DTC to its
participants and other members of the financial community for informational
purposes only and is not intended to serve as a representation, warranty or
contract modification of any kind.
Unless otherwise specified in the applicable prospectus supplement, a book-
entry security will be exchangeable for definitive securities registered in the
names of persons other than DTC or its nominee only if:
- DTC notifies us that it is unwilling or unable to continue as depository
for the book-entry security or DTC ceases to be a clearing agency
registered under the Securities Exchange Act at a time when DTC is
required to be so registered; or
- we execute and deliver to the applicable registrar, transfer agent,
trustee and/or depositary an order complying with the requirements of the
certificate, the indenture or any deposit agreement that the book-entry
security will be so exchangeable.
Any book-entry security that is exchangeable in accordance with the
preceding sentence will be exchangeable for securities registered in such names
as DTC directs.
If one of the events described in the immediately preceding paragraph
occurs, DTC is generally required to notify all participants of the availability
through DTC of definitive securities. Upon surrender by DTC of the book-entry
security representing the securities and delivery of instructions for re-
registration, the registrar, transfer agent, trustee or depositary, as the case
may be, will reissue the securities as definitive securities. After reissuance
of the securities, such persons will recognize the beneficial owners of such
definitive securities as registered holders of securities.
Except as described above:
- a book-entry security may not be transferred except as a whole book-entry
security by or among DTC, a nominee of DTC and/or a successor depository
appointed by us; and
- DTC may not sell, assign or otherwise transfer any beneficial interest in
a book-entry security unless the beneficial interest is in an amount
equal to an authorized denomination for the securities evidenced by the
book-entry security.
None of Devon, the trustees, any registrar and transfer agent or any
depository, or any agent of any of them, will have any responsibility or
liability for any aspect of DTC's or any participant's records relating to, or
for payments made on account of, beneficial interests in a book-entry security.
PLAN OF DISTRIBUTION
We may sell the securities through agents, underwriters or dealers, or
directly to one or more purchasers without using underwriters or agents.
We may designate agents who agree to use their reasonable efforts to
solicit purchases for the period of their appointment or to sell securities on a
continuing basis.
If we use underwriters for a sale of securities, the underwriters will
acquire the securities for their own accounts. The underwriters may resell the
securities in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The obligations of the underwriters to purchase the securities will be subject
to the conditions set forth in the applicable underwriting agreement. The
underwriters will be obligated to purchase all the securities offered if any of
those securities are purchased. Any initial public offering price and any
discounts or concessions allowed or re-allowed or paid to dealers will be
described in the applicable prospectus supplement and may be changed from time
to time.
41
Underwriters, dealers and agents that participate in the distribution of
the securities may be underwriters as defined in the Securities Act and any
discounts or commissions they receive from us and any profit on their resale of
the securities may be treated as underwriting discounts and commissions under
the Securities Act. The applicable prospectus supplement will identify any
underwriters, dealers or agents and will describe their compensation. We may
have agreements with the underwriters, dealers and agents to indemnify them
against certain civil liabilities, including liabilities under the Securities
Act. Underwriters, dealers and agents may engage in transactions with or perform
services for us or our subsidiaries in the ordinary course of their businesses.
TRADING MARKETS AND LISTING OF SECURITIES
Unless otherwise specified in the applicable prospectus supplement, each
class or series of securities will be a new issue with no established trading
market, other than the common stock, which is listed on the American Stock
Exchange. We may elect to list any other class or series of securities on any
exchange, but we are not obligated to do so. It is possible that one or more
underwriters may make a market in a class or series of securities, but the
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. We cannot give any assurance as to the
liquidity of the trading market for any of the securities.
STABILIZATION ACTIVITIES
Any underwriter may engage in over-allotment, stabilizing transactions,
short-covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act. Over-allotment involves sales in excess of
the offering size, which create a short position. Stabilizing transactions
permit bids to purchase the underlying security so long as the stabilizing bids
do not exceed a specified maximum. Short-covering transactions involve purchases
of the securities in the open market after the distribution is completed to
cover short positions. Penalty bids permit the underwriters to reclaim a selling
concession from a dealer when the securities originally sold by the dealer are
purchased in a covering transaction to cover short positions. Those activities
may cause the price of the securities to be higher than it would otherwise be.
If commenced, the underwriters may discontinue any of the activities at any
time.
THE TRUSTEE
We may appoint a separate trustee for any series of debt securities. In the
description of a series of debt securities, the term "trustee" refers to the
trustee appointed with respect to such series of debt securities. The trustee is
a depository for funds and performs other services for, and may transact other
banking business with, Devon and its subsidiaries in the normal course of
business.
LEGAL MATTERS
Certain legal matters in connection with the securities will be passed upon
for us by Mayer, Brown, Rowe & Maw and for any underwriter by legal counsel
named in the prospectus supplement.
EXPERTS
The consolidated financial statements of Devon and its subsidiaries as of
December 31, 2000, 1999, and 1998 and for each of the years then ended have been
incorporated by reference herein in reliance upon the report of KPMG LLP,
independent certified public accountants, to the extent and for the periods
indicated in their report and upon the authority of said firm as experts in
accounting and auditing. The report of KPMG LLP expresses reliance on other
auditors for 1999 and 1998.
The consolidated financial statements of Northstar Energy Corporation as of
and for the year ended December 31, 1998, not separately presented in this
registration statement, have been audited by Deloitte & Touche LLP, Chartered
Accountants, whose report thereon appears in Devon's 2000 Annual Report on Form
10-K/A, incorporated by reference herein. Such consolidated financial
statements, to the
42
extent they have been included in the consolidated financial statements of
Devon, have been so included in reliance on the report of such independent
accountants given on the authority of said firm as experts in accounting and
auditing.
The audited consolidated financial statements of Santa Fe Snyder
Corporation as of December 31, 1999 and 1998 and for the years then ended, not
separately presented in this registration statement, have been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report thereon
appears in Devon's 2000 Annual Report on Form 10-K/A, incorporated by reference
herein. Such consolidated financial statements, to the extent they have been
included in the consolidated financial statements of Devon, have been so
included in reliance on the report of such independent accountants given on the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Anderson as of September 30, 2000
and 2001 for each of the years in the three-year period ended September 30,
2001, have been incorporated by reference herein in reliance on the report of
KPMG LLP, Chartered Accountants, to the extent and for the periods indicated
their report and upon the authority of said firm as experts in accounting and
auditing.
The consolidated financial statements of Mitchell and its subsidiaries as
of December 31, 2000 and 1999 and for each of the three years in the period
ended December 31, 2000, have been incorporated by reference into this
registration statement in reliance on the report by Arthur Andersen LLP,
independent public accountants, incorporated by reference into this registration
statement, and upon the authority of said firm as experts in accounting and
auditing in giving said reports.
Certain information with respect to Devon's oil and gas reserves derived
from the reports of LaRoche Petroleum Consultants, Ltd., Ryder Scott Company,
L.P., AMH Group Ltd., Paddock Lindstrom & Associates, Ltd. independent
consulting petroleum engineers, has been included and incorporated by reference
herein upon the authority of said firms as experts with respect to matters
covered by such reports and in giving such reports.
Certain information relating to Anderson's oil and gas reserves derived
from the reports of Gilbert Laustsen Jung Associates Ltd., independent
consulting petroleum engineers, has been included in this registration statement
on the authority of said firm as experts with respect to such reports and in
giving such reports.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any reports, statements or other information we file at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public from commercial document
retrieval services and at the website maintained by the SEC at
"http://www.sec.gov."
We filed with the SEC a registration statement on Form S-3 with respect to
the securities offered by this prospectus. This prospectus is a part of that
registration statement. As allowed by SEC rules, this prospectus does not
contain all the information you can find in the registration statement or the
exhibits to the registration statement. Instead, the SEC allows us to
"incorporate by reference" information into this prospectus, which means that we
can disclose important information to you by referring you to another document
filed separately with the SEC. The information incorporated by reference is
deemed to be part of this prospectus, except for any information superseded by
information in, or incorporated by reference in, this prospectus.
This prospectus incorporates by reference the documents set forth below
that we have previously filed with the SEC. These documents contain important
information about Devon.
(a) Our Annual Report on Form 10-K for the year ended December 31,
2000, as amended by Form 10-K/A.
43
(b) Our Quarterly Reports on Form 10-Q for the quarters ended March
31, 2001 and June 30, 2001, each as amended by Form 10-Q/A, and September
30, 2001.
(c) Our Current Reports on Form 8-K filed January 30, 2001, September
20, 2001, September 26, 2001, September 27, 2001, October 3, 2001, October
11, 2001, October 12, 2001, October 26, 2001, October 31, 2001, November 1,
2001, November 28, 2001, December 12, 2001, December 21, 2001, January 18,
2002, January 29, 2002 and February 6, 2002 and Current Reports on Form
8-K/A filed December 3, 2001.
(d) The description of our Common Stock set forth in Exhibit 4.9 to
our Form 8-K, dated August 18, 1999, including any amendment or report
filed for the purposes of updating such description.
We are also incorporating by reference additional documents that we file
with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this prospectus but before the completion of the offering.
We will provide documents incorporated by reference in this prospectus
without charge, excluding all exhibits unless we have specifically incorporated
by reference an exhibit in this prospectus. You may obtain documents
incorporated by reference in this prospectus by requesting them in writing, by
e-mail or by telephone from us at the following address:
Devon Energy Corporation, 20 North Broadway, Oklahoma City, Oklahoma
73102-8260 Attention: Corporate Secretary, Telephone: (405) 235-3611,
janice.dobbs@dvn.com
You can also get more information by visiting our website at
"http://www.devonenergy.com." Website materials are not part of this prospectus.
CAUTIONARY STATEMENT
CONCERNING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this document and in the
documents incorporated by reference into this document, which are subject to
risks and uncertainties, including those discussed under the caption "Risk
Factors." These statements are based on the beliefs and assumptions of our
management and on the information currently available to them.
Statements and calculations concerning oil and gas reserves and their
present value also may be deemed to be forward-looking statements in that they
reflect the determination, based on estimates and assumptions, that oil and gas
reserves may be profitably exploited in the future. When used or referred to in
this document, these forward-looking statements may be preceded by, followed by,
or otherwise include the words "believes," "expects," "anticipates," "intends,"
"plans," "estimates," "projects" or similar expressions, or statements that
certain events or conditions "will" or "may" occur.
Except for our ongoing obligations to disclose material information as
required by the federal securities laws, we do not have any intention or
obligation to update forward-looking statements after we distribute this
document.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a statement of estimated expenses incurred in connection
with the securities being registered hereby. Devon will pay for the fees and
expenses of the offering of the securities offered hereby.
SEC Registration Fee*....................................... $ 19,923
Legal Fees and Expenses..................................... 100,000
Printing and Engraving Expenses............................. 100,000
Accounting Fees and Expenses................................ 40,000
Trustees Fees and Expenses.................................. 14,000
Miscellaneous............................................... 40,000
--------
Total....................................................... $313,923
========
---------------
* The fee calculation is based upon $1,500,000,000 of securities and, pursuant
to Rule 457(p), is offset by the fee previously paid in connection with
$447,261,200 of securities of the registrants under Registration Statement No.
333-50034, which was initially filed on November 16, 2000 and terminated on
the date of filing of this Registration Statement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Except to the extent indicated below, there is no charter provision, bylaw,
contract, arrangement or statute under which any director or officer of Devon,
Devon Financing Trust II or Devon Financing Corporation, U.L.C. is insured or
indemnified in any manner against any liability which he or she may incur in his
or her capacity as such.
DEVON ENERGY CORPORATION
Article VIII of Devon's restated certificate of incorporation, as amended,
contains a provision, permitted by Section 102(b)(7) of the Delaware General
Corporation Law, limiting the personal monetary liability of directors for
breach of fiduciary duty as a director. This provision and Delaware law provide
that the provision does not eliminate or limit liability:
- for any breach of the director's duty of loyalty to Devon or its
stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law; or
- for any transaction from which the director derived an improper benefit.
Section 145 of the Delaware General Corporation Law permits indemnification
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with actions, suits
or proceedings in which a director, officer, employee or agent is a party by
reason of the fact that he or she is or was such a director, officer, employee
or agent, if he or she acted in good faith and in a manner he or she 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 or her conduct was unlawful. However, in connection with actions by
or in the right or the corporation, such indemnification is not permitted if
such person has been adjudged liable to the corporation unless the court
determines that, under all of the circumstances, such person is nonetheless
II-1
fairly and reasonably entitled to indemnify for such expenses as the court deems
proper. Article X of Devon's restated certificate of incorporation, as amended,
provides for such indemnification.
Section 145 of the Delaware General Corporation Law also permits a
corporation to purchase and maintain insurance on behalf of its directors and
officers against any liability that may be asserted against, or incurred by,
such persons in their capacities as directors or officers of the corporation
whether or not the corporation would have the power to indemnify such person
against such liabilities under the provisions of such sections. Devon has
purchased such insurance.
Section 145 of the Delaware General Corporation Law further provides that
the statutory provision is not exclusive of any other right to which those
seeking indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or independent directors, or otherwise,
both as to action in such person's official capacity and as to action in another
capacity while holding such office.
Article XIII of Devon's bylaws contains provisions regarding
indemnification that parallel those described above.
The amended and restated merger agreement, dated as of May 19, 1999,
between Devon and PennzEnergy Company provides that for seven years after the
effective time of the merger contemplated by that agreement, Devon will
indemnify and hold harmless each person who was a director or officer of Devon
or PennzEnergy prior to the effective time of that merger from their acts or
omissions in those capacities occurring prior to the effective time of that
merger to the fullest extent permitted by applicable law.
The merger agreement, dated as of May 25, 2000, as amended, between Devon
and Santa Fe Snyder Corporation provides that for six years after the effective
time of the merger contemplated by that agreement, Devon will indemnify and hold
harmless each person who was a director or officer of Santa Fe Snyder prior to
the effective time of that merger from their acts or omissions in those
capacities occurring prior to the effective time of that merger to the fullest
extent permitted by applicable law.
The amended and restated agreement and plan of merger, dated as of August
13, 2001, by and among Devon, Devon NewCo Corporation, Devon Holdco Corporation,
Devon Merger Corporation, Mitchell Merger Corporation and Mitchell Energy &
Development Corp. provides that for six years after the effective time of the
merger contemplated by that agreement, Devon Holdco Corporation will cause the
surviving corporation of the merger to indemnify and hold harmless to the
fullest extent permitted under applicable law each person who was a director or
officer of Mitchell prior to the effective time of that merger.
DEVON FINANCING TRUST II
The Devon Financing Trust II trust agreement will provide for full
indemnification of any trustee, affiliate of any administrative 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 trust agreement or by law. The trust agreement
will further provide 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 trust agreement.
DEVON FINANCING CORPORATION, U.L.C.
Article 160 of Devon Financing Corporation, U.L.C.'s Memorandum and
Articles of Association contain a provision, permitted by the Companies Act of
Nova Scotia, to indemnify every director or
II-2
officer, former director or officer, or person who acts or acted at Devon
Financing Corporation, U.L.C.'s request, as a director or officer of Devon
Financing Corporation, U.L.C., a body corporate, partnership or other
association of which Devon Financing Corporation, U.L.C. is or was a
shareholder, partner, member or creditor, and the heirs and legal
representatives of such person, in the absence of any dishonesty on the part of
such person, against, and it shall be the duty of the directors out of the funds
of Devon Financing Corporation, U.L.C. to pay, all costs, losses and expenses,
including an amount paid to settle an action or claim or satisfy a judgment,
that such director, officer or person may incur or become liable to pay in
respect of any claim made against such person or civil, criminal or
administrative action or proceeding to which such person is made a party by
reason of being or having been a director or officer of Devon Financing
Corporation, U.L.C. or such body corporate, partnership or other association,
whether Devon Financing Corporation, U.L.C. is a claimant or party to such
action or proceeding or otherwise; and the amount for which such indemnify is
proved shall immediately attach as a lien on the property of Devon Financing
Corporation, U.L.C. and have priority as against the shareholders over all other
claims.
Article 161 of Devon Financing Corporation, U.L.C.'s Memorandum and
Articles of Association contain a provision, permitted by the Companies Act of
Nova Scotia, to indemnify every director or officer, former director or officer,
or person who acts or acted at Devon Financing Corporation, U.L.C.'s request, as
a director or officer of Devon Financing Corporation, U.L.C., a body corporate,
partnership or other association of which Devon Financing Corporation, U.L.C. is
or was a shareholder, partner, member or creditor in the absence of any
dishonesty on such person's part, from the acts, receipts, neglects or defaults
of any other director, officer or such person, or for joining in any receipt or
other act for conformity, or for any loss, damage or expense happening to Devon
Financing Corporation, U.L.C. through the insufficiency or deficiency of title
to any property acquired for or on behalf of Devon Financing Corporation,
U.L.C., or through the insufficiency or deficiency of any security in or upon
which any of the funds of Devon Financing Corporation, U.L.C., are invested, or
for any loss or damage arising from the bankruptcy, insolvency or tortious acts
of any person with whom any funds, securities or effects are deposited, or for
any loss occasioned by error of judgment or oversight on the part of such
person, or for any other loss, damage or misfortune whatsoever which happens in
the execution of the duties of such person or in relation thereto.
Reference is made to the form of underwriting agreement to be incorporated
by reference in this registration statement for a description of the
indemnification arrangements Devon, Devon Financing Trust II and Devon Financing
Corporation, U.L.C. agree to in connection with offerings of securities
registered by this registration statement.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DOCUMENT
------- --------
1.1 Form of Underwriting Agreement.*
4.1 Devon's Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3 to Devon's Form 8-K filed on
August 18, 1999, File No. 000-30176).
4.2 Devon's Amended and Restated Bylaws (incorporated by
reference to Exhibit 3.2 to Devon's Form S-4 filed on June
22, 2000, File No. 333-39908).
4.3 Form of Common Stock Certificate (incorporated by reference
to Exhibit 4.1 to Devon's Form 8-K, filed on August 18,
1999, File No. 000-30176).
4.4 Corrected Certificate of Trust of Devon Financing Trust II
(incorporated by reference to Exhibit 4.5 to Devon and Devon
Financing Trust II's Form S-3 filed on November 16, 2000,
File No. 333-50034).
4.5 Restated Declaration of Trust of Devon Financing Trust II
(incorporated by reference to Exhibit 4.6 to Devon and Devon
Financing Trust II's Form S-3 filed on November 16, 2000,
File No. 333-50034).
4.6 Rights Agreement dated as of August 17, 1999 between Devon
and BankBoston, N.A. (incorporated by reference to Exhibit
4.2 to Devon's Form 8-K filed on August 18, 1999).
II-3
EXHIBIT
NUMBER DOCUMENT
------- --------
4.7 Amendment to Rights Agreement dated as of May 25, 2000
between Registrant and Fleet National Bank (f/k/a
BankBoston, N.A.) (incorporated by reference to Exhibit 4.2
to Devon's Form S-4 filed on June 22, 2000, File No.
333-39908).
4.8 Amendment to Rights Agreement, dated October 4, 2001,
between Devon and Fleet National Bank (f/k/a BankBoston,
N.A.) (incorporated by reference to Exhibit 99.1 to Devon
Energy Corporation's Form 8-K filed on October 11, 2001).
4.9 Each form of preferred securities certificate designation
will be filed as an exhibit to a current report of Devon and
incorporated in this Registration Statement by reference.*
4.10 Form of Indenture relating to senior debt securities of
Devon.**
4.11 Form of Indenture relating to subordinated debt securities
of Devon.**
4.12 Form of Indenture relating to debt securities of Devon
Financing Corporation, U.L.C.**
4.13 Indenture, dated October 3, 2001, by and among Devon
Financing Corporation, U.L.C. (as issuer), Devon (as
guarantor) and The Chase Manhattan Bank (as trustee)
(incorporated by reference to Exhibit 4.7 to Devon's Form
S-4 filed on October 31, 2001).
4.14 Form of Trust Preferred Securities Guaranty Agreement for
Devon Financing Trust II.**
4.15 Form of Amended and Restated Declaration of Trust of Devon
Financing Trust II.**
4.16 Form of Senior Debt Security of Devon*
4.17 Form of Subordinated Debt Security of Devon*
4.18 Form of Trust Preferred Securities Certificate.*
4.19 Form of Debt Securities of Devon Financing Corporation,
U.L.C.*
4.20 Memorandum of Articles of Association of Devon Financing
Corporation, U.L.C. (incorporated by reference to Exhibit
3.1 to Devon and Devon Financing Corporation, U.L.C.'s Form
S-4 filed on December 14, 2001, File No. 333-75206).
4.21 Bylaws of Devon Financing Corporation, U.L.C. (incorporated
by reference to Exhibit 3.2 to Devon's Form S-4 filed on
June 22, 2000, File No. 333-39908).
5.1 Opinion of Mayer, Brown, Rowe & Maw.
12.1 Statements of computation of ratios of earnings to combined
fixed charges and preferred stock dividends.**
23.1 Consent of LaRoche Petroleum Consultants, Ltd.
23.2 Consent of AMH Group, Ltd.
23.3 Consent of Paddock Lindstrom & Associates Ltd.
23.4 Consent of KPMG LLP (as to its report on the consolidated
financial statements of Anderson Exploration Ltd.).
23.5 Consent of Ryder Scott Company, L.P.
23.6 Consent of Deloitte & Touche LLP.
23.7 Consent of PricewaterhouseCoopers LLP.
23.8 Consent of Arthur Andersen LLP.
23.9 Consent of Mayer, Brown, Rowe & Maw (contained in opinion in
Exhibit 5.1).
23.10 Consent of KPMG LLP (as to its report on the consolidated
financial statements of Devon).
23.11 Consent of Gilbert Laustsen Jung Associates Ltd.
24.1 Power of Attorney (included in signature pages of the
Registration Statement).**
25.1 Form T-1 Statement of Eligibility of Trustee under Indenture
relating to senior debt securities of Devon.**
25.2 Form T-1 Statement of Eligibility of Trustee under Indenture
relating to subordinated debt securities of Devon.**
25.3 Form T-1 Statement of Eligibility of Trustee under the
Guarantee of Trust Preferred Securities of Devon Financing
Trust II.**
II-4
EXHIBIT
NUMBER DOCUMENT
------- --------
25.4 Form T-1 Statement of Eligibility of Trustee under the Trust
Preferred Securities.**
25.5 Form T-1 Statement of Eligibility of Trustee under Indenture
relating to debt securities of Devon Financing Corporation,
U.L.C.**
25.6 Form T-1 Statement of Eligibility of Trustee under
Indenture, dated October 3, 2001, by and among Devon
Financing Corporation, U.L.C. (as issuer) and Devon (as
guarantor) and The Chase Manhattan Bank (as trustee).
---------------
* To be filed by amendment to this registration statement or as an exhibit to a
current report of Devon and incorporated in this registration statement by
reference.
**Previously filed.
ITEM 17. UNDERTAKINGS
1. The undersigned Registrants hereby undertake:
(a) 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. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculations of
Registration Fee" table in the effective registration statement; and
(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)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the SEC
by the Registrants pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, that are incorporated by reference in the registration statement.
(b) 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; and
(c) 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.
2. The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
Devon's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) 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-5
3. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the provisions described under Item 15 above, or
otherwise, the Registrants have 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
any Registrant of expenses incurred or paid by a director, officer or
controlling person of that Registrant in the successful defense of any action,
suit or proceeding) is asserted against a Registrant by such director, officer
or controlling person in connection with the securities being registered, that
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-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Devon Energy
Corporation certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 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 March 1, 2002.
DEVON ENERGY CORPORATION
By: /s/ J. LARRY NICHOLS
------------------------------------
J. Larry Nichols
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed by the following persons, in
the capacities indicated on March 1, 2002.
SIGNATURE TITLE
--------- -----
/s/ J. LARRY NICHOLS Chairman, President, and Chief Executive Officer
------------------------------------------------
J. Larry Nichols
/s/ WILLIAM T. VAUGHN* Senior Vice President -- Finance
------------------------------------------------
William T. Vaughn
/s/ DANNY J. HEATLY* Vice President -- Accounting
------------------------------------------------
Danny J. Heatly
/s/ THOMAS F. FERGUSON* Director
------------------------------------------------
Thomas F. Ferguson
/s/ DAVID M. GAVRIN* Director
------------------------------------------------
David M. Gavrin
/s/ MICHAEL E. GELLERT* Director
------------------------------------------------
Michael E. Gellert
/s/ JOHN A. HILL* Director
------------------------------------------------
John A. Hill
/s/ WILLIAM J. JOHNSON* Director
------------------------------------------------
William J. Johnson
/s/ MICHAEL M. KANOVSKY* Director
------------------------------------------------
Michael M. Kanovsky
/s/ J. TODD MITCHELL* Director
------------------------------------------------
J. Todd Mitchell
II-7
SIGNATURE TITLE
--------- -----
/s/ ROBERT A. MOSBACHER, JR.* Director
------------------------------------------------
Robert A. Mosbacher, Jr.
/s/ ROBERT B. WEAVER* Director
------------------------------------------------
Robert B. Weaver
*By: /s/ J. LARRY NICHOLS
-----------------------------------------
J. Larry Nichols
Attorney-in-fact
II-8
Pursuant to the requirements of the Securities Act of 1933, Devon Financing
Trust II certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 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 March 1, 2002.
DEVON FINANCING TRUST II
BY: DEVON ENERGY CORPORATION, AS
SPONSOR
By: /s/ J. LARRY NICHOLS
------------------------------------
J. Larry Nichols
President and Chief Executive
Officer
II-9
Pursuant to the requirements of the Securities Act of 1933, Devon Financing
Corporation, U.L.C. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 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 March 1, 2002.
DEVON FINANCING CORPORATION, U.L.C.
By: /s/ J. LARRY NICHOLS
------------------------------------
J. Larry Nichols
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed by the following persons, in
the capacities indicated on March 1, 2002.
SIGNATURE TITLE
--------- -----
/s/ J. LARRY NICHOLS President
------------------------------------------------
J. Larry Nichols
/s/ WILLIAM T. VAUGHN* Senior Vice President
------------------------------------------------
William T. Vaughn
/s/ DANNY J. HEATLY* Vice President
------------------------------------------------
Danny J. Heatly
/s/ PAUL BRERETON* Director
------------------------------------------------
Paul Brereton
/s/ MURRAY T. BROWN* Director
------------------------------------------------
Murray T. Brown
/s/ J.M. LACEY* Director
------------------------------------------------
J.M. Lacey
/s/ JOHN RICHELS* Director
------------------------------------------------
John Richels
/s/ DARRYL G. SMETTE* Director
------------------------------------------------
Darryl G. Smette
*By: /s/ J. LARRY NICHOLS
-----------------------------------------
J. Larry Nichols
Attorney-in-fact
II-10
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT
------- --------
1.1 Form of Underwriting Agreement.*
4.1 Devon's Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3 to Devon's Form 8-K filed on
August 18, 1999, File No. 000-30176).
4.2 Devon's Amended and Restated Bylaws (incorporated by
reference to Exhibit 3.2 to Devon's Form S-4 filed on June
22, 2000, File No. 333-39908).
4.3 Form of Common Stock Certificate (incorporated by reference
to Exhibit 4.1 to Devon's Form 8-K, filed on August 18,
1999, File No. 000-30176).
4.4 Corrected Certificate of Trust of Devon Financing Trust II
(incorporated by reference to Exhibit 4.5 to Devon and Devon
Financing Trust II's Form S-3 filed on November 16, 2000,
File No. 333-50034).
4.5 Restated Declaration of Trust of Devon Financing Trust II
(incorporated by reference to Exhibit 4.6 to Devon and Devon
Financing Trust II's Form S-3 filed on November 16, 2000,
File No. 333-50034).
4.6 Rights Agreement dated as of August 17, 1999 between Devon
and BankBoston, N.A. (incorporated by reference to Exhibit
4.2 to Devon's Form 8-K filed on August 18, 1999).
4.7 Amendment to Rights Agreement dated as of May 25, 2000
between Registrant and Fleet National Bank (f/k/a
BankBoston, N.A.) (incorporated by reference to Exhibit 4.2
to Devon's Form S-4 filed on June 22, 2000, File No.
333-39908).
4.8 Amendment to Rights Agreement, dated October 4, 2001,
between Devon and Fleet National Bank (f/k/a BankBoston,
N.A.) (incorporated by reference to Exhibit 99.1 to Devon
Energy Corporation's Form 8-K filed on October 11, 2001).
4.9 Each form of preferred securities certificate designation
will be filed as an exhibit to a current report of Devon and
incorporated in this Registration Statement by reference.*
4.10 Form of Indenture relating to senior debt securities of
Devon.**
4.11 Form of Indenture relating to subordinated debt securities
of Devon.**
4.12 Form of Indenture relating to debt securities of Devon
Financing Corporation, U.L.C.**
4.13 Indenture, dated October 3, 2001, by and among Devon
Financing Corporation, U.L.C. (as issuer), Devon (as
guarantor) and The Chase Manhattan Bank (as trustee)
(incorporated by reference to Exhibit 4.7 to Devon's Form
S-4 filed on October 31, 2001).
4.14 Form of Trust Preferred Securities Guaranty Agreement for
Devon Financing Trust II.**
4.15 Form of Amended and Restated Declaration of Trust of Devon
Financing Trust II.**
4.16 Form of Senior Debt Security of Devon*
4.17 Form of Subordinated Debt Security of Devon*
4.18 Form of Trust Preferred Securities Certificate.*
4.19 Form of Debt Securities of Devon Financing Corporation,
U.L.C.*
4.20 Memorandum of Articles of Association of Devon Financing
Corporation, U.L.C. (incorporated by reference to Exhibit
3.1 to Devon and Devon Financing Corporation, U.L.C.'s Form
S-4 filed on December 14, 2001, File No. 333-75206).
4.21 Bylaws of Devon Financing Corporation, U.L.C. (incorporated
by reference to Exhibit 3.2 to Devon's Form S-4 filed on
June 22, 2000, File No. 333-39908).
5.1 Opinion of Mayer, Brown, Rowe & Maw.
12.1 Statements of computation of ratios of earnings to combined
fixed charges and preferred stock dividends.**
23.1 Consent of LaRoche Petroleum Consultants, Ltd.
23.2 Consent of AMH Group, Ltd.
23.3 Consent of Paddock Lindstrom & Associates Ltd.
23.4 Consent of KPMG LLP (as to its report on the consolidated
financial statements of Anderson Exploration Ltd.).
EXHIBIT
NUMBER DOCUMENT
------- --------
23.5 Consent of Ryder Scott Company, L.P.
23.6 Consent of Deloitte & Touche LLP.
23.7 Consent of PricewaterhouseCoopers LLP.
23.8 Consent of Arthur Andersen LLP.
23.9 Consent of Mayer, Brown, Rowe & Maw (contained in opinion in
Exhibit 5.1).
23.10 Consent of KPMG LLP (as to its report on the consolidated
financial statements of Devon).
23.11 Consent of Gilbert Laustsen Jung Associates Ltd.
24.1 Power of Attorney (included in signature pages of the
Registration Statement).**
25.1 Form T-1 Statement of Eligibility of Trustee under Indenture
relating to senior debt securities of Devon.**
25.2 Form T-1 Statement of Eligibility of Trustee under Indenture
relating to subordinated debt securities of Devon.**
25.3 Form T-1 Statement of Eligibility of Trustee under the
Guarantee of Trust Preferred Securities of Devon Financing
Trust II.**
25.4 Form T-1 Statement of Eligibility of Trustee under the Trust
Preferred Securities.**
25.5 Form T-1 Statement of Eligibility of Trustee under Indenture
relating to debt securities of Devon Financing Corporation,
U.L.C.**
25.6 Form T-1 Statement of Eligibility of Trustee under
Indenture, dated October 3, 2001, by and among Devon
Financing Corporation, U.L.C. (as issuer) and Devon (as
guarantor) and The Chase Manhattan Bank (as trustee).
---------------
* To be filed by amendment to this registration statement or as an exhibit to a
current report of Devon and incorporated in this registration statement by
reference.
**Previously filed.