Item 1.01 Entry into a Material Definitive Agreement
Stockholders' Agreement
On the Closing Date, pursuant to the terms of the Merger Agreement, the Company,
Felix Investment Holdings II, LLC, a Delaware limited liability company ("Felix
Parent"), and EnCap Energy Capital Fund X, L.P. (collectively with Felix Parent
and certain other affiliates, as applicable, "EnCap") entered into a
Stockholders' Agreement (the "Stockholders' Agreement"). Pursuant to the
Stockholders' Agreement, EnCap has the right to nominate a director (the
"Investor Director") for appointment and election to the board of directors of
the Company (the "Board"). EnCap's right to nominate a director is subject to,
among other things, EnCap continuing to collectively beneficially hold at least
ten percent (10%) of the outstanding shares of common stock of the Company
("Company Common Stock") and the nominee being reasonably acceptable to the
Governance committee of the Board and not being prohibited by law from serving
in such capacity or causing the Company not to be in compliance with applicable
law. Pursuant to the Stockholders' Agreement, for a period of one hundred and
eighty (180) days from the Closing Date, EnCap agrees to not to transfer or
dispose of (or take other analogous actions in accordance with the terms of the
Stockholders' Agreement) any economic, voting or other rights in or to
two-thirds of the shares of Company Common Stock issued to EnCap pursuant to the
Merger Agreement other than certain permitted transfers. The remaining one-third
of the shares of Company Common Stock issued to EnCap will not be subject to
transfer restrictions imposed by the Stockholders' Agreement.
Mr. D. Martin Phillips was nominated by EnCap under the Stockholders' Agreement
as the initial Investor Director to serve on the Board.
The foregoing description of the Stockholders' Agreement is not complete and is
qualified in its entirety by reference to the complete text of the Stockholders'
Agreement, a copy of which is filed as Exhibit 10.1 hereto and the terms of
which are incorporated herein by reference.
Registration Rights Agreement
On the Closing Date, pursuant to the terms of the Merger Agreement, the Company
and Felix Parent entered into a Registration Rights Agreement (the "Registration
Rights Agreement"), pursuant to which, among other things and subject to certain
restrictions, the Company is required to file with the Securities and Exchange
Commission (the "SEC") a registration statement on Form S-3 registering for
resale the shares of Company Common Stock issued to EnCap upon consummation of
the Merger and to conduct certain underwritten offerings upon the request of
holders of registrable securities. The Registration Rights Agreement also
provides holders of registrable securities with certain customary piggyback
registration rights.
The foregoing description of the Registration Rights Agreement is not complete
and is qualified in its entirety by reference to the complete text of the
Registration Rights Agreement, a copy of which is filed as Exhibit 10.2 hereto
and the terms of which are incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
The disclosure set forth in the "Introductory Note" above is incorporated into
this Item 2.01 by reference. Pursuant to the Merger, each share of WPX common
stock, par value $0.01 per share ("WPX Common Stock") issued and outstanding
(other than each share of WPX Common Stock held immediately prior to the
effective time of the Merger by the Company, Merger Sub or any of the Company's
other subsidiaries, or by WPX or any of WPX's subsidiaries, which was canceled
and retired and ceased to exist, and no consideration was delivered in exchange
therefor), was automatically converted into the right to receive 0.5165 shares
of Company Common Stock. No fractional shares of Company Common Stock will be
issued in the Merger, and holders of shares of WPX Common Stock will, instead,
receive cash in lieu of fractional shares of Company Common Stock, if any, as
provided in the Merger Agreement.
The foregoing description of the Merger Agreement and the transactions
contemplated thereby is not complete and is subject to and qualified in its
entirety by reference to the Merger Agreement, which was filed as Exhibit 2.1 to
the Company's Form 8-K filed on September 28, 2020, and the terms of which are
incorporated herein by reference.
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Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Appointment of Directors
Effective upon the consummation of the Merger, in accordance with the Merger
Agreement and as approved by the Board, the Board consists of the following 12
members: (i) Kelt Kindick, Karl F. Kurz, Richard E. Muncrief, D. Martin Phillips
and Valerie M. Williams, each a former member of the WPX board of directors who
has been appointed to the Board (each, a "Legacy WPX Director"); and
(ii) Barbara M. Baumann, John E. Bethancourt, Ann G. Fox, David A. Hager, John
Krenicki Jr., Robert A. Mosbacher Jr. and Duane C. Radtke, each a continuing
director. Each of the Legacy WPX Directors (other than Mr. Muncrief) will
receive the standard annual benefits paid to each non-management director which
were disclosed in the Company's definitive 2020 Notice of Annual Meeting and
Proxy Statement, filed with the SEC on April 22, 2020. In addition to the
standard annual benefits paid to each non-management director, Mr. Kindick will
receive an annual retainer in the amount of $25,000 as Devon's newly appointed
lead independent director.
Effective upon the consummation of the Merger, the Board made the following
Board committee appointments with respect to the Legacy WPX Directors:
(i) Mr. Kindick will serve on the Audit and Governance committees; (ii) Mr. Kurz
will serve on the Compensation and Reserves committees; (iii) Mr. Phillips will
serve on the Compensation and Governance committees; and (iv) Ms. Williams will
serve on the Audit and Reserves committees.
Messrs. Kindick, Kurz, Muncrief and Phillips and Ms. Williams are not related to
any officer or director of the Company. With respect to each of Messrs. Kindick,
Kurz, Muncrief and Phillips and Ms. Williams, there are no arrangements or
understandings between such director and any other persons pursuant to which he
or she will serve as a director, other than the Merger Agreement and the
Stockholders' Agreement.
Departure of Directors
Effective upon and in connection with the consummation of the Merger, each of
the following directors of the Board tendered their resignations to the Company:
Robert H. Henry, Michael M. Kanovsky, Keith O. Rattie and Mary P. Ricciardello.
Appointment of Certain Officers
Effective upon the consummation of the Merger and in accordance with the Merger
Agreement, the senior leadership team of the Company includes the following
officers: David A. Hager as Executive Chair of the Company, Richard E. Muncrief
as President and Chief Executive Officer of the Company, Clay M. Gaspar as
Executive Vice President and Chief Operating Officer of the Company, David G.
Harris as Executive Vice President and Chief Corporate Development Officer of
the Company, Dennis C. Cameron as Executive Vice President and General Counsel
of the Company (Mr. Cameron, together with Messrs. Muncrief and Gaspar, the
"Legacy WPX Officers"), Jeffrey L. Ritenour as Executive Vice President and
Chief Financial Officer of the Company and Tana K. Cashion as Senior Vice
President, Human Resources and Administration.
Additional information with respect to the designations of David A. Hager as
Executive Chair of the Company, Richard E. Muncrief as President and Chief
Executive Officer of the Company, Mr. Gaspar as Executive Vice President and
Chief Operating Officer, Mr. Cameron as Executive Vice President and General
Counsel of the Company and Mr. Harris as Executive Vice President and Chief
Corporate Development Officer of the Company, is set forth in the Company's Form
8-K filed September 28, 2020, which information is incorporated herein by
reference.
In connection with the Merger and effective upon the consummation of the Merger,
the Company, on January 7, 2021, entered into employment agreements with each of
the Legacy WPX Officers to address their roles and terms of employment with the
combined company subject to and effective upon the Closing Date. Those
employment agreements preserve the compensation terms set forth in the
respective letter agreements between the Company and the Legacy WPX Officers
dated September 26, 2020, as described in the Company's Form 8-K filed
September 28, 2020, and otherwise provide for terms and conditions of employment
substantially similar to those provided in the existing employment agreements
with other senior Devon executives. The three employment agreements with the
Legacy WPX Officers are attached hereto as Exhibits 10.3, 10.4 and 10.5,
respectively.
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Item 7.01 Regulation FD Disclosure
On January 7, 2021, Devon and WPX issued a joint press release announcing the
completion of the previously announced Merger. A copy of the press release is
filed as Exhibit 99.1 to this report and is incorporated herein by reference.
The information in this Item 7.01 and Exhibit 99.1 attached hereto are being
furnished and shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that Section, nor shall it be deemed incorporated by reference in
any filing under the Securities Act of 1933, amended, except as shall be
expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements
The audited consolidated balance sheets of WPX as of December 31, 2019 and 2018
and the audited consolidated statements of operations, changes in equity and
cash flows of WPX for the three years ended December 31, 2019, 2018 and 2017 are
incorporated by reference in this Current Report on Form 8-K from WPX's Annual
Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on
February 28, 2020.
(b) Pro Forma Financial Information
The unaudited pro forma combined statements of operations for the year ended
December 31, 2019 and for the nine months ended September 30, 2020, are
presented as if the Merger had been completed on January 1, 2019. The unaudited
pro forma combined balance sheet is presented as if the Merger had been
completed on September 30, 2020. The pro forma financial information, and the
related notes thereto, required to be filed under Item 9.01 of this Current
Report on Form 8-K were previously filed in the Registration Statement on Form
S-4/A filed by the Company with the SEC on November 20, 2020 under the caption
"Unaudited Pro Forma Combined Financial Information," and is incorporated by
reference in this Current Report on Form 8-K.
(d) Exhibits
Exhibit
No. Description
2.1 Agreement and Plan of Merger, dated September 26, 2020, by and among
Devon Energy Corporation, East Merger Sub, Inc., and WPX Energy, Inc.
(incorporated by reference to Exhibit 2.1 to Devon Energy
Corporation's Current Report on Form 8-K, filed September 28, 2020).
10.1 Stockholders' Agreement, by and among Devon Energy Corporation,
Felix Investment Holdings II, LLC, and EnCap Energy Capital Fund X,
L.P., dated January 7, 2021.
10.2 Registration Rights Agreement, by and between Devon Energy
Corporation and Felix Investment Holdings II, LLC, dated January 7,
2021.
10.3 Employment Agreement, dated January 7, 2021, by and between Devon
Energy Corporation and Richard E. Muncrief.
10.4 Employment Agreement, dated January 7, 2021, by and between Devon
Energy Corporation and Clay M. Gaspar.
10.5 Employment Agreement, dated January 7, 2021, by and between Devon
Energy Corporation and Dennis C. Cameron.
99.1 Press Release dated January 7, 2021, announcing completion of merger
of equals.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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