Introductory Note
On January 7, 2021 (the “Closing Date”), East Merger Sub, Inc. (“Merger Sub”), a Delaware corporation and wholly-owned, direct, subsidiary of Devon Energy Corporation, a Delaware corporation (the “Company” or “Devon”), completed its merger (the “Merger”) with and into WPX Energy, Inc., a Delaware corporation (“WPX”), as a result of which WPX became a wholly-owned, direct, subsidiary of the Company. The Merger was effected pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), dated September 26, 2020, by and among the Company, Merger Sub and WPX.
| 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.
