AMENDMENT TO NONQUALIFIED STOCK OPTION AWARD AGREEMENTS UNDER THE DEVON ENERGY CORPORATION 2005 LONG-TERM INCENTIVE PLAN
Exhibit 10.1
AMENDMENT TO NONQUALIFIED STOCK OPTION AWARD AGREEMENTS
UNDER THE
DEVON ENERGY CORPORATION 2005 LONG-TERM INCENTIVE PLAN
UNDER THE
DEVON ENERGY CORPORATION 2005 LONG-TERM INCENTIVE PLAN
THIS AMENDMENT TO NONQUALIFIED STOCK OPTION AWARD AGREEMENTS (“Amendment”) is entered into as
of the ___ day of , 2008 by and between Devon Energy Corporation, a Delaware corporation
(the “Company”), and (the “Participant”).
W I T N E S S E T H:
WHEREAS, the Company and the Participant have previously entered into certain Nonqualified
Stock Option Award Agreements under the Devon Energy Corporation 2005 Long-Term Incentive Plan
listed on Exhibit A (the “Agreements”), which granted to the Participant options to purchase shares
of Common Stock of the Company (the “Stock Options”) in exchange for the Participant’s performance
of future services for the Company pursuant to the terms of the Agreements; and
WHEREAS, the Company and the Participant desire to amend the Agreements with respect to the
vesting and exercisability of the Stock Options following the date of retirement of the Participant
under certain circumstances; and
WHEREAS, Section 12.7 of the Plan permits the Compensation Committee of the Company’s Board of
Directors (the “Committee”) to amend the Agreements; and
WHEREAS, the Committee has approved the amendment of the Agreements as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree that the Agreements are hereby amended as follows:
| 1. | Section 1 is hereby amended by deleting the definition of “Early Retirement Date” in Section 1(b) and by inserting the definition of “Normal Retirement Date” in Section 1(b). | ||
| 2. | Section 1 is hereby amended by adding a new definition in Section 1(c) as follows: | ||
| ““Post-Retirement Eligible” means the Participant’s Date of Termination occurs (i) by reason of the Participant’s retirement and (ii) on or after the Participant has attained age fifty-five (55) with ten (10) or more Years of Service, as that term is defined in the Retirement Plan.” | |||
| 3. | The first sentence of Section 3 is hereby amended to read as follows: | ||
| “Each installment of Covered Shares of the Stock Option shall be exercisable on and after the Vesting Date for such installment as described in the following schedule (but only if the Participant’s Date |
| of Termination has not occurred before the Vesting Date, except as otherwise provided in Section 3 of this Award Agreement):” | |||
| 4. | The first sentence of Section 3(a) is hereby amended to read as follows: | ||
| “The Stock Option shall become fully exercisable upon the occurrence of a Change of Control Event that occurs (i) prior to the Participant’s Date of Termination or (ii) if the Participant has retired prior to such Change of Control Event and is Post-Retirement Eligible, following the Participant’s Date of Termination.” | |||
| 5. | Section 3 is hereby amended to delete from Section 3(c) the phrase “or Early Retirement Date (as such term is defined in the Company’s Retirement Plan).” | ||
| 6. | Section 3 is hereby amended to add a Section 3(d): | ||
| “(d) Notwithstanding any provision to the contrary in this Award Agreement, if the Participant is Post-Retirement Eligible, the Participant shall, subject to the satisfaction of the conditions in Section 10, be eligible to vest, in accordance with the Vesting Schedule above in this Section 3, in the installments of the Covered Shares of the Stock Option that remain unvested on the Date of Termination as follows: |
| Percentage of Unvested Installments of Covered Shares of | ||||
| the Stock Option Eligible to be Earned by the | ||||
| Age at Retirement | Participant | |||
54 and earlier |
0 | % | ||
55 |
60 | % | ||
56 |
65 | % | ||
57 |
70 | % | ||
58 |
75 | % | ||
59 |
80 | % | ||
60 and beyond |
100 | % | ||
| 7. | The last paragraph of Section 3 is amended to read as follows: | ||
| “Nothing in this Award Agreement shall be construed to affect the application of Section 12.6 of the Plan (relating to Change of Control) to the extent such Section would otherwise be applicable.” |
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| 8. | Section 4 is hereby amended to read as follows: | ||
| “Term of Stock Option. The Stock Option shall cease to be exercisable on the earliest to occur of: |
| (a) | The Expiration Date set forth on the Cover Page. | ||
| (b) | If the Participant’s Date of Termination occurs by reason of death, the three-year anniversary of such Date of Termination. | ||
| (c) | If the Participant’s Date of Termination occurs by reason of Disability, the one-year anniversary of such Date of Termination. | ||
| (d) | If the Participant’s Date of Termination occurs by reason of the Participant’s retirement and the Participant is Post-Retirement Eligible, the Expiration Date of the Stock Option; provided, however, if a Non-Compliance Event (as defined in Section 10) occurs following such retirement, the Stock Option shall cease to be exercisable on the one-year anniversary of such Non-Compliance Event. | ||
| (e) | If (i) the Participant’s Date of Termination occurs by reason of the Participant’s retirement, (ii) the Date of Termination occurs on or after the Participant’s Normal Retirement Date, and (iii) the Participant is not Post-Retirement Eligible, the three-year anniversary of such Date of Termination (or such later date as may be permitted by the Committee). | ||
| (f) | If the Participant’s Date of Termination occurs under circumstances in which the Participant is entitled to severance benefits from the Company, a Subsidiary of the Company, or an Affiliated Entity under an employment agreement or severance agreement, the last day of the Severance Period. The “Severance Period” shall be the longer of: |
| (i) | the period beginning on the Date of Termination and continuing through the end of the period during which such severance benefits are paid to the Participant; or | ||
| (ii) | the period described in the following clause (b), if the amount of the Participant’s severance benefits is determined in whole or in part as being equal to the product of (a) the Participant’s salary rate, multiplied by (b) a period over which such benefit would be computed. |
| (g) | If the Participant’s Date of Termination occurs and Sections (b), (c), (d), (e) and (f) are not applicable, the three-month anniversary of such Date of Termination.” |
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| 9. | By adding a new Section 10 that provides as follows: |
| “10. Conditions to Post-Retirement Vesting. | |||
| (a) | Notice of and Conditions to Post-Retirement Vesting. If the Participant is Post-Retirement Eligible, the Company shall, within a reasonable period of time prior to the Participant’s Date of Termination, notify the Participant that the Participant has the right to continue to vest following the Date of Termination in any unvested installments of Covered Shares of the Stock Option (each such unvested installment, an “Installment”), provided that the Participant executes and delivers to the Company, with respect to each such Installment, the following documentation: (i) a non-disclosure letter agreement, in the form attached as Exhibit B, (a “Non-Disclosure Agreement”) on or before January 1 of the year in which such Installment vests pursuant to the Vesting Schedule (or, with respect to the calendar year in which the Date of Termination occurs, on or before the Date of Termination), and (ii) a compliance certificate, in the form attached as Exhibit C, (a “Compliance Certificate”) indicating the Participant’s full compliance with the Non-Disclosure Agreement on or before November 1 of the year in which such Installment vests pursuant to the Vesting Schedule. | ||
| (b) | Consequences of Failure to Satisfy Vesting Conditions. In the event that, with respect to any given Installment, the Participant fails to deliver either the respective Non-Disclosure Agreement or Compliance Certificate for such Installment on or before the date required for the delivery of such document (such failure, a “Non-Compliance Event”), the Participant shall not be entitled to vest in any unvested Installments that would vest from and after the date of the Non-Compliance Event and the Company shall be authorized to take any and all such actions as are necessary to cause such unvested Stock Options to not vest and to terminate. The only remedy of the Company for failure to deliver a Non-Disclosure Agreement or a Compliance Certificate shall be the failure to vest in, and cancellation of, any unvested Installments then held by the Participant.” | ||
The Agreements are not amended in any respect except as herein provided. This Amendment is
not intended and shall not be construed as increasing the aggregate number of shares of Common
Stock subject to the Stock Options under the Agreements.
All capitalized terms used in this Amendment shall have the same meaning ascribed to them in
the Plan and the Agreements unless specifically denoted otherwise.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first
above written.
| “Company” | Devon Energy Corporation, a Delaware corporation | |||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
“Participant” |
||||||
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EXHIBIT B
Form of Non-Disclosure Agreement
[Insert Date]
Devon Energy Corporation
00 Xxxxx Xxxxxxxx
Xxxxxxxx Xxxx, XX 00000
00 Xxxxx Xxxxxxxx
Xxxxxxxx Xxxx, XX 00000
Re: Non-Disclosure Agreement
Ladies and Gentlemen:
This letter agreement is entered between Devon Energy Corporation (together with its
subsidiaries and affiliates, the “Company”) and the undersigned (the “Participant”) in
connection with that certain Amendment to Nonqualified Stock Option Award Agreements (the
“Amendment”) dated , 2008 between the Company and the Participant. All
capitalized terms used in this letter agreement shall have the same meaning ascribed to them in
the Amendment unless specifically denoted otherwise.
The Participant acknowledges that, during the course of and in connection with the
employment relationship between the Participant and the Company, the Company provided and the
Participant accepted access to the Company’s trade secrets and confidential and proprietary
information, which included, without limitation, information pertaining to the Company’s
finances, oil and gas properties and prospects, compensation structures, business and litigation
strategies and future business plans and other information or material that is of special and
unique value to the Company and that the Company maintains as confidential and does not disclose
to the general public, whether through its annual report and/or filings with the Securities and
Exchange Commission or otherwise (the “Confidential Information”).
The Participant acknowledges that his position with the Company was one of trust and
confidence because of the access to the Confidential Information, requiring the Participant’s
best efforts and utmost diligence to protect and maintain the confidentiality of the
Confidential Information. Unless required by the Company or with the Company’s express written
consent, the Participant will not, during the term of this letter agreement, directly or
indirectly, disclose to others or use for his own benefit or the benefit of another any of the
Confidential Information, whether or not the Confidential Information is acquired, learned,
attained or developed by the Participant alone or in conjunction with others.
The Participant agrees that, due to his access to the Confidential Information, the
Participant would inevitably use and/or disclose that Confidential Information in breach of his
confidentiality and non-disclosure obligations if the Participant worked in certain capacities
or engaged in certain activities for a period of time following his employment with the Company,
specifically in a position that involves (i) responsibility and decision-making authority or
input at the executive level regarding any subject or responsibility, (ii) decision-making
responsibility or input at any management level in the Participant’s individual area of
assignment with the Company, or (iii) responsibility and decision-making authority or input that
otherwise allows the use of the Confidential Information (collectively referred to as the
“Restricted Occupation”). Therefore, except with the prior written consent of the Company,
during the term of this letter agreement, the Participant agrees not to be employed by, consult
for or otherwise act on behalf of any person or entity in any capacity in which he would be
involved, directly or indirectly, in a Restricted Occupation. The Participant acknowledges that
this commitment is intended to protect the Confidential Information and is not intended to be
applied or interpreted as a covenant against competition.
The Participant further agrees that, during the term of this letter agreement, the
Participant will not, directly or indirectly on behalf of a person or entity or otherwise, (i)
solicit any of the established customers of the Company or attempt to induce any of the
established customers of the Company to cease doing business with the Company, or (ii)
solicit any of the employees of the Company to cease employment with the Company.
This letter agreement shall become effective upon execution by the Participant and the
Company and shall terminate on December 31, 200___. [NOTE: Insert date that is the end of the
calendar year of the letter agreement.]
If you agree to the above terms and conditions, please execute a copy of this letter
agreement below and return a copy to me.
| “PARTICIPANT” | ||||
THE UNDERSIGNED HEREBY ACCEPTS AND AGREES TO THE TERMS SET FORTH ABOVE AS OF THIS ___ DAY OF
, ___.
| “COMPANY” | ||||||
| DEVON ENERGY | CORPORATION | |||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
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EXHIBIT C
Form of Compliance Certificate
Form of Compliance Certificate
I hereby certify that I am in full compliance with the covenants contained in that certain
letter agreement (the “Agreement”) dated as of , ___ between Devon Energy Corporation
and me and have been in full compliance with such covenants at all times during the period ending
October 31, ___.
| [Name of Participant] |
Dated:
