exv10w40



 





EXHIBIT 10.40


NONEMPLOYEE DIRECTOR NONQUALIFIED STOCK OPTION

AWARD AGREEMENT

UNDER THE DEVON ENERGY CORPORATION

2005 LONG-TERM INCENTIVE PLAN




     THIS NONQUALIFIED STOCK OPTION AGREEMENT (the “Award Agreement”), entered into as of
_______________ (the “Grant Date”), by and between DEVON ENERGY CORPORATION (the “Company”) and
__________________________ (the “Participant”):



WITNESSETH:




     WHEREAS, the Participant is a nonemployee Director of the Company, and it is important to the
Company that the Participant be encouraged to remain a director of the Company; and



     WHEREAS, in recognition of such facts, the Company desires to provide to the Participant an
opportunity to purchase ______________ shares of the common stock of the Company, as hereinafter
provided, pursuant to the “Devon Energy Corporation 2005 Long-Term Incentive Plan” (the “Plan”), a
copy of which has been provided to the Participant; and



     WHEREAS, any capitalized terms used but not defined herein have the same meanings given them
in the Plan.



     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for good
and valuable consideration, the Participant and the Company hereby agree as follows:



     Section 1. Definitions. Words, terms, or phrases used in this Agreement shall have the
meanings set forth in this Section 1:



     (a) The Participant’s “Date of Termination” means the first day occurring on or after the
Grant Date on which the Participant is not a member of the Board.



     Section 2. Grant of Stock Option. The Company hereby grants to the Participant a nonqualified
stock option (the “Stock Option”) that is not intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”), to purchase all or any part of the number of Covered
Shares (as set forth on the Cover Page) of its common stock, par value $.10 (the “Stock”), under
and subject to the terms and conditions of this Award Agreement and the Plan which is incorporated
herein by reference and made a part hereof for all purposes. The purchase price for each share to
be purchased hereunder shall be the option price set forth on the Cover Page (the “Exercise
Price”).



     Section 3. Times of Exercise of Stock Option. The Stock Option shall be fully exercisable on
and after the Grant Date.



     Section 4. 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, or



     (b) The three-year anniversary of the Participant’s Date of Termination.



     Section 5. Nontransferability of Stock Option.



     The Stock Option shall not be transferable otherwise than by will or the laws of descent and
distribution, and the Stock Option may be exercised, during the lifetime of the Participant, only
by the Participant. More particularly (but without limiting the generality of the foregoing), the
Stock Option may not be assigned, transferred (except as provided above), pledged or hypothecated
in any way, shall not



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be assignable by operation of law and shall not be subject to execution, attachment, or
similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of
the Stock Option contrary to the provisions hereof shall be null and void and without effect.




     Section 6. Method of Exercising Stock Option.



     (a) Procedures for Exercise. The manner of exercising the Stock Option herein granted shall
be by written notice to the Secretary of the Company at the time the Stock Option, or part thereof,
is to be exercised, and in any event prior to the expiration of the Stock Option. Such notice
shall state the election to exercise the Stock Option, the number of shares of Stock to be
purchased upon exercise, the form of payment to be used, and shall be signed by the person so
exercising the Stock Option.



     (b) Form of Payment. Payment of the full Exercise Price for shares of Stock purchased under
this Award Agreement shall accompany the Participant’s written notice of exercise, together with
full payment for applicable withholding taxes, if any. Payment shall be made (i) in cash or by
check, draft or money order payable to the order of the Company; (ii) by delivering shares of
Common Stock having a Fair Market Value on the date of payment equal to the amount of the exercise
price, but only to the extent such exercise of an Option would not result in a compensation expense
to the Company for financial accounting purposes with respect to the shares used to pay the
exercise price unless otherwise determined by the Committee; or (iii) a combination of the
foregoing.



     (c) Further Information. In the event the Stock Option is exercised, pursuant to the
foregoing provisions of this Section 6, by any person other than the Participant due to the death
of the Participant, written notice shall also be accompanied by appropriate proof of the right of
such person to exercise the Stock Option. The notice so required shall be given by personal
delivery to the Secretary of the Company or by registered or certified mail, addressed to the
Company at 20 North Broadway, Oklahoma City, Oklahoma 73102-8260, Attention: Secretary, and it
shall be deemed to have been given when it is so personally delivered or when it is so deposited in
the United States mail in an envelope addressed to the Company, as aforesaid, properly stamped for
delivery as a registered or certified letter.



     Section 7. Securities Law Restrictions. The Stock Option shall be exercised and Stock issued
only upon compliance with the Securities Act of 1933, as amended (the “Act”), and any other
applicable securities law, or pursuant to an exemption therefrom. If deemed necessary by the
Company to comply with the Act or any applicable laws or regulations relating to the sale of
securities, the Participant, at the time of exercise and as a condition imposed by the Company,
shall represent, warrant and agree that the shares of Stock subject to the Stock Option are being
purchased for investment and not with any present intention to resell the same and without a view
to distribution, and the Participant shall, upon the request of the Company, execute and deliver to
the Company an agreement to such effect. The Participant acknowledges that any stock certificate
representing Stock purchased under such circumstances will be issued with a restricted securities
legend.



     Section 8. Notices. All notices or other communications relating to the Plan and this Award
Agreement as it relates to the Participant shall be in writing and shall be delivered personally or
mailed (U.S. Mail) by the Company to the Participant at the then current address as maintained by
the Company or such other address as the Participant may advise the Company in writing.



	 	 	 
	“COMPANY”

	 	DEVON ENERGY CORPORATION

a Delaware corporation
	 
	 	 
	“PARTICIPANT”

	 	 
	 

	 	 
	 

	 	 
	 

	 	 








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