exv10w21






Exhibit 10.21




RETIREMENT AGREEMENT




     This Retirement Agreement (the “Agreement”) is entered into as of February
23, 2011, by and between Danny J. Heatly (“Employee”) and Devon Energy Corporation (the
“Company”).



RECITALS




     WHEREAS, Employee is employed by the Company as its Senior Vice President,
Accounting and Chief Accounting Officer.



     WHEREAS, Employee and the Company have entered into an Amended and Restated Severance
Agreement with an effective date of December 15, 2008 (the “Severance Agreement”).



     WHEREAS, Employee previously expressed to the Company his desire to retire on or around his
55th birthday on December 7, 2010.



     WHEREAS, during discussions between Employee and the Company regarding the timing of
Employee’s retirement, the Company requested that Employee consider delaying his retirement until
after the preparation of the Company’s audited financial statements for fiscal year 2010 and the
filing of the Company’s related Form 10-K with the Securities and Exchange Commission.



     WHEREAS, the parties desire to enter this Agreement to reflect their mutual undertakings,
promises, and agreements concerning Employee’s retirement from the Company and benefits to Employee
upon or by reason of such retirement.



     NOW, THEREFORE, in exchange for the valuable consideration paid or given under this Agreement,
the receipt, adequacy, and sufficiency of which is hereby acknowledged, the parties knowingly and
voluntarily agree to the following terms:



TERMS





	1.	 	Retirement Date and Effect of Retirement. Capitalized terms not defined by this
Agreement shall have the same meaning as defined by the Severance Agreement. Pursuant to
paragraph 3(g) of the Severance Agreement, this Agreement constitutes Employee’s Notice of
Termination to the Company that he desires to retire and terminate his employment with the
Company without Good Reason. Such retirement shall result in a Separation from Service and
shall be effective March 4, 2011 (the “Retirement Date”). Until the Retirement Date,
Employee shall continue full-time employment with the Company and shall satisfactorily perform
such job duties and such services for the Company as are requested from time to time by the
Company’s Executive Vice President and Chief Financial Officer.
	 
	2.	 	Enforceability of Severance Agreement. Nothing in this Agreement shall be construed
to limit, supersede, or cancel any of the Company’s or Employee’s rights or obligations under
the Severance Agreement, which shall remain in full force and effect according to its terms.




 









 












	3.	 	Final Pay and Benefits. Upon Employee’s Separation from Service on the Retirement
Date, Employee shall receive all Accrued Obligations in accordance with Paragraph 4(a) of the
Severance Agreement. In addition, in consideration of Employee’s contributions to the Company
during his employment and his decision to delay his retirement until the Retirement Date, any
outstanding stock options, restricted stock awards or other equity-based compensation that
have not fully vested on the Retirement Date (the “Unvested Awards”) shall continue to
vest according to the vesting schedule originally set forth in the applicable award agreements
covering the Unvested Awards (“Post-Retirement Vesting”). The Company and Employee
hereby agree to effectuate the Employee’s Post-Retirement Vesting of Employee’s Unvested
Awards by execution and delivery of amendments to Employee’s award agreements covering the
Unvested Awards in the forms of Annexes A, B and C.
	 
	4.	 	Return of Property. Employee shall return to the Company any and all items of its
property, including without limitation keys, badge/access cards, computers, software, cellular
telephones and personal digital devices, calculators, equipment, credit cards, forms, files,
manuals, correspondence, business records, personnel data, lists of employees, salary and
benefits information, contracts, contract information, training materials, computer tapes and
diskettes or other portable media, computer-readable files and data stored on any hard drive
or other installed device, and data processing reports, and any and all other documents,
property, or Confidential Information which he has had possession of or control over during
his employment with the Company. Employee’s obligations under this paragraph shall not apply
to, and Employee may retain a copy of, personnel, benefit, or payroll documents concerning
only him.
	 
	5.	 	Waiver of Rights to Relief Not Provided in This Agreement. Employee shall and hereby
does irrevocably waive any right to monetary recovery from the Company or its Affiliates,
whether sought directly by him or any administrative agency or other public authority,
individual, or group of individuals that should pursue any claim on his behalf; and he shall
not request or accept from the Company or its Affiliates, as compensation or damages related
to his employment or the termination of his employment with the Company, anything of value
that is not provided for in this Agreement.
	 
	6.	 	Non-prosecution. Except as requested by the Company, or as permitted or compelled by
law or judicial process, Employee shall not assist, cooperate with, or supply information of
any kind to any individual, private-party litigant, governmental agency or their agents or
attorneys (a) in any proceeding, investigation, or inquiry raising issues involving the
Company or its Affiliates, or (b) in any other litigation against the Company or its
Affiliates.
	 
	7.	 	No Violations. Employee represents that he has not informed the Company of, and that
he is unaware of, any alleged violations of law, the Company’s standards of business conduct
or personnel policies, or other misconduct by Company that have not been resolved
satisfactorily by the Company.
	 
	8.	 	Governing Law; Severability; Interpretation. This Agreement and the rights and
duties of the parties under it shall be governed by the laws of the State of Oklahoma, without
regard to any conflicts of laws principles. If any provision of this Agreement is held to be
unenforceable, such provision shall be considered separate, distinct, and




2









 






	 	 	severable from the other remaining provisions of this Agreement, and shall not affect the
validity or enforceability of such other remaining provisions; and in all other respects,
this Agreement shall remain in full force and effect. If any provision of this Agreement is
held to be unenforceable as written but may be made to be enforceable by limitation, then
such provision shall be enforceable to the maximum extent permitted by applicable law. The
language of all parts of this Agreement shall in all cases be construed as a whole,
according to its fair meaning, and not strictly for or against any of the parties.






	9.	 	Assignment. Employee’s obligations, rights, and benefits under this Agreement are
personal to Employee and shall not be assigned to any person or entity without written
permission from the Company. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective heirs, legal representatives, successors, and permitted
assigns.
	 
	10.	 	Consultation With an Attorney. Employee has the right, and is encouraged by this
paragraph, to consult with an attorney before signing this Agreement.
	 
	11.	 	Knowing and Voluntary Agreement. Employee acknowledges that (a) he has had a
reasonable period in which to deliberate regarding the terms of this Agreement and to consider
whether to sign this Agreement, (b) he fully understands the meaning and effect of signing
this Agreement, and (c) his signing of this Agreement is knowing and voluntary. Employee
further acknowledges that the Company has not made any promise or representation to him
concerning this Agreement that is not expressed in this Agreement, and that in signing this
Agreement, he is not relying on any statement or representation by Company, but is instead
relying solely on his own judgment and consultation with his attorney, if any.
	 
	12.	 	Independent Consideration; Common-Law Duties. Whether expressly stated in this
Agreement or not, all obligations Employee assumes and undertakings he makes by signing this
Agreement are understood to be in consideration of the mutual promises and undertakings in
this Agreement. Employee further acknowledges and agrees that his obligations under this
Agreement supplement, rather than supplant, his common-law duties owed to the Company.
	 
	13.	 	Modification. No provision of this Agreement may be amended, modified, or waived
unless such amendment, modification, or waiver is agreed to in writing and signed by Employee
and by a duly authorized officer of the Company.
	 
	14.	 	Internal Revenue Code Section 409A; Consultation With a Tax Advisor. The parties
have drafted this Agreement in accordance with Section 409A of the Internal Revenue Code and
intend that it comply with Section 409A of the Code and any related rules, regulations, or
other guidance. The parties further intend that this Agreement shall be interpreted and
construed to comply with Section 409A of the Code. The parties agree to cooperate and work
together in good faith to take all actions reasonably necessary to effectuate the intent of
this paragraph. Notwithstanding the preceding sentence, Employee shall be solely responsible
for any risk that the tax treatment of all or part of the Accrued Obligations or the
Post-Retirement Vesting may be affected by Section 409A of the Code and impose significant
adverse tax consequences on him, including accelerated taxation, a 20% additional tax, and
interest. Because of the




3









 






	 	 	potential tax consequences, Employee has the right, and is encouraged by this paragraph, to
consult with a tax advisor before signing this Agreement.






	15.	 	Paragraph Headings. The paragraph headings in this Agreement are for convenience of
reference only, form no part of this Agreement, and shall not affect its interpretation.
	 
	16.	 	Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall be considered one and the
same agreement.
	 
	17.	 	Entire Agreement. This Agreement constitutes the entire agreement among the parties
with respect to the subject matters hereof and supersede any and all prior or contemporaneous
oral and written agreements and understandings with respect to such subject matters.





[SIGNATURES APPEAR ON FOLLOWING PAGE]







4









 








     This RETIREMENT AGREEMENT has been executed and agreed to as of the date first written above.



	 	 	 	 	 

	DANNY J. HEATLY

	 	DEVON ENERGY CORPORATION	 	 
	 
	 	 	 	 
	     /s/ Danny J. Heatly

	 	     /s/ Frank W. Rudolph	 	 
	 

Danny J. Heatly

	 	 

Frank W. Rudolph
	 	 
	 

	 	Executive Vice President, Human Resources	 	 











5









 








ANNEX A




AMENDMENT TO RESTRICTED STOCK AWARD AGREEMENT

UNDER THE

DEVON ENERGY CORPORATION 200__ LONG-TERM INCENTIVE PLAN



     THIS AMENDMENT TO RESTRICTED STOCK AWARD AGREEMENT (“Amendment”) is entered into as of the
____ day of ________, 2011 by and between Devon Energy Corporation, a Delaware corporation (the
“Company”), and Danny J. Heatly (the “Participant”).



W I T N E S S E T H:




     WHEREAS, the Company and the Participant have previously entered into a certain Restricted
Stock Award Agreement under the Devon Energy Corporation 200__ Long-Term Incentive Plan listed on
Exhibit A (the “Agreement”), which granted to the Participant shares of Common Stock of the Company
(the “Restricted Stock”) in exchange for the Participant’s performance of future services for the
Company subject to the terms and conditions of the Agreement; and



     WHEREAS, the Company and the Participant desire to amend the Agreement with respect to vesting
of the Restricted Stock following the date of retirement of the Participant under certain
circumstances; and



     WHEREAS, Section 12.6 of the Plan permits the Compensation Committee of the Company’s Board of
Directors (the “Committee”) to amend the Agreement; 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 Agreement is hereby amended as follows:




	 	1.	 	The last sentence of Section 3(b) is amended to read as
follows:
	 
	 	 	 	“The Participant shall forfeit the unvested portion of the Award
(including the underlying Restricted Stock and “Accrued Dividends,”
as such term is hereinafter defined) upon the occurrence of the
Participant’s Date of Termination unless the Award becomes vested
under the circumstances described in Sections 3(b)(i), (ii), (iii)
or (iv) below.”
	 
	 	2.	 	The first sentence of Section 3(b)(i) is hereby amended to read as follows:
	 
	 	 	 	“The Restricted Stock shall become fully vested upon the occurrence
of a Change of Control Event that occurs (A) prior to the
Participant’s Date of Termination or (B) if the Participant has
retired prior to such Change of Control Event, is Post-Retirement
Eligible and no Non-Compliance Event has occurred, following the
Participant’s Date of Termination.”





 









 






	 	3.	 	Section 3(b) is hereby amended to add a Section 3(b)(iv):
	 
	 	 	 	“(iv) Notwithstanding any provision to the contrary in this
Agreement, if the Participant is Post-Retirement Eligible, the
Participant shall, subject to the satisfaction of the conditions in
Section 14, be eligible to vest in accordance with the Vesting
Schedule above in Section 3(b), in the installments of Restricted
Stock that remain unvested on the Date of Termination. If (i) the
Participant is Post-Retirement Eligible, (ii) the death of the
Participant occurs following the Date of Termination, and (iii) no
Non-Compliance Event has occurred prior to the date of the
Participant’s death, then any installments of Restricted Stock that
remain unvested on the date of the Participant’s death but in which
the Participant was eligible to vest pursuant to this Section
3(b)(iv) shall become fully vested upon the Participant’s death.”
	 
	 	4.	 	By adding a new Section 14 that provides as follows:
	 
	 	 	 	“14. 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, pursuant to
this Section 14(a), to continue to vest following the Date of
Termination in any unvested installments of Restricted Stock
(each such unvested installment, an “Installment”). The
Participant shall have the right to vest in such Installments
of Restricted Stock 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”),





ii




 









 






	 	 	 	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
Restricted Stock 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.”






	 	5.	 	Section 3 is hereby amended to add a Section 3(p):
	 
	 	 	 	“(f) Post-Retirement Eligible. For purposes of this
Agreement, ‘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 for Employees of Devon Energy Corporation
(the “Retirement Plan”).”





     The Agreement is 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
granted under the Agreement.



     All capitalized terms used in this Amendment shall have the same meaning ascribed to them in
the Plan and the Agreement unless specifically denoted otherwise.



[SIGNATURES APPEAR ON FOLLOWING PAGE]




iii




 









 








     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:	 	 	 	 
	 

	 	 	 	 

	 	 
	“Participant”
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Danny J. Heatly	 	 






iv




 









 





EXHIBIT A




Restricted Stock Award Agreement

Subject to Amendment



[Insert list of agreements]









 









 








EXHIBIT B




Form of Non-Disclosure Agreement



[Insert Date]



Devon Energy Corporation

20 North Broadway

Oklahoma City, OK 73102




          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 Restricted Stock Award Agreements (the
“Amendment”) dated _______________, __________ 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”	 	 
	 
	 	 	 	 
	 
	 

	 	 

[Name of 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:
	 	 

	 	 
	 

	 	 	 	 

	 	 






ii




 









 





EXHIBIT C



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:       
               
            
      









 









 








ANNEX B




AMENDMENT TO NONQUALIFIED STOCK OPTION AGREEMENT

UNDER THE

DEVON ENERGY CORPORATION 200__ LONG-TERM INCENTIVE PLAN


THIS AMENDMENT TO NONQUALIFIED STOCK OPTION AGREEMENT (“Amendment”) is entered into as of the ___
day of ______, 2011 by and between Devon Energy Corporation, a Delaware corporation (the
“Company”), and Danny J. Heatly (the “Participant”).




W I T N E S S E T H:




     WHEREAS, the Company and the Participant have previously entered into a certain Nonqualified
Stock Option Agreement under the Devon Energy Corporation 200__ Long-Term Incentive Plan listed on
Exhibit A (the “Agreement”), 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 Agreement; and



     WHEREAS, the Company and the Participant desire to amend the Agreement 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 12.6 of the Plan permits the Compensation Committee of the Company’s Board of
Directors (the “Committee”) to amend the Agreement; and



     WHEREAS, the Committee has approved the amendment of the Agreement as set forth herein.



     NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree that the Agreement is hereby amended as follows:




	 	1.	 	The first sentence of Section 2(a) is hereby amended to read as
follows:
	 
	 	 	 	“The Stock Option shall become fully vested and exercisable on and
after the vesting date for each installment of Covered Shares as
described in the following schedule (the “Vesting Date”) (but only
if the Participant’s Date of Termination has not occurred before the
Vesting Date):”
	 
	 	2.	 	Section 2(b) is hereby amended to read as follows:
	 
	 	 	 	“The Stock Option shall become fully vested and 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, is Post-Retirement
Eligible and no Non-Compliance Event has occurred, following the
Participant’s Date of Termination.”





 









 






	 	3.	 	Section 2 is hereby amended to add a Section 2(e):
	 
	 	 	 	“(e) 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 9, be eligible to vest, in accordance with the Vesting
Schedule above in Section 2(a), in the installments of the Covered
Shares of the Stock Option that remain unvested on the Date of
Termination. If (i) the Participant is Post-Retirement Eligible,
(ii) the death of the Participant occurs following the Date of
Termination, and (iii) no Non-Compliance Event has occurred prior to
the date of the Participant’s death, then any installments of the
Covered Shares of the Stock Option that remain unvested on the date
of the Participant’s death but in which the Participant was eligible
to vest pursuant to this Section 2(e) shall become fully vested and
exercisable upon the Participant’s death.” 
	 
	 	4.	 	Section 3 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
on or after the Participant’s Early Retirement Date or on or after the
Participant’s Normal Retirement Date, and Sections (b) and (e) do not
apply, the one-year anniversary of such Date of Termination (or such
later date as may be permitted by the Committee).
	 
	 	(e)	 	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 occurs following such Date
of Termination, the Stock Option shall cease to be exercisable on the
one-year anniversary of such Non-Compliance Event.
	 
	 	(f)	 	If (i) the Participant is Post-Retirement
Eligible, (ii) the death of the Participant occurs following the Date
of Termination, (iii) there are installments of the Covered Shares of
the Stock Option that remain unvested as of the date of the
Participant’s death but in which the Participant was eligible to vest
pursuant to Section 2(e), and (iv) no Non-Compliance Event has occurred
prior to the date of the





ii




 









 






	 	 	 	Participant’s death, the three-year anniversary of the date of the
Participant’s death.
	 
	 	(g)	 	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.






	 	(h)	 	If the Participant’s Date of Termination occurs
and Sections (b), (c), (d), (e), (f) and (g) are not applicable, the
three-month anniversary of such Date of Termination.”






	 	5.	 	By adding a new Section 9 that provides as follows:
	 
	 	 	 	“9. 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, pursuant to this Section 9(a), 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”). The Participant shall have the right to vest in such
Installments of Covered Shares of the Stock Option 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.





iii




 









 






	 	(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.”






	 	6.	 	Section 10 is hereby amended by adding a new definition in
Section 10(r) 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.”





     The Agreement is 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 Agreement.



     All capitalized terms used in this Amendment shall have the same meaning ascribed to them in
the Plan and the Agreement unless specifically denoted otherwise.



[SIGNATURES APPEAR ON FOLLOWING PAGE]




iv




 









 





     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:	 	 	 	 
	 

	 	 	 	 

	 	 
	“Participant”
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Danny J. Heatly	 	 






v 







 









 








EXHIBIT A




Nonqualified Stock Option Agreements

Subject to Amendment



[Insert list of agreements]









 









 








EXHIBIT B




Form of Non-Disclosure Agreement



[Insert Date]



Devon Energy Corporation

20 North Broadway

Oklahoma City, OK 73102




          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 Agreements (the “Amendment”)
dated _______________, _______ 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”	 	 
	 
	 	 	 	 
	 
	 

	 	 

[Name of 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:
	 	 

	 	 
	 

	 	 	 	 

	 	 






ii









 









 











EXHIBIT C



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:      
               
              
     









 









 








ANNEX C




AMENDMENT TO INCENTIVE STOCK OPTION AGREEMENT

UNDER THE

DEVON ENERGY CORPORATION 200__ LONG-TERM INCENTIVE PLAN



     THIS AMENDMENT TO INCENTIVE STOCK OPTION AGREEMENT (“Amendment”) is entered into as of the
____ day of ______, 2011 by and between Devon Energy Corporation, a Delaware corporation (the
“Company”), and Danny J. Heatly (the “Participant”).



W I T N E S S E T H:




     WHEREAS, the Company and the Participant have previously entered into a certain Incentive
Stock Option Agreement under the Devon Energy Corporation 200__ Long-Term Incentive Plan listed on
Exhibit A (the “Agreements”), which granted to the Participant incentive stock options to purchase
shares of Common Stock of the Company (the “Incentive Stock Options”) in exchange for the
Participant’s performance of future services for the Company pursuant to the terms of the
Agreement; and



     WHEREAS, the Company and the Participant desire to amend the Agreement with respect to the
vesting and exercisability of the Incentive Stock Options following the date of retirement of the
Participant under certain circumstances; and



     WHEREAS, Section 12.6 of the Plan permits the Compensation Committee of the Company’s Board of
Directors (the “Committee”) to amend the Agreement; and



     WHEREAS, the Committee has approved the amendment of the Agreement as set forth herein.



     NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree that the Agreement is hereby amended as follows:




	 	1.	 	The first sentence of Section 2(a) is hereby amended to read as
follows:






	 	 	 	“The Incentive Stock Option shall become fully vested and
exercisable on and after the vesting date for each installment of
Covered Shares as described in the following schedule (the “Vesting
Date”) (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):”






	 	2.	 	The first sentence of Section 2(b) is hereby amended to read as
follows:






	 	 	 	“The Incentive Stock Option shall become fully vested and
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,
is Post-Retirement Eligible, and no Non-Compliance Event has
occurred, following the Participant’s Date of Termination.”





 









 






	 	3.	 	Section 2(e) is hereby amended to read as follows:






	 	 	 	“(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 11, be eligible to vest, in accordance with the Vesting
Schedule above in Section 2(a), in the installments of the Covered
Shares of the Incentive Stock Option that remain unvested on the
Date of Termination. If (i) the Participant is Post-Retirement
Eligible, (ii) the death of the Participant occurs following the
Date of Termination, and (iii) no Non-Compliance Event has occurred
prior to the date of the Participant’s death, then any installments
of the Covered Shares of the Incentive Stock Option that remain
unvested on the date of the Participant’s death but in which the
Participant was eligible to vest pursuant to this Section 2(e) shall
become fully vested and exercisable upon the Participant’s
death.”






	 	4.	 	Section 3 is hereby amended to read as follows:






	 	 	 	“Term of Incentive Stock Option. The Incentive Stock Option shall
cease to be exercisable on the earliest to occur of:






	 	(i)	 	The Expiration Date set forth on the Cover
Page.
	 
	 	(j)	 	If the Participant’s Date of Termination occurs
by reason of death, the three-year anniversary of such Date of
Termination.
	 
	 	(k)	 	If the Participant’s Date of Termination occurs
by reason of Disability, the one-year anniversary of such Date of
Termination.
	 
	 	(l)	 	If the Participant’s Date of Termination occurs
on or after the Participant’s Early Retirement Date or on or after the
Participant’s Normal Retirement Date, and Sections (b) and (e) do not
apply, the one-year anniversary of such Date of Termination (or such
later date as may be permitted by the Committee).
	 
	 	(m)	 	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 Incentive Stock
Option; provided, however, if a Non-Compliance Event occurs following
such Date of Termination, the Incentive Stock Option shall cease to be
exercisable on the one-year anniversary of such Non-Compliance Event.
	 
	 	(n)	 	If (i) the Participant is Post-Retirement
Eligible, (ii) the death of the Participant occurs following the Date
of Termination, (iii) there are installments of the Covered Shares of
the Incentive Stock Option that remain unvested as of the date of the
Participant’s death but in which the Participant was eligible to vest
pursuant to Section 3(d), and (iv) no Non-Compliance Event has occurred
prior to the date of





ii




 









 






	 	 	 	the Participant’s death, the three-year anniversary of the date of the
Participant’s death.
	 
	 	(o)	 	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.






	 	(p)	 	If the Participant’s Date of Termination occurs
and Sections (b), (c), (d), (e), (f) and (g) are not applicable, the
three-month anniversary of such Date of Termination.






	 	 	 	The Participant should be aware that exercising the Incentive Stock
Option more than three months after the Date of Termination (one
year in the case of termination by reason of certain disabilities)
will generally result in the option being treated as a nonqualified
option rather than an incentive stock option for tax purposes. The
Participant should also be aware that if his or her employment is
transferred to a limited liability company that is an Affiliated
Entity that does not satisfy the definition of “company” or
“subsidiary” in Section 424 of the Code, the transfer will be
classified as a termination of employment for purposes of the
incentive stock option rules regardless of whether it constitutes a
Date of Termination under this Award Agreement. As a result, the
option, if not exercised within three months of such transfer, will
be treated as a nonqualified stock option rather than an incentive
stock option for tax purposes. Regardless of classification of the
option for tax purposes, this Award Agreement shall continue in full
force and effect.”






	 	5.	 	By adding a new Section 11 that provides as follows:






	 	 	 	“11. Conditions to Post-Retirement Vesting.






	 	(c)	 	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





iii




 









 






	 	 	 	right, pursuant to this Section 11(a), to continue to vest following the
Date of Termination in any unvested installments of Covered Shares of
the Incentive Stock Option (each such unvested installment, an
“Installment”). The Participant shall have the right to vest in such
Installments of Covered Shares of the Incentive Stock Option 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.
	 
	 	(d)	 	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
Incentive 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.”






	 	6.	 	Section 12 is hereby amended by adding a new definition in
Section 12(o) 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.”





     The Agreement is 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 Incentive Stock Options under the Agreement.



     All capitalized terms used in this Amendment shall have the same meaning ascribed to them in
the Plan and the Agreement unless specifically denoted otherwise.



[SIGNATURES APPEAR ON FOLLOWING PAGE]




iv





 









 








     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:	 	 	 	 
	 

	 	 	 	 

	 	 
	“Participant”
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Danny J. Heatly	 	 






v 






 









 








EXHIBIT A




Incentive Stock Option Agreements

Subject to Amendment



[Insert list of agreements]









 









 








EXHIBIT B




Form of Non-Disclosure Agreement



[Insert Date]



Devon Energy Corporation

20 North Broadway

Oklahoma City, OK 73102




          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 Incentive Stock Option Agreements (the “Amendment”)
dated _______________, ___________ 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”	 	 
	 
	 	 	 	 
	 
	 

	 	 

[Name of 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:
	 	 

	 	 
	 

	 	 	 	 

	 	 






ii




 









 





EXHIBIT C



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: