As filed with the Securities and Exchange Commission on May 10, 2010
Registration No. 333-                                                      


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________________

NEWFIELD EXPLORATION COMPANY
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of Incorporation or Organization)
 
72-1133047
(I.R.S. Employer
Identification Number)
Newfield Exploration Company
363 N. Sam Houston Parkway E., Suite 100
Houston Texas 77060
(Address of Registrant’s Principal Executive Office) (Zip Code)
___________________________

Newfield Exploration Company 2010 Employee Stock Purchase Plan
(Full Title of the Plan)
 
John D. Marziotti
Newfield Exploration Company
363 N. Sam Houston Parkway E., Suite 100
Houston, Texas 77060
(281) 847-6000

 (Name and Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Indicate by check mark whether the registrant is a large accelerated filter, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer                                            þ            Accelerated filer                                                       ¨
Non-accelerated filer                                            ¨            Smaller reporting Company                                                       ¨
___________________________
 
CALCULATION OF REGISTRATION FEE
 
Title of Securities to be Registered (1)
Amount to be
Registered
Proposed Maximum Offering Price
Per Share (2)
Proposed Maximum Aggregate
Offering Price (2)
Amount of
Registration Fee (2)
Common Stock
1,000,000 shares
$55.45
$55,450,000
$3,954
________________
 
(1)      In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this registration statement also covers an indeterminate amount of interests to be offered or sold pursuant to the employee benefit plan described herein.
 
(2)      Estimated, solely for the purposes of calculating the registration fee, in accordance with Rule 457(h) under the Securities Act of 1933 on the basis of the price of securities of the same class, as determined in ccordance with Rule 457(c), using the average of the high and low sales prices as reported by New York Stock Exchange for the common stock on May 5, 2010.


 
 
 

PART II
 
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
 
Item 3. Incorporation of Documents by Reference.
 
The following documents filed by the registrant with the SEC pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are incorporated by reference and made a part of this registration statement:
 
·  
Annual Report on Form 10-K for the year ended December 31, 2009;
·  
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2010;
·  
Current Reports on Form 8-K filed on January 12, 2010, January 20, 2010 (and dated January 20, 2010), January 21, 2010, January 22, 2010, January 26, 2010, February 8, 2010, February 19, 2010 and May 5, 2010 (excluding any portions of such reports that were “furnished” rather than “filed”); and
·  
the description of the registrant’s common stock contained in the Form 8-A Registration Statement filed with the SEC on November 4, 1993.

All information filed by the registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act (other than information furnished to, and not filed with, the SEC) subsequent to the effective date of this registration statement will be deemed to be incorporated by reference herein and to be a part of this document from the date of filing of such information until all of the securities offered pursuant to this registration statement are sold or the offering pursuant to this registration statement is terminated. Any statement contained herein or in any information incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this registration statement to the extent that a statement contained in any other subsequently filed information that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed to constitute a part of this registration statement, except as so modified or superseded.
 
Experts
 
The financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Report on Internal Control over Financial Reporting) incorporated in this registration statement by reference to the Annual Report on Form 10-K for the year ended December 31, 2009 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
 
Item 4. Description of Securities.
 
Not applicable.
 
Item 5. Interests of Named Experts and Counsel.
 
The legality of the registrant’s common stock is opined on by John D. Marziotti, the registrant’s General Counsel and Secretary. As of May 7, 2010, Mr. Marziotti owned 22,803 shares of the registrant’s common stock, either directly or through employee benefit plans, and held options to acquire 28,000 shares of the registrant’s common stock.
 

 
2
 

Item 6. Indemnification of Directors and Officers.
 
Section 145 of the General Corporation Law of the State of Delaware (the “DGCL”) authorizes a corporation, under certain circumstances, to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that the person is or was a director, officer, employee or agent of such corporation, or is or was serving at the request of that corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation. With respect to any criminal action or proceeding, such indemnification is available if he or she had no reasonable cause to believe his or her conduct was unlawful.
 
Article Seventh of the registrant’s Second Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), together with Article VI of the registrant’s Bylaws, as amended and restated (the “Bylaws”), provide for indemnification of each person who is or was made a party to any actual or threatened civil, criminal, administrative or investigative action, suit or proceeding because such person is, was or has agreed to become an officer or director of the registrant or is a person who is or was serving or has agreed to serve at the request of the registrant as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another corporation or of a partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise to the fullest extent permitted by the DGCL as it existed at the time the indemnification provisions of the Certificate of Incorporation and Bylaws were adopted or as may be thereafter amended. Article VI expressly provides that it is not the exclusive method of indemnification.
 
Section 145 of the DGCL also empowers a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of such corporation against liability asserted against or incurred by him in any such capacity, whether or not such corporation would have the power to indemnify such person against such liability under the provisions of Section 145.
 
Article Seventh of the registrant’s Certificate of Incorporation and Article VI of the registrant’s Bylaws also provide that the registrant may maintain insurance, at the registrant’s expense, to protect the registrant and any director, officer, employee or agent of the registrant or of another entity against any expense, liability, or loss, regardless of whether the registrant would have the power to indemnify such person against such expense, liability or loss under the DGCL.
 
Section 102(b)(7) of the DGCL provides that a certificate of incorporation may contain a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director (a) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL (relating to liability for unauthorized acquisitions or redemptions of, or dividends on, capital stock) or (d) for any transaction from which the director derived improper personal benefit. Article Seventh of the Certificate of Incorporation contains such a provision.
 
The registrant has entered into indemnification agreements with each of its directors and executive officers whereby each is indemnified by the registrant against certain liabilities that he or she may incur as a result of serving as a director or executing his duties as an executive officer of the registrant.  A form of these agreements, which is incorporated herein by reference, was filed as Exhibit 10.20 to the registrant’s Current Report on Form 8-K on February 6, 2009.
 
Item 7. Exemption from Registration Claimed.
 
Not applicable.
 

 
3
 

Item 8. Exhibits.
 
The following exhibits are filed with or incorporated by reference into this registration statement pursuant to Item 601 of Regulation S-K:
 

 
Exhibit No.
 
Description
4.1.1
 
Second Restated Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-12534))
4.1.2
 
Certificate of Amendment to Second Restated Certificate of Incorporation of the registrant dated May 15, 1997 (incorporated by reference to Exhibit 3.1.1 to the registrant’s Registration Statement on Form S-3 (Registration No. 333-32582))
4.1.3
 
Certificate of Amendment to Second Restated Certificate of Incorporation of the registrant dated May 12, 2004 (incorporated by reference to Exhibit 4.2.3 to the registrant’s Registration Statement on Form S-8 (Registration No. 333-116191))
4.2
 
Amended and Restated Bylaws of the registrant (incorporated by reference to Exhibit 3.2 to the registrant’s Current Report on Form 8-K filed on February 6, 2009 (File No. 1-12534))
5.1
 
Opinion of John D. Marziotti, General Counsel and Secretary of the registrant
23.1
 
Consent of PricewaterhouseCoopers LLP
23.2
 
Consent of John D. Marziotti (included in Exhibit 5.1)
24.1
 
Powers of Attorney (included on the signature pages to this registration statement)
99.1
 
Newfield Exploration Company 2010 Employee Stock Purchase Plan

 

 

 
4
 

 
Item 9. Undertakings.
 
 
The undersigned registrant hereby undertakes:
 
 
(a) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
 
 
                (i) to include any prospectus required by Section 10(a)(3) of the Securities Act;
 
 
                (ii) to reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment hereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement; and
 
 
                (iii) to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement;
 
 
provided, however , that paragraphs (a)(i) and (a)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this registration statement;
 
 
(b) that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;
 
 
(c) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;
 
 
(d) that, for the purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and
 
 
 (e) insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
 

 
5
 

SIGNATURES

The Registrant

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on this the 10th day of May, 2010.
 

 
    NEWFIELD EXPLORATION COMPANY


                                     By:
/s/ Terry W. Rathert
 
Terry W. Rathert
 
Executive Vice President and Chief Financial Officer
 


POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Terry W. Rathert and John D. Marziotti, or any of them, as  true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorney-in-fact and agent full power and authority to do and perform each and every act and thing required or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that such attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities indicated on the 10th day of May, 2010.


Signature
Title
   
/s/ Lee K. Boothby
Chairman, President and Chief Executive Officer
Lee K. Boothby
and Director (Principal Executive Officer)
   
/s/ Terry W. Rathert
Executive Vice President and Chief Financial Officer
Terry W. Rathert
(Principal Financial Officer)
   
/s/ Brian L. Rickmers
Controller (Principal Accounting Officer)
Brian L. Rickmers
 
   
/s/ Philip J. Burguieres
Director
Philip J. Burguieres
 
   
/s/ Pamela J. Gardner
Director
Pamela J. Gardner
 
   
/s/ John R. Kemp III
Director
John R. Kemp III
 
   
/s/ J. Michael Lacey
Director
J. Michael Lacey
 

 
 
 


   
/s/ Joseph H. Netherland
Director
Joseph H. Netherland
 
   
/s/ Howard H. Newman
Director
Howard H. Newman
 
   
/s/ Thomas G. Ricks
Director
Thomas G. Ricks
 
   
/s/ Juanita F. Romans
Director
Juanita F. Romans
 
   
/s/ C. E. Shultz
Director
C. E. Shultz
 
   
/s/ J. Terry Strange
Director
J. Terry Strange
 

The Plan

Pursuant to the requirements of the Securities Act of 1933, the Administrative Committee, as the Plan Administrator, has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on this the 10th day of May, 2010.
 

 
NEWFIELD EXPLORATION COMPANY 2010 EMPLOYEE STOCK PURCHASE PLAN

By the Administrative Committee:

 
By:   /s/ Lee K. Boothby
Lee K. Boothby

/s/ Gary D. Packer                                                         
Gary D. Packer

/s/ Terry W. Rathert                                                         
Terry W. Rathert





 
 
 

EXHIBIT INDEX
 

 
Exhibit No.
 
Description
4.1.1
 
Second Restated Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-12534))
4.1.2
 
Certificate of Amendment to Second Restated Certificate of Incorporation of the registrant dated May 15, 1997 (incorporated by reference to Exhibit 3.1.1 to the registrant’s Registration Statement on Form S-3 (Registration No. 333-32582))
4.1.3
 
Certificate of Amendment to Second Restated Certificate of Incorporation of the registrant dated May 12, 2004 (incorporated by reference to Exhibit 4.2.3 to the registrant’s Registration Statement on Form S-8 (Registration No. 333-116191))
4.2
 
Amended and Restated Bylaws of the registrant (incorporated by reference to Exhibit 3.2 to the registrant’s Current Report on Form 8-K filed on February 6, 2009 (File No. 1-12534))
5.1
 
Opinion of John D. Marziotti, General Counsel and Secretary of the registrant
23.1
 
Consent of PricewaterhouseCoopers LLP
23.2
 
Consent of John D. Marziotti (included in Exhibit 5.1)
24.1
 
Powers of Attorney (included on the signature pages to this registration statement)
99.1
 
Newfield Exploration Company 2010 Employee Stock Purchase Plan
 


 
EXHIBIT 5.1
 
John D. Marziotti
Tel.   (281) 847-6151
General Counsel and Secretary
Fax.  (281) 405-4228
 
jmarziotti@newfield.com

 
May 10, 2010
 

 
Ladies and Gentlemen:
 
I am General Counsel and Secretary of Newfield Exploration Company (the “Company”).  This opinion is furnished to you in connection with the registration under the Securities Act of 1933, as amended, of 1,000,000 shares (the “Shares”) of common stock, par value $0.01 per share, of the Company (“Common Stock”) that may be issued under the Company’s 2010 Employee Stock Purchase Plan (the “Plan”).  In such capacity, I am familiar with the Company’s Certificate of Incorporation and Bylaws, each as amended from time to time, as well as the Plan.  In addition, I have examined records of relevant corporate proceedings with respect to the offering of the Shares under the Plan and such other records, instruments and documents pertaining to the Company that I have deemed necessary for purposes of delivering this opinion.  I also have examined the Company’s Registration Statement on Form S-8 to which this opinion is an exhibit (the “Registration Statement”).  I have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents examined as originals, the conformity to original documents of all documents examined as certified or photostatic copies and the authenticity of the originals of such copies.  In addition, I have assumed that the consideration received by the Company for the Shares will not be less than the par value of the Shares.
 
Based on the foregoing and having regard for such legal considerations as I have deemed relevant, I am of the opinion that the Shares have been duly and validly authorized for issuance and, when issued in accordance with the terms of the Plan, will be duly and validly issued, fully paid and nonassessable.
 
The foregoing opinion is limited in all respects to matters governed by the General Corporation Law of the State of Delaware, which includes statutory provisions and also all applicable provisions of the Delaware Constitution and reported judicial decisions interpreting these laws, and the federal laws of the United States of America, to the extent applicable.  I hereby consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement.
 

 
Sincerely,
 
/s/ John D. Marziotti
 
John D. Marziotti
General Counsel and Secretary


 
EXHIBIT 23.1
 
 
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated February 26, 2010 relating to the financial statements and the effectiveness of internal control over financial reporting of Newfield Exploration Company, which appears in Newfield Exploration Company’s Annual Report on Form 10-K for the year ended December 31, 2009.  We also consent to the reference to us under the heading “Experts” in such Registration Statement.
 
 
/s/ PricewaterhouseCoopers LLP
 
 
Houston, Texas
 
 
May 10, 2010
 
 


 
EXHIBIT 99.1
 
NEWFIELD EXPLORATION COMPANY
 
2010 EMPLOYEE STOCK PURCHASE PLAN
 

 
WHEREAS , Newfield Exploration Company, a Delaware corporation (the “Company”) desires to establish the Employee Stock Purchase Plan (the “Plan”) to provide employees of the Company and employees of related corporations designated by the Company with an opportunity to purchase common stock of the Company through offerings of options at a discount so as to further incent them to work for the continued success of the Company and its related corporations;
 
NOW THEREFORE, the Plan is hereby established as follows, effective July 1, 2010, provided that the stockholders of the Company approve of the adoption of the Plan within 12 months after the date on which the Board of Directors of the Company adopts the Plan.
 
 

 
1
 

 
TABLE OF CONTENTS

 
Section
ARTICLE I - PURPOSE, SHARE COMMITMENT AND INTENT
 
Purpose
1.1
Share Commitment
1.2
Intent
1.3
 
ARTICLE II - DEFINITIONS
 
Account
2.1
Administrative Committee
2.2
Authorized Leave of Absence
2.3
Base Compensation
2.4
Beneficiary
2.5
Board
2.6
Code
2.7
Company
2.8
Compensation & Management Development Committee
2.9
Corporation
2.10
Employee
2.11
Employer Corporation
2.12
Exercise Date
2.13
Fair Market Value
2.14
Five Percent Owner
2.15
Grant Date
2.16
Highly Compensated Employee
2.17
Offering
2.18
Offering Period
2.19
Option
2.20
Option Price
2.21
Parent Corporation
2.22
Participant
2.23
Participating Corporation
2.24
Plan
2.25
Qualified Employee Stock Purchase Plan
2.26
Related Corporation
2.27
Stock
2.28
Subsidiary Corporation
2.29
Trading Day
2.30
 
ARTICLE III - ELIGIBILITY
 
General Requirements
3.1
Exclusions From Participation
3.2
Limitations Upon Participation by Certain Stockholders
3.3
 
ARTICLE IV - OPTIONS
 
Terms of an Offering
4.1
Grant of Option
4.2
Maximum Number of Shares Subject to Option
4.3
Formula or Specific Share Limitation Established by the Company
4.4
Annual $25,000 Limitation
4.5
Equal Rights and Privileges
4.6
Adjustments of Options
4.7
Insufficient Number of Shares
4.8

 
2
 
ARTICLE V – PAYROLL DEDUCTIONS
 
Authorization of Payroll Deductions
5.1
Right to Stop Payroll Deductions
5.2
Accounting for Funds
5.3
Participating Corporation's Use of Funds
5.4
Return of Funds
5.5
 
ARTICLE VI –  IN SERVICE WITHDRAWAL, TERMINATION OR DEATH
 
In Service Withdrawal1
6.1
Termination of Employment Prior to the Exercise Date
6.2
Death
6.3
 
ARTICLE VII - EXERCISE OF OPTION
 
Purchase of Shares of Stock
7.1
Accounting for Shares of Stock
7.2
Issuance of Shares of Stock
7.3
 
ARTICLE VIII - ADMINISTRATION
 
Powers
8.1
Quorum and Majority Action
8.2
Standard of Judicial Review of Committee Actions
8.3
 
ARTICLE IX – PARTICIPATION IN PLAN BY OTHER RELATED CORPORATIONS
 
Participation Procedure
9.1
No Joint Venture Implied
9.2
 
ARTICLE X - TERMINATION AND AMENDMENT OF THE PLAN
 
Termination
10.1
Amendment
10.2
 
ARTICLE XI - MISCELLANEOUS
 
Plan Not An Employment Contract
11.1
Options Are Not Transferable
11.2
Voting of Shares of Stock
11.3
No Rights of Shareholder
11.4
Governmental Regulations
11.5
Notices
11.6
Indemnification of the Administrative Committee, the Compensation & Management Development Committee and the Board
11.7
Tax Withholding
11.8
Gender and Number
11.9
Data Privacy
11.10
Notice of Disposition
11.11
Dispositions in Compliance with Securities Laws
11.12
Beneficiary(ies)
11.13
Severability
11.14
Binding Effect
11.15
Limitation on Liability
11.16
Arbitration
11.17
Governing Law
11.18

 
3
 

ARTICLE I
 
PURPOSE, SHARE COMMITMENT AND INTENT
 
     1.1     Purpose.   The purpose of the Plan is to provide Employees of the Company and its Related Corporations that are selected by the Company to participate in the Plan pursuant to Article IX an opportunity to purchase shares of Stock through periodic offerings of options to purchase shares of Stock at a discount and thus develop a stronger incentive to work for the continued success of the Company and its Related Corporations.
 
     1.2     Share Commitment.   The aggregate number of shares of Stock authorized to be sold pursuant to Options granted under the Plan is 1,000,000 subject to adjustment as provided in Section 4.7.   The shares of Stock authorized to be sold pursuant to Options granted under the Plan may be unissued shares or reacquired shares, including shares bought on the open market or otherwise for purposes of the Plan. In computing the number of shares of Stock available for grant, any shares of Stock relating to Options which are granted, but which subsequently lapse, are cancelled or are otherwise not exercised by the final date for exercise, shall be available for future grants of Options.
 
     1.3     Intent.   It is the intention of the Company to have the Plan qualify as an “employee stock purchase plan” under section 423 of the Code.  Therefore, the provisions of the Plan are to be construed in a manner that is consistent with the requirements of section 423 of the Code.

ARTICLE II
 
DEFINITIONS
 
The words and phrases defined in this Article shall have the meaning set out in these definitions throughout the Plan, unless the context in which any word or phrase appears reasonably requires a broader, narrower, or different meaning.
 
     2.1     “Account” means the bookkeeping account maintained by the Administrative Committee that reflects the amount of payroll deductions credited on behalf of a Participant under the Plan.
 
     2.2     “Administrative Committee” means the committee appointed by the Compensation & Management Development Committee to administer the Plan.
 
     2.3      “ Authorized Leave of Absence ” means a bona fide leave of absence from service with the Company or a Related Corporation if the period of the leave does not exceed 90 days, or, if longer, so long as the individual’s right to reemployment with the Company or a Related Corporation is guaranteed either by statute or contract.
 
     2.4      “ Base Compensation ”   means regular straight-time earnings or base salary, excluding payments for overtime, shift differentials, incentive compensation, bonuses, and other special payments, fees, allowances or extraordinary compensation.
 
     2.5      “ Beneficiary ”   means the person who is entitled to receive amounts under the Plan upon the death of a Participant as determined under Section 11.13.
 
     2.6     "B oard ”   means the board of directors of the Company.
 
     2.7      “ Code ”   means the United States Internal Revenue Code of 1986, as amended from time to time.
 
     2.8      “ Company ”   means Newfield Exploration Company, a Delaware corporation.
 
     2.9     “Compensation & Management Development Committee” means the Compensation & Management Development Committee of the Board or a successor committee appointed by the Board.
 
     2.10     “Corporation” has the meaning prescribed by section 7701(a)(3) of the Code and Department of  Treasury Regulation section 301.7701-2(b).  For example, the term “Corporation” includes a foreign corporation (as defined in section 7701(a)(5) of the Code) and a limited liability company that is treated as a corporation for all United States Federal income tax purposes.
 
 
4
 
     2.11      “ Employee ”   means any person who is a common-law employee of a Participating Corporation.
 
     2.12     “Employer Corporation” means a Corporation that is, at the time the Option is granted, the employer of the Employee.
 
     2.13     “ Exercise Date ” means the last Trading Day of each Offering Period, which is the day that all Options that eligible Employees have elected to exercise are to be exercised.
 
     2.14     “Fair Market Value” of one share of Stock as of a particular date means the mean of the reported high and low sales prices of the Stock on the New York Stock Exchange composite tape on that date, or if no prices are reported on that date, on the last preceding date on which such prices of the Stock are so reported. If the Stock is traded over the counter at the time a determination of its fair market value is required to be made hereunder, its fair market value shall be deemed to be equal to the average between the reported high and low prices of Stock on the most recent date on which the Stock was publicly traded. In the event Stock is not publicly traded at the time a determination of its value is required to be made hereunder, the determination of fair market value shall be made by the Administrative Committee in such manner as it deems appropriate.
 
     2.15     “Five Percent Owner” means an owner of five percent or more of the total combined voting power of all classes of stock of the Employer Corporation or of any Related Corporation.  An individual is considered to own any stock that is owned directly or indirectly by or for his brothers and sisters (whether by whole or half-blood), spouse, ancestors and lineal descendants.  For purposes of determining whether an Employee is a Five Percent Owner, an Employee is considered to own stock that the Employee may purchase under outstanding options (including incentive stock options, nonqualified stock options, options granted under the Plan or any other stock options). Further, for purposes of determining whether an Employee is a Five Percent Owner, the rules of section 424 of the Code (relating to attribution of stock ownership) shall apply. Accordingly, for purposes of determining whether an Employee is a Five Percent Owner, (i) the Employee is considered as owning the stock owned, directly or indirectly, by or for the Employee’s brothers or sisters (whether by the whole or half blood), spouse, ancestors and lineal descendants and (ii) stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust is considered as being owned proportionately by or for its shareholders, partners, or beneficiaries.  The determination of the percentage of the total combined voting power of all classes of stock of the Company or any Related Corporation that is owned by an individual is made by comparing the voting power or value of the shares owned (or treated as owned) by the individual to the aggregate voting power of all shares actually issued and outstanding immediately after the grant of the Option to the individual.  The aggregate voting power or value of all shares actually issued and outstanding immediately after the grant of the Option does not include the voting power or value of treasury shares or shares authorized for issue under outstanding options held by the individual or any other person.
 
     2.16     “Grant Date” means the first day of each Offering Period, which is the day all eligible Employees are granted an Option under the Plan.
 
     2.17     “Highly Compensated Employee” has the meaning specified in section 414(q) of the Code.
 
     2.18     “Offering” means a given offering of Options under a Plan.
 
     2.19     “Offering Period” means, with respect to a given Offering, the period beginning on the Grant Date and ending on the Exercise Date.  The Offering Periods shall begin and end at such times as are specified by the Administrative Committee. Unless and until the Administrative Committee specifies different Offering Periods in writing, there shall be two Offering Periods during a calendar year, the first of which  commences on January 1 and ends on June 30 and the second on which begins on July 1 and ends on December 31.  In no event shall an Offering Period exceed 27 months.
 
     2.20     “Option” means an option granted under the Plan to purchase shares of Stock at the Option Price on the Exercise Date.
 
 
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     2.21     “Option Price” means the price per share of Stock to be paid by each Participant upon exercise of an Option, which, subject to the following sentence, shall be 85 percent of the lesser of (a) the Fair Market Value of a share of Stock on the Grant Date or (b) the Fair Market Value of a share of Stock on the Exercise Date. Prior to the commencement of an Offering Period, the Board, the Compensation & Management Development Committee or the Administrative Committee may, in lieu of the Option Price specified in the preceding sentence, establish in writing an Option Price for an Offering that is greater than the amount specified in the preceding sentence. The Option Price may be stated as either a percentage or as a dollar amount. The Option Price shall be subject to adjustment under Section 4.7.
 
     2.22     “Parent Corporation” means any Corporation (other than the Employer Corporation) in an unbroken chain of Corporations ending with the Employer Corporation if, at the time of the granting of the Option, each of the Corporations other than the Employer Corporation owns stock possessing 50 percent or more of the total combined voting power of all classes of stock in one of the other Corporations in such chain.
 
     2.23     “Participant” means a person who is eligible to be granted an Option under the Plan for the applicable Offering.
 
     2.24     “Participating Corporation” means the Company and/or any of its Related Corporations that is selected for participation in the applicable Offering pursuant to Article IX.
 
     2.25     “Plan” means the Newfield Exploration Company 2010 Employee Stock Purchase Plan, as set out in this document and as it may be amended from time to time.
 
     2.26     “Qualified Employee Stock Purchase Plan” means a stock purchase plan to the extent that section 423 of the Code applies to the plan.
 
     2.27     “Related Corporation” means a Corporation that is either a Parent Corporation or a Subsidiary Corporation with respect to the Company on the Grant Date of an Option.
 
     2.28     “Stock” means the common stock of the Company, $.01 par value per share, or, in the event that the outstanding shares of common stock are later changed into or exchanged for a different class of shares or securities of the Company or another corporation, that other share or security.  Shares of Stock, when issued, may be represented by a certificate or by book or electronic entry.
 
     2.29     “Subsidiary Corporation” means any Corporation (other than the Employer Corporation) in an unbroken chain of Corporations beginning with the Employer Corporation if, at the  time of the granting of the Option, each of the Corporations other than the last Corporation in the unbroken chain owns stock possessing 50 percent or more of the total combined voting power of all classes of stock in one of the other Corporations in the chain.
 
     2.30     “Trading Day” means a day on which the principal securities exchange on which the shares of Stock are listed is open for trading.
 
ARTICLE III
 
ELIGIBILITY
 
     3.1     General Requirements.   Subject to Section 3.3, each Employee of each Participating Corporation who is not excluded from participation pursuant to Section 3.2 is eligible to participate in a given Offering if the individual is in the employ of a Participating Corporation on the Grant Date.  For purposes of this Section 3.1, the existence of the employment relationship between an individual and a Participating Corporation will be determined under Department of Treasury Regulation section 1.421-1(h). Participation in the Plan by any Employee is voluntary.    
 
     3.2     Exclusions From Participation.   Subject to Section 3.3, under each Offering Options will be granted to all Employees of all Participating Corporations, except that one or more of the following categories of Employees may be excluded from coverage under an Offering:
   
 
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     (a)     Persons Employed Less Than Two Years. Employees who have been employed less than two years (or a lesser period of time) as of the Grant Date may be excluded from an Offering provided that the exclusion is applied in an identical manner to all Employees of every Participating Corporation whose Employees are granted Options under the Offering.
   
     (b)     Persons Customarily Employed Less Than 20 Hours Per Week. Employees whose customary employment is 20 hours or less per week (or a lesser number of hours per week as may be specified in writing by the Administrative Committee) as of the Grant Date may be excluded from an Offering provided that the exclusion is applied in an identical manner to all Employees of every Participating Corporation whose Employees are granted Options under the Offering.
 
     (c)     Persons Customarily Employed for Not More Than Five Months During a Calendar Year. Employees whose customary employment is for not more than five months in any calendar year as of the Grant Date (or a lesser number of months as may be specified in writing by the Administrative Committee) may be excluded from an Offering, provided that the exclusion is applied in an identical manner to all Employees of every Participating Corporation whose Employees are granted Options under the Offering.
 
     (d)     P ersons Who Are Highly Compensated Employees.   Employees who are Highly Compensated Employees as of the Grant Date may be excluded from an Offering. Alternatively, Employees who are Highly Compensated Employees with compensation above a certain level as of the Grant Date may be excluded from an Offering.  Alternatively, Employees who are both Highly Compensated Employees and officers or subject to the disclosure requirements of section 16(a) of the Securities Exchange Act of 1934 as of the Grant Date may be excluded from an Offering. Any exclusion relating to Highly Compensated Employees must be applied in an identical manner to all Highly Compensated Employees of all Participating Corporations.
   
     (e)     Certain Residents of Foreign Jurisdictions. Employees who are residents of a foreign jurisdiction (without regard to whether they are also citizens of the United States or resident aliens within the meaning of section 7701(b)(1)(A) of the Code) may be excluded from an Offering if (1) the grant of an Option under the Offering to a citizen or resident of the foreign jurisdiction is prohibited under the laws of such jurisdiction or (2) compliance with the laws of the foreign jurisdiction would cause the Offering to violate the requirements of section 423 of the Code.    
 
     (f)     Default Exclusions From Participation.   Unless the Administrative Committee specifies in writing different exclusions are applicable with respect to a given Offering, the following persons shall be excluded from participation in an Offering: (1) Employees whose customary employment is 20 hours or less per week as of the Grant Date, (2) Employees whose customary employment is for not more than five months in any calendar year as of the Grant Date, and (3) Employees who are residents of a foreign jurisdiction (without regard to whether they are also citizens of the United States or resident aliens within the meaning of section 7701(b)(1)(A) of the Code) if (a) the grant of an Option under the Offering to a citizen or resident of the foreign jurisdiction is prohibited under the laws of such jurisdiction or (b) compliance with the laws of the foreign jurisdiction would cause the Offering to violate the requirements of section 423 of the Code.
 
     (g)     Use of Exclusions Other Than Default Exclusions From Participation.   If the Administrative Committee determines to apply exclusions from participation with respect to a given Offering that are different than the default exclusions specified in paragraph (f) of this Section 3.2, such exclusions shall be specified in writing. Any such exclusions from participation shall be consistent with the provisions of this Section 3.2.
 
     3.3     Limitations Upon Participation by Certain Stockholders.   No Employee shall be granted an Option to the extent that the Option would cause the Employee to be a Five Percent Owner immediately after the grant. Accordingly, an Employee who is a Five Percent Owner immediately prior to the Date of Grant for an Offering shall not be granted an Option for such Offering.  An Employee who would become a Five Percent Owner immediately after the grant of an Option only as a result of the grant of the Option shall be granted an Option to purchase no more than the number of whole shares of Stock as would not cause him to become a Five Percent Owner.
 
 
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ARTICLE IV

OPTIONS
   
     4.1     Terms of an Offering.   The terms of an Offering shall be established by the Administrative Committee.  The terms shall be set forth in writing and communicated to eligible Employees prior to the Grant Date for the Offering. The terms of an Offering shall include (1) a designation of the Participating Corporations, (2) the identification of any exclusions from participation applicable to the Offering (which exclusions must be permitted under Section 3.2), (3) the Offering Period, and (4) the Option Price. Offerings may be consecutive and overlapping, and the terms of each Offering need not be identical provided that the terms of the Plan and the Offering together satisfy the requirements of this Section 4.1 and Department of Treasury Regulations issued under Section 423 of the Code.
 
     4.2     Grant of Option .  Effective as of the Grant Date of each Offering, the Company shall grant an Option to each Participant which shall be exercisable on the Exercise Date through funds accumulated by the Participant through payroll deductions made during the Offering Period.  Each Option grant is subject to the availability of a sufficient number of shares of Common Stock reserved for purchase under the Plan.  In the event there is an insufficient number of shares reserved for purchase under the Plan, the number of shares purchased shall be adjusted as provided in Section 4.8.
 
     4.3     Maximum Number of Shares Subject to Option. An Option granted to an Employee for any Offering shall be for that number of whole shares of Stock equal to the least of the number of whole shares of Stock that may be purchased during the Offering Period (1) at the Option Price with the amount credited to the Participant’s Account on the Exercise Date, (2) under limitations established by the Administrative Committee or the Compensation & Management Development Committee pursuant to Section 4.4, (3) under the limitation set forth in Section 4.5 or (4) without causing the Employee to become a Five Percent Owner.  The number of shares of Stock that may be purchased under an Option shall be subject to adjustment under Sections 4.7 and 4.8.
 
     4.4     Formula or Specific Share Limitation Established by the Company. The Administrative Committee shall establish and announce to Participants prior to an Offering a maximum number of shares of Stock that may be purchased by a Participant during the Offering Period.  The Administrative Committee or the Compensation & Management Development Committee may specify that the maximum amount of Stock that a Participant may purchase under an Offering is determined on the basis of a uniform relationship to the total compensation or the basic or regular rate of compensation, of all Employees. Notwithstanding any other provision of the Plan, unless the Administrative Committee, with the advance approval of the Compensation & Management Development Committee, determines otherwise with respect to an Offering the maximum number of shares of Common Stock that that a Participant shall be permitted to purchase during an Offering Period is 500 shares.
 
     4.5     Annual $25,000 Limitation. No Employee will be permitted to purchase shares of Stock under all Qualified Employee Stock Purchase Plans of the Employer Corporation and its Related Corporations at a rate which exceeds $25,000 in Fair Market Value of the shares of Stock (determined at the time the Option is granted) for each calendar year in which any option granted to the Employee is outstanding at any time. This limitation shall be applied taking into account the rules set forth in Department of Treasury Regulation section 1.423-2(i) (or a successor regulation). Accordingly, in applying the limitation set forth in this Section 4.5, (1) the right to purchase stock under an option accrues when the option (or any portion thereof) first becomes exercisable during the calendar year, (2) the right to purchase stock under an option accrues at the rate provided in the option, but in no case may such rate exceed $25,000 of fair market value of such stock (determined at the time such option is granted) for any one calendar year and (3) a right to purchase stock that has accrued under one option granted pursuant to the plan may not be carried over to any other option.
 
     4.6     Equal Rights and Privileges.   All Employees who are granted Options under an Offering must have equal rights and privileges within the meaning of section 423 of the Code and Department of Treasury Regulation section 1.423-2(f).  An Offering will not fail to satisfy the requirements of this Section 4.6 if, in order to comply with the laws of a foreign jurisdiction, the terms of an Option granted under the Offering to citizens or residents of such foreign jurisdiction (without regard to whether they are also citizens of the United States or resident aliens within the meaning of section 7701(b)(1)(A) of the Code) are less favorable than the terms of Options granted under the Offering to Employees who are resident in the United States.

 
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     4.7     A djustments of Options.   In the event of any stock dividend, split-up, recapitalization, merger, consolidation, combination or exchange of shares, or the like, as a result of which shares shall be issued in respect of the outstanding shares of Stock, or the shares of Stock shall be changed into the same or a different number of the same or another class of stock, the total number of shares of Stock authorized to be committed to the Plan, the number of shares of Stock subject to each outstanding Option, the Option Price applicable to each Option, and/or the consideration to be received upon exercise of each Option shall be appropriately adjusted by the Administrative Committee or the Compensation & Management Development Committee.  In addition, the Compensation & Management Development Committee shall, in its sole discretion, have authority to provide for (a) the acceleration of the Exercise Date of outstanding Options or (b) the conversion of outstanding Options into cash or other property to be received in certain of the transactions specified in this paragraph above upon the completion of the transaction.
 
     4.8     Insufficient Number of Shares.   If the number of shares of Common Stock reserved for purchase for any Offering Period is insufficient to cover the number of shares which Participants elect to purchase during such Offering Period, then the number of shares of Common Stock which each Participant has a right to purchase on the Exercise Date shall be reduced to the number of shares of Common Stock which the Administrative Committee shall determine by multiplying the number of shares of Common Stock reserved under the Plan for such Offering Period by a fraction, the numerator of which shall be the number of shares of Common Stock which the Participant elected to purchase during the Offering Period and the denominator of which shall be the total number of shares of Common Stock which all Participants elected to purchase during such Offering Period.

ARTICLE V

PAYROLL DEDUCTIONS
 
     5.1     Authorization of Payroll Deductions. For an Employee to participate during a given Offering Period, he must elect to participate in the Offering by authorizing deductions from his Base Compensation prior to the beginning of the Offering Period in accordance with procedures established by the Administrative Committee or the Compensation & Management Development Committee.  Unless the Participant changes the rate of the Participant’s payroll deductions, the Participant’s payroll deductions shall continue through the last pay date prior to the Exercise Date.  A Participant may not make additional payments to the Participant’s Account. An Employee who does not authorize payroll deductions from his Base Compensation with respect to a given Offering shall be deemed to have elected to not participate in the Offering.
 
     5.2     Right to Stop Payroll Deductions.   A Participant shall have the right to discontinue the Participant’s payroll deduction authorization in accordance with procedures established by the Administrative Committee or the Compensation & Management Development Committee.
 
     5.3     Accounting for Funds.   As of each payroll deduction period, the Participating Corporation shall cause to be credited to the Participant’s Account in a ledger established for that purpose the funds withheld from and attributable to the Participant’s cash compensation for that period.  No interest shall be credited to the Participant’s Account at any time.  The obligation of the Participating Corporation to the Participant for this Account shall be a general corporate obligation and shall not be funded through a trust nor secured by any assets which would cause the Participant to be other than a general creditor of the Participating Corporation.
 
     5.4     Participating Corporation’s Use of Funds.   All payroll deductions received or held by a Participating Corporation may be used by the Participating Corporation for any corporate purpose, and the Participating Corporation shall not be obligated to segregate such payroll deductions.
 
     5.5     Return of Funds.   Except as specified herein, as soon as administratively practicable after the expiration of an Offering Period, payroll deductions that are not used to purchase Stock during such Offering Period will be refunded to the Participants without interest.  In accordance with procedures established by the Administrative Committee or the Compensation & Management Development Committee, a Participating Corporation may be permitted to apply a Participant’s unused payroll deductions to purchase additional shares of Stock during a subsequent Offering Period, but only if the amount so applied does not exceed the value of a fractional share that the Participant could not purchase during the preceding Offering Period (because purchases of fractional shares are not permitted under the Plan).
 

 
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ARTICLE VI

IN SERVICE WITHDRAWAL, TERMINATION OR DEATH
 
     6.1     In Service Withdrawal.   A Participant may, at any time on or before 15 days prior to the Exercise Date, or such other date as shall be selected by the Administrative Committee or the Compensation & Management Development Committee from time to time, elect to withdraw all of the funds then credited to the Participant’s Account by giving notice in accordance with the rules established by the Administrative Committee or the Compensation & Management Development Committee.  The amount elected to be withdrawn by the Participant shall be paid to the Participant as soon as administratively feasible.  Any election by a Participant to withdraw the Participant’s cash balance under the Plan terminates the Participant’s right to exercise the Participant’s Option on the Exercise Date and the Participant’s entitlement to elect any further payroll deductions for the then-current Offering Period.  If the Participant wishes to participate in any future Offering Period, he must file a new payroll deduction election within the time frame required by the Administrative Committee or the Compensation & Management Development Committee for participation for that Offering Period.
 
     6.2     Termination of Employment Prior to the Exercise Date .   If a Participant’s employment with the Company and all Related Corporations is terminated for any reason prior to the Exercise Date, the Option granted to the Participant for that Offering Period shall lapse.  If a Participant is on an Authorized Leave of Absence, for purposes of the Plan, the Participant’s employment with the Company and all Related Corporations shall be deemed to be terminated on the later of the 91 st day of such leave or the date through which the Participant’s employment is guaranteed either by statute or contract.  The Participant’s funds then credited to the Participant’s Account shall be returned to the Participant as soon as administratively feasible.
 
     6.3     Death.   If a Participant’s employment with the Company and all Related Corporations is terminated due to death, the Participant’s Beneficiary shall be refunded all of the funds then credited to the Participant’s Account as of the date of the Participant’s death.
 

ARTICLE VII

EXERCISE OF OPTION
 
     7.1     Purchase of Shares of Stock.   Subject to the provisions of the Plan, on the Exercise Date of the applicable Offering Period for an Offering, each Participant’s Account shall be used to purchase the maximum number of whole shares of Stock that can be purchased at the Option Price for that Offering.  If in any Offering the total number of shares of Stock to be purchased by all Participants exceeds the number of shares of Stock committed to the Plan, then each Participant shall be entitled to purchase only the Participant’s pro rata portion of the shares of Stock remaining available under the Plan based on the balances in each Participant’s Account as of the Exercise Date.  After the purchase of all shares of Stock available on the Exercise Date, all Options granted for the Offering to the extent not used are terminated because no Option shall remain exercisable after the Exercise Date.
 
     7.2     Accounting for Shares of Stock.   After the Exercise Date of each Offering, a report shall be given to each Participant stating the amount of the Participant’s Account, the number of shares of Stock purchased and the Option Price.
 
     7.3     Issuance of Shares of Stock.    The Administrative Committee may determine in its discretion the manner of delivery of the shares of Stock purchased under the Plan, which may be by electronic account entry into new or existing accounts, delivery of shares of Stock certificates or any other means as the Administrative Committee, in its discretion, deems appropriate.  The Administrative Committee may, in its discretion, hold the shares of Stock certificate for any shares of Stock or cause it to be legended in order to comply with the securities laws of the applicable jurisdiction, or should the shares of Stock be represented by book or electronic account entry rather than a certificate, the Administrative Committee may take such steps to restrict transfer of the shares of Stock as the Administrative Committee considers necessary or advisable to comply with applicable law.
 
 
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ARTICLE VIII

ADMINISTRATION
 
     8.1     Powers.   The Administrative Committee has the responsibility for the general administration of the Plan, and has all powers necessary to accomplish that purpose, including but not limited to the following rights, powers, and authorities:
 
(a)                      to make rules for administering the Plan so long as they are not inconsistent with the terms of the Plan;
 
(b)                      to construe all provisions of the Plan;
 
(c)                      to correct any defect, supply any omission, or reconcile any inconsistency which may appear in the Plan;
 
(d)                      to select, employ, and compensate at any time any consultants, accountants, attorneys, and other agents the Administrative Committee believes necessary or advisable for the proper administration of the Plan;
 
(e)                      to determine all questions relating to eligibility, Fair Market Value, Option Price and all other matters relating to benefits or Participants’ entitlement to benefits;
 
(f)                      to determine all controversies relating to the administration of the Plan, including but not limited to any differences of opinion arising between a Participating Corporation and a Participant, and any questions it believes advisable for the proper administration of the Plan; and
 
(g)                      to delegate any clerical or recordation duties of the Administrative Committee as the Administrative Committee believes is advisable to properly administer the Plan.
 
     8.2     Quorum and Majority Action.   A majority of the Administrative Committee constitutes a quorum for the transaction of business.  The vote of a majority of the members present at any meeting shall decide any question brought before that meeting.  In addition, the Administrative Committee may decide any question by a vote, taken without a meeting, of a majority of its members via telephone, computer, fax or any other media of communication.
 
     8.3     S tandard of Judicial Review of Committee Actions.   The Administrative Committee has full and absolute discretion in the exercise of each and every aspect of its authority under the Plan.  Notwithstanding anything to the contrary, any action taken, or ruling or decision made by the Administrative Committee in the exercise of any of its powers and authorities under the Plan shall be final and conclusive as to all parties other than the Company, including without limitation all Participants and their beneficiaries, regardless of whether the Administrative Committee or one or more of its members may have an actual or potential conflict of interest with respect to the subject matter of the action, ruling, or decision.  No final action, ruling, or decision of the Administrative Committee shall be subject to de novo review in any judicial proceeding; and no final action, ruling, or decision of the Administrative Committee may be set aside unless it is held to have been arbitrary and capricious by a final judgment of a court having jurisdiction with respect to the issue.

ARTICLE IX

PARTICIPATION IN PLAN BY OTHER RELATED CORPORATIONS
 
     9.1     Participation Procedure.   The Company, acting through the Compensation & Management Development Committee or the Administrative Committee, shall designate the Related Corporations of the Company that may participate in a given Offering. A Related Corporation that is selected to participate in an Offering shall provide the Company all information required by the Company in order to administer the Plan.
 
 
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     9.2     No Joint Venture Implied.   Neither the participation in the Plan or an Offering by a Related Corporation nor any act performed by it in relation to the Plan shall create a joint venture or partnership relation between it and the Company or any other Related Corporation.
 

ARTICLE X

TERMINATION AND AMENDMENT OF THE PLAN
 
     10.1      T ermination.   The Company may, by action of the Board or the Compensation & Management Development Committee, terminate the Plan at any time and for any reason.  The Plan shall automatically terminate upon the purchase by Participants of all shares of Stock committed to the Plan, unless the number of shares of Stock committed to the Plan is increased by the Board and approved by the shareholders of the Company.  Upon termination of the Plan, as soon as administratively feasible there shall be refunded to each Participant the remaining funds in the Participant’s Account.  The termination of the Plan shall not affect the current Options already outstanding under the Plan to the extent there are shares of Stock committed, unless the Participants agree otherwise.
 
     10.2     Amendment.   The Board or the Compensation & Management Development Committee has the right to modify, alter or amend the Plan at any time and from time to time to any extent that it deems advisable, including, without limiting the generality of the foregoing, any amendment to the Plan deemed necessary to ensure compliance with section 423 of the Code.  The Board or the Compensation & Management Development Committee may suspend the operation of the Plan for any period as it may deem advisable.  However, no amendment or suspension shall operate to reduce any amounts previously allocated to a Participant’s Account, reduce a Participant’s rights with respect to shares of Stock previously purchased and held on the Participant’s behalf under the Plan or adversely affect the current Option a Participant already has outstanding under the Plan without the Participant’s agreement.  Any amendment changing the aggregate number of shares of Stock to be committed to the Plan and any other change for which stockholder approval is required under regulations issued by the Department of Treasury must be approved by the stockholders of the Company in order to be effective.

ARTICLE XI

MISCELLANEOUS
 
     11.1     Plan Not An Employment Contract.   The adoption and maintenance of the Plan is not a contract between any Participating Corporation and its Employees which gives any Employee the right to be retained in its employment.  Likewise, it is not intended to interfere with the rights of any Participating Corporation to discharge any Employee at any time or to interfere with the Employee’s right to terminate the Employee’s employment at any time.
   
     11.2     Options Are Not Transferable.   No Option granted a Participant under the Plan is transferable by the Participant other than by will or the laws of descent and distribution, and must be exercisable, during the Participant’s lifetime, only by the Participant.  In the event any Participant attempts to violate the terms of this Section, any Option held by the Participant shall be terminated by the Company and, upon return to the Participant of the remaining funds in the Participant’s Account, all of the Participant’s rights under the Plan will terminate.
 
     11.3     Voting of Shares of Stock.   Shares of Stock held under the Plan for the account of each Participant shall be voted by the holder of record of those shares of Stock in accordance with the Participant’s instructions.
 
     11.4     No Rights of Shareholder.   No eligible Employee or Participant shall by reason of participation in the Plan have any rights of a shareholder of the Company until he acquires shares of Stock as provided in the Plan.
 
     11.5     Governmental Regulations.   The obligation to sell or deliver the shares of Stock under the Plan is subject to the approval of all governmental authorities required in connection with the authorization, purchase, issuance or sale of the shares of Stock.

 
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     11.6     Notices.   All notices and other communication in connection with the Plan shall be in the form specified by the Administrative Committee and shall be deemed to have been duly given when sent to the Participant at the Participant’s last known address or to the Participant’s designated personal representative or beneficiary, or to the Participating Corporation or its designated representative, as the case may be.
 
     11.7     Indemnification of the Administrative Committee, the Compensation & Management Development Committee and the Board.   In addition to all other rights of indemnification as they may have as directors or as members of the Administrative Committee or the Compensation & Management Development Committee, the members of the Administrative Committee and the Compensation & Management Development Committee shall be indemnified by the Company against the reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Option granted under the Plan, and against all amounts paid in settlement (provided the settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any action, suit or proceeding, except in relation to matters as to which it is adjudged in the action, suit or proceeding, that the Administrative Committee or Compensation & Management Development Committee member is liable for gross negligence or willful misconduct in the performance of his duties.
 
     11.8     Tax Withholding.   At the time a Participant’s Option is granted or exercised or at the time a Participant disposes of some or all of the shares of Stock purchased under the Plan, the Participant must make adequate provision for the Participating Corporation’s federal, state, foreign or other tax withholding obligations, if any, which arise upon the grant or exercise of the Option or the disposition of the shares of Stock.  At any time, the Participating Corporation may, but shall not be obligated to, withhold from the Participant’s compensation the amount necessary for the Participating Corporation to meet applicable withholding obligations.
 
     11.9     Gender and Number.   If the context requires it, words of one gender when used in the Plan shall include the other genders, and words used in the singular or plural shall include the other.
 
     11.10     Data Privacy.   By participating in the Plan, each Participant agrees to the collection, processing, use and transfer of personal information by the Participating Corporation that employs the Participant, the Company, the Administrative Committee and the Compensation & Management Development Committee in order to administer the Plan.
 
     11.11     Notice of Disposition.   By becoming a Participant in the Plan, each Participant agrees to promptly give the Administrative Committee or its delegee notice of any shares of Common Stock disposed of by the Participant. The notice shall include the number of shares of Common Stock disposed of, the Exercise Date and the Date of Grant for the Common Stock.
   
     11.12     D ispositions in Compliance with Securities Laws .  By becoming a Participant in the Plan, each Participant agrees that any dispositions of shares of Common Stock by such Participant shall be in compliance with the provisions of federal, state and foreign securities laws, including the provisions of Section 16(b) of the Exchange Act.
   
     11.13     Beneficiary(ies) .  At the time of the Participant’s or former Participant’s death, (a) any cash in the Plan or (b) any cash and shares of Common Stock in the Account shall be distributed to such Participant’s or former Participant’s (1) executor or administrator or (2) his heirs at law, if there is no administration of such Participant’s or former Participant’s estate.  The Participant’s or former Participant’s executor or administrator or heirs at law, if there is no administration of such Participant’s or former Participant’s estate, shall be such Participant’s or former Participant’s Beneficiaries.  Before any distribution is made, the Administrative Committee may require appropriate written documentation of (a) the appointment of the personal representative of the Participant’s estate or (b) heirship.
 
     11.14     Severability .  Each provision of this Agreement may be severed.  If any provision is determined to be invalid or unenforceable, that determination shall not affect the validity or enforceability of any other provision.

 
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     11.15     Binding Effect .  This Agreement shall be binding upon any successor of the Company.
 
     11.16     Limitation on Liability .  Under no circumstances shall the Company incur liability for any indirect, incidental, consequential or special damages (including lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the form of the act in which such a claim may be brought, with respect to this Plan or the Company’s role as Plan sponsor.
 
     11.17     Arbitration .  Any controversy arising out of or relating to the Plan, including without limitation, any and all disputes, claims (whether in tort, contract, statutory or otherwise) or disagreements concerning the interpretation or application of the provisions of the Plan, Employer Corporation’s employment of Participant and the termination of that employment, shall be resolved by arbitration in accordance with the Employee Benefit Plan Claims Arbitration Rules of the American Arbitration Association (the “ AAA ”) then in effect.  Within ten (10) business days of the initiation of an arbitration hereunder, the Company and the Participant will each separately designate an arbitrator, and within twenty (20) business days of selection, the appointed arbitrators will appoint a neutral arbitrator from the AAA National Panel of Employee Benefit Plan Claims Arbitrators.  The arbitrators shall issue their written decision (including a statement of finding of facts) within thirty (30) days from the date of the close of the arbitration hearing.  The decision of the arbitrators selected hereunder will be final and binding on both parties.  This arbitration provision is expressly made pursuant to and shall be governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-16 (or replacement or successor statute).  Pursuant to Section 9 of the Federal Arbitration Act, the Company and any Participant agrees that any judgment of the United States District Court for the District in which the headquarters of the Company is located at the time of initiation of an arbitration hereunder shall be entered upon the award made pursuant to the arbitration.  Nothing in this Section 11.17 shall be construed, in any way, to limit the scope and effect of Article 8.  In any arbitration proceeding full effect shall be given to the rights, powers, and authorities of the Administrative Committee under Article 8.
 
     11.18     Governing Law .  All provisions of the Plan shall be construed in accordance with the laws of State of Texas, except to the extent preempted by federal law and except to the extent that the conflicts of laws provisions of the State of Texas would require the application of the relevant law of another jurisdiction, in which event the relevant law of the State of Texas will nonetheless apply, with venue for litigation being in Houston, Texas.
 
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