Exhibit 10.12.1

KEY EMPLOYEE DEFERRED COMPENSATION PLAN OF

CONOCOPHILLIPS

TITLE I

(Effective for benefits earned and vested prior to

January 1, 2005)

The Key Employee Deferred Compensation Plan of ConocoPhillips is hereby amended
and restated effective as of the “Effective Time” defined in the Employee
Matters Agreement by and between ConocoPhillips and Phillips 66 (the “Effective
Time”) and conditioned on the occurrence of the “Distribution” defined in such
Employee Matters Agreement (the “Distribution”).

PURPOSE

The purpose of the Key Employee Deferred Compensation Plan of ConocoPhillips
(the “Plan”) is to attract and retain key employees by providing them with an
opportunity to defer receipt of cash amounts which otherwise would be paid to
them under various compensation programs or plans by the Company. This Plan is
the continuation of the Key Employee Deferred Compensation Plan of Phillips
Petroleum Company, of the Conoco Inc. Global Variable Compensation Deferral
Program, and of the portions of the Conoco Inc. Salary Deferral & Savings
Restoration Plan consisting of Salary Deferral Obligations and Retiree
Obligations, and all deferrals made under any of those plans, programs, or
arrangements shall continue under their terms and the terms of this Plan. Title
I of this Plan is effective with regard to benefits earned and vested prior to
January 1, 2005, while Title II of this Plan is effective with regard to
benefits earned or vested after December 31, 2004. Other than earnings, gains,
and losses, no further benefits shall accrue under Title I of this Plan after
December 31, 2004.

This Title I of the Plan is intended (1) to be a “grandfathered” plan pursuant
to Code section 409A, as enacted as part of the American Jobs Creation Act of
2004, and official guidance issued thereunder, and (2) to be “a plan which is
unfunded and is maintained by an employer primarily

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for the purpose of providing deferred compensation for a select group of
management or highly compensated employees” within the meaning of sections
201(2), 301(a)(3), and 401(a)(1) of ERISA. Notwithstanding any other provision
of this Plan, this Plan shall be interpreted, operated, and administered in a
manner consistent with these intentions.

SECTION 1. Definitions.

 

  (a) “Affiliated Group” shall mean the Company plus other subsidiaries and
affiliates in which it owns, directly or through a subsidiary or affiliate, a 5%
or more equity interest.

 

  (b)

“Award” shall mean the United States cash dollar amount (i) allotted to an
Employee under the terms of an Incentive Compensation Plan or a Long Term
Incentive Plan, or (ii) required to be credited to an Employee’s Deferred
Compensation Account pursuant to an Incentive Compensation Plan, the Long Term
Incentive Compensation Plan, the Strategic Incentive Plan, a Long Term Incentive
Plan, or any similar plans, or any administrative procedure adopted pursuant
thereto, or (iii) credited as a result of a Participant’s deferral of the
receipt of the value of the Stock which would otherwise be delivered to an
Employee in the event restrictions lapse on Restricted Stock or Restricted Stock
Units or the settlement of Restricted Stock Units previously awarded or which
may be awarded to the Participant pursuant to an Incentive Compensation Plan,
the Long Term Incentive Compensation Plan, the Strategic Incentive Plan, a Long
Term Incentive Plan, an Omnibus Securities Plan, or any similar plans, or any
administrative procedure adopted pursuant thereto, or (iv) credited resulting
from a lump sum distribution from any of the Company’s non-qualified retirement
plans and/or plans which provide for a retirement supplement, or (v) resulting
from the forfeiture of Restricted Stock, required by Phillips Petroleum Company,
of key employees who became employees of GPM Gas Corporation, or (vi) credited
as a result of an Employee’s deferral of the receipt of the lump sum cash
payment from the Employee’s account in the Defined Contribution Makeup Plan, or
(vii) credited as a result of an Employee’s voluntary reduction of Salary, or
(viii)

 

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  credited as a result of an Employee’s deferral of a Performance Based
Incentive Award, or (ix) any other amount determined by the Committee to be an
Award under the Plan. Sections 2 and 3 of this Plan shall not apply with respect
to Awards included under (ii), (v), and (ix) above and a participant receiving
such an Award shall be deemed, with respect thereto, to have elected a
Section 5(b)(i) payment option - 10 annual installments commencing about one
year after retirement at age 55 or above, but subject to revision under the
terms of this Plan.

 

  (c) “Board of Directors” shall mean the board of directors of the Company.

 

  (d) “Chief Executive Officer” or “CEO” shall mean the Chief Executive Officer
of the Company.

 

  (e) “Committee” shall mean the Human Resources Compensation Committee of the
Board of Directors of ConocoPhillips.

 

  (f) “Company” shall mean ConocoPhillips Company.

 

  (g) “Conoco Inc. Global Variable Compensation Deferral Program” shall mean the
Conoco Inc. Global Variable Compensation Deferral Program, prior to its merger
into this Plan on October 3, 2003.

 

  (h) “Conoco Inc. Salary Deferral & Savings Restoration Plan” shall mean the
Conoco Inc. Salary Deferral & Savings Restoration Plan, prior to its merger into
this Plan on October 3, 2003.

 

  (i) “Deferred Compensation Account” shall mean an account established and
maintained for each Participant in which is recorded the amounts of Awards
deferred by a Participant, the deemed gains, losses, and earnings accrued
thereon, and payments made therefrom all in accordance with the terms of the
Plan.

 

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  (j) “Defined Contribution Makeup Plan” shall mean the Defined Contribution
Makeup Plan of ConocoPhillips, or any similar plan or successor plans.

 

  (k) “Disability” shall mean the inability, in the opinion of the Company’s
Medical Director, of a Participant, because of an injury or sickness, to work at
a reasonable occupation that is available with the Company, a Participating
Subsidiary, or another subsidiary of the Company.

 

  (l) “Employee” shall mean any individual or Rehired Participant who satisfies
the conditions of Section 5(j) who is a salaried employee of the Company or of a
Participating Subsidiary who is eligible to receive an Award from an Incentive
Compensation Plan, has Restricted Stock and/or Restricted Stock Units, and is
classified as a ConocoPhillips salary grade 19 or above or any equivalent salary
grade at a Participating Subsidiary. Employee shall also include Participants
who are employed by a member of the Affiliated Group and former employees of a
member of the Affiliated Group who Retire or are Laid Off and are eligible to
receive a lump sum distribution from non-qualified retirement plans. Employee
shall also include any individual or Rehired Participant who was hired as a
salaried employee of ConocoPhillips Services Inc. on or after January 1, 2003,
and is classified as a ConocoPhillips salary grade 19 or above or any equivalent
salary grade at a Participating Subsidiary. Notwithstanding the foregoing, prior
to October 3, 2003, Employee shall not include anyone who is classified as a
Heritage Conoco Employee. On and after October 3, 2003, Employee shall include
anyone who is classified as a Heritage Conoco Employee.

 

  (m) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor statute.

 

  (n) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended
and in effect from time to time, or any successor statute.

 

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  (o) “Heritage Conoco Employee” shall mean an individual employed by Conoco
Inc., Conoco Pipe Line Company, or Louisiana Gas Systems Inc. prior to
January 1, 2003; provided, however, that an individual who has been terminated
from employment with a member of the Affiliated Group at any time and rehired by
a member of the Affiliated Group after January 1, 2003, shall not be considered
a Heritage Conoco Employee for purposes of this Plan.

 

  (p) “Incentive Compensation Plan” shall mean the ConocoPhillips Variable Cash
Incentive Program, the Incentive Compensation Plan of Phillips Petroleum
Company, or the Annual Incentive Compensation Plan of Phillips Petroleum
Company, the Special Incentive Plan for Former Tosco Executives, the Conoco Inc.
Global Variable Compensation Plan, or a similar plan of a Participating
Subsidiary, or any similar or successor plans, or all, as the context may
require.

 

  (q) “Layoff” or “Laid Off” shall mean an applicable termination of employment
by reason of layoff under the Phillips Layoff Plan or the Phillips Work Force
Stabilization Plan, an applicable Qualifying Event (without there being a
Disqualifying Event) under the Conoco Severance Pay Plan, or layoff or
redundancy under any other layoff or redundancy plan which the Company, any
Participating Subsidiary, or any other member of the Affiliated Group may adopt
from time to time. If all or any portion of the benefits under the layoff or
redundancy plan are contingent on the employee’s signing a general release of
liability, such termination shall not be considered as a Layoff for purposes of
this Plan unless the employee executes and does not revoke a general release of
liability, acceptable to the Company, under the terms of such layoff or
redundancy plan.

 

  (r) “Long-Term Incentive Compensation Plan” shall mean the Long-Term Incentive
Compensation Plan of Phillips Petroleum Company, which was terminated
December 31, 1985.

 

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  (s) “Long-Term Incentive Plan” shall mean the ConocoPhillips Performance Share
Program, the ConocoPhillips Restricted Stock Program, the Phillips Petroleum
Company Long-Term Incentive Plan, or a similar or successor plan of any of them,
established under an Omnibus Securities Plan.

 

  (t) “Newhire Employee” shall mean any Employee who is hired or rehired during
a calendar year.

 

  (u) “Omnibus Securities Plan” shall mean the Omnibus Securities Plan of
Phillips Petroleum Company, the 2002 Omnibus Securities Plan of Phillips
Petroleum Company, the 1998 Stock and Performance Incentive Plan of
ConocoPhillips, the 1998 Key Employee Stock Plan of ConocoPhillips, or a similar
or successor plan of any of them.

 

  (v) “Participant” shall mean a person for whom a Deferred Compensation Account
is maintained.

 

  (w) “Participating Subsidiary” shall mean a subsidiary of the Company, of
which the Company beneficially owns, directly or indirectly, more than 50% of
the aggregate voting power of all outstanding classes and series of stock, where
such subsidiary has adopted one or more plans making participants eligible for
participation in this Plan and one or more Employees of which are Potential
Participants.

 

  (x) “Plan Administrator” shall mean the Vice President, Human Resources of the
Company, or his or her successor.

 

  (y) “Potential Participant” shall mean a person who has received a notice
specified in Section 2 or in Section 5 (h).

 

  (z) “Rehired Participant” shall mean a Participant who, subsequent to
Retirement or Layoff, is rehired by the Company, or any subsidiary of the
Company, and whose employment status is classified as regular full-time or its
equivalent.

 

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  (aa) “Restricted Stock” and “Restricted Stock Units” shall mean respectively
shares of Stock and units each of which shall represent a hypothetical share of
Stock, which have certain restrictions attached to the ownership thereof or the
delivery of shares pursuant thereto.

 

  (bb) “Retiree Obligations” shall mean obligations to former employees who have
retired on or after the earliest retirement date available under the Retirement
Plan of Conoco and who are Participants in this Plan arising from deferrals made
as participants in the Conoco Inc. Salary Deferral & Savings Restoration Plan
prior to its merger into this Plan.

 

  (cc) “Retirement” or “Retire” or “Retiring” shall mean termination of
employment with the Company or any subsidiary of the Company on or after the
earliest early retirement date at age 55 or above as defined in the
ConocoPhillips Retirement Plan (or, with respect to a Heritage Conoco Employee,
the Retirement Plan of Conoco) or of the applicable retirement plan of a member
of the Affiliated Group.

 

  (dd) “Retirement Income Plan” shall mean the ConocoPhillips Retirement Plan
(or, with respect to a Heritage Conoco Employee, the Retirement Plan of Conoco)
or a similar retirement plan of the Participating Subsidiary pursuant to the
terms of which the Participant retires.

 

  (ee) “Salary Deferral Obligations” shall mean obligations to Employees who are
Participants in this Plan arising from salary deferrals made as participants in
the Conoco Inc. Salary Deferral & Savings Restoration Plan prior to its merger
into this Plan.

 

  (ff) “Settlement Date” shall mean the date on which all acts under an
Incentive Compensation Plan or the Long-Term Incentive Compensation Plan or
actions directed by the Committee, as the case may be, have been taken which are
necessary to make an Award payable to the Participant.

 

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  (gg) “Salary” shall mean the monthly equivalent rate of pay for an Employee
before adjustments for any before-tax voluntary reductions.

 

  (hh) “Stock” means shares of common stock of ConocoPhillips, par value $.01.

 

  (ii) “Strategic Incentive Plan” shall mean the Strategic Incentive Plan
portion of the 1986 Stock Plan of Phillips Petroleum Company, of the 1990 Stock
Plan of Phillips Petroleum Company, of the Phillips Petroleum Company Omnibus
Securities Plan, and of any successor plans of similar nature.

 

  (jj) “Trustee” shall mean the trustee of the grantor trust established for
this Plan by a trust agreement between the Company and the trustee, or any
successor trustee.

SECTION 2. Notification of Potential Participants.

 

  (a) Incentive Compensation Plan. Each year, during October, Employees who are
eligible to receive an Award in the immediately following calendar year under an
Incentive Compensation Plan will be notified and given the opportunity, in a
manner prescribed by the Plan Administrator, to indicate a preference concerning
deferral of all or part (in one percent increments) of such Award.

 

  (b) Restricted Stock and Restricted Stock Units Lapsing.

(i) Each year during October, Employees who are or will be 55 years of age or
older prior to the end of the following calendar year will be notified and given
the opportunity, in a manner prescribed by the Plan Administrator, to indicate a
preference to delay the lapsing of the restrictions on part (in one percent
increments) or all of the shares of Restricted Stock and/or Restricted Stock
Units previously awarded or which may be awarded to the Employee under an
Incentive

 

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Compensation Plan, the Long Term Incentive Compensation Plan, a Long-Term
Incentive Plan, the Strategic Incentive Plan, or an Omnibus Securities Plan in
the event the Compensation Committee takes action in the following calendar year
to lapse restrictions on Restricted Stock and/or Restricted Stock Units and/or
settle Restricted Stock Units.

(ii) Each year during October, Employees who have been granted a special
Restricted Stock Award and/or Restricted Stock Unit Award will be notified and
given the opportunity, in a manner prescribed by the Plan Administrator to
indicate a preference to delay the lapsing of the restrictions on part (in one
percent increments) or all of the shares of Restricted Stock and/or Restricted
Stock Units when the restrictions lapse on the Special Restricted Stock and/or
Restricted Stock Units or the Restricted Stock Units are settled based on the
terms of the Special Restricted Stock and/or Restricted Stock Unit Awards in the
following year.

(iii) Such indication of preference as outlined in (i) above may be made within
60 days of the amendment of this Plan providing for the notice; provided,
however, that such indication of preference must be made no later than June 6,
2003, for such Awards that would otherwise be lapsed or settled later in 2003.

 

  (c) Restricted Stock and Restricted Stock Unit Awards Deferral.

(i) Each year during October, Employees who are or will be 55 years of age or
older prior to the end of the calendar year will be notified and given the
opportunity, in a manner prescribed by the Plan Administrator, to indicate a
preference concerning the deferral of the receipt of the value of all or part
(in one percent increments) of the Stock which would otherwise be delivered to
the Employees in the event, during the following calendar year, the Compensation
Committee takes action to lapse restrictions on Restricted Stock and/or
Restricted Stock Units and/or settle Restricted Stock Units previously awarded
or which may be awarded to the Employees under an Incentive Compensation Plan,
the Long Term Incentive Compensation Plan, a Long Term Incentive Plan, the
Strategic Incentive Plan, or an Omnibus Securities Plan.

 

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(ii) Employees who have been granted a special Restricted Stock Award and/or
Restricted Stock Units Award may, in the year preceding the year in which the
restrictions are scheduled to lapse or the Restricted Stock Units are to be
settled, indicate a preference concerning the deferral of the value of all or
part (in one percent increments) of the stock which would otherwise be delivered
to the Employees in the next calendar year when the restrictions lapse on the
special Restricted Stock and /or Restricted Stock Units or the Restricted Stock
Units are settled based on the terms of the special Restricted Stock Awards
and/or Restricted Stock Units Awards.

(iii) Employees who are Laid Off during or after the year they reach age 50 may
no later than 30 days after being notified of Layoff, in the manner prescribed
by the Plan Administrator, indicate a preference concerning the deferral of the
receipt of the value of all or part (in one percent increments) of the Stock
which would be otherwise be delivered to the Employees in the event Restricted
Stock Units, which have been granted in exchange for Restricted Stock pursuant
to the Exchange offer initiated by the Company on December 17, 2001, are
settled.

(iv) Such indication of preference as outlined in (i) above may be made within
60 days of the amendment of this Plan providing for the notice; provided,
however, that such indication of preference must be made no later than June 6,
2003, for such Awards that would otherwise be lapsed or settled later in 2003.

 

  (d) Lump Sum Distribution from Non-Qualified Retirement Plans. With respect to
the lump sum distribution permitted from the Company’s non-qualified retirement
plans and/or plans which provide for a retirement supplement, Employees may
indicate, in a manner prescribed by the Plan Administrator, a preference
concerning deferral of all or part (in one percent increments) of such lump sum
distribution.

 

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  (e) Lump Sum from Defined Contribution Makeup Plan. Employees who will receive
a lump sum cash payment from their account under the Defined Contribution Makeup
Plan, may indicate, in a manner prescribed by the Plan Administrator, a
preference concerning deferral of all or part (in one percent increments) of
such payment.

 

  (f) Salary Reduction. Annually, Employees and Newhire Employees on the U.S.
dollar payroll may elect, in a manner prescribed by the Plan Administrator, a
voluntary reduction of Salary for each pay period of the following calendar
year, or for Newhire Employees the remainder of the calendar year in which they
are hired, in which case the Company will credit a like amount as an Award
hereunder, provided that the amount of such voluntary reduction shall not be
less than 1% nor more than 50% of the Employee’s Salary per pay period (and may
be further limited by the Plan Administrator such that the resulting salary that
is paid is sufficient to satisfy all benefit plan deductions, tax deductions,
elective deductions, and other deductions required to be withheld by the
Company).

 

  (g) Performance Based Incentive Award. Each year, during October, Employees
who are eligible to receive a Performance Based Incentive Award in the
immediately following calendar year will be notified and given the opportunity,
in a manner prescribed by the Plan Administrator, to indicate a preference for
the award to be paid as cash, deferred to their KEDCP account, or issued as
Restricted Stock or a combination of cash, deferred compensation and Restricted
Stock.

SECTION 3. Indication of Preference or Election to Defer Award.

 

  (a)

Incentive Compensation Plan. If a Potential Participant prefers to defer under
this Plan all or any part of the Award to which a notice received under
Section 2(a) pertains, the Potential Participant must indicate such preference,
in a manner prescribed by the Plan Administrator, (i) if the Potential
Participant is subject to Section 16 of the Exchange Act, to the Committee, or
(ii) if the Potential Participant is not subject to Section 16 of the Exchange
Act, to the CEO. The Potential

 

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  Participant’s preference must be received on or before October 31 of the year
in which said Section 2(a) notice was received. Such indication must state the
portion of the Award the Potential Participant desires to be deferred. If an
indication is not received by October 31, the Potential Participant will be
deemed to have elected to receive and not to defer any such Incentive
Compensation Plan award.

Such indication of preference, if accepted, becomes irrevocable on November 1 of
the year in which the indication is submitted to the Committee or CEO, except
that, in the event of any of the following:

 

  i) the Employee is demoted to a job classification/grade that is no longer
eligible to receive an Award from an Incentive Compensation Plan,

 

  ii) the Employee’s employment status is classified to a status other than
regular full-time or its equivalent, or

 

  iii) the Employee is receiving Unavoidable Absence Benefits (UAB) pay such
that the pay received is less than his/her pay had been prior to being on UAB,

the Employee can request, subject to approval by the Plan Administrator, that
his/her indication of preference to defer, whether approved or not, be revoked
for that Incentive Compensation Plan Award.

The Committee or CEO, as applicable, shall consider such indication of
preference as submitted and shall decide whether to accept or reject the
preference expressed.

 

  (b)

Restricted Stock and Restricted Stock Unit Awards Lapsing. If a Potential
Participant prefers to delay the lapsing of the restrictions on part or all of
the shares of Restricted Stock and/or Restricted Stock Units to which a notice
received under Section 2(b) pertains, the Potential Participant must indicate
such preference in a manner prescribed by the Plan Administrator, (i) if the
Potential Participant is subject to Section 16 of the Exchange Act, to the
Committee, or (ii) if the Potential Participant is not subject to Section 16 of
the Exchange Act, to the CEO. The Potential Participant’s preference must state
the percentage of the shares and/or units on which the lapsing is to be delayed.
If an indication is not received by October 31,

 

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  the Potential Participant will be deemed to have elected to have the
restrictions lapsed if the Compensation Committee takes action to lapse
restrictions or as specified under the terms of the Special Restricted Stock
and/or Restricted Stock Unit Awards. If the Potential Participant prefers to
delay the lapsing of the restrictions on part or all of the shares of Restricted
Stock or Restricted Stock Units awarded under an Incentive Compensation Plan,
the Long Term Incentive Compensation Plan, a Long Term Incentive Plan, or
Strategic Incentive Plan, those shares and/or units will be subject to another
indication of preference in the following year. If the Potential Participant
prefers to delay the lapsing of the restrictions on part or all of the shares of
Restricted Stock or Restricted Stock Units from Special Stock Awards, those
shares and/or units will remain restricted and the Employee will receive a
notice to indicate a preference for such shares when the Employee is or will be
55 years of age or older prior to the end of the calendar year as specified in
Section 2(b)(i).

 

  (c)

Restricted Stock or Restricted Stock Unit Deferral. If a Potential Participant
prefers to defer under this Plan the value of all or any part of the Restricted
Stock or Restricted Stock Units to which a notice received under Section 2(c)
pertains, the Potential Participant must indicate such preference, in a manner
prescribed by the Plan Administrator, (i) if the Potential Participant is
subject to Section 16 of the Exchange Act, to the Committee, or (ii) if the
Potential Participant is not subject to Section 16 of the Exchange Act, to the
CEO. The Potential Participant’s preference must be received on or before
October 31 of the year in which said Section 2(c) notice was received. Such
indication must state the portion of the value of the Restricted Stock or
Restricted Stock Units the Potential Participant desires to be deferred. If an
indication is not received by October 31, the Potential Participant will be
deemed to have elected to receive any shares or units for which the restrictions
are lapsed. Such indication of preference becomes irrevocable on November 1 of
the year in which the indication is submitted to the Committee or CEO. The
Committee or CEO, as applicable, shall consider such indication of preference as
submitted and shall decide whether to accept or reject the preference expressed.
A deferral of the value of the Restricted Stock or Restricted Stock Units will
be paid under the terms of

 

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  Section 5(b)(i) hereof - 10 annual installments commencing about one year
after Retirement at age 55 or above, but subject to revision under the terms of
this Plan. Such approved indication of preference shall also apply to any
Restricted Stock Units granted in exchange for shares of Restricted Stock
pursuant to the Exchange offer initiated by the Company on December 17, 2001.

 

  (d) Lump Sum Distribution from Non-Qualified Retirement Plans. If a Potential
Participant prefers to defer under this Plan all or part of the lump sum
distribution to which Section 2(d) pertains, the Potential Participant must
indicate such preference, in a manner prescribed by the Plan Administrator,
(i) if the Potential Participant is subject to Section 16 of the Exchange Act,
to the Committee or (ii) if the Potential Participant is not subject to
Section 16 of the Exchange Act, to the CEO. The Potential Participant’s
preference must be received in the period beginning 90 days prior to and ending
no less than 30 days prior to the date of commencement of retirement benefits
under such plans. Such indication must state the portion of the lump sum
distribution the Potential Participant desires to be deferred. The Committee or
CEO, as applicable, shall consider such indication of preference as submitted
and shall decide whether to accept or reject the preference expressed as soon as
practicable. Such indication of preference, if accepted, becomes irrevocable on
the date of such acceptance.

 

  (e)

Lump Sum from Defined Contribution Makeup Plan. If a Potential Participant
prefers to defer under this Plan all or part of the lump sum cash payment to
which Section 2(e) pertains, the Potential Participant must indicate such
preference, in a manner prescribed by the Plan Administrator, (i) if the
Potential Participant is subject to Section 16 of the Exchange Act, to the
Committee or (ii) if the Potential Participant is not subject to Section 16 of
the Exchange Act, to the CEO. The Potential Participant’s preference must be
received in the period beginning 365 days prior to and ending no less than 90
days prior to the Participant’s retirement date at age 55 or above except that
if a Potential Participant is notified of layoff during or after the year in
which the Potential Participant reaches age 50, the Potential Participant’s

 

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  preference must be received no later than 30 days after being notified of
layoff. Such indication must state the portion of the lump sum payment the
Potential Participant desires to be deferred. The Committee or CEO, as
applicable, shall consider such indication of preference as submitted and shall
decide whether to accept or reject the preference expressed as soon as
practicable. Such indication of preference, if accepted, becomes irrevocable on
the date of such acceptance. A deferral of the lump sum from the Defined
Contribution Makeup Plan will be paid under the terms of Section 5(b)(i) hereof
- 10 annual installments commencing about one year after Retirement at age 55 or
above, but subject to revision under the terms of the Plan.

 

  (f) Salary Reduction. If a Potential Participant elects to voluntarily reduce
Salary and receive an Award hereunder in lieu thereof, the Potential Participant
must make an election, in the manner prescribed by the Plan Administrator, which
must be received on or before October 31 prior to the beginning of the calendar
year of the elected deferral or for Newhire Employees as soon as practicable
within a 30-day period after their first day of employment or reemployment. Such
election must be in writing signed by the Potential Participant, and must state
the amount of the salary reduction the Potential Participant elects. Such
election becomes irrevocable on October 31 prior to the beginning of the
calendar year or for Newhire Employees after the 30-day period after their first
day of employment or reemployment, except that in the event of any of the
following:

 

  i) the Employee is demoted to a job classification/grade that is no longer
eligible to receive an Award from an Incentive Compensation Plan,

 

  ii) the Employee’s employment status is classified to a status other than
regular full-time or its equivalent, or

 

  iii) the Employee is receiving Unavoidable Absence Benefits (UAB) pay such
that the pay received is less than his/her pay had been prior to being on UAB,

the Employee can request, subject to approval by the Plan Benefits
Administrator, that his/her election to voluntarily reduce his/her salary be
revoked for the remainder of the calendar year.

 

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An Award in lieu of voluntarily reduced salary will be paid under the terms of
Section 5(b)(i) hereof - 10 annual installments commencing about one year after
Retirement at age 55 or above, but subject to revision under the terms of the
Plan.

 

  (g) Performance Based Incentive Award. The Potential Participant who is
eligible to receive a Performance Based Incentive Award in the immediately
following calendar year, must indicate a preference, in a manner prescribed by
the Plan Administrator, (i) if the Potential Participant is subject to
Section 16 of the Exchange Act, to the Committee, or (ii) if the Potential
Participant is not subject to Section 16 of the Exchange Act, to the CEO. The
Potential Participant’s preference must be received on or before October 31 of
the year in which said Section 2(g) notice was received. Such indication must
state the portion of the award the Potential Participant desires to be in cash,
the portion to be deferred and the portion to be in Restricted Stock. If an
indication is not received by October 31 the Potential Participant will be
deemed to have elected to receive the award as cash. Such indication of
preference becomes irrevocable on November 1 of the year in which the indication
is submitted to the Committee or CEO. The Committee or CEO, as applicable, shall
consider such indication of preference as submitted and shall decide whether to
accept or reject the preference expressed.

SECTION 4. Deferred Compensation Accounts.

 

  (a)

Credit for Deferral. Amounts deferred pursuant to Section 3(a) and
Section 5(h)(1) will be credited to the Participant’s Deferred Compensation
Account as soon as practicable, but not less than 30 days after the Settlement
Date of the Incentive Compensation Plan. Amounts deferred pursuant to
Section 3(c) and Section 5(h)(2) will be credited, as applicable, as soon as
practicable, but not later than 30 days after the date as of which the
restrictions lapse at the market value of the underlying Restricted Stock or the
shares represented by the Restricted Stock Units awarded under an Incentive
Compensation Plan, the Long Term Incentive Compensation Plan,

 

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  a Long Term Incentive Plan or a Strategic Incentive Plan Performance Period
which began prior to January 1, 2003. For this purpose, the market value of the
underlying Restricted Stock or the shares represented by the Restricted Stock
Units, as applicable, shall be based on the higher of (i) the average of the
high and low selling prices of the Stock on the date the restrictions lapse or
the last trading day before the day the restrictions lapse if such date is not a
trading day or (ii) the average of the high three monthly Fair Market Values of
the Stock during the twelve calendar months preceding the month in which the
restrictions lapse. The monthly Fair Market Value of the Stock is the average of
the daily Fair Market Value of the Stock for each trading day of the month.

The market value of the underlying Restricted Stock or the shares represented by
the Restricted Stock Units awarded under a Long Term Incentive Plan, under an
Incentive Compensation Plan that began on or after January 1, 2003, under an
Omnibus Securities Plan (with regard to awards made on or after January 1,
2003), and for the Special Stock Awards issued on October 22, 2002, shall be the
monthly average Fair Market Value of the Stock during the calendar month
preceding the month in which the restrictions lapse or shares are to be
delivered as applicable. The monthly average Fair Market Value of the Stock is
the average of the daily Fair Market Value of the Stock for each trading day of
the month.

The daily Fair Market Value of the Stock shall be deemed equal to the average of
the high and low selling prices of the Stock on the New York Stock Exchange.

Amounts deferred pursuant to Section 3(e) and 3(f) and Section 5(h)(3) will be
credited to the Participant’s Deferred Compensation Account as soon as
practicable, but not later than 30 days after the cash payment would have been
made had it not been deferred. Amounts deferred pursuant to other provisions of
this Plan shall be credited as soon as practicable but not later than 30 days
after the date the Award would otherwise be payable.

 

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  (b) Designation of Investments. The amount in each Participant’s Deferred
Compensation Account shall be deemed to have been invested and reinvested from
time to time, in such “eligible securities” as the Participant shall designate.
Prior to or in the absence of a Participant’s designation, the Company shall
designate an “eligible security” in which the Participant’s Deferred
Compensation Account shall be deemed to have been invested until designation
instructions are received from the Participant. Eligible securities are those
securities designated by the Chief Financial Officer of the Company, or his
successor. The Chief Financial Officer of the Company may include as eligible
securities, stocks listed on a national securities exchange, and bonds, notes,
debentures, corporate or governmental, either listed on a national securities
exchange or for which price quotations are published in The Wall Street Journal
and shares issued by investment companies commonly known as “mutual funds”. The
Participant’s Deferred Compensation Account will be adjusted to reflect the
deemed gains, losses, and earnings as though the amount deferred was actually
invested and reinvested in the eligible securities for the Participant’s
Deferred Compensation Account.

Notwithstanding anything to the contrary in this section 4(b), in the event the
Company (or any trust maintained for this purpose) actually purchases or sells
such securities in the quantities and at the times the securities are deemed to
be purchased or sold for a Participant’s Deferred Compensation Account, the
Account shall be adjusted accordingly to reflect the price actually paid or
received by the Company for such securities after adjustment for all transaction
expenses incurred (including without limitation brokerage fees and stock
transfer taxes).

In the case of any deemed purchase not actually made by the Company, the
Deferred Compensation Account shall be charged with a dollar amount equal to the
quantity and kind of securities deemed to have been purchased multiplied by the
fair market value of such security on the date of reference and shall be
credited with the quantity and kind of securities so deemed to have been
purchased. In the case of any deemed

 

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sale not actually made by the Company, the account shall be charged with the
quantity and kind of securities deemed to have been sold, and shall be credited
with a dollar amount equal to the quantity and kind of securities deemed to have
been sold multiplied by the fair market value of such security on the date of
reference. As used in this paragraph “fair market value” means in the case of a
listed security the closing price on the date of reference, or if there were no
sales on such date, then the closing price on the nearest preceding day on which
there were such sales, and in the case of an unlisted security the mean between
the bid and asked prices on the date of reference, or if no such prices are
available for such date, then the mean between the bid and asked prices to the
nearest preceding day for which such prices are available.

The Chief Financial Officer of the Company may also designate a third party to
provide services that may include record keeping, Participant accounting,
Participant communication, payment of installments to the Participant, tax
reporting, and any other services specified by the Company in agreement with
such third party.

 

  (c) Payments. A Participant’s Deferred Compensation Account shall be debited
with respect to payments made from the account pursuant to this Plan as of the
date such payments are made from the account. The payment shall be made as soon
as practicable, but no later than 30 days, after the installment payment date.

If any person to whom a payment is due hereunder is under legal disability as
determined in the sole discretion of the Plan Administrator, the Plan
Administrator shall have the power to cause the payment due such person to be
made to such person’s guardian or other legal representative for the person’s
benefit, and such payment shall constitute a full release and discharge of the
Company, the Plan Administrator, and any fiduciary of the Plan.

 

  (d) Statements. At least one time per year the Company or the Company’s
designee will furnish each Participant a written statement setting forth the
current balance in the Participant’s Deferred Compensation Account, the amounts
credited or debited to such account since the last statement and the payment
schedule of deferred Awards, and deemed gains, losses, and earnings accrued
thereon as provided by the deferred payment option selected by the Participant.

 

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SECTION 5. Payments from Deferred Compensation Accounts.

 

  (a) Election of Method of Payment for an Incentive Compensation Plan Award. At
the time a Potential Participant submits an indication of preference to defer
all or any part of an Award under an Incentive Compensation Plan as provided in
Section 3(a) above, the Potential Participant shall also elect in a manner
prescribed by the Plan Administrator, which of the payment options, provided for
in Paragraph (b) of this Section, shall apply to the deferred portion of said
Award adjusted for any deemed gains, losses, and earnings accrued thereon
credited to the Participant’s Deferred Compensation Account under this Plan.
Subject to Paragraphs (e), (g), and (h) of this Section, if the Committee or
CEO, as appropriate, accepts the Potential Participant’s indication of
preference, the election of the method of payment of the amount deferred shall
become irrevocable.

 

  (b) Payment Options. A Potential Participant may elect to have the deferred
portion of an Incentive Compensation Plan Award adjusted for any deemed gains,
losses, and earnings accrued thereon paid:

 

  (i) (Post-Retirement) in 1 to 15 annual installments, in 2 to 30 semi-annual
installments, or in 4 to 60 quarterly installments, the payment of the first of
any of such installments to commence on the first day of the first calendar
quarter which is on or after the first anniversary of (x) the Potential
Participant’s first day of Retirement at age 55 or above (or at age 50 or above
for a Heritage Conoco Employee who was employed by Conoco Inc. or its affiliates
on August 30, 2002 if such Heritage Conoco Employee is eligible for early
retirement under the Retirement Plan of Conoco) or (y) the Potential
Participant’s first day of Layoff at age 50 or above, or

 

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  (ii)

(Date Certain) with regard only to the deferred portion of an Incentive
Compensation Award, in 1 to 15 annual installments, in 2 to 30 semi-annual
installments, or in 4 to 60 quarterly installments, the payment of the first of
any of such installments to commence on the first day of calendar quarter which
is designated by the Participant, is at least one year after the date on which
the election is made, and is not later than the 65th birthday of the
Participant; provided, however, that in the event of termination of employment
from the Affiliated Group by a Heritage Conoco Employee who had made deferral of
amounts from the Conoco Inc. Global Variable Compensation Plan, the balance of
such deferred amounts (adjusted for earnings, gains, and losses) shall be paid
in a lump sum as soon as practicable after termination, notwithstanding an
installment election made pursuant to this Paragraph, or

 

  (iii) (Pre-Retirement) otherwise, in a lump sum paid as soon as practicable
following the Participant’s termination from employment with the Affiliated
Group.

 

  (iv) In the event that no election is properly and timely made with regard to
the time and method of payment under Section 5(b)(i) or (ii), payment shall be
made in 10 annual installments, the payment of the first of any of such
installments to commence on the first day of the first calendar quarter which is
on or after the first anniversary of (x) the Potential Participant’s first day
of Retirement at age 55 or above (or at age 50 or above for a Heritage Conoco
Employee who was employed by Conoco Inc. or its affiliates on August 30, 2002 if
such Heritage Conoco Employee is eligible for early retirement under the
Retirement Plan of Conoco) or (y) the Potential Participant’s first day of
Layoff at age 50 or above.

 

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  (c) Election of Method of Payment of the Value of Restricted Stock and
Restricted Stock Units. As provided in Section 3(c) above, a deferral of the
value of all or part of the Restricted Stock or Restricted Stock Units will be
considered payment option (b)(i) of this Section subject to Paragraphs (e) and
(g) of this Section.

 

  (d) Election of Method of Payment of a Lump Sum Distribution from
Non-Qualified Retirement Plans. At the time a Potential Participant submits an
indication of preference to defer all or part of the lump sum distribution as
provided in Section 3(d) above, the Potential Participant shall also elect in a
manner prescribed by the Plan Administrator which payment option shall apply to
the deferred lump sum adjusted for any gains, losses, and earnings to be accrued
thereon credited to the Participant’s Deferred Compensation Account under this
Plan. The payment options are annual installments of not less than 1 nor more
than 15, semi-annual installments of not less than 2 nor more than 30, or
quarterly installments of not less than 4 nor more than 60. The first
installment shall commence as soon as practicable after any date specified by
the Potential Participant, so long as such date is the first day of a calendar
quarter and is at least one year and not later than five years from the date the
payout option was elected. Subject to Paragraph (g) of this Section, if the
Committee or CEO, as appropriate, accepts the Potential Participant’s indication
of preference, the election of the method of payment of the amount deferred
shall become irrevocable.

 

  (e) Payment Option Revisions. If a Section 5(b)(i) payment option applies to
any part of the balance of a Participant’s Deferred Compensation Account, the
Participant may revise such payment option as follows:

 

  (i) Prior to Retirement. The Participant at any time during a period beginning
365 days prior to and ending 90 days prior to the date the Participant Retires
at age 55 or above may, with respect to the total of all amounts subject to such
payment option at the time of the Participant’s Retirement at age 55 or above,
in the manner prescribed by the Plan Administrator, revise such payment option
and elect one of the payment options specified in (e)(iv) of this Section to
apply to such total amount in place of such payment option.

 

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  (ii) Upon Layoff. If a Participant who is eligible to Retire or who is Laid
Off during or after the year in which the Participant reaches age 50 is notified
of Layoff, the Participant may, no later than 30 days after being notified of
Layoff, in the manner prescribed by the Plan Administrator, revise such payment
option and elect one of the payment options specified in (e)(iv) of this Section
to apply to such total amount in place of such payment option.

 

  (iii) If Disabled. The Participant may at any time during a period from the
date of the beginning of the qualifying period for the Company’s Long Term
Disability Plan or similar plan to no later than 90 days prior to the end of
such period, or within 30 days of the amendment of this Plan providing for such
election, in the manner prescribed by the Plan Administrator, revise such
payment option and elect one of the payment options specified in (e)(iv) of this
Section to apply to the total of all amounts subject to such payment option;
provided, however, that after the payments have begun, such payments may be made
in a different manner if, the Participant due to an unanticipated emergency
caused by an event beyond the control of the Participant results in financial
hardship to the Participant, so request and the CEO gives written consent to the
method of payment requested.

 

  (iv) Payment Options After Revision. If a Participant revises a
Section 5(b)(i) payment option as specified in (e)(i), (e)(ii), or (e)(iii) of
this Section, the Participant may select payments in annual installments of not
less than 1 nor more than 15, in semi-annual installments of not less than 2 nor
more than 30, or in quarterly installments of not less than 4 nor more than 60,
with the first installment to commence as soon as practicable following any date
specified by the Participant so long as such date is the first day of a calendar
quarter, is on or after the Participant’s first day of Retirement at age 55 or
above or the first day the Participant is no longer an Employee following
Layoff, is at least one year and no more than five years from the date the
payment option was revised.

 

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  (f) Installment Amount. The amount of each installment shall be determined by
dividing the balance in the Participant’s Deferred Compensation Account as of
the date the installment is to be paid, by the number of installments remaining
to be paid (inclusive of the current installment).

 

  (g) Death of Participant. Upon the death of a Participant, the Participant’s
beneficiary or beneficiaries designated in accordance with Section 6, or in the
absence of an effective beneficiary designation, the surviving spouse, surviving
children (natural or adopted) in equal shares, or the Estate of the deceased
Participant, in that order of priority, shall receive payments in accordance
with the payment option selected by the Participant, if death occurred after
such payments had commenced; or if death occurred before payments have
commenced, the beneficiary may select payments in annual installments of not
less than 1 nor more than 15, in semi-annual installments of not less than 2 nor
more than 30, or in quarterly installments of not less than 4 nor more than 60
with the first installment to commence as soon as practicable following any date
specified by the beneficiary so long as such date is the first day of a calendar
quarter and is at least one year and no more than five years from the date the
payment option is selected and is not later than the date the deceased
Participant would have been age 65; provided, however, such payments may be made
in a different manner if the beneficiary or beneficiaries entitled to receive or
receiving such payments, due to an unanticipated emergency caused by an event
beyond the control of the beneficiary or beneficiaries that results in financial
hardship to the beneficiary or beneficiaries, so requests and the CEO gives
written consent to the method of payment requested.

 

  (h) Disability of Participant. In the event a Participant or Employee becomes
disabled, the individual may, in the period from the date of the beginning of
the qualifying period for the Company’s Long Term Disability Plan to no later
than 90 days prior to the end of such period, or within 30 days of the amendment
of this Plan providing for such election, indicate a preference, in a manner
prescribed by the Plan Administrator, for any of the following:

 

  (1) To defer part or all of any Incentive Compensation Plan Award the Employee
is eligible to receive in the immediately following calendar year,

 

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  (2) To defer part or all of the value of the Stock which would otherwise be
delivered to the Employee when the restrictions lapse on any Restricted Stock or
Restricted Stock Units or Restricted Stock Units are settled, or

 

  (3) To defer part or all of the value from their account under the Defined
Contribution Makeup Plan which would otherwise be paid as a lump sum to the
Participant.

Such indications of preference shall be subject to approval by the Committee if
the Potential Participant is subject to Section 16 of the Exchange Act or by the
CEO if the Potential Participant is not subject to Section 16 of the Exchange
Act. The Committee or CEO, as applicable, shall consider such indication or
preference as submitted and shall decide whether to accept or reject the
preference expressed.

Such indications of preference, if accepted, become irrevocable on the date of
such acceptance. A deferral of any amount will be paid under the terms of
Section 5(b)(i) hereof - ten (10) annual installments, but subject to revision
as specified under the terms of this Plan.

 

  (i) Termination of Employment. In the event a Participant’s employment with
the Company, any Participating Subsidiary, or any other subsidiary of the
Company terminates for any reason other than death, Retirement at age 55 or
above, Disability, or Layoff during or after the year in which the Participant
reaches age 50, the entire balance of the Participant’s Deferred Compensation
Account shall be paid to the Participant in one lump sum as soon as practicable
after the date the Participant terminates employment, except that a Participant
who becomes employed by a member of the Affiliated Group immediately after
terminating employment with the Company or Participating Subsidiary shall not
receive their benefit under the Plan until the Participant terminates employment
from the Affiliated Group; provided, however, the Committee, in its sole
discretion, may elect to make such payments in the amounts and on such schedule
as it may determine.

 

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  (j) Rehire of Participant. In the event a Participant is a Rehired
Participant, he/she will be eligible to receive notifications as specified in
Section 2 and will be eligible to submit an Indication of Preference or Election
to Defer as specified in Section 3, if the Participant agrees to the suspension
of payments from his/her Deferred Compensation Account during the period of
reemployment by the Company. Upon termination of reemployment, such payments
shall resume on the same schedule as was in effect at the time the Participant
previously Retired or was Laid Off.

SECTION 6. Special Provisions for Former ARCO Alaska Employees.

Notwithstanding any provisions to the contrary, in order to comply with the
terms of the Master Purchase and Sale Agreement (“Sale Agreement”) by which the
Company acquired certain Alaskan assets of Atlantic Richfield Company (“ARCO”),
a Participant who was eligible to participate in the ARCO employee benefit plans
immediately prior to becoming an Employee and who was not employed by ARCO
Marine, Inc. (a “former ARCO Alaska employee”) may, in a manner prescribed by
the Plan Administrator, indicate a preference or make an election:

 

  (a) To reduce voluntarily salary and receive an Award in the amount of the
reduction credited to, at the Employee’s election, (i) an account under this
Plan or (ii) for so long as the ARCO Executive Deferral Plan will accept such
deferrals of salary, but not beyond December 31, 2001, an account under the ARCO
Executive Deferral Plan; or

 

  (b) To defer any Award payable to a former ARCO employee who is involuntarily
terminated prior to April 18, 2002, in lieu of a target ARCO Annual Incentive
Plan (AIP) award, and at the Employee’s election credit the Award to (i) an
account under this Plan or (ii) to the ARCO Executive Deferral Plan; or

 

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  (c) To defer the Final ARCO Supplemental Executive Retirement Plan (SERP)
benefit that will be calculated as of the earlier of April 17, 2002, or the date
the former ARCO employee voluntarily or involuntarily terminates employment from
the Company or any Participating Subsidiary to the ARCO Executive Deferral Plan;
or

 

  (d) To defer the value of the restricted stock granted on July 31, 2000, to an
account under this Plan when the restrictions lapse on July 31, 2001, July 31,
2002, and July 31, 2003; provided that such indications of preference shall be
made in July of the year preceding the calendar year when the restrictions are
scheduled to lapse or as soon as practicable after July 31, 2000, for the
restrictions on the shares that are to be lapsed on July 31, 2001; or

 

  (e) For a former ARCO Alaska employee who was classified as a grade 7 or 8
under ARCO’s job classification system and was eligible under ARCO’s Executive
Deferral Plan to voluntarily reduce salary and defer the amount of the voluntary
salary reduction and who was classified as a grade 31 or below at that time
under Phillips Petroleum Company’s job classification system, to make an annual
election to voluntarily reduce salary and defer the amount of the voluntary
salary reduction for salary received from July 31, 2000, through December 31,
2000, and for the five years from 2001 through 2005 and receive a salary
deferral credit under this Plan.

All indications of preference in Sections 6(a), (b), and (c) are subject to
approval by the Compensation Committee if the Employee is subject to Section 16
of the Exchange Act and by the CEO if the Employee is not subject to Section 16
of the Exchange Act.

SECTION 7. Designation of Beneficiary.

Each Participant shall designate a beneficiary or beneficiaries to receive the
entire balance of the Participant’s Deferred Compensation Account by giving
signed written notice of such

 

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designation to the Plan Administrator. The Participant may from time to time
change or cancel any previous beneficiary designation in the same manner. The
last beneficiary designation received by the Plan Administrator shall be
controlling over any prior designation and over any testamentary or other
disposition. After acceptance by the Plan Administrator of such written
designation, it shall take effect as of the date on which it was signed by the
Participant, whether the Participant is living at the time of such receipt, but
without prejudice to the Company or the CEO on account of any payment made under
this Plan before receipt of such designation.

SECTION 8. Nonassignability.

The right of a Participant, or beneficiary, or other person who becomes entitled
to receive payments under this Plan, shall not be assignable or subject to
garnishment, attachment, or any other legal process by the creditors of, or
other claimants against, the Participant, beneficiary, or other such person.

SECTION 9. Administration.

 

  (a) The Plan Administrator may adopt such rules, regulations, and forms as
deemed desirable for administration of the Plan and shall have the discretionary
authority to allocate responsibilities under the Plan to such other persons as
may be designated.

 

  (b) Any claim for benefits hereunder shall be presented in writing to the Plan
Administrator for consideration, grant or denial. In the event that a claim is
denied in whole or in part by the Plan Administrator, the claimant, within
ninety days of receipt of said claim by the Plan Administrator, shall receive
written notice of denial. Such notice shall contain:

 

  (1) a statement of the specific reason or reasons for the denial;

 

  (2) specific references to the pertinent provisions hereunder on which such
denial is based;

 

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  (3) a description of any additional material or information necessary to
perfect the claim and an explanation of why such material or information is
necessary; and

 

  (4) an explanation of the following claims review procedure set forth in
paragraph (c) below.

 

  (c) Any claimant who feels that a claim has been improperly denied in whole or
in part by the Plan Administrator may request a review of the denial by making
written application to the Trustee. The claimant shall have the right to review
all pertinent documents relating to said claim and to submit issues and comments
in writing to the Trustee. Any person filing an appeal from the denial of a
claim must do so in writing within sixty days after receipt of written notice of
denial. The Trustee shall render a decision regarding the claim within sixty
days after receipt of a request for review, unless special circumstances require
an extension of time for processing, in which case a decision shall be rendered
within a reasonable time, but not later than 120 days after receipt of the
request for review. The decision of the Trustee shall be in writing and, in the
case of the denial of a claim in whole or in part, shall set forth the same
information as is required in an initial notice of denial by the Plan
Administrator, other than an explanation of this claims review procedure. The
Trustee shall have absolute discretion in carrying out its responsibilities to
make its decision of an appeal, including the authority to interpret and
construe the terms hereunder, and all interpretations, findings of fact, and the
decision of the Trustee regarding the appeal shall be final, conclusive and
binding on all parties.

 

  (d) Compliance with the procedures described in paragraphs (b) and (c) shall
be a condition precedent to the filing of any action to obtain any benefit or
enforce any right which any individual may claim hereunder. Notwithstanding
anything to the contrary in the Plan, these paragraphs (b), (c), and (d) may not
be amended without the written consent of a seventy-five percent (75%) majority
of Participants and Beneficiaries and such paragraphs shall survive the
termination of this Plan until all benefits accrued hereunder have been paid.

 

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SECTION 10. Employment not Affected by Plan.

Participation or nonparticipation in this Plan shall neither adversely affect
any person’s employment status nor confer any special rights on any person other
than those expressly stated in the Plan. Participation in the Plan by an
Employee of the Company or of a Participating Subsidiary shall not affect the
Company’s or the Participating Subsidiary’s right to terminate the Employee’s
employment or to change the Employee’s compensation or position.

SECTION 11. Determination of Recipients of Awards.

The determination of those persons who are entitled to Awards under an Incentive
Compensation Plan and any other such plans shall be governed solely by the terms
and provisions of the applicable plan, and the selection of an Employee as a
Potential Participant or the acceptance of an indication of preference to defer
an Award hereunder shall not in any way entitle such Potential Participant to an
Award.

SECTION 12. Method of Providing Payments.

 

  (a) Nonsegregation. Amounts deferred pursuant to this Plan and the crediting
of amounts to a Participant’s Deferred Compensation Account shall represent the
Company’s unfunded and unsecured promise to pay compensation in the future. With
respect to said amounts, the relationship of the Company and a Participant shall
be that of debtor and general unsecured creditor. While the Company may make
investments for the purpose of measuring and meeting its obligations under this
Plan such investments shall remain the sole property of the Company subject to
claims of its creditors generally, and shall not be deemed to form or be
included in any part of the Deferred Compensation Account.

 

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  (b) Funding. It is the intention of the Company that this Plan shall be
unfunded for federal tax purposes and for purposes of Title I of ERISA;
provided, however, that the Company may establish a grantor trust to satisfy
part or all of its Plan payment obligations so long as the Plan remains unfunded
for federal tax purposes and for purposes of Title I of ERISA.

SECTION 13. Amendment or Termination of Plan.

Subject to Paragraph 9(d), the Company reserves the right to amend this Plan
from time to time or to terminate the Plan entirely, provided, however, that no
amendment may affect the balance in a Participant’s account on the effective
date of the amendment. No Participant shall participate in a decision to amend
or terminate this Plan. In the event of termination of the Plan, the Chief
Executive Officer, in his sole discretion, may elect to have the Company pay to
the Participant in one lump sum as soon as practicable after termination of the
Plan, the balance then in the Participant’s account.

SECTION 14. Miscellaneous Provisions.

 

  (a) Except as otherwise provided herein, the Plan shall be binding upon the
Company, its successors and assigns, including but not limited to any
corporation which may acquire all or substantially all of the Company’s assets
and business or with or into which the Company may be consolidated or merged.

 

  (b) This Plan shall be construed, regulated, and administered in accordance
with the laws of the State of Texas except to the extent that said laws have
been preempted by the laws of the United States.

 

  (c)

At the Effective Time, certain active employees of Phillips 66 and members of
its controlled group ceased to participate in the Plan, and the liabilities,
including liabilities related to benefits grandfathered from Code section 409A
(i.e., amounts deferred and vested prior to January 1, 2005), for these
participant’s benefits under the Plan were transferred to the members of the
Phillips 66 controlled group and

 

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  continued as the Phillips 66 Key Employee Deferred Compensation Plan.
ConocoPhillips distributed its interest in Phillips 66 to its shareholders as of
the Distribution. On and after the Effective Time, the Company, other members of
the Affiliated Group (as determined after the Distribution), the Plan, any
directors, officers, or employees of any member of the Affiliated Group (as
determined after the Distribution), and any successors thereto, shall have no
further obligation or liability to, or on behalf of, any such participant with
respect to any benefit, amount, or right transferred to or due under the
Phillips 66 Key Employee Deferred Compensation Plan.

Further, as of the Distribution, the Restricted Stock and Restricted Stock Units
of ConocoPhillips shall be converted into Restricted Stock and Restricted Stock
Units of ConocoPhillips and restricted stock and restricted stock units of
Phillips 66 as provided in the Agreement. The amounts to be credited to a
Participant’s Deferred Compensation Account under Section 4(a) will be based on
such Restricted Stock and Restricted Stock Units of ConocoPhillips and
restricted stock and restricted stock units of Phillips 66 after the
Distribution.

Furthermore, with regard to any valuation that occurs after the Distribution and
which requires valuation of Stock or the common stock of Phillips 66 (“Phillips
66 Common Stock”), or of both, from a time on or before the Distribution and
from a time after the Distribution, then the following shall apply, in order to
allow the valuation to take into account the distribution by stock dividend of
one share of Phillips 66 Common Stock for each two shares of Stock held at the
Distribution:

 

  (1) The value of Stock or of Phillips 66 Common Stock determined as of any
date after the Distribution shall be determined using market information related
to each;

 

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  (2) The value of Stock determined as of any date on or before the Distribution
that does not also require a valuation of Stock as of any date after the
Distribution shall be determined using market information related to Stock as it
traded on or before the Distribution;

 

  (3) The value of Stock determined as of any date on or before the Distribution
that also requires a valuation of Stock or of Phillips 66 Common Stock as of any
date after the Distribution shall be deemed to be two-thirds of the value of
Stock determined using market information related to Stock as it traded on or
before the Distribution; and

 

  (4) The value of Phillips 66 Common Stock determined as of any date on or
before the Distribution that also requires a valuation of Stock or of Phillips
66 Common Stock as of any date after the Distribution shall be deemed to be
one-third of the value of Stock determined using market information related to
Stock as it traded on or before the Distribution.

 

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SECTION 15. Effective Date of Restated Plan.

Title I of the Key Employee Deferred Compensation Plan of ConocoPhillips is
hereby amended and restated effective as of the Effective Time and conditioned
on the occurrence of the Distribution.

Executed this 19th day of April 2012, by a duly authorized officer of the
Company.

 

 

/s/ Carin S. Knickel                

  Carin S. Knickel   Vice President, Human Resources

 

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