**Exhibit 10.10**

 

 

 

**RELATIVE PERFORMANCE VALUE PLAN**

 

**OF**

 

**CHEVRON PHILLIPS CHEMICAL COMPANY LLC**

 

**(Effective January 1, 2006)**

 

 

 

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**RELATIVE PERFORMANCE VALUE PLAN**

**OF**

**CHEVRON PHILLIPS CHEMICAL COMPANY LLC**

**(Effective January 1, 2006)**

 

**TABLE OF CONTENTS**

 
| ** ** | ** **                                            | **Page** |
|------------|-------------------------------------------------------|----------|
|       |                                                  |     |
| 1.         | Interpretation  and Definitions                       | 1        |
| 2.         | Administration  of Plan                               | 6        |
| 3.         | Eligibility and  Participation                        | 7        |
| 4.         | Grants and  Settlement of Awards                      | 8        |
| 5.         | Deferral of  Awards                                   | 9        |
| 6.         | Vesting and  Forfeiture                               | 9        |
| 7.         | Amendments or  Discontinuance                         | 10       |
| 8.         | Recapitalization,  Merger, and Consolidation          | 11       |
| 9.         | General  Provisions                                   | 11       |
|       | Exhibit A “Peer  Companies”            | 13       |
|       | Exhibit B “Award  Calculation Example” | 14       |

 

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**RELATIVE PERFORMANCE VALUE PLAN**

**OF**

**CHEVRON PHILLIPS CHEMICAL COMPANY LLC**

**Effective January 1, 2006**

 

**PURPOSE**

 

The purpose of thisRelative Performance Value Plan of Chevron Phillips Chemical Company LLC (the “Plan”)is to attract, motivate, and retain qualified management personnel by providingto them a long-term incentive compensation plan that will provide competitivecompensation opportunities similar to those of comparable companies in thechemical industry, align the interests of key management with the interests ofthe Company’s owners, and encourage the creation of additional owner value.

 

The Plan is intended tobe a “bonus program” within the meaning of Labor Reg. § 2510.3-2(c) and,therefore, is not intended to be subject to the requirements of ERISA.  It is also intended that the Plan comply withthe requirements of Section 409A of the Internal Revenue Code, as added byThe American Jobs Creation Act of 2004 (“Section 409A”).

 

The Plan shall beeffective as of January 1, 2006.

 

# **1.**                                      Interpretationand Definitions

 

(a)                                  General.

 

(1)                                  Interpretation.  Unless a clear contrary intention appears,for purposes of construction of this Plan and all related Plan Documents:

 

(i)                                     thesingular number includes the plural number and vice versa;

 

(ii)                                  referenceto any person includes such person’s successors and assigns but, if applicable,only if such successors and assigns are permitted by the Plan Documents, andreference to a person in a particular capacity excludes such person in anyother capacity or individually;

 

(iii)                               reference to any genderincludes the other gender;

 

(iv)                              referenceto any Plan Document or any other agreement, document or instrument means theapplicable Plan Document or such other agreement, document or instrument asamended or modified and in effect from time to time in accordance with theterms thereof;

 

(v)                                 referenceto any law means such law as amended, modified, codified, replaced orreenacted, in whole or in part, and in effect from time to time, including rules andregulations promulgated thereunder, and reference to any section or otherprovision of any law means that provision

 

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ofsuch law from time to time in effect and constituting the substantiveamendment, modification, codification, replacement or reenactment of such section orother provision;

 

(vi)                              referencein any Plan Document to any article, section, appendix, schedule orexhibit means such article or section thereof or appendix, schedule orexhibit thereto;

 

(vii)                           “hereunder”,“hereof”, and words of similar import shall be deemed references to a PlanDocument as a whole and not to any particular article, section or otherprovision thereof;

 

(viii)                        “including”(and with the correlative meaning “include”) means including without limitingthe generality of any description preceding such term;

 

(ix)                                “or”is not exclusive;

 

(x)                                   relativeto the determination of any period of time, “from” means “from and including”and “to” means “to but excluding;” and

 

(xi)                                referencesto days, weeks, months, quarters and years are references to such periods asdetermined by the Gregorian calendar.

 

(2)                                  **Accounting Terms.**  Ineach Plan Document, unless expressly otherwise provided, accounting terms shallbe construed and interpreted, and accounting determinations and computationsshall be made, in accordance with generally accepted accounting principles.

 

(3)                                  **Conflict in Plan Documents.** If there is any conflict between any two or more Plan Documents, suchPlan Documents shall be interpreted and construed, if possible, so as to avoidor minimize such conflict but, to the extent (and only to the extent) of suchconflict, the Plan Document dealing most specifically with the matter as towhich there is a conflict shall prevail and control.  If it cannot be determined which PlanDocument deals most specifically with a matter as to which there is a conflictthen the Plan shall prevail and control.

 

(b)                                 Definitions

 

(1)                                  “Board”means the Board of Directors of the Company.

 

(2)                                  “CapitalCharge” means the economic cost of the Total Assets used in the operations ofthe Company, as determined by the Committee from time to time.

 

(3)                                  “ChemSystems Leader” means reports provided by Nexant Company or other relevantthird party data that review chemical industry performance in various areas

 

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suchas cash cost margins and cash cost return on investment. The chemical industrymay use this data to illustrate their performance compared to the performanceof the rest of the chemical industry, and to identify top performance in theindustry.

 

(4)                                  “Chevron”means Chevron Corporation, or such entity as may be controlled by ChevronCorporation, that directly or indirectly holds a membership interest in theCompany.

 

(5)                                  “Committee”means the Compensation Committee of the Board.

 

(6)                                  “Company”means Chevron Phillips Chemical Company LLC and any successor entity.

 

(7)                                  “ConocoPhillips”means ConocoPhillips, or such entity as may be controlled by ConocoPhillips,that directly or indirectly holds a membership interest in the Company.

 

(8)                                  “Dateof Grant” means the effective date on which a Relative Performance Value Awardis granted to a Participant.

 

(9)                                  “Dateof Termination” means the date on which a Participant ceases to be an Employee.

 

(10)                            “DeferredCompensation Plan” means the Chevron Phillips Chemical Company LP ExecutiveDeferred Compensation Plan.

 

(11)                            “Disability”means the Participant is eligible for, and is continuously receiving disabilityinsurance benefits under the Social Security Act or the Participating Employer’slong-term disability plan.

 

(12)                            “EBITDA”means earnings before interest, taxes, depreciation, and amortization asreported in the financial records of the Company, or the financial records ofany other company, or segment thereof, against whom the performance of theCompany is being compared.

 

(13)                            “EffectiveDate” means, for purposes of this Plan, January 1, 2006.

 

(14)                            “EligibleEmployee” means any regular, full time Employee (including an Employee who isalso a director or an officer) who is a pay grade 93 or above.  Notwithstanding anything contained in thePlan to the contrary, any person who, pursuant to a written contract with aParticipating Employer that provides that he is an independent contractor andnot an Employee, shall be excluded from the definition of Eligible Employee andshall not be eligible to participate in the Plan during the period such writtencontract is in effect regardless of such person’s reclassification as anEmployee for such period by the Internal Revenue Service for tax withholdingpurposes.  If, during any period, aParticipating Employer has not treated an individual as an Employee and,

 

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forthat reason, has not withheld employment taxes with respect to that individual,then that individual shall not be an Eligible Employee for that period, even inthe event that the individual is determined, retroactively, to have been anEmployee during all or any portion of that period.

 

(15)                            “Employee”means any employee of a Participating Employer.

 

(16)                            “ERISA”means the Employee Retirement Income Security Act of 1974, as amended.

 

(17)                            “EVA”or “Economic Value Added” means EBITDA minus any Capital Charge.

 

(18)                            “GeographicDifferences” means the impact of the location of various assets owned by a PeerCompany that cause differences in financial performance, such as assets ownedin the United States vs. assets owned in Europe, the Middle East, or otherareas.

 

(19)                            “Grant”means the award of a Relative Performance Value Award, subject to such termsand conditions as may be set forth in a Grant Agreement accompanying suchaward.

 

(20)                            “GrantAgreement” or “Agreement” means the agreement accompanying such Grant that setsforth the Relative Performance Value Award target amount, the Share Ratiounderlying said target amount, the initial Market Value Per Share, PerformanceCycle, vesting, and other terms and conditions pertaining to that Grant asestablished by the Committee.  All suchGrant Agreements may be entered into by the Company as agent for theParticipating Employers, and all Relative Performance Value Awards shall be andremain the liability of the Participating Employer employing the Participant atthe time of such Grants.

 

(21)                            “MarketValue Per Share” means the closing price of each Parent Company’s common stockon the applicable Valuation Date, as adjusted by the Committee in its solediscretion, considering factors deemed relevant by the Committee, which mayinclude, but are not limited to, the dividend policies of the Parent Companies.

 

(22)                            “ParentCompany” means Chevron, ConocoPhillips, and their respective successors.

 

(23)                            “Participant”means an Eligible Employee to whom a Relative Performance Value Award may begranted pursuant to the Plan.

 

(24)                            “ParticipatingEmployer” means the Company and any direct or indirect subsidiary entity of theCompany which, with the Company’s consent, has adopted the Plan.

 

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(25)                            “PeerCompanies” means those chemical companies, or chemical segments thereof,identified in Exhibit A which may be amended from time to time by theCommittee in its discretion.

 

(26)                            “PerformanceCycle” means the continuous period as established in the respective GrantAgreement during which a Relative Performance Value Award is earned by a Participant.

 

(27)                            “Plan”means the Relative Performance Value Plan of Chevron Phillips Chemical CompanyLLC.

 

(28)                            “PlanDocument” means this Plan, any Grant Agreement executed in respect of anyaward, and any other document defining the rights and liabilities of anyParticipant.

 

(29)                            “RelativePerformance” means any measure established by the Committee in its sole andabsolute discretion that compares the Company’s performance to a group of PeerCompanies. Relative Performance measures considered may include, but are notlimited to, EBITDA divided by Total Assets; comparison to Chem Systems Leaderor other relevant third party data; and/or EVA. The evaluation by the Committee may consider adjustments to normalize portfolioand Geographic Differences and to account for special events.

 

(30)                            “RelativePerformance Value Award”, “RPVA” or “Award” means, unless modified by theCommittee pursuant to the authority granted to it herein, an award under thePlan that rewards Participants for changes in the Company’s RelativePerformance compared to a group of Peer Companies.

 

(31)                            “Retirement”means an Eligible Employee’s Termination of Service in connection with theattainment of any applicable early retirement age or normal retirement age asdefined in (i) the Chevron Phillips Chemical Company LP Retirement Plan, (ii) anyretirement plan of any Participating Employer, or (iii) the retirementplan of any Parent Company or any of its respective subsidiaries other thanChevron Phillips Chemical Company LLC. A Participant whose Termination ofService occurs while eligible to retire under any of such plans, but who doesnot elect to immediately commence the receipt of benefits thereunder, shallnevertheless be deemed to have retired under such plan for purposes of this Plan.

 

(32)                            “ShareRatio” means the number of hypothetical shares of each ConocoPhillips andChevron common shares underlying each Relative Performance Value Award targetamount as determined by the Committee. Such Share Ratio is generally established to provide that one-half ofthe opportunity inherent in the Grant is based on the value of common stock ofeach Parent Company, considering factors deemed relevant by the Committee,which may include but are not limited to, dividend policies of each Parent Company.  Share Ratios are fixed over the PerformanceCycle of any individual Grant, but may vary among Grants occurring on differentdates.

 

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Notwithstanding the foregoing, the Committee retainsthe authority to adjust the Share Ratio for active Performance Cycles in amanner it deems appropriate to account for capital restructurings or othersimilar transactions involving the common shares of the Parent Company.

 

(33)                            “Terminationof Service” occurs when a Participant ceases to serve as an Employee for anyreason.

 

(34)                            “TotalAssets” means the sum of current and long-term assets owned by a company.

 

(35)                            “ValuationDate” means:

 

(i)                                     forpurposes of determining the Market Value Per Share at the beginning of anyPerformance Cycle, the last New York Stock Exchange trading day in December forthe year immediately preceding said Performance Cycle; and

 

(ii)                                  forpurposes of determining the Market Value Per Share at the end of anyPerformance Cycle, the last New York Stock Exchange trading day in December forthe last year of said Performance Cycle.

 

# **2.**                                      Administrationof the Plan

 

(a)                                  ThePlan shall be administered by the Committee.

 

(b)                                 Notwithstandingany other provision of the Plan, the Plan shall be interpreted, operated andadministered in a manner consistent with Section 409A.

 

(c)                                  TheCommittee may establish, from time to time and at any time, subject to thelimitations of the Plan as set forth herein, such rules and regulationsand amendments and supplements thereto, as it deems necessary to comply withapplicable law and for the proper administration of the Plan.

 

(d)                                 TheCommittee’s interpretation and construction of the provisions of the Plan and rules andregulations adopted by the Committee shall be final.  No member of the Committee or the Board shallbe liable for any action taken, or determination made, in respect of the Planin good faith.

 

(e)                                  Themembers of the Committee may retain counsel, employ agents, and provide forsuch clerical, accounting and consulting services as they may require incarrying out the provisions of the Plan; and may allocate among themselves ordelegate to other persons all or such portion of their duties under the Plan asthey in their sole discretion, shall decide. Each member of the Committee and each member of the Board shall be fullyjustified in relying upon or acting in good faith upon any opinion, report, orinformation furnished in connection with the Plan by any accountant, counsel,or other

 

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specialist so retained (including financial officersof the Company, whether or not such persons are Participants in the Plan).

 

(f)                                    ThisPlan may be adopted by such subsidiary entities of the Company as the Board orCommittee may approve, whereupon such entities shall become ParticipatingEmployers.

 

(g)                                 TheCommittee shall periodically evaluate the effectiveness of the Plan in meetingthe purposes for which the Plan was adopted. Subject to the limitations andrequirements of Section 7 and Section 409A, the Committee, based onsuch an evaluation, may in its sole and absolute discretion, add a new optionalform of Grant, eliminate an optional form of Grant, modify the terms of anexisting form of Grant, or offer one form of Grant in exchange for an existingGrant made to a Participant for a Performance Cycle.  Any exchange of an existing Grant for a newGrant under the Plan shall be for good and valuable consideration and subjectto consent of the Participant and the provisions of Section 7 and Section 409A.

 

# **3.**                                      Eligibilityand Participation

 

(a)                                  TheCommittee, upon its own action, may grant, but shall not be required to grant,Relative Performance Value Awards to any Eligible Employee.  Grants may be made by the Committee at anytime and from time to time to new Eligible Employees, or to then EligibleEmployees, or to a greater or lesser number of Eligible Employees, and mayinclude or exclude previous Participants, as the Committee shall determine.

 

(b)                                 If,during a Performance Cycle, a regular, full time Employee is promoted to a paygrade of 93 or above, the Employee becomes eligible to participate in thePlan.  If the Eligible Employee isotherwise selected by the Committee to participate in the Plan, the EligibleEmployee will receive a Grant of a Relative Value Performance Award for themost recent, active Performance Cycle. Such Award will be prorated for theperiod which begins on the date of promotion and ends as of the end of theapplicable Performance Cycle. If, during a Performance Cycle, an individual ishired in a pay grade of 93 or above, the Employee becomes eligible toparticipate in the Plan.  If the EligibleEmployee is otherwise selected by the Committee to participate in the Plan, theEligible Employee will receive a Grant of a Relative Value Performance Awardfor the most recent, active Performance Cycle. Such Award will be pro-rated forthe period which begins on the date of hire and ends as of the end of theapplicable Performance Cycle. Notwithstanding the foregoing, when an individual is hired in a paygrade of 93 or above, the CEO will have the authority to give prorated Awardsfor all active Performance Cycles when required for competitive reasons.  In the event a Participant is demoted to apay grade lower than 90, outstanding Relative Performance Value Awards will beprorated for all active Performance Cycles to which such outstanding Awardsapply.  For this purpose, the prorationperiod will begin as of the Date of Grant for each applicable Award and willend on the effective date of the Participant’s demotion. Outstanding RelativePerformance Value Awards will not be subject to such proration in the event theParticipant is demoted to a pay grade lower than 93; provided such demotion isnot below 90.  At the end of theapplicable Performance Cycle, the value of

 

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saidprorated Relative Performance Value Awards, as determined in accordance with Section 4,shall be deferred to Participant’s Deferred Compensation Plan account inaccordance with Section 5.

 

# **4.**                                      Grants andSettlement of Awards

 

(a)                                  EachGrant shall be evidenced by a Grant Agreement executed by the Participant insuch form and with such terms and conditions, as the Committee may from time totime determine. The rights of a Participant with respect to any Grant shall atall times be subject to the terms and conditions set forth in the GrantAgreement relating thereto and in the Plan Documents. Except as required bythis Plan, different Grants need not contain terms or conditions similar to anyGrant made prior thereto or contemporaneously therewith.  The Committee’s determinations under the Plan(including determinations of which Eligible Employees, if any, are to receiveGrants, the form, amount and timing of such Grants, the terms and provisions ofsuch Grants and the agreements evidencing same) need not be uniform and may bemade by it selectively among Eligible Employees who receive, or are eligible toreceive, Grants under the Plan.

 

(b)                                 EachPerformance Cycle, subject to the other limitations set forth in the Plan, mayextend for a period of up to three (3) years from the Date of Grant.  The length of each Performance Cycle shall bedetermined by the Committee; provided, however, if no term is established bythe Committee the term of the Performance Cycle shall be three (3) yearsfrom the Date of Grant.

 

(c)                                  Atthe beginning of each Performance Cycle, the Committee shall establish theParticipant’s Relative Performance Value Award target amount. The Committeeshall also determine the (1) Share Ratio underlying such RelativePerformance Value Award target amount based upon the Market Value Per Shareestablished by the Committee at the beginning of said Performance Cycle; and (2) theRelative Performance measures for the Performance Cycle, at the beginning ofsaid Performance Cycle. Moreover, the RPVA target amounts, applicable ShareRatio, and the Relative Performance measures shall be set forth in writingwithin ninety (90) days of the beginning of each Performance Cycle.

 

Notwithstanding anything in the Plan to the contrary,in no event shall any RPVA be awarded to any Participant for a PerformanceCycle if the Award is not based on the Company’s favorable performance ascompared with the group of Peer Companies.

 

(d)                                 Atthe end of each Performance Cycle, the Committee shall evaluate the Company’sRelative Performance in comparison to the group of Peer Companies to establishwhat percentage of the Share Ratio will be used as a basis for calculating theParticipant’s Relative Performance Value Award. The percentage may range from 0% to 200%.

 

(e)                                  Atthe end of each Performance Cycle, the Committee shall also establish a MarketValue Per Share which shall be applied to the Share Ratio, as adjusted pursuantto Section 4(d), to determine the Participant’s Relative Performance ValueAward. Any

 

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RelativePerformance Value Award may be further adjusted as a result of the applicationof the provisions in Section 4(f) or by the Committee in its sole andabsolute discretion either in individual cases or in the aggregate.  An example of a Relative Performance ValueAward determination is set forth, for illustration purposes only, in Exhibit B.

 

(f)                                    Notwithstandinganything contained in this Plan document to the contrary, in the event that anyParticipant engages in any activity which the Committee judges to bedetrimental to any Participating Employer, or otherwise fails to perform hisobligations as a regular, full time Employee, the Committee may cancel orreduce the Participant’s Relative Performance Value Award in whole or in partat any time prior to the date said RPVA is deferred to the Participant’sDeferred Compensation Plan account, as more particularly described in Section 5.

 

**5.****                                      Deferralof Awards**

 

(a)                                  Uponfinal determination by the Committee of a Participant’s right to receive aRelative Performance Value Award, the amount of said RPVA shall beautomatically deferred to the Participant’s Deferred Compensation Plan accountattributable to Relative Performance Value Awards.  Deferrals shall occur on May 10 of theyear following the end of the Performance Cycle; provided, however that if adeferral date occurs on a Saturday, Sunday or bank holiday, the deferral willbe made the next following business day.

 

(b)                                 Therules and procedures governing the Deferred Compensation Plan shall governand be binding upon the Participants. In addition, deferral and distributionelections shall be made in accordance with Section 409A and the terms ofthe Deferred Compensation Plan. Specifically, irrevocable elections by Participants of the time and formof payment of the RPVA paid under the Deferred Compensation Plan shall be madeno later than the date that is six (6) months before the end of theapplicable Performance Cycle in accordance with the Proposed TreasuryRegulation section 1.409A-2(a)(7) and subsequent guidance.

 

**6.****                                      Vestingand Forfeiture**

 

(a)                                  Exceptas provided in the Plan Document, upon a Participant’s Termination of Service,the Participant’s outstanding Grants of Relative Value Performance Awards andall rights thereunder shall terminate on the Date of Termination; provided,however, that in the case of a Participant’s Termination of Service due toRetirement, transfer to a Parent Company, Disability or death, the Participantshall be entitled, with respect to each Grant still outstanding, to a proratedRelative Performance Value Award for the period beginning as of the Date ofGrant for each respective Relative Performance Value Award and ending on theDate of Termination.  At the end ofapplicable Performance Cycle, the amount of said prorated Relative PerformanceValue Award shall be deferred to Participant’s Deferred Compensation Planaccount as described in Section 5.

 

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(b)                                 Exceptas provided in the Plan Document or the Deferred Compensation Plan, aParticipant will be vested in his Deferred Compensation Plan accountattributable to Relative Performance Value Award deferrals (and deemed earningsand losses thereon) only upon Participant’s Date of Termination resulting fromTermination of Service due to Retirement, layoff, transfer to a Parent Company,Disability or death.  If a Participantterminates employment with the Participating Employer for any reason other thanRetirement, layoff, transfer to a Parent Company, Disability or death, then theParticipant shall forfeit the entire portion of the Participant’s DeferredCompensation Plan account attributable to Relative Performance Value Awarddeferrals (and deemed earnings and losses thereon).

 

Notwithstanding the foregoing, any Eligible Employeewho is a Participant in the Plan as of January 1, 2006 will be vested inhis Deferred Compensation Plan account attributable to Relative PerformanceValue Award deferrals (and deemed earnings and losses thereon) upon his Date ofTermination without regard to the cause of the Termination of Service.

 

(c)                                  Notwithstandingthe foregoing, in the event a Participant takes a leave of absence from theParticipating Employer for personal reasons or as a result of entry into theArmed Forces of the United States, or terminates employment for reasons which,in the judgment of the Committee, are deemed to be special circumstances, the Committeemay consider such circumstances and may take such action (to the extentconsistent with Section 409A) in respect of the Participant’s (1) relatedoutstanding Grants as it may deem appropriate under the circumstances,including extending the rights of a Participant to continue participation inthe Plan beyond his Date of Termination; provided in no event may participationbe extended beyond the term of the Performance Cycle; or (2) vestingrights related to his Deferred Compensation Plan account attributable to theRelative Performance Value Award deferrals (and deemed earnings and lossesthereon), including extending vesting rights to the Participant upon his Dateof Termination with respect to said account.

 

# **7.**                                      Amendment orDiscontinuance

 

Subject to the limitations set forth in this Section 7,the Board may at any time and from time to time, without the consent of theParticipants, alter, amend, revise, suspend, or discontinue the Plan in wholeor in part.  Any such amendment shall, tothe extent deemed necessary or advisable by the Committee, be applicable to anyoutstanding Grants theretofore awarded under the Plan, notwithstanding anycontrary provisions contained in any Grant Agreement.  In the event of any such amendment to thePlan, the holder of any Grant outstanding under the Plan shall, upon request ofthe Committee and as a condition to the exercisability thereof, execute aconforming amendment in the form prescribed by the Committee to any GrantAgreement relating thereto. Notwithstanding anything contained in this Plan to the contrary, unlessrequired by law, no action contemplated or permitted by this Section 7shall adversely affect any rights of Participants or obligations of theParticipating Employer to Participants with respect to any award theretoforegranted under the Plan without the consent of the affected Participant.

 

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# **8.**                                      Recapitalization,Merger, and Consolidation

 

The existence of this Plan and the awards grantedhereunder shall not affect in any way the right or power of the Company orthose entities holding membership interests in the Company to make or authorizeany or all adjustments, reorganizations, or other changes in the Company’scapital structure and its business, or any merger or consolidation of theCompany, or the dissolution or liquidation of the Company, or any sale ortransfer of all or part of its assets or business, or any other corporate actor proceeding, whether of a similar character or otherwise.

 

# **9.**                                      GeneralProvisions

 

(a)                                  RelativeValue Performance Awards shall be nontransferable and nonassignable, exceptthat any such Grant may be transferred (1) to such beneficiary as theParticipant may designate in the event of death, Disability or otherincapacity, or (2) by testamentary instrument or by the laws of descentand distribution. The Committee shall prescribe the form and manner in whichbeneficiary designations shall be made, revoked or amended. Any validbeneficiary designation on file with the Company shall take priority over anyconflicting provision of any testamentary or similar instrument.

 

(b)                                 Theestablishment of the Plan shall not confer any legal rights upon any Employeeor other person to continued employment, nor shall it interfere with the rightof any Participating Employer (which right is hereby reserved) to discharge anyEmployee and to treat****him****without regard to the effect which that treatment mighthave upon him****as a Participant or potentialParticipant.

 

(c)                                  Neitherthe adoption of this Plan nor any action of the Board or the Committee shall bedeemed to give any person any right to be granted an award or any other rightsexcept as may be evidenced by a Grant Agreement, or any amendment thereto, dulyauthorized by the Committee and executed on behalf of the Company, and thenonly to the extent and upon the terms and conditions expressly set forththerein.

 

(d)                                 TheCompany shall have the right to deduct from all amounts hereunder paid in cash,any federal, state, local, or other taxes required by law to be withheld withrespect to such payments.

 

(e)                                  THEVALIDITY, CONSTRUCTION AND EFFECT OF THE PLAN, ANY PLAN DOCUMENTS, AND ANYACTIONS TAKEN OR RELATING TO THE PLAN SHALL BE DETERMINED IN ACCORDANCE WITHTHE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMEDWITHIN SUCH STATE.

 

(f)                                    TheCompany will require any successor (whether direct or indirect, by purchase,merger, consolidation or otherwise) to all or substantially all of the businessand/or assets of the Company, expressly to assume and agree to perform theCompany’s obligations

 

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under this Plan in the same manner and to the sameextent that the Company would be required to perform them if no such successionhad taken place.

 

(g)                                 ThePlan shall be unfunded. Neither the Company, any Participating Employer, theCommittee, nor the Board shall be required to segregate any assets or secureany liability that may at any time be represented by Grants made pursuant tothe Plan.

 

(h)                                 ThePlan shall have a term of ten (10) years from its Effective Date.  After termination of the Plan, no futureGrants may be made, but Grants made before that date will continue to beeffective in accordance the terms and conditions of the respective GrantAgreement.

 

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**EXHIBIT A**

 

**PEER COMPANIES**

 

Thefollowing companies, or the chemicals segments thereof, shall be the initialcomparator companies for purposes of Performance Awards:

 

1.                                       TheDow Chemical Company

 

2.                                       Borealis(polyolefins & chemicals segment)

 

3.                                       NOVAChemicals Corporation

 

4.                                       Lyondell(chemical segment)

 

5.                                       ExxonMobilCorporation (chemicals segment)

 

6.                                       BP,p.l.c. (chemicals segment)

 

7.                                       RoyalDutch/Shell Group (chemicals segment)

 

ChemSystems Data or other relevant third-party data may also be used to determinerelative performance.

 

**THIS EXHIBIT AMAY BE MODIFIED FROM TIME TO TIME BY THE COMMITTEE IN ITS SOLE ANDABSOLUTE DISCRETION.**

 

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**EXHIBIT B**

**AWARD CALCULATION EXAMPLE**

 

Assume that Participant’sRPVA target amount for a Performance Cycle is $100,000, and the Market ValuePer Share for common stock of each Parent Company as determined by theCommittee at the beginning of the Performance Cycle is $51.98 for Chevron stockand $53.51 for COP stock.

 

The Share Ratio for theRPVA target amount, as determined by the following formula, is 962 shares ofChevron stock and 934 shares of COP stock.

 
| *COP Share Ratio Allocation* =         | .5 x RVPA Target/COP  MVPS |
|----------------------------------------|----------------------------|
| *{In this example:*                    | *.5  x 100,000/$53.51}*    |
| * *                               |
| *CVX*  *Share  Ratio Allocation=* | .5 x RVPA  Target/CVX MVPS |
| *{In this example:*                    | *.5  x 100,000/$51.98}*    |
|                                        |                            |  |  |

 

Where,

 

*RVPA Target* is the RPVA target amount forthe Performance Cycle;

 

*COP MVPS* is the Market Value Per Share forCOP stock at the beginning of the Performance Cycle; and

 

*CVX MVPS* is the Market Value Per Share forChevron stock at the beginning of the Performance Cycle.

 

Assume that at theend of the Performance Cycle, based upon the Company’s Relative Performanceduring the Performance Cycle, the Committee awards the Participants 110% of theShare Ratios underlying their RPVA target amount, as determined above.  Further assume that at the end of thePerformance Cycle, the Market Value Per Share for Chevron stock is $77.00 andthe Market Value Per Share for COP stock is $67.00.  In this example, the Participant’s RelativeValue Performance Award will equal $150,275, as calculated in accordance withthe following formula:

 

*RVPA =*[(COP ShareRatio Allocation x RP%) x MVPS1)] + [(CVX Share Ratio Allocation xRP%) x CVX MVPS1)],

 

*{In this example:  [(934 x 110%) x $67] + [(962 x 110%) x $77]}*

 

Where

 

*COP Share Ratio Allocation* and *CVX Share Ratio Allocation* are definedabove;

 

*RP%* is the percentage to be applied to theParticipants’ Share Ratios based upon Committee’s determination of the Company’sRelative Performance;

 

*COP MVPS*1 is the Market ValuePer Share for COP stock at the end of the Performance Cycle; and

 

*CVX MVPS*1 is the Market ValuePer Share for Chevron stock at the end of the Performance Cycle.

 

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**AMENDMENT NUMBER ONETO THERELATIVE PERFORMANCE VALUE PLAN OFCHEVRON PHILLIPS CHEMICALCOMPANY LLC**

 

WHEREAS, effective January 1, 2006, ChevronPhillips Chemical Company LLC (the “Company”) established the Relative PerformanceValue Plan of Chevron Phillips Chemical Company LLC (the “Plan”);

 

WHEREAS, pursuant to Section 7 of the Plan,the Company reserves the right at any time and from time to time to amend thePlan in whole or in part;

 

NOW, THEREFORE, BE IT RESOLVED,

 

1.             Effective January 1, 2006, paragraphs (a) and(b) of Section 6 are amended in their entirety as follows:

 

(a)                                  Ifa Participant becomes Disabled or has a Termination of Service due to Retirement,transfer to a Parent Company, or death, the Participant shall be entitled, withrespect to each Grant still outstanding, to a prorated Relative PerformanceValue Award for the period beginning as of the Date of Grant for eachrespective Relative Performance Value Award and ending when the Participant isplaced on Disability or on the Participant’s Date of Termination, asapplicable. If a Participant terminates employment for any reason other thanRetirement, transfer to a Parent Company, or death, then the Participant’soutstanding Grants of Relative Performance Value Awards and all rightsthereunder shall be forfeited.

 

(b)                                 AParticipant shall be vested in his Deferred Compensation Plan accountattributable to Relative Performance Value Award deferrals (and deemed earningsand losses thereon) only upon the Participant’s Disability or on theParticipant’s Date of Termination resulting from Termination of Service due toRetirement, layoff, transfer to a Parent Company, or death.  If a Participant terminates employment forany reason other than Retirement, layoff, transfer to a Parent Company, ordeath, then the Participant shall forfeit the entire portion of theParticipant’s Deferred Compensation Plan account  attributable to Relative Performance ValueAward deferrals (and deemed earnings and losses thereon).

 

Notwithstanding the foregoing, any Participant who isa Participant in the Plan  as of January1, 2006 will become vested in the entire portion of his Deferred Compensationaccount attributable to Relative Performance Value Award deferrals (and deemedearning and losses thereon) on the Participant’s Date of Termination, withoutregard to the cause of his Termination of Service.

 

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2.             Effective January1, 2006, paragraph (a) of Section 9 is amended in its entirety as follows:

 

(a)                             Exceptas otherwise expressly provided in the Deferred Compensation Plan, RelativeValue Performance Awards 

shall benontransferable and nonassignable.

 

 

IN WITNESS WHEREOF, Chevron Phillips ChemicalCompany LLC has caused this Amendment Number One to be executed this 24 day ofFebruary, 2006.

 

 
|   | **CHEVRON PHILLIPS CHEMICAL  COMPANY LLC** |
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|   | By:                                        | */s/ James L. Gallogly* |
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|   | Its:                                       | President  and Chief Executive Officer |

 

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