Exhibit 10.6


 




 


 





LONG-TERM INCENTIVE PLAN


 


OF


 


CHEVRON PHILLIPS CHEMICAL COMPANY LLC


 


(As Amended and Restated Effective January 1,
2005)


 




 





 

















 


LONG-TERM INCENTIVE PLAN


OF


CHEVRON PHILLIPS CHEMICAL COMPANY LLC


(As Amended and Restated Effective January 1,
2005)


 


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.

  	
  Payment of
  Awards

  	
  9

  
	
  6.

  	
  Vesting and
  Forfeiture.

  	
  10

  
	
  7.

  	
  Amendments or
  Discontinuance

  	
  10

  
	
  8.

  	
  Recapitalization,
  Merger, and Consolidation

  	
  11

  
	
  9.

  	
  General
  Provisions

  	
  11

  
	
   

  	
  Exhibit A “Peer
  Companies”

  	
  13

  



 


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LONG-TERM INCENTIVE PLAN


OF


CHEVRON PHILLIPS CHEMICAL COMPANY LLC


(As Amended and Restated Effective January 1,
2005)


 


PURPOSE


 


The purpose of this
amended and restated Long-Term Incentive Plan (the “Plan”) is to attract,
motivate, and retain qualified management personnel by providing to them a
long-term incentive compensation plan that will provide competitive
compensation opportunities similar to those of comparable companies in the
chemical industry, align the interests of key management with the interests of
the Company’s owners, and encourage the creation of additional owner value.


 


The Plan is intended to
be 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 with
the requirements of Section 409A of the Internal Revenue Code, as added by
the American Jobs Creation Act of 2004 (“Section 409A”).


 


The Plan was
amended and restated effective January 1, 2001.


 


The Plan is, except as
otherwise set forth in the document, amended and restated effective January 1,
2005.


 


1.                                      Interpretation
and Definitions


 


(a)                                  General.


 


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


 


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


 


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


 


(iii)                               reference to any gender
includes the other gender;


 


(iv)                              reference
to any Plan Document or any other agreement, document or instrument means the
applicable Plan Document or such other agreement, document or instrument as
amended or modified and in effect from time to time in accordance with the
terms thereof;


 


(v)                                 reference
to any law means such law as amended, modified, codified, replaced or
reenacted, in whole or in part, and in effect from time to time, including rules and
regulations promulgated thereunder, and


 


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reference
to any section or other provision of any law means that provision of such
law from time to time in effect and constituting the substantive amendment,
modification, codification, replacement or reenactment of such section or
other provision;


 


(vi)                              reference
in any Plan Document to any article, section, appendix, schedule or
exhibit means such article or section thereof or appendix, schedule or
exhibit thereto;


 


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


 


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


 


(ix)                                “or”
is not exclusive;


 


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


 


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


 


(2)                                  Accounting Terms.  In
each Plan Document, unless expressly otherwise provided, accounting terms shall
be construed and interpreted, and accounting determinations and computations
shall 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, such
Plan Documents shall be interpreted and construed, if possible, so as to avoid
or minimize such conflict but, to the extent (and only to the extent) of such
conflict, the Plan Document dealing most specifically with the matter as to
which there is a conflict shall prevail and control.  If it cannot be determined which Plan
Document deals most specifically with a matter as to which there is a conflict
then the Plan shall prevail and control.


 


(b)                                 Definitions.


 


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


 


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


 


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(3)                                  “Chem
Systems Leader” means reports provided by Nexant Company or other relevant
third party data that review chemical industry performance in various areas
such as cash cost margins and cash cost return on investment. The chemical
industry may use this data to illustrate their performance compared to the
performance of the rest of the chemical industry, and to identify top
performance in the industry.


 


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


 


(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)                                  “Date
of Grant” means the effective date on which a Relative Performance Award or a
Strategic Performance Award, as the case may be, is granted to a Participant.


 


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


 


(10)                            “Deferred
Compensation Plan” means the Chevron Phillips Chemical Company LP Executive
Deferred Compensation Plan.


 


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


 


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


 


(13)                            “Effective
Date” means, for purposes of this Plan, January 1, 2001.


 


(14)                            “Eligible
Employee” means:


 


(i)                                     in
the case of Strategic Performance Awards, any regular, full-time Employee
(including an Employee who is also a director or an officer) who is a pay grade
90 or above; and


 


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(ii)                                  in
the case of Relative Performance Awards, any regular, full-time Employee
(including an Employee who is also a director or an officer) who is a pay grade
93 or above.


 


Notwithstanding anything contained in the Plan to the
contrary, any person who, pursuant to a written contract with a Participating
Employer that provides that he is an independent contractor and not an
Employee, shall be excluded from the definition of Eligible Employee and shall
not be eligible to participate in the Plan during the period such written
contract is in effect regardless of such person’s reclassification as an
Employee for such period by the Internal Revenue Service for tax withholding
purposes.  If, during any period, a
Participating Employer has not treated an individual as an Employee and, for
that reason, has not withheld employment taxes with respect to that individual,
then that individual shall not be an Eligible Employee for that period, even in
the event that the individual is determined, retroactively, to have been an Employee
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)                            “Geographic
Differences” means the impact of the location of various assets owned by a Peer
Company that causes differences in the financial performance, such as assets
owned in the United States vs. assets owned in Europe, the Middle East or other
areas.


 


(19)                            “Grant”
means the award of a Relative Performance Award or a Strategic Performance
Award, as the case may be, subject to such terms and conditions as may be set
forth in a Grant Agreement accompanying such award.  Notwithstanding the foregoing, effective for
Performance Cycles beginning on or after January 1, 2006 Grants of
Relative Performance Awards will no longer be available under the Plan.


 


(20)                            “Grant
Agreement” or “Agreement” means the agreement accompanying such Grant which
sets forth the Relative Performance Award or Strategic Performance Award, as
applicable, target amount, the Performance Cycle, vesting and other terms and
conditions pertaining to that Grant, as established by the Committee.


 


(21)                            “Parent
Company” means Chevron, ConocoPhillips, and their respective successors.


 


(22)                            “Participant”
means an Eligible Employee to whom a Relative Performance Award and/or a
Strategic Performance Award, as the case may be, may be granted pursuant to the
Plan.


 


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


 


(24)                            “Peer
Companies” means those chemical companies, or chemical segments thereof,
identified in Exhibit A which may be amended from time to time by the
Committee in its discretion.


 


(25)                            “Performance
Cycle” means the continuous period as established in the respective Grant
Agreement during which a Relative Performance Award or a Strategic Performance
Award is earned by a Participant.


 


(26)                            “Plan”
means the Long-Term Incentive Plan of Chevron Phillips Chemical Company LLC.


 


(27)                            “Plan
Document” means this Plan, any Grant Agreement executed in respect of any
award, and any other document defining the rights and liabilities of any
Participant.


 


(28)                            “Relative
Performance” means any measure established by the Committee in its sole and
absolute discretion that compares the Company’s performance to a group of Peer
Companies. Relative Performance measures considered may include but are not
limited to EBITDA divided by Total Assets; comparison to Chem Systems Leader or
other relevant third party data; and/or EVA. 
The evaluation by the Committee may consider adjustments to normalize
portfolio and Geographic Differences and to account for special events.


 


(29)                            “Relative
Performance Award” or “RPA” means, unless modified by the Committee pursuant to
the authority granted to it herein, an award under the Plan which will be paid
to a Participant that rewards Participants for changes in the Company’s
Relative Performance compared to a group of Peer Companies.


 


(30)                            “Retirement”
means an Eligible Employee’s Termination of Service in connection with the
attainment of any applicable early retirement age or normal retirement age as
defined in (i) the Chevron Phillips Chemical Company LP Retirement Plan, (ii) any
retirement plan of any Participating Employer, or (iii) the retirement
plan of any Parent Company or any of its respective subsidiaries other than
Chevron Phillips Chemical Company LLC. A Participant whose Termination of
Service occurs while eligible to retire under any of such plans, but who does
not elect to immediately commence the receipt of benefits thereunder, shall
nevertheless be deemed to have retired under such plan for purposes of this
Plan.


 


(31)                            “Strategic
Performance” means any measure established by the Committee in its sole and
absolute discretion that compares the Company’s performance to the attainment
of internal strategic objectives. Strategic Performance measures may initially


 


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include
but are not limited to gap closure/synergies; major projects; portfolio
management; effective management of capital projects; unit cost reductions
versus baseline measurements; reliability versus baseline measurements; and
achievement of effective growth goals. 
The Committee will annually review the internal strategic objectives to
be measured for each succeeding Performance Cycle and may alter, amend or
revise, in its sole and absolute discretion, such measures.


 


(32)                            “Strategic
Performance Award” or “SPA” means, unless modified by the Committee pursuant to
the authority granted to it herein, an award which will be paid to a
Participant for Company’s Strategic Performance compared to the internal
strategic objectives established by the Committee.


 


(33)                            “Termination
of Service” occurs when a Participant ceases to serve as an Employee for any
reason.


 


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


 


2.                                      Administration
of the Plan


 


(a)                                  The
Plan shall be administered by the Committee.


 


(b)                                 Notwithstanding
any other provision of the Plan, the Plan shall be interpreted, operated and
administered in a manner consistent with Section 409A.


 


(c)                                  The
Committee may establish, from time to time and at any time, subject to the
limitations of the Plan as set forth herein, such rules and regulations
and amendments and supplements thereto, as it deems necessary to comply with
applicable law and for the proper administration of the Plan.


 


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


 


(e)                                  The
members of the Committee may retain counsel, employ agents, and provide for
such clerical, accounting and consulting services as they may require in
carrying out the provisions of the Plan; and may allocate among themselves or
delegate to other persons all or such portion of their duties under the Plan as
they in their sole discretion, shall decide. 
Each member of the Committee and each member of the Board shall be fully
justified in relying upon or acting in good faith upon any opinion, report, or
information furnished in connection with the Plan by any accountant, counsel,
or other specialist so retained (including financial officers of the Company,
whether or not such persons are Participants in the Plan).


 


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(f)                                    This
Plan may be adopted by such subsidiary entities of the Company as the Board or
Committee may approve, whereupon such entities shall become Participating
Employers.


 


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


 


3.                                      Eligibility
and Participation


 


(a)                                  The
Committee, upon its own action, may grant, but shall not be required to grant,
Relative Performance Awards and/or Strategic Performance Awards (collectively,
the “Award” or “Awards”) to any Eligible Employee.  Grants may be made by the Committee at any
time and from time to time to new Eligible Employees, or to then Eligible
Employees, or to a greater or lesser number of Eligible Employees, as the
Committee shall determine. 
Notwithstanding any other provision of this Plan to the contrary,
effective for Performance Cycles beginning on or after January 1, 2006
Grants of Relative Performance Awards will no longer be available under the
Plan.


 


(b)                                 If,
during a Performance Cycle, a regular, full-time Employee is promoted to a pay
grade of 90 or above, the Employee becomes eligible to participate in the
Plan.  If the Eligible Employee is
otherwise selected by the Committee to participate in the Plan, the Eligible
Employee will receive a Grant of a Relative Performance Award and/or a
Strategic Performance Award for the most recent, active Performance Cycle.  Such Award will be prorated for the period
which begins on the date of promotion and ends as of the end of the applicable
Performance Cycle.  If, during a Performance
Cycle, an individual is hired as an Employee in a pay grade of 90 or above, the
Employee becomes eligible to participate in the Plan.  If the Eligible Employee is otherwise
selected by the Committee to participate in the Plan, the Eligible Employee will
receive a Grant of a Relative Performance Award and/or a Strategic Performance
Award for the most recent, active Performance Cycle.  Such Award will be prorated for the period
which begins on the date of employment and ends as of the end of the applicable
Performance Cycle.  Notwithstanding the
foregoing, when a regular, full-time Employee is hired in a pay grade of 90 or
above, the CEO will have the authority to give prorated Awards for all active
Performance Cycles when required for competitive reasons.  In the event a Participant is demoted to a
pay grade lower than 90, outstanding Strategic Performance Awards will be
prorated for all active Performance Cycles to which such outstanding Awards
apply.  For this purpose, the proration
period will begin as of the Date of Grant for each applicable outstanding Award
and will end on the effective date of the


 


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Employee’s demotion. Outstanding Relative Performance
Awards will not be subject to such proration in the event the Participant is
demoted to a pay grade lower than 93.


 


4.                                      Grants and
Settlement of Awards


 


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


 


(b)                                 Each
Performance Cycle, subject to the other limitations set forth in the Plan, may
extend for a period of up to three (3) years from the Date of Grant.  The length of each Performance Cycle shall be
determined by the Committee at the time of Grant; provided, however, if no term
is established by the Committee the term of the Performance Cycle shall be
three (3) years from the Date of Grant.


 


(c)                                  With
respect to the Relative Performance Award, at the beginning of each Performance
Cycle, the Committee shall establish the Participant’s Relative Performance
Award target amount.  The Committee shall
also determine the Relative Performance measures for the Performance
Cycle.  Moreover, the Relative
Performance Award target amount and the Relative Performance measures shall be
set forth in writing within ninety (90) days of the beginning of each
Performance Cycle.


 


At the end of each Performance Cycle, the Committee
shall evaluate the Company’s Relative Performance in comparison to the group of
Peer Companies to establish what percentage of the Participant’s Relative
Performance Award target amount will be awarded the Participant.  The percentage may range from 0% to 200%. Any
resultant Relative Value Award may be further adjusted as a result of the
application of the provisions in Section 4(e) or by the Committee in
its sole and absolute discretion either in individual cases or in the
aggregate.  Notwithstanding anything
contained in the Plan to the contrary, in no event shall any Relative
Performance Award be awarded to any Participant for a Performance Cycle if the
award is not based on the Company’s favorable performance as compared with the
group of Peer Companies.


 


(d)                                 With
respect to the Strategic Performance Award, at the beginning of each Performance
Cycle, the Committee shall establish the Participant’s Strategic Performance
Award target amount.  The Committee shall
also determine the Strategic Performance measures for the Performance Cycle.
Moreover, the Strategic Performance Award target amount and the Strategic
Performance measures shall be set forth in writing within ninety (90) days of
the beginning of each Performance Cycle.


 


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At the end of each Performance Cycle, the Committee
shall evaluate the Company’s Strategic Performance in comparison to the
Strategic Performance measures established by the Committee to establish what
percentage of the Participant’s Strategic Performance Award target amount will
be awarded the Participant.  The
percentage may range from 0% to 200%. 
Any resultant Strategic Performance Award may be further adjusted as a
result of the application of the provisions in Section 4(e) or by the
Committee in its sole and absolute discretion either in individual cases or in
the aggregate.  Notwithstanding anything
contained in the Plan to the contrary, in no event shall any Strategic
Performance Award be awarded to any Participant for a Performance Cycle if the
award is not based on the Company’s favorable performance as compared to the
Strategic Performance measures established by the Committee.


 


(e)                                  Notwithstanding
anything contained in this Plan document to the contrary, in the event that any
Participant engages in any activity which the Committee judges to be
detrimental to any Participating Employer, or otherwise fails to perform his
obligations as a regular, full-time Employee, the Committee may cancel or
reduce the Relative Performance Value Award or Strategic Performance Value
Award in whole or in part at any time prior to payment of the Award.


 


5.                                      Payment
of Awards


 


(a)                                  Upon
final determination by the Committee of a Participant’s right to receive a
distribution of a Relative Performance Award or Strategic Performance Award,
the distribution shall be paid in cash as a lump sum as soon as practicable
after such final determination by the Committee.


 


For Performance Cycles beginning on or after January 1,
2003, upon final determination by the Committee of a Participant’s right to
receive a distribution of a Relative Performance Award or a Strategic
Performance Award (or a pro rata portion thereof), the distribution shall be
paid in cash as a lump sum: (1) with respect to the Relative Performance
Award, on May 10 of the year following the end of the Performance Cycle in
question; and (2) with respect to the Strategic Performance Award, on March 22
of the year following the end of the Performance Cycle in question; provided,
however that if a payment date occurs on a Saturday, Sunday or bank holiday, payment will be made the next
following business day.


 


(b)                                 If
a Participant is eligible to participate in the Deferred Compensation Plan,
then the Participant may voluntarily elect to defer receipt of his Award and to
cause such amount to be credited to his account with the Deferred Compensation
Plan.  The rules and procedures
governing the Deferred Compensation Plan shall govern and be binding upon any
Participants who elect to make such deferrals.


 


Deferral and distribution elections shall be made in
accordance with Section 409A and the terms of the Deferred Compensation
Plan.  Specifically, irrevocable
elections by Participants of the time and form of payment of the Strategic
Performance Award and


 


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Relative
Performance Award under the Deferred Compensation Plan shall be made no later
than the date that is six (6) months before the end of the applicable
Performance Cycle in accordance with the Proposed Treasury Regulation section 1.409A-2(a)(7) and
subsequent guidance.


 


6.                                      Vesting
and Forfeiture


 


(a)                                  A
Participant will be vested in his Strategic Performance Award or Relative
Performance Award, as the case may be, at the end of the Performance Cycle
applicable to said Award provided the Participant is an Eligible Employee at
the end of said Performance Cycle.


 


(b)                                 Except
as provided in the Plan Document, upon a Participant’s Termination of Service,
the Participant’s outstanding Grants of Strategic Performance Awards or
Relative Performance Awards, as the case may be, and all rights thereunder shall
terminate on the Date of Termination; provided, however, that if a Participant’s
Termination of Service is due to Retirement, transfer to a Parent Company,
Disability, or death, said forfeiture shall not occur, and the Participant
shall be vested on the Date of Termination in each outstanding Strategic
Performance Award or Relative Performance Award.  Each outstanding Strategic Performance Award
will be prorated for the active Performance Cycle to which such outstanding
Award applies.  For this purpose, the
proration period will begin as of the Date of Grant for each applicable
outstanding Strategic Performance Award and will end on the Participant’s Date
of Termination. Except in the case of Termination of Service due to transfer to
a Parent Company, outstanding Relative Performance Awards will not be subject
to such proration.


 


(c)                                  Notwithstanding
the foregoing, in the event a Participant: (1) takes a leave of absence
from the Company for personal reasons or as a result of entry into the Armed
Forces of the United States, or (2) terminates employment for reasons
which, in the judgment of the Committee, are deemed to be special
circumstances, the Committee may consider such circumstances and may take such
action (to the extent consistent with Section 409A) in respect of the
related Grant and Grant Agreement as it may deem appropriate under the
circumstances, including extending the rights of a Participant to continue
participation in the Plan beyond his Date of Termination; provided in no event
may participation be extended beyond the term of the Performance Cycle.


 


7.                                      Amendment
or Discontinuance


 


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 the Participants, alter, amend, revise,
suspend, or discontinue the Plan in whole or in part.  Any such amendment shall, to the extent
deemed necessary or advisable by the Committee, be applicable to any
outstanding Grants theretofore awarded under the Plan, notwithstanding any
contrary provisions contained in any Grant Agreement.  In the event of any such amendment to the
Plan, the holder of any Grant outstanding under the Plan shall, upon request of
the Committee and as a condition to the exercisability thereof, execute a
conforming amendment in the form


 


10

















 


prescribed
by the Committee to any Grant Agreement relating thereto.  Notwithstanding anything contained in this
Plan to the contrary, unless required by law, no action contemplated or permitted
by this Section 7 shall adversely affect any rights of Participants or
obligations of the Company to Participants with respect to any Award
theretofore granted under the Plan without the consent of the affected
Participant.


 


8.                                      Recapitalization,
Merger, and Consolidation


 


The existence of this Plan and the Awards granted
hereunder shall not affect in any way the right or power of the Company or
those entities holding membership interests in the Company to make or authorize
any or all adjustments, reorganizations, or other changes in the Company’s
capital structure and its business, or any merger or consolidation of the
Company, or the dissolution or liquidation of the Company, or any sale or
transfer of all or part of its assets or business, or any other corporate act
or proceeding, whether of a similar character or otherwise.


 


9.                                      General
Provisions


 


(a)                                  Strategic
Performance Awards and Relative Performance Awards shall be nontransferable and
nonassignable, except that any such Grant may be transferred (1) to such
beneficiary as the Participant may designate in the event of death, Disability
or other incapacity, or (2) by testamentary instrument or by the laws of
descent and distribution. The Committee shall prescribe the form and manner in
which beneficiary designations shall be made, revoked or amended. Any valid
beneficiary designation on file with the Company shall take priority over any
conflicting provision of any testamentary or similar instrument.


 


(b)                                 The
establishment of the Plan shall not confer any legal rights upon any Employee
or other person to continued employment, nor shall it interfere with the right
of any Participating Employer (which right is hereby reserved) to discharge any
Employee and to treat him without regard to the effect which that treatment might
have upon him as a Participant or potential
Participant.


 


(c)                                  Neither
the adoption of this Plan nor any action of the Board or the Committee shall be
deemed to give any person any right to be granted an award or any other rights
except as may be evidenced by a Grant Agreement, or any amendment thereto, duly
authorized by the Committee and executed on behalf of the Company, and then
only to the extent and upon the terms and conditions expressly set forth
therein.


 


(d)                                 The
Company 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 with
respect to such payments.


 


(e)                                  THE
VALIDITY, CONSTRUCTION AND EFFECT OF THE PLAN, ANY PLAN DOCUMENTS, AND ANY
ACTIONS TAKEN OR RELATING TO THE PLAN SHALL BE DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE


 


11

















 


OF TEXAS APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED WITHIN SUCH STATE.


 


(f)                                    The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, expressly to assume and agree to perform the
Company’s obligations under this Plan in the same manner and to the same extent
that the Company would be required to perform them if no such succession had
taken place.


 


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


 


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


 


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EXHIBIT A


 


PEER COMPANIES


 


The
following companies, or the chemicals segments thereof, shall be the initial
comparator companies for purposes of Relative Performance Awards:


 


1.                                       The
Dow Chemical Company


 


2.                                       Borealis
(polyolefins & chemicals segment)


 


3.                                       NOVA
Chemicals Corporation


 


4.                                       Equistar
Chemicals, LP


 


5.                                       ExxonMobil
Corporation (chemicals segment)


 


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


 


7.                                       Royal
Dutch/Shell Group (chemicals segment)


 


Chem
Systems Data or other relevant third-party data may also be used to determine
relative performance.


 


THIS EXHIBIT A
MAY BE MODIFIED FROM TIME TO TIME BY THE COMMITTEE IN ITS SOLE AND
ABSOLUTE DISCRETION.


 


13

















 


AMENDMENT NUMBER ONE

TO THE

LONG-TERM INCENTIVE PLAN OF


CHEVRON
PHILLIPS CHEMICAL COMPANY LLC


 


WHEREAS, effective January 1, 2001, Chevron
Phillips Chemical Company LLC (the “Company”) established the Long-Term
Incentive Plan of Chevron Phillips Chemical Company LLC (the “Plan”);


 


WHEREAS, the Plan was subsequently amended
and restated effective January 1, 2001, and effective January 1, 2005; and


 


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


 


NOW, THEREFORE, BE IT RESOLVED,


 


1.             Effective January 1, 2005, Section 6(b) is
amended in its entirety as follows:


 


(b)                                 If
a Participant becomes Disabled or has a Termination of Service due to
Retirement, transfer to a Parent Company, or death, the Participant shall be
vested in each outstanding Strategic Performance Award or Relative Performance
Award, as the case may be, when the Participant is placed on Disability or on
the Participant’s Date of Termination, as applicable.  Each outstanding Strategic Performance Award
will be prorated for the active Performance Cycle to which such outstanding
award applies.  For this purpose, the
proration period will begin as of the Date of Grant for each applicable
outstanding Strategic Performance Award and will end when the Participant is
placed on Disability or on the Participant’s Date of Termination, as
applicable.  Except in the case of
Termination of Service due to transfer to a Parent Company, outstanding
Relative Performance Awards will not be subject to such proration.  If a Participant terminates employment for
any reason other than Retirement, transfer to a Parent Company, or death, then
the Participant’s outstanding Grants of Strategic Performance Awards or
Relative Performance Awards, as the case may be, and all rights thereunder
shall be forfeited.


 


IN WITNESS WHEREOF, Chevron Phillips Chemical
Company LLC has caused this Amendment Number One to be executed this 24 day of
February 2006.


 


	
   

  	
   

  	
   

  	
  CHEVRON
  PHILLIPS CHEMICAL

  COMPANY LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  James L. Gallogy

  
	
   

  	
   

  	
   

  	
  Its:

  	
  President and Chief
  Executive Officer