exv10w1



 





Exhibit 10.1




CONOCOPHILLIPS

KEY EMPLOYEE CHANGE IN CONTROL SEVERANCE PLAN




(Effective October 1, 2004)




     Effective October 1, 2004, the Company adopts this the ConocoPhillips Key
Employee Change in Control Severance Plan (the “Plan”) for the benefit of
certain employees of the Company and its subsidiaries.



     All capitalized terms used herein are defined in Section 1 hereof. This
Plan is intended to be a plan maintained primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees, within the meaning of Title I of the Employee Retirement Income
Security Act of 1974, as amended and shall be interpreted in a manner
consistent with such intention.



SECTION 1. DEFINITIONS. As hereinafter used:


1.1 “Affiliate” has the meaning ascribed to such term in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the
Effective Date.


1.2 “Associate” means, with reference to any Person, (a) any corporation, firm,
partnership, association, unincorporated organization, or other entity (other
than the Company or a subsidiary of the Company) of which such Person is an
officer or general partner (or officer or general partner of a general partner)
or is, directly or indirectly, the Beneficial Owner of 10% or more of any class
of equity securities, (b) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity, and (c) any relative or spouse of such Person,
or any relative of such spouse, who has the same home as such Person.


1.3 “Beneficial Owner” means, with reference to any securities, any Person if:




     (a) such Person or any of such Person’s Affiliates and Associates,
directly or indirectly, is the “beneficial owner” of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act, as in effect on the Effective Date) such securities or
otherwise has the right to vote or dispose of such securities, including
pursuant to any agreement, arrangement, or understanding (whether or not
in writing); provided, however, that a Person shall not be deemed the
“Beneficial Owner” of, or to “beneficially own,” any security under this
subsection (a) as a result of an agreement, arrangement, or understanding
to vote such security if
such agreement, arrangement, or understanding: (i) arises solely from a
revocable proxy or consent given in response to a public (i.e., not



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including a solicitation exempted by Rule 14a-2(b)(2) of the General
Rules and Regulations under the Exchange Act) proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Exchange Act,
and (ii) is not then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report);




     (b) such Person or any of such Person’s Affiliates and Associates,
directly or indirectly, has the right or obligation to acquire such
securities (whether such right or obligation is exercisable or effective
immediately or only after the passage of time or the occurrence of an
event) pursuant to any agreement, arrangement, or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange
rights, other rights, warrants, or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
“beneficially own,” (i) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange or (ii) securities issuable upon exercise of Exempt Rights; or




     (c) such Person or any of such Person’s Affiliates or Associates (i)
has any agreement, arrangement, or understanding (whether or not in
writing) with any other Person (or any Affiliate or Associate thereof)
that beneficially owns such securities for the purpose of acquiring,
holding, voting (except as set forth in the proviso to subsection (a) of
this definition), or disposing of such securities or (ii) is a member of
a group (as that term is used in Rule 13d-5(b) of the General Rules and
Regulations under the Exchange Act) that includes any other Person that
beneficially owns such securities;


provided, however, that nothing in this definition shall cause a Person engaged
in business as an underwriter of securities to be the Beneficial Owner of, or
to “beneficially own,” any securities acquired through such Person’s
participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition. For purposes hereof,
“voting” a security shall include voting, granting a proxy, consenting or
making a request or demand relating to corporate action (including, without
limitation, a demand for a stockholder list, to call a stockholder meeting or
to inspect corporate books and records), or otherwise giving an authorization
(within the meaning of Section 14(a) of the Exchange Act) in respect of such
security.



     The terms “beneficially own” and “beneficially owning” have meanings that
are correlative to this definition of the term “Beneficial Owner.”


1.4 “Board” means the Board of Directors of the Company.


1.5 “Cause” means (i) the willful and continued failure by the Eligible
Employee to substantially perform the Eligible Employee’s duties with the
Employer (other than any such failure resulting from the Eligible Employee’s
incapacity due to physical or mental illness), or (ii) the willful engaging,
not in good faith, by the
Eligible Employee in conduct which is demonstrably injurious to the Company or
any of its subsidiaries, monetarily or otherwise.



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1.6 “Change in Control” means any of the following occurring on or after the
Effective Date:




     (a) any Person (other than an Exempt Person) shall become the
Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding or 20% or more of the combined voting power of the Voting
Stock of the Company then outstanding; provided, however, that no Change
of Control shall be deemed to occur for purposes of this subsection (a)
if such Person shall become a Beneficial Owner of 20% or more of the
shares of Common Stock or 20% or more of the combined voting power of the
Voting Stock of the Company solely as a result of (i) an Exempt
Transaction or (ii) an acquisition by a Person pursuant to a
reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions described in
clauses (i), (ii) and (iii) of subsection (c) of this definition are
satisfied;




     (b) individuals who, as of the Effective Date, constitute the Board
(the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date, whose election, or nomination
for election by the Company’s shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the
Incumbent Board; provided, further, that there shall be excluded, for
this purpose, any such individual whose initial assumption of office
occurs as a result of any actual or threatened Election Contest that is
subject to the provisions of Rule 14a-11 of the General Rules and
Regulations under the Exchange Act;




     (c) the Company shall consummate a reorganization, merger, or
consolidation, in each case, unless, following such reorganization,
merger, or consolidation, (i) 50% or more of the then outstanding shares
of common stock of the corporation resulting from such reorganization,
merger, or consolidation and the combined voting power of the then
outstanding Voting Stock of such corporation are beneficially owned,
directly or indirectly, by all or substantially all of the Persons who
were the Beneficial Owners of the outstanding Common Stock immediately
prior to such reorganization, merger, or consolidation in substantially
the same proportions as their ownership, immediately prior to such
reorganization, merger, or consolidation, of the outstanding Common
Stock, (ii) no Person (excluding any Exempt Person or any Person
beneficially owning, immediately prior to such reorganization, merger, or
consolidation, directly or indirectly, 20% or more of the Common Stock
then outstanding or 20% or more of the combined voting power of the
Voting Stock of the Company then outstanding) beneficially owns, directly
or indirectly, 20% or more of the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger, or
consolidation or the combined voting power of the then outstanding Voting
Stock of such corporation, and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
reorganization, merger, or consolidation were members of the Incumbent Board at the time of the initial agreement or initial
action by the Board providing for such reorganization, merger, or
consolidation; or



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     (d) (i) the shareholders of the Company shall approve a complete
liquidation or dissolution of the Company unless such liquidation or
dissolution is approved as part of a plan of liquidation and dissolution
involving a sale or disposition of all or substantially all of the assets
of the Company to a corporation with respect to which, following such
sale or other disposition, all of the requirements of clauses (ii)(A),
(B), and (C) of this subsection (d) are satisfied, or (ii) the Company
shall consummate the sale or other disposition of all or substantially
all of the assets of the Company, other than to a corporation, with
respect to which, following such sale or other disposition, (A) 50% or
more of the then outstanding shares of common stock of such corporation
and the combined voting power of the Voting Stock of such corporation is
then beneficially owned, directly or indirectly, by all or substantially
all of the Persons who were the Beneficial Owners of the outstanding
Common Stock immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior
to such sale or other disposition, of the outstanding Common Stock, (B)
no Person (excluding any Exempt Person and any Person beneficially
owning, immediately prior to such sale or other disposition, directly or
indirectly, 20% or more of the Common Stock then outstanding or 20% or
more of the combined voting power of the Voting Stock of the Company then
outstanding) beneficially owns, directly or indirectly, 20% or more of
the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding Voting Stock of such
corporation, and (C) at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the
time of the initial agreement or initial action of the Board providing
for such sale or other disposition of assets of the Company.


1.7 “Code” means the Internal Revenue Code of 1986, as it may be amended from
time to time.


1.8 “Common Stock” means the common stock, par value $.01 per share, of the
Company.


1.9 “Company” means ConocoPhillips or any successors thereto.


1.10 “Credited Compensation” of a Severed Employee means the aggregate of the
Severed Employee’s annual base salary plus his or her annual incentive
compensation, each as further described below. For purposes of this
definition, (a) annual base salary shall be determined immediately prior to the
Severance Date (without regard to any reductions therein which constitute Good
Reason) and (b) annual incentive compensation shall be deemed to equal the
higher of (i) the Severed Employee’s most recently established target
(determined at one hundred percent of target) for annual incentive compensation
for such employee prior to such employee’s Severance Date or (ii) the average
of the most recent two annual incentive compensation payments to by such
Severed Employee pursuant to the Variable Cash Incentive Program or its
successor program maintained by the Employer made before his or her Severance
Date; provided, however, that for purposes of this clause (ii), (I) if such
Severed Employee has been eligible to receive only one such annual incentive
compensation payment for a period ending before his or her Severance Date, the
amount of annual incentive compensation for purposes of determining Credited
Compensation shall be equal to the amount of such single annual incentive
compensation payment (if any), and (II) if such Severed



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Employee has not been
eligible for any such annual incentive compensation payment, the amount of
annual incentive compensation for purposes of determining Credited Compensation
shall be equal to his or her most recently established target (determined at
one hundred percent of target) for annual incentive compensation for such
employee prior to such employee’s Severance Date.


1.11 “Effective Date” means the date first stated above as the effective date
of this Plan.


1.12 “Eligible Employee” means any employee that is a Tier 1 Employee or a Tier
2 Employee.


1.13 “Employer” means the Company or any of its subsidiaries.


1.14 “Exchange Act” means the Securities Exchange Act of 1934, as amended.


1.15 “Excise Tax” shall mean the excise tax imposed by Section 4999 of the
Code, together with any interest or penalties imposed with respect to such
excise tax.


1.16 “Exempt Person” means any of the Employers, any employee benefit plan of
any of the Employers, and any Person organized, appointed, or established by
any Employer for or pursuant to the terms of any such plan.


1.17 “Exempt Rights” means any rights to purchase shares of Common Stock or
other Voting Stock of the Company if at the time of the issuance thereof such
rights are not separable from such Common Stock or other Voting Stock (i.e.,
are not transferable otherwise than in connection with a transfer of the
underlying Common Stock or other Voting Stock), except upon the occurrence of a
contingency, whether such rights exist as of the Effective Date, or are
thereafter issued by the Company as a dividend on shares of Common Stock or
other Voting Securities or otherwise.


1.18 “Exempt Transaction” means an increase in the percentage of the
outstanding shares of Common Stock or the percentage of the combined voting
power of the outstanding Voting Stock of the Company beneficially owned by any
Person solely as a result of a reduction in the number of shares of Common
Stock then outstanding due to the repurchase of Common Stock or Voting Stock by
the Company, unless and until such time as (a) such Person or any Affiliate or
Associate of such Person shall purchase or otherwise become the Beneficial
Owner of additional shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock or additional Voting Stock representing 1%
or more of the combined voting power of the then outstanding Voting Stock, or
(b) any other Person (or Persons) who is (or collectively are) the Beneficial
Owner of shares of Common Stock constituting 1% or more of the then outstanding
shares of Common Stock or Voting Stock representing 1% or more of the combined
voting power of the then outstanding Voting Stock shall become an Affiliate or
Associate of such Person.


1.19 “Good Reason” means the occurrence, on or after the date of a Change in
Control, and without the Eligible Employee’s written consent, of (i) the
assignment to the Eligible Employee of duties in the aggregate that are
inconsistent with the Eligible Employee’s level of responsibility immediately
prior to the date of the Change in Control or any diminution in the nature of
the Eligible



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Employee’s responsibilities from those in effect immediately prior
to the date of the Change in Control; (ii) a reduction by the Employer in the
Eligible Employee’s annual base salary or any adverse change in the Eligible
Employee’s aggregate annual and long term incentive compensation opportunity
from that in effect immediately prior to the Change in Control which change is
not pursuant to a program applicable to all comparably situated executives of
the Employer; or (iii) the relocation of the Eligible Employee’s principal
place of employment to a location more than 50 miles from the Eligible
Employee’s principal place of employment immediately prior to the date of the
Change in Control; provided, however, that this clause (iii) shall not be
considered to be Good Reason if the Employer undertakes to pay all reasonable
relocation expenses of the Eligible Employee in connection with such
relocation, whether through a relocation plan, program, or policy of the
Employer or otherwise.


1.20 “Gross-Up Payment” has the meaning set forth in Section 2.5 hereof.


1.21 “Parachute Value” of a Payment shall mean the present value as of the date
of the change of control for purposes of Section 280G of the Code of the
portion of such Payment that constitutes a “parachute payment” under Section
280G(b)(2), as determined by the Accounting Firm for purposes of determining
whether and to what extent the Excise Tax will apply to such Payment.


1.22 “Payment” shall mean any payment or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code) to or for
the benefit of an Eligible Employee, whether paid or payable pursuant to this
Plan or otherwise, by any Employer or by a Person that is a party to the Change
in Control.


1.23 “Person” means any individual, firm, corporation, partnership,
association, trust, unincorporated organization, or other entity.


1.24 “Plan” means the ConocoPhillips Key Employee Change in Control Severance
Plan, as set forth herein, as it may be amended from time to time.


1.25 “Plan Administrator” means the person or persons appointed from time to
time by the Board, which appointment may be revoked at any time by the Board.


1.26 “Public Offering” means the initial sale of common equity securities of
the Company pursuant to an effective registration statement (other than a
registration on Form S-4 or S-8 or any successor or similar forms) filed under
the Securities Act of 1933.


1.27 “Retirement Plans” means the ConocoPhillips Retirement Plan and the
ConocoPhillips Key Employee Supplemental Retirement Plan.


1.28 “Safe Harbor Amount” means, with respect to an Eligible Employee, 2.99
times the Eligible
Employee’s “base amount,” within the meaning of Section 280G(b)(3) of the Code.



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1.29 “Severance” means the termination of an Eligible Employee’s employment
with the Employer on or within two years following the date of a Change in
Control, (i) by the Employer other than for Cause, or (ii) by the Eligible
Employee for Good Reason. An Eligible Employee will not be considered to have
incurred a Severance if his employment is discontinued by reason of the
Eligible Employee’s death or a physical or mental condition causing such
Eligible Employee’s inability to substantially perform his duties with the
Employer and entitling him or her to benefits under any long-term sick pay or
disability income policy or program of the Employer. Furthermore, an Eligible
Employee will not be considered to have incurred a Severance if employment with
the Employer is discontinued after the Eligible Employee has been offered
employment with another employer that has purchased a subsidiary or division of
the Company or all or substantially all of the assets of an a subsidiary or
division of the Company and the offer of employment from the other employer is
at the same or greater salary and the same or greater target bonus as the
Eligible Employee has at that time from the Employer. Notwithstanding anything
herein to the contrary, Good Reason shall not be deemed to have occurred unless
the Company shall have been given (1) written notice of the Eligible Employee’s
assertion that an event constituting Good Reason has occurred, which notice
shall be given not less than 30 days prior to the Severance Date to which such
notice relates, and (2) a reasonable opportunity to cure such occurrence during
such 30-day period.


1.30 “Severance Date” means the date on which an Eligible Employee incurs a Severance.


1.31 “Severance Pay” means the payment determined pursuant to Section 2.1 hereof.


1.32 “Severed Employee” means an Eligible Employee who has incurred a Severance.


1.33 “Tier 1 Employee” means any employee of the Employer who is in salary
grade 26 or above (under the salary grade schedule of the Company on the
Effective Date, with appropriate adjustment for any subsequent change in such
salary grade schedule), at or subsequent to the time of the Change in Control.


1.34 “Tier 2 Employee” means any employee of the Employer, other than a Tier 1
Employee, who is in salary grade 23 or above (under the salary grade schedule
of the Company on the Effective Date, with appropriate adjustment for any
subsequent change in such salary grade schedule) at or subsequent to the time
of the Change in Control.


1.35 “Value” of a Payment shall mean the economic present value of a Payment as
of the date of the change of control for purposes of Section 280G of the Code,
as determined by the Accounting Firm using the discount rate required by
Section 280G(d)(4) of the Code.


1.36 “Voting Stock” means, with respect to a corporation, all securities of
such corporation of any class or series that are entitled to vote generally in
the election of directors of such corporation (excluding any
class or series that would be entitled so to vote by reason of the occurrence
of any contingency, so long as such contingency has not occurred).



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SECTION 2. BENEFITS.



2.1 Subject to Section 2.9, each Severed Employee shall be entitled to receive
Severance Pay equal to the sum of (a) and (b). For this purpose, (a) is the
Severed Employee’s Credited Compensation, multiplied by (i) 3, in the case of a
Tier 1 Employee or (ii) 2 in the case of a Tier 2 Employee and (b) is the
present value, determined as of the Severed Employee’s Severance Date, of the
increase in benefits under the Retirement Plans that would result if the
Severed Employee was credited with the following number of additional years of
age and service under the Retirement Plans: (i) 3, in the case of a Tier 1
Employee or (ii) 2, in the case of a Tier 2 Employee. Present value shall be
determined based on the assumptions utilized under the ConocoPhillips
Retirement Plan for purposes of determining contributions under Code Section
412 for the most recently completed plan year.


2.2 Severance Pay (as well as any amount payable pursuant to Section 2.6
hereof) shall be paid to an eligible Severed Employee in a cash lump sum, as
soon as practicable following the Severance Date, but in no event later than 5
business days immediately following the date the Severed Employee’s release,
described in Section 2.9, becomes irrevocable.


2.3 Subject to Section 2.9, for a period of (a) 36 months, in the case of a
Tier 1 Employee or (b) 24 months, in the case of a Tier 2 Employee, beginning
the first of the month following the termination of active employee benefits,
the Company shall arrange to provide the Severed Employee and his dependents
benefits similar to those the Severed Employee and his dependents had
immediately prior to the Severed Employee’s Severance Date. Only those
dependents who were eligible for coverage on the Severed Employee’s Severance
Date may be covered thereafter, but no amendment to any plan or program
providing these benefits made after the Severed Employee’s Severance Date shall
prevent eligibility for dependents who would otherwise have been eligible for
coverage on the Severed Employee’s Severance Date. These benefits will be
provided at no greater cost to the Severed Employee than active employee rates
for the plan year of coverage provided the benefits continue to be offered by
the Company to active employees and the Severed Employee and his dependents
meet the same eligibility criteria for the benefits as an active employee and
dependents of an active employee. Depending on coverages prior to the Severed
Employee’s Severance Date, these benefits could include the following, but do
not include any other benefits offered by the Company: Life Insurance, which
includes Basic, Executive Basic, Supplemental, and Dependent Life; Personal
Accident Insurance; Medical (Primary PPO and Traditional Options); and Dental
(CP Dental Option). Severed employees may also continue Long Term Care and
Executive Life directly through the vendor to be paid for by the Severed
Employee. If a Severed Employee is covered by any other Medical Option prior
to the Severed Employee’s Severance Date, the Severed Employee will be covered
under the Primary PPO Option or the Traditional Option for medical benefits, at
the Severed Employee’s choice, as soon as possible after the Severed Employee’s
Severance Date. If a Severed Employee is covered by any other Dental Option
prior to the Severed Employee’s Severance Date, the Severed Employee will be
covered
under the CP Dental Option for dental benefits as soon as possible after the
Severed Employee’s Severance Date. While as an active employee the Severed
Employee may have been able to make employee contributions or pay premiums for
certain



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coverage through a pre-tax salary reduction arrangement, that will not
continue after the Severed Employee’s Severance Date. The cost of these
benefits will not be adjusted to reflect that the Severed Employee’s cost will
no longer be pre-tax. All other active employee benefits, not specifically
mentioned above, are excluded, although if any of the benefits specifically
mentioned above are replaced with a similar benefit after the Severed
Employee’s Severance Date, such replacement benefits are to be considered as
mentioned specifically above even though their names, terms, and conditions may
have been changed. Such benefits shall not be provided (except to the extent
as may be required by law) during any period when the Severed Employee is
eligible to receive such benefits from another employer or from an Employer or
if the Severed Employee has resumed working for an Employer. The Severed
Employee is obligated to inform the Company when or if they become eligible to
receive such benefits from another employer.


2.4 Upon Change in Control, each Eligible Employee shall immediately become
fully vested in all outstanding equity awards and shall not thereafter be
forfeitable for any reason (except that options shall expire and be cancelled
ten years from the date of their grant). Any options granted to the Eligible
Employee shall be exercisable at the times set forth in the applicable award
documents. Each such option shall remain outstanding until ten years from the
date of grant, notwithstanding any provision of the option grant or any plan
under which the option may have been granted to the contrary. Restrictions
existing on any restricted stock or restricted stock units granted to the
Eligible Employee shall immediately lapse, and any such stock held in escrow
shall be released. Any stock or other value payable from grants of restricted
stock or restricted stock units shall be delivered or paid to the Eligible
Employee as soon as practicable following the Change in Control, but in no
event later than 5 business days immediately following the Change in Control.




	2.5	 	(a) Anything in this Plan to the contrary notwithstanding and except as
set forth below, in the event it shall be determined that any Payment to
an Eligible Employee would be subject to the Excise Tax, then the Eligible
Employee shall be entitled to receive an additional payment (the “Gross-Up
Payment”) in an amount such that, after payment by the Eligible Employee
of all taxes (and any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Eligible Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 2.5(a), if it
shall be determined that an Eligible Employee is entitled to the Gross-Up
Payment, but that the Parachute Value of all Payments does not exceed 110%
of the Safe Harbor Amount, then no Gross-Up Payment shall be made to the
Eligible Employee and the amounts payable under this Plan shall be reduced
so that the Parachute Value of all Payments, in the aggregate, equals the
Safe Harbor Amount. The reduction of the amounts payable hereunder, if
applicable, shall be made by first reducing the payments under Section
2.1, unless an alternative method of reduction is elected by the Eligible
Employee, and in any event shall be made in such a manner as to maximize
the Value of all Payments actually made to the Eligible Employee. For
purposes of reducing the Payments to the Safe Harbor Amount, only amounts
payable under this Plan (and no other Payments) shall be reduced. If the
reduction of the amount payable under this Plan to an Eligible Employee
would not result in a




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reduction of the Parachute Value of all Payments to
the Safe Harbor Amount, no amounts payable to the Eligible Employee under
the Plan shall be reduced pursuant to this Section 2.5(a). The Company’s
obligation to make Gross-Up Payments to an Eligible Employee under this
Section 2.5 shall not be conditioned upon the Eligible Employee’s
termination of employment.


(b) Subject to the provisions of Section 2.5(c), all determinations
required to be made under this Section 2.5, including whether and when a
Gross-Up Payment is required, the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be
made by a nationally recognized certified public accounting firm
designated by the Plan Administrator (the “Accounting Firm”). The
Accounting Firm shall provide detailed supporting calculations both to
the Company and each Eligible Employee Eligible Employee within 15
business days of the receipt of notice from the Eligible Employee that
there has been a Payment or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 2.5, shall be paid by the Company to the Eligible Employee
within 5 days of the receipt of the Accounting Firm’s determination. Any
determination by the Accounting Firm shall be binding upon the Company
and the Eligible Employee. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments that will not have been made by the Company should have
been made (the “Underpayment”), consistent with the calculations required
to be made hereunder. In the event the Company exhausts its remedies
pursuant to Section 2.5(c) and the Eligible Employee thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit
of the Eligible Employee.


(c) As a condition to being entitled to Gross-Up Payment hereunder, each
Eligible Employee shall be required to notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable, but no later than 10
business days after the Eligible Employee is informed in writing of such
claim. The Eligible Employee shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Eligible Employee shall not pay such claim prior to the expiration of the
30-day period following the date on which the Eligible Employee gives
such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the
Company notifies the Eligible Employee in writing prior to the expiration
of such period that the Company desires to contest such claim, the
Eligible Employee shall:



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(i) give the Company any information reasonably requested by the
Company relating to such claim,




(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,




(iii) cooperate with the Company in good faith in order effectively
to contest such claim, and




(iv) permit the Company to participate in any proceedings relating
to such claim;


provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest, and shall indemnify and hold the Eligible
Employee harmless, on an after-tax basis, for any Excise Tax or income
tax (including interest and penalties) imposed as a result of such
representation and payment of costs and expenses. Without limitation on
the foregoing provisions of this Section 2.5(c), the Company shall
control all proceedings taken in connection with such contest, and, at
its sole discretion, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion,
either direct the Eligible Employee to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Eligible
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however,
that, if the Company directs the Eligible Employee to pay such claim and
sue for a refund, the Company shall make such payment and shall indemnify
and hold the Eligible Employee harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties) imposed with
respect to such payment or with respect to any imputed income in
connection with such payment; and provided, further, that any extension
of the statute of limitations relating to payment of taxes for the
taxable year of the Eligible Employee with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be
limited to issues with respect to which the Gross-Up Payment would be
payable hereunder, and the Eligible Employee shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.


(d) If, after the Company has made a Gross-Up Payment or a payment
pursuant to Section 2.5(c), an Eligible Employee becomes entitled to
receive any refund with respect to the Excise Tax to which such Gross-Up
Payment relates or with respect to the claim to which such payment
relates, the Eligible Employee shall (subject to the Company’s complying
with the requirements of Section 2.5(c), if applicable) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the Company
has paid any amount pursuant to Section 2.5(c), a



11









 






determination is made
that the Eligible Employee shall not be entitled to any refund with respect to
such claim and the Company does not notify the Eligible Employee in
writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then the amount of such
payment shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.




(e) Notwithstanding any other provision of this Section 2.5, the Company
may, in its sole discretion, withhold and pay over to the Internal
Revenue Service or any other applicable taxing authority, for the benefit
of any Eligible Employee, all or any portion of any Gross-Up Payment, and
each Eligible Employee shall be required to consent to such withholding
as a condition to being entitled to any Gross-Up Payment.


2.6 Each Severed Employee shall be entitled to receive the employee’s full
salary through the Severance Date and, subject to Section 2.9 but
notwithstanding any provision of the Company’s Variable Cash Incentive Program
or similar annual bonus incentive plan to the contrary, a cash lump sum amount
equal to a pro rata portion to the Severance Date of the aggregate value of the
annual incentive compensation award to such Severed Employee for the then
uncompleted fiscal year under such plan, calculated by multiplying the average
of the last two annual awards paid to the Severed Employee, by the fraction
obtained by dividing the number of full months and any fractional portion of a
month during said fiscal year through the Severance Date by 12; provided,
however, that for purposes of this clause, (I) if such Severed Employee has
been eligible to receive only one such annual incentive compensation payment
for a period ending before his or her Severance Date, the amount of annual
incentive compensation for purposes of determining this cash lump sum shall be
equal to the amount of such single annual incentive compensation payment (if
any), and (II) if such Severed Employee has not been eligible for any such
annual incentive compensation payment, the amount of annual incentive
compensation for purposes of determining this cash lump sum shall be equal to
his or her most recently established target (determined at one hundred percent
of target) for annual incentive compensation for such employee prior to such
employee’s Severance Date.


2.7 The Company will pay to each Eligible Employee all reasonable legal fees
and expenses incurred by such Eligible Employee in pursuing any claim under the
Plan, unless the applicable finder of fact determines that the Eligible
Employee’s claim was frivolous or not maintained in good faith.


2.8 The Company shall be entitled to withhold and/or to cause to be withheld
from amounts to be paid to the Severed Employee hereunder any federal, state,
or local withholding or other taxes or charges which it is from time to time
required to withhold.


2.9 No Severed Employee shall be eligible to receive Severance Pay or other
benefits under the Plan unless he or she first executes a written release
substantially in the form attached as Exhibit A hereto (or, if the Severed
Employee was not a United States employee, a similar release which is in
accordance with the applicable laws in the relevant jurisdiction) and, to the
extent such release is revocable by its terms, only if the Severed Employee
does not revoke it.



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SECTION 3. PLAN
ADMINISTRATION.



3.1 The Plan Administrator shall administer the Plan and may interpret the
Plan, prescribe, amend, and rescind rules and regulations under the Plan and
make all other determinations necessary or advisable for the administration of
the Plan, subject to all of the provisions of the Plan.


3.2 In the event of a claim by an Eligible Employee as to the amount or timing
of any payment or benefit, such Eligible Employee shall present the reason for
his or her claim in writing to the Plan Administrator. The Plan Administrator
shall, within 14 days after receipt of such written claim, send a written
notification to the Eligible Employee as to its disposition. Except as
provided in the preceding portion of this Section 3.2, all disputes under this
Plan shall be settled exclusively by binding arbitration in Houston, Texas, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator’s award in any court having
jurisdiction.


3.3 The Plan Administrator may delegate any of its duties hereunder to such
person or persons from time to time as it may designate.


3.4 The Plan Administrator is empowered, on behalf of the Plan, to engage
accountants, legal counsel, and such other personnel as it deems necessary or
advisable to assist it in the performance of its duties under the Plan. The
functions of any such persons engaged by the Plan Administrator shall be
limited to the specified services and duties for which they are engaged, and
such persons shall have no other duties, obligations or responsibilities under
the Plan. Such persons shall exercise no discretionary authority or
discretionary control respecting the management of the Plan. All reasonable
expenses thereof shall be borne by the Employer.



SECTION 4. DURATION; AMENDMENT; AND TERMINATION.



4.1 This Plan shall be effective on the Effective Date. If a Change in Control
has not occurred, this Plan shall continue in effect unless and until it is
terminated as provided in Section 4.2. If a Change in Control occurs, this
Plan shall continue in full force and effect and shall not terminate or expire
until after all Eligible Employees who become or may become entitled to any
payments hereunder shall have received such payments in full and all
adjustments required to be made pursuant to Section 2 have been made.




	4.2	 	(a) If a Change in Control has not occurred, this Plan may be amended
from time to time during its term by the Company acting through its Board
of Directors or, to the extent authorized by the Board of Directors, its
officers, provided that any such amendment which shall in any manner
reduce, diminish, or otherwise adversely affect any benefit which is or
may at any time in the future become payable hereunder, or any such
amendment which shall alter the definition of Change in Control shall be
made effective not less than two years after the action of the Company
authorizing such amendment, and in no event shall any such amendment take
effect prior to October 1, 2006,
unless, and then only to the extent that such




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	 	 	amendment is or becomes
necessary in order to assure continued compliance by this Plan with any
applicable state or federal law or regulation.
	 
	(b)	 	This Plan shall not terminate prior to October 1, 2006. On or after
October 1, 2004, the Company may, by action of its Board of Directors,
terminate this Plan, provided, however, that the effective date of such
termination shall be not less than two years from the date of such Board
action. Provided further that in the event a Change in Control shall
occur prior to the effective date of termination, the provisions of
Section 4.2(c) shall apply.
	 
	(c)	 	If a Change in Control shall occur while this Plan is in effect, no
then-pending amendment or termination shall take effect, this Plan shall
remain in full force and effect as at the Change in Control, and this Plan
shall terminate automatically without further action on behalf of the
Company immediately following the making of all payments to Eligible
Employees under this Plan.




SECTION 5. GENERAL PROVISIONS.



5.1 Except as otherwise provided herein or by law, no right or interest of any
Eligible Employee under the Plan shall be assignable or transferable, in whole
or in part, either directly or by operation of law or otherwise, including
without limitation by execution, levy, garnishment, attachment, pledge, or in
any manner; no attempted assignment or transfer thereof shall be effective; and
no right or interest of any Eligible Employee under the Plan shall be liable
for, or subject to, any obligation or liability of such Eligible Employee.
When a payment is due under this Plan to a Severed Employee who is unable to
care for his or her affairs, payment may be made directly to his or her legal
guardian or personal representative.


5.2 If any Employer is obligated by law or by contract to pay severance pay, a
termination indemnity, notice pay, or the like, to a Severed Employee, or if
any Employer is obligated by law to provide advance notice of separation
(“Notice Period”) to a Severed Employee, then any Severance Pay hereunder to
such Severed Employee shall be reduced by the amount of any such severance pay,
termination indemnity, notice pay, or the like, as applicable, and by the
amount of any compensation received during any Notice Period. This provision
specifically includes any payments or obligations under the Conoco Inc. Key
Employee Severance Plan, as amended and restated effective October 1, 2001, and
as subsequently amended, or under the ConocoPhillips Severance Pay Plan, as
effective March 13, 2004, and as subsequently amended, or under the
ConocoPhillips Executive Severance Plan, as effective October 1, 2004, and as
subsequently amended. Furthermore, if an Eligible Employee has willful and bad
faith conduct demonstrably injurious to Company or its subsidiaries, monetarily
or otherwise, after receiving Severance Pay, the Company may offset an amount
equal to such Severance Pay against any other amounts due from other plans or
programs, unless otherwise required by law.


5.3 Neither the establishment of the Plan, nor any modification thereof, nor
the creation of any fund, trust, or account, nor the payment of any benefits
shall be construed as giving any Eligible Employee, or any person whomsoever,
the right to be retained in the service of the Employer, and all



14









 




Eligible
Employees shall remain subject to discharge to the same extent as if the Plan
had never been adopted.


5.4 If any provision of this Plan shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provisions hereof,
and this Plan shall be construed and enforced as if such provisions had not
been included.


5.5 This Plan shall be binding upon the heirs, executors, administrators,
successors, and assigns of the parties, including each Eligible Employee,
present and future, and any successor to the Employer.


5.6 The headings and captions herein are provided for reference and convenience
only, shall not be considered part of the Plan, and shall not be employed in
the construction of the Plan.


5.7 The Plan shall not be funded. No Eligible Employee shall have any right
to, or interest in, any assets of any Employer that may be applied by the
Employer to the payment of benefits or other rights under this Plan.


5.8 Any notice or other communication required or permitted pursuant to the
terms hereof shall have been duly given when delivered or mailed by United
States Mail, first-class, postage prepaid, addressed to the intended recipient
at his, her or its last known address.


5.9 This Plan shall be construed and enforced according to the laws of the
State of Delaware.



CONOCOPHILLIPS




	 	 	 	 	 	 	 
	By:

	 	/s/ Carin S. Knickel
	 	Dated:
	 	11/1/2004
	

	
 	
 
	 	 	
 	
 
	

	 	Carin S. Knickel

Vice President, Human Resources	 	 	 	 







15









 





Exhibit A




WAIVER AND RELEASE OF CLAIMS




     In consideration of, and subject to, the payments to be made to me by
ConocoPhillips, a Delaware corporation (the “Company”) or any of its
subsidiaries, pursuant to the ConocoPhillips Key Employee Change in Control
Severance Plan (the “Plan”), which I acknowledge that I would not otherwise be
entitled to receive, I hereby waive any claims I may have for employment or
re-employment by the Company or any subsidiary or parent of the Company after
the date hereof, and I further agree to and do release and forever discharge
the Company or any subsidiary or parent of the Company, and their respective
past and present officers, directors, shareholders, employees, and agents from
any and all claims and causes of action, known or unknown, arising out of or
relating to my employment with the Company or any subsidiary or parent of the
Company, or the termination thereof, including, but not limited to, wrongful
discharge, breach of contract, tort, fraud, the Civil Rights Acts, Age
Discrimination in Employment Act, Employee Retirement Income Security Act,
Americans with Disabilities Act, or any other federal, state, or local
legislation or common law relating to employment or discrimination in
employment or otherwise.



     Notwithstanding the foregoing or any other provision hereof, nothing in
this Waiver and Release of Claims shall adversely affect (i) my rights under
the Plan; (ii) my rights to benefits other than severance benefits under plans,
programs, and arrangements of the Company or any subsidiary or parent of the
Company which are accrued but unpaid as of the date of my termination; or (iii)
my rights to indemnification under any indemnification agreement, applicable
law and the certificates of incorporation and bylaws of the Company and any
subsidiary or parent of the Company, and my rights under any director’s and
officers’ liability insurance policy covering me.



     I acknowledge that I have signed this Waiver and Release of Claims
voluntarily, knowingly, of my own free will and without reservation or duress
and that no promises or representations have been made to me by any person to
induce me to do so other than the promise of payment set forth in the first
paragraph above and the Company’s acknowledgement of my rights reserved under
the second paragraph above.



	 	 	 	 	 	 	 
	Signature:

	 	 	 	Dated:	 	 
	

	
 	
 
	 	 	
 	
 








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