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Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 20-F

o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934ORý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934For the fiscal year ended December 31, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                                    toORo

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this shell company report


Commission file number 1-3064



NOVA Chemicals Corporation(Exact name of Registrant as specified in its charter)

New Brunswick, Canada(Jurisdiction of incorporation or organization)

1000 7th Avenue S.W.
Calgary, Alberta
Canada, T2P 5L5(Address of principal executive offices)

Contact Person: Todd D. Karran
Senior Vice President, Chief Financial Officer and Treasurer
1000 7th Avenue S.W.
Calgary, Alberta
Canada, T2P 5L5
403-750-3600
karrantd@novachem.com(name, telephone, e-mail and/or facsimile number and address of company contact person)



Securities registered or to be registered pursuant to Section 12(b) of the Act.None

Securities
registered or to be registered pursuant to Section 12(g) of the Act:None

Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act:None

As
of December 31, 2009, there were 141,494,222 shares of the registrant's common stock outstanding.

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
o Yes    ý No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934. ý Yes    o No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. o Yes    ý No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act (check one):

o Large accelerated filer

o Accelerated filer

ý Non-accelerated filer


Indicate
by check mark which basis for accounting the registrant has used to prepare the financing statements included in this filing:

U.S. GAAP
o        International Financial Reporting Standards as issued by        Other
ýCanadian GAAP
the International Accounting Standards Board o

Indicate by check mark which financial statement item the registrant has elected to follow.

ý
Item 17            o Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).

o
Yes    ý No



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Table of Contents



TABLE OF CONTENTS



PageEXPLANATORY NOTES

4DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION

5PART I

7Item 1.  Identity of Directors, Senior
Management and Advisors

7Item 2.  Offer Statistics and Expected
Timetable

7Item 3.  Key Information

73.A.  SELECTED FINANCIAL INFORMATION

73.B.  CAPITALIZATION AND INDEBTEDNESS

103.C.  REASONS FOR THE OFFER AND USE OF
PROCEEDS

103.D.  RISK FACTORS

10Item 4.  Information on the Company

214.A.  HISTORY AND DEVELOPMENT OF THE COMPANY

214.B.  BUSINESS OVERVIEW

244.C.  ORGANIZATIONAL STRUCTURE

384.D.  PROPERTY, PLANTS AND EQUIPMENT

38Item 4A.  Unresolved Staff Comments

38Item 5.  Operating and Financial Review and
Prospects

38Item 6.  Directors, Senior Management and
Employees

916.A.  DIRECTORS AND SENIOR MANAGEMENT

916.B.  COMPENSATION

936.C.  BOARD PRACTICES

1166.D.  EMPLOYEES

1176.E.  SHARE OWNERSHIP

117Item 7.  Major Shareholders and Related Party
Transactions

1177.A.  MAJOR SHAREHOLDERS

1177.B.  RELATED PARTY TRANSACTIONS

1187.C.  INTERESTS OF EXPERTS AND COUNSEL

119Item 8.  Financial Information

1198.A.  CONSOLIDATED STATEMENTS AND OTHER FINANCIAL
INFORMATION

1198.B.  SIGNIFICANT CHANGES

119Item 9.  The Offer and Listing

1199.A.  OFFER AND LISTING DETAILS

1199.B.  PLAN OF DISTRIBUTION

1199.C.  MARKETS

1199.D.  SELLING SHAREHOLDERS

1199.E.  DILUTION

1199.F.  EXPENSES OF THE ISSUE

119Item 10.  Additional Information

12010.A.  SHARE CAPITAL

12010.B.  MEMORANDUM AND ARTICLES OF ASSOCIATION

120


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Page10.C.  MATERIAL CONTRACTS

12210.D.  EXCHANGE CONTROLS

12310.E.  TAXATION

12310.F.  DIVIDENDS AND PAYING AGENTS

12310.G.  STATEMENT BY EXPERTS

12310.H.  DOCUMENTS ON DISPLAY

12410.I.  SUBSIDIARY INFORMATION

124Item 11.  Quantitative and Qualitative Disclosures About Market
Risk

124Item 12.  Description of Securities Other than Equity
Securities

12412.A.  DEBT SECURITIES

12412.B.  WARRANTS AND RIGHTS

12412.C.  OTHER SECURITIES

12412.D.  AMERICAN DEPOSITORY SHARES

124PART II

124Item 13.  Defaults, Dividend Arrearages and
Delinquencies

124Item 14.  Material Modifications to the Rights of Security
Holders and Use of Proceeds

124Item 15.  Controls and Procedures

124Item 16A.  Audit Committee Financial Expert

125Item 16B.  Code of Ethics

125Item 16C.  Principal Accountant Fees and
Services

125Item 16D.  Exemptions from the Listing Standard for Audit
Committees

126Item 16E.  Purchases of Equity Securities by the Issuer and
Affiliated Purchasers

126Item 16F.  Change of Registrant's Certifying Accountant

126Item 16G.  Corporate Governance

126PART III

126Item 17.  Financial Statements

126Item 18.  Financial Statements

126Item 19.  Exhibits

127Index to Financal Statements

F-i


3

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Table of Contents

EXPLANATORY NOTES

The Corporation

We are a global company continued under the laws of the province of New Brunswick, Canada, with our head office located at
1000-7th Avenue S.W., Calgary, Alberta, Canada T2P 5L5, and our United States commercial center located at 1555 Coraopolis Heights Road, Moon
Township, PA 15108. Our telephone number is (403) 750-3600. We maintain a website atwww.novachemicals.com. The information on our
website is not a part of this Form 20-F.

Unless
otherwise indicated or required by the context, as used in this Form 20-F, the terms "NOVA Chemicals," the "Corporation," "we," "our" and "us" refer to
NOVA Chemicals Corporation and all of its subsidiaries and joint ventures that are consolidated under Canadian generally accepted accounting principles.

Presentation of Financial Information

The consolidated financial statements contained in this Form 20-F are reported in U.S. dollars but have been
prepared in accordance with generally accepted accounting principles ("GAAP") in Canada. Canadian GAAP differs in certain material respects from U.S. GAAP. Note 23 to our Annual
Audited Consolidated Financial Statements contained in this Form 20-F summarizes the effect on our consolidated financial statements of the principal differences between GAAP in
Canada and in the United States.

Market and Industry Data

We obtained the market and competitive position data used throughout this annual report from our own research, surveys or studies
conducted by third parties and industry or general publications, including data from Chemical Market Associates, Inc., Nexant Chem Systems, the American Chemistry Council, IHS Global Insight
and other petrochemical industry consultants. Industry publications and surveys generally state that they have obtained information from sources believed to be reliable. We have not independently
verified such data. Similarly, our internal research has not been verified by any independent sources.

Unless
otherwise indicated, when we present relative market rankings in this annual report, we include each producer's capacity, including any known capacity it has through ownership of
joint venture interests.

TRADEMARKS

Advanced
SCLAIRTECH and SCLAIRTECH are trademarks of NOVA Chemicals.

ARCEL®,
DYLARK®, DYLITE® and NOVACAT® are registered trademarks of NOVA Chemicals Inc.

EPS
Silver® is a registered trademark of NOVA Chemicals (International) S.A. in the European Community and a trademark of NOVA Chemicals Inc. in North America.

SCLAIR®
is a registered trademark of NOVA Chemicals Corporation in Canada and of NOVA Chemicals (International) S.A. elsewhere; authorized use/utilisation
autorisée.

SURPASS®
is a registered trademark of NOVA Chemicals Corporation in Canada and of NOVA Chemicals (International) S.A. elsewhere.

NAS®,
STYROSUN® and ZYLAR® are registered trademarks of INEOS NOVA.

Responsible
Care® or variations thereof are registered service marks of the Chemistry Industry Association of Canada in Canada and the American Chemistry Council, Inc. in the
United States.

4

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Table of Contents

DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION

This Form 20-F contains forward-looking information with respect to us within the meaning of U.S. federal
securities laws. By its nature, forward-looking information requires us to make assumptions and is subject to inherent risks and uncertainties. There is significant risk that predictions, forecasts,
conclusions and projections that constitute forward-looking information will not prove to be accurate, that our assumptions may not be correct and that actual results may vary from the forward-looking
information.

Forward-looking
information for the time periods beyond 2010 involves longer-term assumptions and estimates than forward-looking information for 2010 and is consequently
subject to greater
uncertainty. We caution readers of this Form 20-F not to place undue reliance on our forward-looking information as a number of factors could cause actual results, conditions,
actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking information.

The
words "believe," "expect," "plan," "intend," "estimate," or "anticipate" and similar expressions, as well as future or conditional verbs such as "should," "would," and "could" often
identify forward-looking information. Specific forward-looking information contained in this Form 20-F includes, among others, statements regarding: the possibility of a joint
control arrangement between IPIC and OMV; our financing plans and beliefs about our liquidity, our credit facilities and other sources of liquidity; our low-cost ethylene position; our
plans to restructure our Performance Styrenics business; our beliefs about our competitive advantages and our ability to compete successfully; our beliefs about expected funding for our pension plans;
general economic conditions; our beliefs about and expectations for our Olefins/Polyolefins business unit, including our beliefs about our cost advantaged feedstock, our beliefs about ethane supply in
Alberta in 2010 and beyond, our expectations for feedstock supply via the Union Pipeline Project, our expectations for our modernization and expansion project at our Mooretown, Ontario plant, and our
beliefs about the supply/demand balance for ethylene and polyethylene; our beliefs and expectations concerning the global styrenics industry and our joint venture with INEOS, including our belief that
efficiency enhancing actions taken by INEOS NOVA and others in the industry and lower feedstock costs could lead to higher operating rates and improved industry profitability; and our beliefs and
expectations regarding our Performance Styrenics business unit and our restructuring of this business, including our beliefs about our styrenic polymers and ventures and the advantages they can
provide for our customers.

With
respect to forward-looking information contained in this Form 20-F, we have made material assumptions regarding, among other things: future oil, natural gas,
natural gas liquids and benzene prices; our ability to obtain raw materials; our ability to market products successfully to our anticipated customers; the impact of increasing competition; and our
ability to obtain financing on acceptable terms. Some of our assumptions are based upon internal estimates and analyses of current market conditions and trends, management plans and strategies,
economic conditions and other factors and are necessarily subject to risks and uncertainties inherent in projecting future conditions and results.

Some
of the risks that could affect our future results and could cause results to differ materially from those expressed in our forward-looking information include: a deterioration in
our cash balances or liquidity; our ability to access capital markets, which could impact our ability to react to changing economic and business conditions; the ongoing world financial crisis and
economic downturn; commodity chemicals price levels (which depend, among other things, on supply and demand for these products, capacity utilization and substitution rates between these products and
competing products); feedstock availability and prices; operating costs; terms and availability of financing; technology developments; currency exchange rate fluctuations; starting up and operating
facilities using new technology; realizing synergy and cost savings targets; our ability to implement our business strategy; meeting time and budget targets for significant capital investments;
avoiding unplanned facility shutdowns; safety, health and environmental risks associated with the operation of chemical plants and marketing of chemical products, including transportation of these
products; public perception of chemicals and chemical end-use products; the impact of competition; changes in customer demand; changes in, or the introduction of new laws and regulations
relating to our business, including environmental, competition and employment laws; loss of the services of any of our executive officers; uncertainties associated with the North American, South
American, European and Asian economies; terrorist attacks; severe weather and other risks detailed from time to time in our publicly filed disclosure documents and securities commission reports. The

5

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Table of Contents

information
contained in this Form 20-F, including the information provided under the heading "Risk Factors," identifies additional factors that could affect our operating results
and performance.

The
forward-looking information in this Form 20-F is expressly qualified in its entirety by this cautionary statement. In addition, the forward-looking information is
made only as of the date of this Form 20-F, and except as required by applicable law, we undertake no obligation to update publicly this forward-looking information to reflect new
information, subsequent events or otherwise.

6

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Table of Contents

PART I

Item 1.    Identity of Directors, Senior Management and Advisors



Item 2.    Offer Statistics and Expected Timetable



Item 3.    Key Information

3.A. SELECTED FINANCIAL INFORMATION

The selected historical consolidated financial information set forth below has been derived from our audited consolidated financial
statements for each of the years in the five-year period ended December 31, 2009, which statements have been audited by Ernst & Young LLP, Chartered Accountants.

Certain
amounts in the selected historical consolidated financial information presented below have been restated from that which has been included elsewhere in this
Form 20-F due to adoption of new accounting standards or to conform with the presentation of our financial information for the year ended December 31, 2009. In the opinion of
management, all adjustments considered necessary for a fair presentation of our results and financial position have been included in those results and financial position.

The
selected historical consolidated financial information presented below is condensed and may not contain all of the information that you should consider. This selected financial data
should be read in conjunction with our Annual Audited Consolidated Financial Statements, the notes related to those financial statements and the section entitled "Item 5Operating
and Financial Review and Prospects."

For
a description of our election to use push down accounting and predecessor/successor presentation, see "Item 5Operating and Financial Review and
ProspectsIPIC Transaction."

7

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Table of Contents

Year Ended December 31,Jan. 1-
July 5,
2009

July 6-
Dec. 31,
20092005(a)

2006(a)

2007(a)

2008(a)Predecessor

Successor(U.S. dollars in millions)Consolidated Statement of Income (Loss) Data:Revenue

$
5,616

$
6,519

$
6,732

$
7,366

$
1,871

$
2,179Feedstock and operating costs


4,937


5,675


5,597


6,852


1,683


1,712Depreciation and amortization


290


293


237


261


130


131Selling, general and administrative


199


202


207


225


171


99Research and development


50


51


50


52


20


20Foreign exchange (gains) losses











(117
)

39


105Restructuring charges(b)


168


985


86


37


42


23Total operating expenses


5,644


7,206


6,177


7,310


2,085


2,090Operating income (loss)


(28
)

(687
)

555


56


(214
)

89Interest expense, net


(113
)

(168
)

(175
)

(156
)

(94
)

(85
)Other gains (losses)(c)


8


1


20


(2
)

6


1(105
)

(167
)

(155
)

(158
)

(88
)

(84
)Income tax (expense) recovery


8


146


(52
)

62


63


(7
)Net income (loss)

$
(125
)
$
(708
)
$
348

$
(40
)
$
(239
)
$
(2
)Selected Financial Data:RevenueOlefins/Polyolefins

$
3,586

$
4,281

$
4,533

$
5,301

$
1,258

$
1,482Performance Styrenics


363


385


412


433


105


156INEOS NOVA/STYRENIX


1,937


2,186


2,092


1,942


552


635Intersegment eliminations


(270
)

(333
)

(305
)

(310
)

(44
)

(94
)Total revenue

$
5,616

$
6,519

$
6,732

$
7,366

$
1,871

$
2,179Operating income (loss)Olefins/Polyolefins

$
474

$
637

$
792

$
371

$
43

$
223Performance Styrenics


(5
)

(29
)

(30
)

(69
)

(27
)

(2
)INEOS NOVA/STYRENIX


(211
)

(149
)

(5
)

(103
)

6


(2
)Corporate


(286
)

(1,146
)

(202
)

(143
)

(236
)

(130
)Total operating income (loss)

$
(28
)
$
(687
)
$
555

$
56

$
(214
)
$
89Other Consolidated Financial Data:Capital expenditures

$
419

$
198

$
156

$
166

$
41

$
60Cash (used in) from operations


338


350


329


272


(257
)

(20
)Ratio of earnings to fixed charges(d)


N/A


N/A


3.0


N/A


N/A


1.0U.S. GAAP Financial Data:Revenue

$
5,616

$
6,519

$
6,732

$
7,366

$
1,871

$
2,179Net income (loss)


(141
)

(703
)

363


(24
)

(240
)

(2
)


8

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Table of Contents



December 31,2005(a)

2006(a)

2007(a)

2008(a)

2009Predecessor

Successor(U.S. dollars in millions)Consolidated Balance Sheet Data (at end of period):Cash and cash equivalents

$
166

$
53

$
118

$
74

$
267Working capital(e)


207


179


327


54


330Plant, property and equipment (net)


3,626


2,719


3,047


2,808


3,570Total assets


5,147


4,063


4,816


4,007


5,533Total debt(f)


1,974


1,780


1,797


1,652


1,825Shareholders' equity


1,191


521


1,072


895


1,793U.S. GAAP Financial Data:Total assets


5,172


4,086


4,850


4,006


5,533Total debt(g)


1,977


1,782


1,796


1,652


1,825Shareholders' equity


1,202


466


987


746


1,800


Notes: (a)Certain
prior year information has been restated due to the adoption of CICA 3064 on January 1, 2009. See "Management's Discussion and
Analysis of Financial Condition and Results of OperationsAccounting Standards."(b)Restructuring
charges include:


Year Ended December 31,Jan. 1-
July 5,
2009

July 6-
Dec. 31,
20092005

2006

2007

2008Predecessor

Successor(U.S. dollars in millions)Asset write-downs

$
161

$
908

$
61

$
17

$
17

$
Severance costs


7


76


13


11


13


22Other





1


12


9


12


1$
168

$
985

$
86

$
37

$
42

$
23




9

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Table of Contents

Year Ended December 31,Jan. 1-
July 5,
2009

July 6-
Dec. 31,
20092005

2006

2007

2008Predecessor

Successor(U.S. dollars in millions)Gain on sale of Chesapeake








17








Gain on sale of Cambridge








1








IRS settlement


6














Other


2


1


2


(2
)

6


1$
8

$
1

$
20

$
(2
)
$
6

$
1


(d)For
purposes of computing the ratio of earnings to fixed charges, earnings consist of earnings before income taxes plus fixed charges (excluding capitalized
interest during the period). Fixed charges consist of interest expense, capitalized interest and amortization of bond discount and issue costs. For the period January 1, 2009 through
July 5, 2009 and the years ended December 31, 2008, 2006 and 2005, earnings were insufficient to cover fixed charges, and the ratio is not meaningful.(e)Working
capital equals accounts receivable plus prepaid expenses plus inventories less accounts payable and accrued liabilities.(f)Total
debt equals long-term debt plus installments on long-term debt due within one year and bank loans.(g)Total
debt includes long-term debt under U.S. GAAP, installments on long-term debt due within one year and bank loans.


3.B. CAPITALIZATION AND INDEBTEDNESS



3.C. REASONS FOR THE OFFER AND USE OF PROCEEDS



3.D. RISK FACTORS

Risks Related to Our Business

We are and may continue to be materially adversely affected by the ongoing world financial crisis. The financial crisis and economic downturn will continue to have a
negative impact on our business, results of operations, and financial condition and our ability to accurately forecast our results, and may cause a number of the risks that we currently face to
increase in likelihood, magnitude and duration.

The
recent worldwide financial and credit crisis has reduced the availability of liquidity and credit to fund the continuation and expansion of many business
operations worldwide. This shortage of liquidity and credit, combined with recent substantial losses in worldwide equity markets, could lead to an extended worldwide economic recession and result in a
material adverse effect on our business, financial condition and results of operations. The impact of these events will depend on a number of factors, including the duration and severity of these
events, whether the U.S., Canadian and global economies enter into a prolonged recession, and whether the recovery period is brief or prolonged. As a result, we may face new risks as yet unidentified,
and a number of risks that we ordinarily face and that are further disclosed below have increased, or may increase in likelihood, magnitude and duration. These include but are not limited to deferrals
or reductions of customer orders, potential deterioration of customers' ability to pay us or our suppliers' ability to meet their obligations, losses or impairment charges, reduced revenue, reduced
demand for our products, deterioration in our cash balances and liquidity, and increased volatility in energy and raw material prices.

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Our success could be jeopardized by the loss of key personnel or an inability to attract qualified candidates.

Our
Chief Executive Officer and our Chief Financial Officer resigned from those offices effective November 16, 2009, and our Senior Vice President,
Chief Legal Officer and Corporate Secretary resigned this office effective December 31, 2009. Randy G. Woelfel has been appointed to serve as Chief Executive Officer and Todd D. Karran, our
former Vice President, Corporate Development and Treasurer has been appointed to serve as Senior Vice President, Chief Financial Officer and Treasurer. Effective December 15, 2009, our board of
directors established the NOVA Chemicals Management Board and, in addition to Messrs. Woelfel and Karran, appointed William G. Greene, Senior Vice President, Operations, Marilyn N.
Horner, Senior Vice President and Chief Human Resources Officer, and Grant Thomson, Senior Vice President and President, Olefins and Feedstock, as members of the Management Board, reporting directly
to our board of directors. We cannot provide any assurance that this new management team will be successful in executing our strategy and improving our current results of operations and that there
will not be other significant departures of key personnel.

The cyclicality of plastics and chemical businesses may cause significant fluctuation in our income and cash flow.

Our
historical operating results reflect the cyclical and volatile nature of plastics and chemical businesses. Our businesses historically experience
alternating periods of inadequate capacity and tight supply, causing prices and profit margins to increase, followed by periods of oversupply, resulting from capacity additions. Prolonged oversupply
leads to declining capacity utilization rates, prices and profit margins. The markets for ethylene, polyethylene, styrene monomer and styrenic polymers are also highly cyclical, resulting in volatile
profits and cash flow over the business cycle. Because we derive nearly all of our revenue from sales of these products, our operating results are more sensitive to this cyclical nature than many of
our competitors who have more diversified businesses. This cyclicality is exacerbated by volatility in feedstock prices. We cannot provide assurance that pricing or profitability in the future will be
comparable to any particular historical period, including the most recent period shown in our operating results.

Excess
industry capacity, especially at times when demand is weak, has in the past and may in the future cause us and other industry participants to lower production rates, which can
reduce our margins, income and cash flow.

Rising costs of energy and raw materials may result in increased operating expenses and reduced results of operations.

We
purchase large amounts of energy and raw materials, including natural gas and crude oil, for our businesses, representing a substantial portion of our
operating expenses. The prices of energy and raw materials have historically been highly volatile and cyclical, and our energy and raw material costs have fluctuated significantly in recent years.
Although certain of our customer contracts are tied to changes in feedstock costs or provide for surcharges if feedstock costs change, many contracts are tied to market prices. Currently, the price of
crude oil has risen disproportionately more than natural gas prices resulting in a higher than average ratio between the two potentially giving natural gas-based producers an advantage
over oil-based producers. We cannot predict whether and to what extent energy and/or raw materials prices will rise in the future or whether and to what extent we will be able to pass on
such cost increases to our customers. Any significant energy and/or raw materials cost increase could have a material adverse effect on our business, results of operations, financial condition or
cash flow.

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Our business may be adversely affected by fluctuations in currency exchange rates and other risks associated with international operations.

Although we report our results in U.S. dollars, we conduct a significant portion of our business outside the
United States, and we are subject to risks normally associated with international operations.

Our
financial results are impacted by both translation and transaction currency effects resulting from changes in currency exchange rates. Translation currency effects occur when the
financial results of our subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars using the exchange rates prevailing during the relevant
period. The resulting impact of such translation can affect results when compared to other periods translated at different foreign exchange rates. Until September 30, 2008, the majority of our
subsidiaries which resided outside of the United States had functional currencies other than the U.S. dollar. On October 1, 2008, all of our wholly owned subsidiaries adopted the
U.S. dollar as their
functional currency and are therefore no longer exposed to translation effects. However, we have non-wholly owned subsidiaries which reside outside of the United States and have
retained their non U.S. dollar functional currency and are therefore still exposed to limited translation effects.

Transaction
currency effects occur when one of our subsidiaries incurs costs or earns revenue in a currency different from its functional currency. This can impact our financial results
in two ways:



Fluctuations
in exchange rates may also affect the relative competitive position of a particular manufacturing facility, as well as our ability to market our products successfully in
other markets.

Other
risks of international operations include trade barriers, tariffs, exchange controls, national and regional labor strikes, social and political risks, general economic risks,
required compliance with a variety of foreign laws, including tax laws, and the difficulty of enforcing agreements and collecting receivables through foreign legal systems.

Interruptions in our supply of raw materials could adversely affect our business.

We
purchase large amounts of raw materials, including natural gas and crude oil, for our businesses. If temporary shortages due to disruptions in supply caused
by weather, transportation, production delays or other factors require us to procure our raw materials from sources other than our current suppliers, we cannot provide any assurance that we will be
able to do so on terms as favorable as our current terms, or at all. The amount of ethane available as feedstock in Alberta is largely dependent on volumes of natural gas available to be extracted at
the ethane extraction plants on the mainline of the TransCanada Alberta pipeline system ("Straddle Plants") as well as the ethane content in that natural gas. Weather conditions and economic
conditions drive demand for and the price of natural gas and could lead to short-term supply dislocations. In 2010, we expect the flows of natural gas across the Canadian border to the
United States to decline due primarily to low selling prices for natural gas in North
America. This will likely lead to less natural gas flowing through the Straddle Plants and therefore less ethane available as feedstock for our ethylene plants in Western Canada. We plan to continue
to work with suppliers and the Alberta government to source additional supply for our feedstock needs. These sources could include, among others, the streaming of natural gas with low ethane content
for industrial consumption in Alberta, with the expected result that high ethane content natural gas will flow through the Straddle Plants; natural gas liquids from large new gas finds in Alberta,
British Columbia and northern sources; ethane from off-gas produced at Alberta's oilsands; and ethane from the Alliance pipeline which is not currently extracted in Alberta. There can be
no assurances on the timing, volume or ethane content from any of these sources.

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We sell our products in highly competitive markets and face significant price pressure.

We
sell our products in highly competitive markets. Due to the commodity nature of a majority of our products, and to a lesser degree for higher value
polyethylene manufactured using Advanced SCLAIRTECH technology, competition in these markets is based primarily on price and to a lesser extent on product performance, product quality,
product deliverability and customer service. As a result, we may not be able to protect our market position by product differentiation or pass on cost increases to our customers. Accordingly,
increases in raw material costs and other costs may not necessarily correlate with changes in product prices, either in the direction of the price change or in magnitude. Although we strive to
maintain or increase our profitability by reducing costs through improving production efficiency, emphasizing higher margin products and controlling selling and administration expenses, we cannot
provide any assurance that these efforts will be sufficient to offset fully the effect of any pricing changes on our operating results.

Among
our competitors are some of the world's largest chemical companies and major integrated petroleum companies that have their own raw material resources. Some of these companies may
be able to produce products more economically than we can. In addition, most of our competitors are larger and have greater financial resources, which may enable them to invest significant capital
into their businesses, including expenditures for research and development. If any of our current or future competitors develop proprietary technology that enables them to produce products that
compete with our products at a significantly lower cost, segments of our technology could be rendered over time uneconomical or obsolete. The entrance of new competitors into the industry may reduce
our ability to capture profit margins in circumstances where capacity utilization in the industry is decreasing. Further, production from low-cost producers in petroleum-rich
countries is increasing in the chemical industry and may expand significantly in the future. Any of these developments could affect our ability to enjoy higher profit margins during periods of
increased demand.

External factors beyond our control can cause fluctuations in demand for our products and in our prices and margins, which may negatively affect our income and
cash flow.

External
factors can cause significant fluctuations in demand for our products and volatility in the price of raw materials and other operating costs. Examples
of external factors include general economic conditions, including a prolonged economic downturn, competitor actions, technological developments, unplanned facility shutdowns, international events and
circumstances, and governmental regulation.

Demand
for our products is influenced by general economic conditions. A number of our products are highly dependent on durable goods markets, which are themselves particularly cyclical.
If the global economy does not improve, demand for our products and our income and cash flow would be adversely affected.

We
may reduce production, idle a facility for an extended period of time, or discontinue certain products because of high raw material prices, an oversupply of a particular product,
feedstock unavailability and/or lack of demand for that particular product. When we decide to reduce or idle production, reduced operating rates are often necessary for several quarters or, in certain
cases, longer and cause us to incur costs, including the expenses of the outages and the restart of these facilities.

Operating problems in our business may adversely affect our income and cash flow.

The
occurrence of significant operating problems at our facilities may have a material adverse effect on the productivity and profitability of a particular
manufacturing facility, or on our operations as a whole. Our income and cash flow are dependent on the continued operation of our various production facilities. Our operations are subject to the usual
hazards associated with chemical manufacturing and the related storage and transportation of raw materials, products and wastes, including pipeline, storage tank and other leaks and ruptures; fires;
mechanical failure; labor difficulties; remediation complications; discharges or releases of pollutants, contaminants or toxic or hazardous substances or gases and other environmental risks;
explosions; chemical spills; unscheduled downtime; transportation interruptions; and inclement weather and natural disasters.

Some
of these hazards may cause personal injury and loss of life, severe damage to or destruction of property and equipment and environmental damage, and may result in suspension of
operations and the imposition of civil, regulatory or criminal penalties. Furthermore, we are also subject to present and future

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claims
with respect to workplace exposure, workers' compensation and other matters. We carry insurance against potential operating hazards which is consistent with industry norms. If we were to incur
a significant liability that was not covered by insurance, it could significantly affect our productivity, profitability and financial position.

We conduct a significant portion of our operations through, and our consolidated results are materially dependent upon the performance of, INEOS NOVA. We do not control this
joint venture and actions taken by it could materially adversely affect our business.

Our
joint venture with INEOS Group Ltd. ("INEOS"), INEOS NOVA, is a 50:50 joint venture, meaning that our ownership rights, funding
obligations and governance rights are equal to those of INEOS. While we have a certain amount of influence over INEOS NOVA, we do not control INEOS NOVA and are therefore dependent on
our joint venture partner, INEOS, to cooperate in making strategic and operational decisions regarding the joint venture. As with most joint venture arrangements, there is a significant risk that, as
a result of differing views and priorities, there will be occasions when the two parties do not agree on various matters and any such disagreements may result in delayed decisions or disputes.
Moreover, the day-to-day operation of INEOS NOVA's plants and business is the responsibility of the joint venture's management team. Therefore, our ability to influence
INEOS NOVA's operations on a day-to-day basis is limited, and we may be unable to prevent actions that we believe are not in the best interests of INEOS NOVA or
us. In addition, INEOS NOVA is not subject to the same requirements regarding internal controls and internal control over financial reporting that we follow. As a result, internal control
problems could arise with respect to the joint venture. Any such actions or internal control problems could materially adversely affect our business, results of operations and financial condition.

As
a plastics and chemical producer, INEOS NOVA is exposed to many of the same risks to which we are exposed and which are discussed elsewhere in this "Risk Factors" section.

Our joint venture with INEOS may not realize all of its intended benefits.

We may not realize the anticipated benefits of the joint venture with INEOS, and cash flow or profits derived from our ownership
interest in INEOS NOVA may be less than the cash flow or profits that could have been derived had we retained the transferred assets and continued to operate that business.

In
addition, we and INEOS have agreed that either party is entitled to exercise a put of all, but not less than all, of such party's interest in the joint venture to the other party or a
call for all, but not less than all, of the other party's interest in the joint venture. If either party exercises this put/call option, the other party has the right to present the exercising party
with a reverse put or call, as applicable, on identical terms and the exercising party shall be deemed to accept such reverse put or call. If the put/call option is exercised, we may be required to
acquire INEOS' 50% ownership interest in the joint venture, which could require a significant investment by us that could adversely affect our financial condition and result in us experiencing
difficulties with respect to integrating the joint venture business into our existing business. Alternatively, we could be required to sell our interest in the joint venture to INEOS at a time when
such interest may be valuable to us.

We are exposed to costs arising from environmental compliance, cleanup and adverse litigation, which may have a substantial adverse effect on our business, financial
condition, operating results and cash flow.

We are subject to extensive foreign, federal, provincial, state and local environmental laws and regulations concerning the
manufacturing, processing and importation of certain chemical substances, air emissions, water discharges and the generation, handling, storage, transportation, treatment, disposal and clean up of
regulated substances. Our operations involve the risk of accidental discharges or releases of hazardous materials, personal injury, property and environmental damage. Furthermore, applicable
environmental laws and regulations are complex, change frequently and provide for substantial fines, regulatory penalties and criminal sanctions in the event of non-compliance. We cannot
provide any assurance that we will not incur substantial costs or liabilities as a result of such occurrences or the enforcement of environmental laws.

From
time to time, we have entered into consent agreements or been subject to administrative orders for pollution abatement or remedial action. Under some environmental laws, we may be
subject to strict and under

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certain
circumstances, joint and several liability for the costs of environmental contamination on or from our properties, and at off-site locations where we disposed of or arranged for
disposal or treatment of hazardous substances, and may also incur liability for related damages to natural resources. We have been named as a potentially responsible party under the
U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, or its state equivalents, at several third-party sites. We have a provision in our financial statements to
cover the estimated costs of remediation of discontinued sites and future environmental liabilities. Nevertheless, we cannot provide assurance that we will not incur substantial costs and liabilities
resulting from future events or unknown circumstances, which exceed our reserves or will be material.

We could incur significant costs to comply with greenhouse gas emission reduction requirements, which in turn could reduce our operating results and
cash flow.

In
2002, Canada ratified the Kyoto Protocol, and agreed to regulate reductions in air emissions that contribute to climate change. In 2007, the Canadian
federal government released its plan for reducing industrial air emissions, including an ultimate goal of reducing greenhouse gas ("GHG") emissions by 20% from 2006 levels by the year 2020 and by 60
to 70% by 2050.

Since
then, the Canadian federal government released information indicating that the climate change regulations for the Energy Intensive Trade Exposed industries were under review and
that Canada intends to work closely with the U.S. to establish a North America-wide GHG emission cap and trade system. As a result, legally binding federal GHG emission reduction
requirements are expected to be imposed on our operations in Canada, although the scope and timing for such requirements and the related impacts are uncertain.

Many
Canadian provinces are also considering GHG emissions reduction legislation. In Alberta, theSpecified Gas Emitters Regulationunder
theClimate Change and Emissions Management Actcame into effect in 2007, imposing annual reductions requirements on facilities that emit over
100,000 tonnes of GHGs per year. In compliance with the regulations, we submitted the GHG emissions baseline data and the 2007 and 2008 emissions data and have satisfied the requirements
associated with reducing GHG emissions intensity by 12% from the 2003-2005 baseline. On May 27, 2009, the Ontario legislature introduced Bill 185, which amends the Environmental
Protection Act and provides the foundation for the province's cap and trade program to reduce GHG emissions. This Bill is intended to allow Ontario's program to align with the federal Canadian and
other systems in North America and abroad. However, the scope and timing of such a GHG cap and trade system is uncertain. On December 1, 2009, Ontario filed its Greenhouse Gas Emissions
Reporting Regulation under the Environmental Protection Act. This regulation provides for the annual reporting of GHGs by prescribed facilities that emit 25,000 tonnes of carbon dioxide
equivalent or more per year and came into force on January 1, 2010.

Although
the United States has not ratified the Kyoto Protocol, a number of federal laws and regulations related to GHG emissions are being considered by the
U.S. Environmental Protection Agency ("EPA") and in Congress. In addition, various state and regional laws, regulations and initiatives have been enacted or are being considered, including the
Regional Greenhouse Gas Initiative, the Midwestern Regional Greenhouse Gas Reduction Accord, and the Western Climate Initiative. On September 22, 2009, the EPA issued the Final Mandatory
Reporting of Greenhouse Gases Rule, which was published in the Federal Register on October 30, 2009. Under the rule, facilities that emit more than 25,000 tonnes of GHGs per year are
required to collect data beginning January 1, 2010 with the first annual reports due March 31, 2011. On September 30, 2009, the EPA released a proposed rule that would impose
requirements upon new and modified major stationary sources emitting more than 25,000 tonnes of GHGs per year. The proposed regulations would require new or modified sources beginning as soon
as March 2011 to obtain permits on the basis of acceptable GHG controls or mitigation, the standards for which would be established within the current Clean Air Act framework of
pre-construction permitting and limitation of emissions using best available control technology or the equivalent.

On
June 26, 2009, the U.S. House of Representatives passed the bill for theAmerican Clean Energy and Security Act("ACES").
The ACES would establish an economy-wide cap and trade program; create incentives and standards for clean energy and energy efficiency; and establish GHG emissions standards for vehicles,
stationary sources, and fuels. On September 20, 2009, Senators John Kerry and Barbara Boxer unveiled the U.S. Senate's version of the climate change legislation: the Clean Energy Jobs and American Power
Act. It

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proposes,
among other things, 20% GHG emission reduction target, compared to 2005 levels by 2020 and an 80% cut by 2050. As a result of the uncertainties surrounding the timing and scope of these
potential federal laws and regulations, we cannot estimate the potential financial impact on our operations.

We
are developing and implementing a variety of initiatives to reduce GHG emissions and improve energy efficiency across our operations. Due to the uncertainty of long term regulatory
requirements, we cannot provide assurance that we will not incur substantial costs to meet GHG emission reduction requirements or whether they will be material.

We may be subject to losses that are not covered by insurance.

We carry comprehensive liability and property (including fire and extended perils) insurance on all of our facilities, with deductibles
and other policy specifications and insured limits customarily carried in the petrochemical industry for similar properties. In addition, some types of losses, such as losses resulting from war are
not insured. We determine coverage limits based on what we believe to be a reasonable maximum foreseeable loss scenario for our operations. In the event that an uninsured loss or a loss in excess of
insured limits occurs, we may not be reimbursed for the cost to replace capital invested in that property, nor insured for the anticipated future revenues derived from the manufacturing activities
conducted at that property, while we could remain obligated for any indebtedness or other financial obligations related to the property. Any such loss could adversely affect our business, results of
operations or financial condition.

In addition to our joint venture with INEOS, we have made and may continue to make investments in entities that we do not control.

We
have established joint ventures and made minority interest investments designed to increase our vertical integration, enhance customer service and increase
efficiencies in our marketing and distribution. Our principal joint ventures are INEOS NOVA and our jointly owned third ethylene plant at our Joffre facility. We do not control
these entities.

Our
inability to control entities in which we invest may affect our ability to receive distributions from those entities or to implement our business plan fully. The incurrence of debt
or entry into other agreements by an entity not under our control may result in restrictions or prohibitions on that entity's ability to pay dividends or make other distributions to us. Even where
these entities are not restricted by contract or by law from making distributions to us, we may not be able to influence the occurrence or timing of such distributions. In addition, if any of the
other investors in a non-controlled entity fails to observe its commitments, that entity may not be able to operate according to its business plan or we may be required to increase our
level of commitment. If any of these events were to transpire, our business, results of operations or financial condition could be adversely affected.

Labor disputes could have an adverse effect on our business.

As of December 31, 2009, we had approximately 2,500 employees globally. Approximately 350, or 14%, of our North American
employees are represented by unions under two separate collective bargaining agreements that expire on March 31, 2010 and March 15, 2012. We expect to renew the contract due on
March 31, 2010 through collective bargaining. However, if we are unable to negotiate acceptable contracts with these unions upon expiration of an existing contract or other employees were to
become unionized, we could experience work stoppages, a disruption in operations or higher labor costs, which could have an adverse effect on our business, financial condition, results of operations
or cash flow.

Our business is dependent on its intellectual property. If our patents are declared invalid or our trade secrets become known to our competitors, our ability to compete may
be adversely affected.

Proprietary
protection of our processes, apparatuses and other technology is important to our business. Consequently, we rely on judicial enforcement for
protection of our patents. While a presumption of validity exists with respect to patents issued to us in the United States and Canada, there can be no assurance that any of our patents will
not be challenged, invalidated or circumvented. Furthermore, if any pending patent application filed by us does not result in an issued patent, then the use of any such intellectual property by our
competitors

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could
have an adverse effect on our businesses, financial condition, results of operations or cash flow. Additionally, our competitors or other third parties may obtain patents that restrict or
preclude our ability to produce or sell our products lawfully in a competitive manner, which could have an adverse effect on our business, financial condition, results of operations or
cash flow.

We
also rely upon unpatented proprietary know-how and continuing technological innovation and other trade secrets to develop and maintain our competitive position. While it
is our policy to enter into confidentiality agreements with our employees and third parties to protect our intellectual property, these
confidentiality agreements may be breached and, consequently, may not provide meaningful protection for our trade secrets or proprietary know-how, or adequate remedies may not be available
in the event of an unauthorized use or disclosure of such trade secrets and know-how. In addition, others could obtain knowledge of such trade secrets through independent development or
other access by legal means. Although we do not regard any single patent or trademark as being material to our operations as a whole, the failure of our patents or confidentiality agreements to
protect our processes, apparatuses, technology, trade secrets or proprietary know-how could have an adverse effect on our business, financial condition, results of operations or
cash flow.

Litigation
may be necessary to enforce our intellectual property rights and protect our proprietary information, or to defend against claims by third parties alleging that we infringe
third party intellectual property rights. Any litigation or claims brought by or against us, whether with or without merit, or whether successful or not, could result in substantial costs and
diversion of our resources, which could have a material adverse effect on our business, financial condition, results of operations or cash flows. Any intellectual property litigation or claims against
us could result in the loss or compromise of our intellectual property and proprietary rights, could subject us to significant liabilities, require us to seek licenses on unfavorable terms, if
available at all, prevent us from manufacturing or selling products and require us to redesign, relabel or, in the case of trademark claims, rename our products, any of which could have a material
adverse effect on our business, financial condition, results of operations or cash flows.

We are involved in litigation from time to time in the ordinary course of business.

We
are involved in litigation from time to time in the ordinary course of business. Among these items is a claim for approximately $120 million by Dow
Chemical Canada ULC and its European affiliate concerning our third ethylene plant at our Joffre site. We have counterclaimed in the same action for approximately $300 million. Because
of the inherent uncertainties of litigation, there can be no assurance on the outcome of any litigation.

Our future pension costs and required level of contributions could be unfavorably impacted by the current credit crisis and market volatility.

We
currently maintain four defined benefit plans in North America covering various categories of employees and retirees, which represent our major defined
benefit retirement plans. In addition, we have smaller retirement plans and past service liabilities for former employees now employed by INEOS NOVA in Europe. Funding obligations are
determined using actuarial valuations that are based on certain assumptions about the long-term operation of the plans, including employee turnover, retirement rates, the performance of
the financial markets and interest rates. If future trends differ from the assumptions, the amount we are obligated to contribute to the plans may increase. If financial markets perform lower than
what is assumed, we may have to make larger contributions to the plans than we would otherwise have to make and expenses related to defined benefit obligations could increase. Also, if interest rates
are lower than we assume, we may be required to make larger contributions than we would otherwise have to make.

In
late 2008 and early 2009, we experienced significant declines in the value of our pension plan assets due to the adverse conditions in the equity markets globally. The U.S. and the
Canadian provincial legislators have enacted temporary funding relief measures and market conditions improved in the latter part of 2009. For 2010, we expect our funding obligations to be similar to
what we contributed to these plans in 2009. However, if difficult economic conditions persist, absent extended government funding relief we will have to make significantly larger contributions to our
defined benefit plans. Reported results could be materially and adversely affected and our cash flow available for other uses may be significantly reduced.

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We may not realize the expected benefits of a possible integration of our businesses with Borealis' businesses.

As
described in more detail in this annual report (see Item 6.A-Directors and Senior Management-Recent Changes to
Organizational Structure, Board of Directors and Executive Officers), on July 6, 2009, International Petroleum Investment Company ("IPIC"), completed the acquisition of NOVA Chemicals
Corporation. IPIC also has other investments in the chemicals industry, including Borealis AG ("Borealis"), a petrochemicals company in Europe. Borealis is jointly controlled by IPIC (with 64% of the
share capital) and OMV Aktiengesellschaft ("OMV") (with 36% of the share capital). OMV is one of the largest oil and gas groups in Central and Southeastern Europe, with significant investments
in petrochemicals. In addition, IPIC owns approximately 20% of the share capital of OMV.

IPIC,
OMV and Borealis have entered into an agreement in principle ("AiP") to define our future corporate governance structure, including IPIC sharing control of our company with OMV,
which has been approved by the European Commission. As a result of the approval, our business may be integrated with Borealis' businesses. Our ability to realize the anticipated benefits of the
integration of our businesses with the businesses of Borealis will depend, in part, on our ability to integrate successfully these businesses, and we cannot provide any assurance that the combination
of the two companies will result in the realization of the anticipated economic, operational and other benefits within expected time frames or at all. Our ability to achieve savings and synergies
depends on a number of factors, some of which are beyond our control, and we will not be able to fully assess these opportunities until after the completion of the integration. Some of the factors
affecting the possible integration include:



As
a result of the aforementioned and other risks, a potential integration of our businesses with Borealis' businesses may not generate expected revenue synergies, cross-selling
opportunities or cost savings on the expected time frames or at all. If we are unable to implement successfully an integration with Borealis and realize the expected benefits, our results of
operations and cash flows could be adversely affected.

Risks Relating to Our Indebtedness

We have a significant amount of debt, which could adversely affect our financial condition.

We
have a significant amount of indebtedness. As of December 31, 2009, we had (a) total indebtedness of approximately $1,824 million and
(b) additional amounts of approximately $564 million available for borrowing under our credit facilities (including $51 million in letters of credit), subject to customary
conditions. In addition, subject to the restrictions in our credit facilities and the indentures, we may incur significant additional indebtedness from time to time.

The
level of our indebtedness could have important consequences, including:



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If
new debt is added to current debt levels, the related risks described above would intensify. If financing is not available when required or is not available on acceptable terms, we
may be unable to grow our business, take advantage of business opportunities, respond to competitive pressures or refinance maturing debt, any of which could have a material adverse effect on our
operating results and financial condition.

We will require a significant amount of cash to service our indebtedness and our ability to generate cash depends on many factors beyond
our control.

Our
ability to make payments on and to refinance our indebtedness will depend on our ability to generate cash. Our ability to fund working capital and planned
capital expenditures will also depend on our ability to generate cash in the future. We have a significant amount of indebtedness, of which approximately $314 million is maturing in 2010. We
cannot provide any assurance that:



Factors
beyond our control will affect our ability to make these payments and refinancings. These factors could include those discussed elsewhere in this Form 20-F,
including under this "Risk Factors" section and under "Disclosure Regarding Forward-Looking Information."

If
we cannot generate sufficient cash from our operations to meet our debt service obligations, we may need to reduce or delay capital expenditures or curtail research and development
efforts. In addition, we may need to refinance our debt, obtain additional financing or sell assets, which we may not be able to do on commercially reasonable terms, if at all. We cannot provide any
assurance that our business will generate sufficient cash flow, or that we will be able to obtain funding, sufficient to satisfy our debt service obligations.

Our debt agreements restrict our ability to take certain actions.

The agreements governing our indebtedness impose significant operating and financial restrictions on us and our subsidiaries. These
restrictions may restrict our ability to pursue our business strategies, such as acquisitions or joint ventures, or engage in other favorable business activities.



Our indentures governing our public debt contain various covenants that limit our ability to engage in certain transactions, including
the ability to create liens or engage in sale and leaseback transactions.

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We have four revolving credit facilities aggregating $615 million of borrowing capacity. While each of the credit facilities
contains typical affirmative and negative covenants, which are substantially the same, our senior secured credit facility, as well as other financing agreements, contain financial covenants, which
require quarterly compliance. Our ability to meet the financial covenants may be impacted by events beyond our control, and we may not be able to satisfy these covenants in the future.

Our
credit facilities also contain restrictive covenants that limit our ability, and the ability of our restricted subsidiaries, among other things, to incur additional liens; sell
certain assets; make distributions on or repurchase equity; incur additional debt; enter into hedging agreements; enter into operating leases; engage in reorganizations or mergers; and change the
character of our business.

A
breach of any of these provisions could permit the lenders to declare all amounts outstanding under the credit facilities to be immediately due and payable and to terminate all
commitments to extend further credit. If we were unable to repay those amounts, the lenders under our $350 million secured credit facility could proceed against the collateral granted to them
to secure that debt.

A downgrade in the ratings of our debt securities could result in increased interest and other financial expenses related to future borrowings and could restrict our access
to additional capital or trade credit.

Standard &
Poor's Corporation, Moody's Investor Service, Inc., Dominion Bond Rating Service Limited ("DBRS") and Fitch Ratings Ltd.
maintain credit ratings for our debt securities. Except for the DBRS rating, each of these ratings is currently below investment grade. Any decision by these or other ratings agencies to downgrade
such ratings in the future could result in increased interest and other financial expenses relating to our future borrowings and could restrict our ability to obtain additional financing on
satisfactory terms, if at all. In addition, any downgrade could restrict our access to, and negatively impact the terms of, trade credit extended by our suppliers of raw materials.

We are controlled by IPIC and its affiliates, whose interests may not be aligned with the interests of our debt holders.

A
holding company controlled by IPIC and its affiliates currently owns all of our equity and, therefore, IPIC has the power to control our affairs and
policies. It also controls the election of directors, the appointment of management, the entering into mergers, sales of substantially all of our assets and other extraordinary transactions. The
directors so elected have authority, subject to the terms of
our debt, to issue additional stock, declare dividends and make other decisions. Under the AiP, IPIC and OMV will share control over decisions affecting us.

The
interests of IPIC and its affiliates and OMV could conflict with the interests of the holders of our debt. For example, if we encounter financial difficulties or are unable to pay
our debts as they mature, the interests of IPIC, as equity holders, might conflict with the interests of holders of our debt. IPIC and its affiliates may also have an interest in pursuing
acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investments, even though such transactions might involve risks. Additionally, IPIC and
its affiliates are in the business of making investments in companies, and may from time to time in the future acquire interests in businesses that directly or indirectly compete with certain portions
of our business or are suppliers or customers of ours. See "Related Party Transactions."

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Item 4.    Information on the Company

4.A. HISTORY AND DEVELOPMENT OF THE COMPANY

NOVA Chemicals Corporation

NOVA Chemicals' predecessor, NOVA Corporation of Alberta, was incorporated in 1954 by Special Act of the Legislative Assembly of
the Province of Alberta. On May 10, 1994, NOVA Corporation of Alberta filed articles of arrangement under the Business Corporations Act of Alberta (the "Act") to complete a
reorganization pursuant to which it became a wholly owned subsidiary of NOVA Corporation ("NOVA"), changed its name to NOVA Gas Transmission Ltd. and its common shareholders became the common
shareholders of NOVA. At the same time, NOVA also became the parent corporation of Novacor Chemicals Ltd. and NOVA Gas International Ltd. Novacor Chemicals Ltd.'s name was changed
to NOVA Chemicals Ltd. in March 1996.

On
July 2, 1998, NOVA and TransCanada PipeLines Limited ("TransCanada") completed a merger of equals by way of a plan of arrangement (the "TransCanada Arrangement") under
the Act. Under the terms of the TransCanada Arrangement, shareholders of NOVA exchanged each NOVA common share for 0.52 of a TransCanada common share. As part of the TransCanada Arrangement,
TransCanada distributed to its common shareholders, including all of the former common shareholders of NOVA, all of the common shares of NOVA on the basis of 0.2 of a NOVA common share for each
TransCanada common share. At the time of the distribution of NOVA common shares, the only material asset of NOVA was all of the common shares of NOVA Chemicals Ltd.

As
a result of the TransCanada Arrangement, NOVA continued to conduct the commodity plastics and chemical businesses through NOVA Chemicals Ltd., and TransCanada began to
conduct the energy services businesses formerly carried on by NOVA, through NOVA's former subsidiaries, NOVA Gas Transmission Ltd. and NOVA Gas International Ltd.

On
December 31, 1998, NOVA Chemicals Ltd. changed its name to NOVA Chemicals Corporation. Effective January 1, 1999, NOVA Chemicals Corporation
amalgamated with NOVA under the Act and the resulting corporation adopted the name NOVA Chemicals Corporation.

On
April 14, 2004, NOVA Chemicals Corporation was continued under the Canada Business Corporations Act.

On
July 6, 2009, International Petroleum Investment Company ("IPIC"), which is wholly owned by the government of the Emirate of Abu Dhabi, completed the acquisition of
NOVA Chemicals Corporation by way of a plan of arrangement (the "Arrangement") under the Canada Business Corporations Act. Pursuant to the Arrangement, a wholly owned subsidiary of IPIC,
acquired all of our issued and outstanding common shares for $6.00 per share in cash. On that same day, NOVA Chemicals was continued under theBusiness Corporations
Act(New Brunswick), and our common shares were delisted from the New York Stock Exchange and the Toronto Stock Exchange.

Development of NOVA Chemicals Corporation



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Developments since January 1, 2009



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Events Subsequent to December 31, 2009



For
a description, including the amount invested, of our principal capital expenditures since the beginning of our last three fiscal years, see the "Liquidity and Capital Resources"
section in our "Management Discussion and Analysis of Financial Condition and Results of Operation" included in this annual report under "Item 5Operating and Financial
Review and Prospects."

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4.B. BUSINESS OVERVIEW

General

Our principal business is the production and marketing of plastics and chemicals. We operate an Olefins/Polyolefins business unit that
produces and markets ethylene, polyethylene, higher-value polyethylene manufactured using our Advanced SCLAIRTECH technology, and a variety of chemical and energy products (commonly known as
co-products). We also operate a
Performance Styrenics business unit that produces and markets EPS as well as higher value styrenic polymers. Our Performance Styrenics business unit also includes our interests in
EPS-based downstream businesses and ventures for end-use consumer and industrial applications primarily for the building and construction industry.

Our
polyethylene and styrenic polymer resins are used in a wide range of applications including rigid and flexible packaging, containers, plastic bags, plastic pipe, consumer
electronics, building and construction materials, housewares and other industrial and consumer goods.

Ethylene
is a basic chemical used to manufacture a wide variety of polymers and other chemical products. Ethylene production in excess of our internal consumption requirements is sold to
third parties. In addition, we engage in swap transactions with other producers of ethylene where we have limited or no ethylene production capability.

We
produce polyethylene primarily from our internal ethylene production. We produce the following varieties of polyethylene: high-density polyethylene ("HDPE"),
low-density polyethylene ("LDPE") and linear low-density polyethylene ("LLDPE"). In addition, we develop and market higher value LLDPE and HDPE manufactured using our Advanced
SCLAIRTECH technology, including SURPASS® and some SCLAIR® polyethylene resins.

Styrene
monomer is a basic chemical used to manufacture a wide variety of polymers and other chemical products. We have a minority interest in LyondellBasell Industries'
("LyondellBasell") propylene oxide/styrene monomer ("PO/SM") facility in Channelview, Texas and an associated long-term styrene monomer processing agreement to acquire styrene monomer that
provides sufficient styrene monomer supply for the operation of our Performance Styrenics business unit.

Our
Performance Styrenics business unit produces EPS, ARCEL® resin and has interests in EPS-based downstream businesses and ventures for the building and
construction industry.

In
addition to our principal business of producing and marketing plastics and chemicals, we have a licensing business. For example, we offer for license our proprietary polyethylene
SCLAIRTECH process technology and catalyst technology. We also license our Performance Styrenics business unit's technology such as its in-mold labeled cup and container technology.

We
own a 50% interest in INEOS NOVA, a joint venture with INEOS that produces and markets styrene monomer and SPS in North America and SPS and EPS in Europe. INEOS NOVA
produces styrenic polymers primarily from its internal styrene monomer production. INEOS NOVA sells styrene monomer production in excess of its North American internal consumption to third
parties. INEOS NOVA purchases styrene monomer for their European polymers production sites from other producers through a mix of established purchase agreements, spot purchases, or when
economically viable, from internally produced styrene monomer in North America.

2009 Revenue

2009 Operating Income(U.S. dollars in millions)Olefins/Polyolefins

$
2,740

$
266INEOS NOVA JV


1,187


4Performance Styrenics


261


(29
)


Properties and Production Facilities

Our products are manufactured at seven sites in North America. All production facilities are owned by us (except LyondellBasell's PO/SM
facility in Channelview, Texas, in which we have a minority interest, and the

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E3 manufacturing
plant at Joffre, Alberta, in respect of which we and Dow each own 50%). With the exception of the Channelview facility, we own the land on which our production facilities
are located.

INEOS NOVA
produces styrene monomer at three facilities in North America, SPS at three facilities in North America and styrenic polymers at five sites in Europe.

In
addition to our production facilities, we lease or own office space in numerous locations, mostly in North America. Our head office is located in Calgary, Alberta. Our
United States commercial center is located in Moon Township, Pennsylvania.

The
following charts and tables show our and INEOS NOVA's plastics and chemical product flow and production facilities.

NOVA Chemicals Product Flow Chart

GRAPHIC

---

Notes:

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INEOS NOVA Product Flow Chart

GRAPHIC

---

Notes:

Facility Profile (Olefins/Polyolefins)

Rated CapacitySite

Feedstocks

Main Products

(mmlbs/year)

(kilotonnes/year)1.Joffre, Alberta

Ethane/Propane

Ethylene (E1)


1,600


730Ethane/Propane

Ethylene (E2)


1,800


820Ethane

Ethylene (E3)(1)


1,400


640Co-products


830
(2)

380Ethylene

LLDPE (PE1)


1,480


670LLDPE & HDPE (PE2)


950


4302.Corunna, Ontario

Crude Oil, Condensates,

Ethylene


1,800
(3)

820Ethane, Butane, Propane,

Co-products


4,700
(3)

2,130Naphtha, Gas Oils3.St. Clair River,Corunna, Ontario

Ethylene

HDPE


450


2004.Mooretown, Ontario

Ethylene

HDPE


465


210LDPE


275


120TOTAL ETHYLENE PRODUCTION CAPACITY (Design Production)


6,600


2,990
*TOTAL POLYETHYLENE PRODUCTION CAPACITY


3,620


1,640
*


Notes: (1)The
annual design production capacity of E3 totals 2,800 million pounds and is divided between Dow and us. Our share of the production
capacity is 50%.(2)Production
capacity is variable and depends on the feedstock used.(3)Ethylene
design capacity is 1,800 million pounds per year and propylene design capacity is 900 million pounds per year, resulting in
4,700 million pounds per year of co-product capacity. In both cases, capacity is dependent on feedstock mix.*Difference
between total and individual plant values attributable to rounding.


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Facility Profile (Performance Styrenics)

Rated CapacitySite

Feedstocks

Main Products

(mmlbs/year)

(kilotonnes/year)Styrene Monomer1.Channelview, Texas(1)

Benzene, Ethylene

Styrene Monomer


400


180TOTAL STYRENE MONOMER PRODUCTION CAPACITY


400


180Styrenic Polymers1.Monaca, Pennsylvania(2)

Styrene Monomer

ARCEL and EPS


250


1152.Painesville, Ohio

Styrene Monomer

EPS


100


45TOTAL STYRENIC POLYMERS PRODUCTION CAPACITY


350


160


Notes: (1)This
represents a minority interest in the LyondellBasell Channelview, Texas PO/SM facility and the long-term styrene monomer processing
agreement associated with that interest.(2)We
have exited the DYLARK resin business. This capacity does not include any production from the unit.


Facility Profile (INEOS NOVA(1))

Rated CapacitySite

Feedstocks

Main Products

(mmlbs/year)

(kilotonnes/year)Styrene Monomer1.Bayport, Texas

Benzene, Ethylene

Styrene Monomer


1,700
(2)

7702.Sarnia, Ontario

Benzene, Ethylene

Styrene Monomer


980


4453.Texas City, Texas

Benzene, Ethylene

Styrene Monomer


1,070


485TOTAL STYRENE MONOMER PRODUCTION CAPACITY


3,750


1,700Styrenic Polymers1.Breda, The Netherlands(3)

Styrene Monomer

EPS and STYROSUN


240


1102.Decatur, Alabama

Styrene Monomer

SPS


420


1903.Joliet, Illinois

Styrene Monomer

SPS


880


4004.Marl, Germany

Styrene Monomer

EPS and SPS


620


2805.Ribécourt, France

Styrene Monomer

EPS and EPS Silver


220


1006.Springfield, Massachusetts

Styrene Monomer

SPS and NAS


330


1507.Trelleborg, Sweden

Styrene Monomer

SPS


175


808.Wingles, France

Styrene Monomer

EPS and SPS


620


280TOTAL STYRENIC POLYMERS PRODUCTION CAPACITY


3,505


1,590


Notes: (1)We
own 50% of INEOS NOVA.(2)Approximately
220 million pounds per year of this capacity is committed to BASF Corporation.(3)INEOS NOVA
closed its SPS production facilities on the Breda, The Netherlands site at the end of December 2009. The SPS facility had an annual
capacity of 200 million pounds (90 kilotonnes) and the closure is not expected to impact the manufacturing of EPS and high performance polystyrene at the Breda site. This capacity does
not include any production from Breda's SPS unit.


Our Business Segments

OLEFINS/POLYOLEFINS

Our Olefins/Polyolefins business unit produces ethylene and polyethylene. As part of the ethylene production process, and in the
preparation of feedstocks for this process, we also produce a number of co-products.

Our
Joffre, Alberta site is integrated with AEGS, which connects large-scale ethane extraction plants and ethane storage facilities to our ethylene plants. The Joffre feedstock pipeline
is also integrated with the Joffre site and connects natural gas liquids production and storage facilities in Fort Saskatchewan, Alberta to the Joffre

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site.
AltaGas completed construction of the Joffre feedstock pipeline in early 2005, and we operate and are the sole shipper on this pipeline. Ethylene produced at Joffre is fed directly to onsite
polyethylene production at Joffre, as well as to customers at Joffre, Prentiss, Edmonton and Scotford, Alberta and to storage and customers at Fort Saskatchewan, Alberta.

The
Corunna, Ontario ethylene facility is connected to multiple pipeline systems that, in conjunction with the facility's flexible feedstock capabilities, enable us to optimize our
feedstock slate. In addition, we utilize rail and marine transport to transport feedstocks. The Corunna facility provides ethylene by pipeline to our polyethylene production facilities in Mooretown,
Ontario and our St. Clair River site in Corunna, Ontario. The Corunna facility also provides ethylene to INEOS NOVA's styrene monomer facility in Sarnia, Ontario as well as to customers
in the Sarnia, Ontario area.

For
financial reporting purposes, we have three reportable segments as part of our Olefins/Polyolefins business unit: Joffre Olefins, Corunna Olefins and Polyethylene.



We have annual production capacity of approximately 6,600 million pounds of ethylene (excluding Dow's share of E3). Ethylene is
a commodity chemical that we produce through thermal cracking, or pyrolysis, of various feedstocks, a process that uses high temperatures to break down the carbon chains. The feedstocks used to
produce ethylene are natural gas liquids and crude oil derived feedstocks including ethane, naphtha, propane, butane and gas oils. The most common feedstocks used by us are ethane and, to a lesser
extent, crude oil, naphtha and other natural gas liquids, such as propane and butane. Ethylene is used in the manufacture of polyethylene, styrene monomer, styrenic polymers and polyvinyl chloride, as
well as chemical intermediates such as ethylene oxide, ethylene glycol, ethylene dichloride and vinyl acetate.



Co-products are produced in the ethylene manufacturing process and can be grouped into two categories: chemical
co-products and energy co-products. Chemical co-products include propylene, benzene, and butadienebuilding blocks that are used to make items such as
tires, carpet and clothing fibers, or household goods. Energy co-products include gasoline additives and fuel oil. The profitability of co-products depends on energy prices and
the supply and demand balance for each co-product. Co-product production depends on the feedstock mix. Total co-product production capacity is approximately
5,500 million pounds per year. The majority of the co-products produced at our Joffre, Alberta and Corunna, Ontario facilities are sold to third parties in markets in Alberta,
Ontario and the U.S. Gulf Coast. However, some co-products are consumed internally by us or sold to INEOS NOVA either as fuel or for the production of other products. For
example, benzene, a co-product produced at our Corunna flexi-cracker is transported by pipeline from this facility to INEOS NOVA's Sarnia, Ontario styrene monomer facility and is
used in the production of styrene monomer by INEOS NOVA.

We
produce ethylene and co-products at two locations, Joffre, Alberta and Corunna, Ontario. At Joffre, Alberta, we have three production units, E1, E2, and E3. In Corunna,
Ontario, we have one production unit.



We have annual production capacity of approximately 3,600 million pounds of polyethylene. Polyethylene is produced through the
polymerization of ethylene. We produce polyethylene
from ethylene supplied from our Joffre, Alberta and Corunna, Ontario facilities at three locations in Canada: Joffre, Alberta; St. Clair River, Corunna, Ontario; and Mooretown, Ontario.

We
have two polyethylene plants located at Joffre, Alberta, PE1 and PE2. PE1 has annual production capacity of approximately 1,480 million pounds and produces LLDPE from
ethylene supplied from E1, E2 and E3. PE1 currently utilizes the NOVACAT® family of catalysts that was developed by us and our catalyst development partner, INEOS, as well as our
proprietary gas-phase process technology originally licensed from Union Carbide Corporation ("UCC"). The licenses from UCC are fully paid and the obligations of confidence

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and
non-use pursuant to these licenses have expired. Accordingly, we pay no royalties for the use of this technology and independently sustain and develop this technology as used in our
facilities. PE2 has annual production capacity of approximately 950 million pounds. PE2 uses Advanced SCLAIRTECH technology to produce our SURPASS and some SCLAIR polyethylene
resins from ethylene supplied from E1, E2 and E3.

We
have a polyethylene plant located at the St. Clair River site in Corunna, Ontario, which has annual production capacity of approximately 450 million pounds. We typically
manufacture HDPE at this plant but can also manufacture LLDPE. Ethylene feedstock is supplied from the Corunna, Ontario olefins facility.

We
have a polyethylene plant located near Mooretown, Ontario that has an annual production capacity of approximately 740 million pounds. Ethylene feedstock is supplied from our
Corunna, Ontario olefins facility. One of the lines at the plant currently uses our proprietary gas-phase process technology originally licensed from UCC to produce HDPE and the other line
at the plant currently uses our proprietary high pressure process technology, also originally licensed from UCC, to produce LDPE. These licenses from UCC are fully paid and the obligations to UCC of
confidence and non-use pursuant to these licenses have expired. We plan to complete a modernization and expansion project at our Mooretown, Ontario LDPE asset. We expect this project to be
completed by late 2010 and expect the project to add up to 120 million pounds of annual production capacity, as well as upgrade the product slate, improve reliability and reduce production
costs. See "Advanced Manufacturing Investment Strategy Loan" in our "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this annual report under
"Item 5Operating and Financial Review and Prospects" for a description of a financing arrangement we entered to partially finance this project.



After acquiring SCLAIRTECH technology in 1994, we further developed the technology and, in December 1996, announced that we had
developed Advanced SCLAIRTECH technology. Advanced SCLAIRTECH solution-phase technology yields higher value polyethylene resins that we believe provide several advantages over standard polyethylene
resins, such as clarity and toughness in end-use products manufactured by our customers.

Advanced
SCLAIRTECH technology used at PE2 includes two proprietary catalyst systems. The Ziegler-Natta ("Z-N") catalyst introduced in 2001 is used to make our SCLAIR
line of polyethylene products. These are octene-based polyethylene grades primarily for film applications. In 2003, we commercialized a single-site catalyst using Advanced SCLAIRTECH
technology and introduced a series of new polyethylene products under the trademark SURPASS. SURPASS resins have been commercialized for film, rotational molding and thin wall injection molding
applications.



We have three ethylene production facilities at Joffre, Alberta: E1, E2 and E3 (E3 is 50% owned by Dow). These three plants have
an annual production capacity of approximately 1,600, 1,800 and 2,800 million pounds of ethylene (including Dow's share of E3 production capacity), respectively, for a total combined
capacity of 6,200 million pounds. The combined co-product production capacity of E1, E2 and E3 is approximately 830 million pounds per year, depending on the
feedstock used.

Approximately
half of the ethylene production capacity at these facilities (excluding Dow's share of E3 production capacity) is used internally to support our Joffre polyethylene
production and the rest is sold to third parties. Third party sales are facilitated through a variety of medium to long-term contracts. These contracts typically contain pricing mechanisms
that include a cost recovery component and a market-based component.

All
of the ethylene plants at the Joffre site use ethane as their primary feedstock. Ethane is typically supplied under contracts with the owners of natural gas liquids extraction and
fractionation plants located in Alberta. Most of these supply agreements have 5 to 10 years remaining on their terms with the possibility of renewal by the parties. The price we pay under these
agreements typically consists of two components: (1) the cost to replace the energy content of the ethane extracted from the gas stream (this component varies with the

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price
of natural gas; we may pay the owner for replacement natural gas or purchase or swap natural gas to physically replace the energy content of the ethane) and (2) a fee to cover an agreed
upon portion of the costs of plant operation and return on invested capital (this component may be fixed or vary with production). We supplement our ethane supplies through spot purchases.

Virtually
all of the ethane requirements for the Joffre site are transported via AEGS. Under a transportation agreement, we have the right to ship ethane on AEGS. We have also entered
into an operating agreement with Fort Chicago, the owner of AEGS, under which we are responsible for the physical operation of AEGS, while Fort Chicago has responsibility for all commercial aspects of
AEGS operations.

We
have the flexibility to use propane in addition to ethane for a portion of the Joffre feedstock requirements. Propane can be transported to Joffre by the Joffre feedstock pipeline
owned by AltaGas.

We
continuously look for opportunities to expand our feedstock flexibility and supply to enhance our operational flexibility and support longer-term growth opportunities. In
July 2007, the Alberta government released details of its "incremental ethane extraction policy" that provides incentives for value-added production and use of ethane in the province. We plan
to take advantage of this policy to increase the utilization of our existing ethylene crackers at our Joffre manufacturing facility.

In
2008, we participated in the Alberta Energy and Utilities Board's (the "EUB") inquiry into potential inequities surrounding the conventions and practices governing the
extraction of natural gas liquids from the common natural gas stream transported on Alberta regulated pipelines and other related matters (the "Inquiry"). The Inquiry examined whether or not
these conventions and practices need to be changed, what those changes might be, and how they could be implemented. The Inquiry's report to the Alberta government was issued in February 2009.
The Inquiry made several recommendations that could be beneficial to the petrochemical industry in Alberta. We have been involved in committees and policy groups seeking consensus on the
implementation of the various recommendations of the Inquiry and plan to continue our involvement in these groups. In addition, TransCanada has received approval to move the regulation of its Alberta
system (the former NOVA Gas Transmission Ltd.) from the EUB to the National Energy Board. We have participated in shipper committees and regulatory proceedings relating to this change
of regulation and plan to participate in future proceedings on these issues.

In
2010, we expect the flows of natural gas across the Canadian border to the United States to decline due primarily to low selling prices for natural gas in North America. This
will likely lead to less natural gas flowing through the Straddle Plants and therefore less ethane available as feedstock for our ethylene plants at Joffre. We plan to continue work with suppliers and
the Alberta government to source additional supply for our feedstock needs. These sources could include, among others, the streaming of natural gas with low ethane content for industrial consumption
in Alberta, with the expected result that high ethane content natural gas will flow through the Straddle Plants; natural gas liquids from large new gas finds in Alberta, British Columbia and northern
sources; ethane from off-gas produced at Alberta's oilsands; and ethane from the Alliance pipeline which is not currently extracted in Alberta. There can be no assurances on the timing,
volume or ethane content from any of these sources.

As
part of the ethylene production process at Joffre, we produce approximately 830 million pounds of co-products per year, depending on the feedstock used.
Co-products, other than hydrogen and carbon dioxide, are shipped by railcar to markets in Alberta, Ontario and the U.S. Gulf Coast.



The Corunna, Ontario olefins facility, located near Sarnia, Ontario, has an annual production capacity of approximately
1,800 million pounds of ethylene and 900 million pounds of propylene. In both cases, capacity is dependent on feedstock mix. The Corunna olefins facility has the flexibility to process a
wide range of hydrocarbon feedstocks including crude oil, condensates, ethane, propane, butane, naphtha and gas oils to produce ethylene and co-products for use by our downstream
operations and for sale to third parties. The feedstock chosen depends on market conditions and is determined by using a model that calculates the optimal feedstock mix to produce the most profitable
mix of products. The majority of ethylene production from the

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Corunna
olefins facility is used internally by us to produce polyethylene or sold to INEOS NOVA for styrene monomer production.

The
blend of feedstocks processed in the Corunna, Ontario olefins facility determines the range of co-products obtained, with heavier feedstocks such as naphtha producing
more co-products. The facility has a production capacity of approximately 4,700 million pounds of co-products per year.

Feedstocks
for the Corunna, Ontario olefins facility are obtained from a wide variety of sources. Crude oil and naphtha are the main feedstocks processed at the facility. Condensate, a
lighter feedstock than crude oil that yields a higher proportion of olefins versus fuel oil co-products, as well as propane, butane and naphtha are also processed at the Corunna facility.
All crude oil and the majority of condensate are delivered via Enbridge Inc. ("Enbridge") pipeline systems. We source crude oil and condensate feedstocks from offshore locations, western Canada
and the United States. Offshore crude oil and condensate are delivered to Portland, Maine and then ultimately to the Corunna facility via Enbridge's Line 9 pipeline system. Propane,
butane and naphtha are sourced from western Canadian and local producers as well as United States sources, principally by pipeline. In February 2010, we and Buckeye Partners L.P.
announced the signing of a memorandum of understanding regarding the evaluation and possible development of a mixed natural gas liquids pipeline from the Marcellus Basin in Pennsylvania to the
refining and petrochemical complex in the Sarnia-Lambton area in Ontario, Canada. We hope to be able to secure long-term competitive petrochemical feedstock supply for our Sarnia
operations via this project.



In June 2000, we, ATCO Power Canada Ltd. ("ATCO"), and an affiliate of EPCOR Utilities Inc. ("EPCOR") opened a
natural gas-fired cogeneration power plant with a nominal installed peak capacity of 480 megawatts at our production site at Joffre, Alberta. The power plant
supplies the electrical needs for the entire Joffre site, with excess power sold to Alberta's provincial power grid. The facility also provides steam to certain production facilities within the site.
We jointly own the cogeneration facility with ATCO and EPCOR, with ATCO serving as the facility operator. Our respective interest is 20% while both ATCO and EPCOR each have a 40% interest.

PERFORMANCE STYRENICS

Our Performance Styrenics business unit includes our EPS and ARCEL resin assets, our minority interest in LyondellBasell's PO/SM
facility in Channelview, Texas and our interests in EPS-based downstream businesses and ventures for the building and construction industry. During 2009, we restructured our Performance
Styrenics business unit to decrease overall fixed costs and focus our resources on only our best and most immediate opportunities. For example, we rationalized our EPS capacity to a more sustainable
level to allow us focus on our best performing EPS products. In addition, we ended commercial production of our DYLARK engineering resin, one of our polymer products, due to the long-term
market deterioration. We intend to continue to evaluate this business unit and may exit other product lines and eliminate, consolidate or sell certain downstream businesses or ventures.

The
long-term styrene monomer processing agreement associated with our interest in LyondellBasell's PO/SM facility provides sufficient styrene monomer supply for the
operation of our Performance Styrenics business unit. We and INEOS NOVA have an agreement in place whereby INEOS NOVA provides our required share of benzene to the LyondellBasell facility.



We produce EPS at our Beaver Valley site at Monaca, Pennsylvania and at our Painesville, Ohio facility. EPS resins are used in
applications such as foam cups, noodle bowls, takeout and ice cream containers, insulation board and foam packaging. Our EPS cup and container resin is sold under the trademark DYLITE®.

Our
Beaver Valley site in Monaca, Pennsylvania also produces ARCEL resins, which contain polystyrene and polyethylene. This expandable bead is sold into the protective packaging market.
In addition to producing

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ARCEL
resins at our Beaver Valley site, in September 2005, we entered into an agreement with Ningbo Chang-Qiao Engineering Plastics Co., Ltd., an affiliate of Loyal
Chemical Industrial Corporation, to provide new finishing capacity for ARCEL resins near Shanghai, China.

The
Beaver Valley site also produced DYLARK resins for use in instrument panels and other parts for the global automotive industry. Due to the long-term deterioration of the
market, we ended commercial production of our DYLARK resin in 2009.



We attempt to leverage our intellectual property and market expertise by entering into downstream businesses and ventures, either
directly or by entering into strategic relationships with partners. These businesses and ventures are in the development or start-up stage. The strategic objective of these initiatives is
to capture value beyond the sale of resin. In addition to the sale of the finished products manufactured by these businesses and ventures, we have, to a limited extent, licensed certain of our
proprietary technology, such as our in-mold labeled cup and container technology. As part of the restructuring of our Performance Styrenics business unit in 2009, we eliminated certain of
these downstream businesses and ventures. We intend to continue to evaluate this business unit, which may result in exiting certain downstream businesses and ventures.

INEOS NOVA

We own a 50% interest in INEOS NOVA, a 50:50 joint venture with INEOS that produces and markets styrene monomer and SPS
in North America and SPS and EPS in Europe.



INEOS NOVA has a total rated production capacity of approximately 3,750 million pounds of styrene monomer per year at
sites in Sarnia, Ontario (980 million pounds), Bayport, Texas (1,700 million pounds) and Texas City, Texas (1,070 million pounds). Styrene monomer is produced from ethylene and
benzene. INEOS NOVA produces styrene monomer by the process of alkylation of ethylene with benzene to produce ethylbenzene and then dehydrogenation of ethylbenzene.

In
connection with the expansion of the joint venture on October 1, 2007, we and an affiliate of INEOS entered into a series of North American feedstock agreements with
INEOS NOVA's North American operating companies. All of the ethylene and approximately half of the benzene requirements for the Sarnia, Ontario styrene monomer facility are supplied by pipeline
from our Corunna, Ontario olefins facility. The balance of benzene feedstock is obtained from nearby third-party petroleum refineries. We and the affiliate of INEOS entered into ethylene supply
agreements with INEOS NOVA to supply the Bayport, Texas styrene monomer facility with the ethylene required for that facility. All benzene for the Bayport, Texas facility is
obtained from external sources. All of the ethylene for the joint venture's Texas City, Texas styrene monomer facility is obtained from INEOS's affiliate and the benzene is obtained from nearby third
party refineries as well as from merchant sources.

In
connection with the commencement of the joint venture in October 2005, we entered into a contract to supply the joint venture with 50% of its styrene monomer requirements. When
the joint venture was expanded in 2007, we contributed our North American styrene monomer assets and our European styrene monomer purchase contracts to INEOS NOVA. Accordingly,
INEOS NOVA is now responsible for supplying the 50% of its European styrene monomer requirements that was formerly supplied by us. INEOS NOVA has a contract with INEOS pursuant to which
INEOS is responsible for supplying the joint venture with the remaining 50% of its European styrene monomer requirements.

While
INEOS NOVA does not produce styrene monomer in Europe, it obtains its 50% styrene monomer feedstock requirement from other European producers through a mix of established
purchase agreements, spot purchases, or when economically viable, from internally produced styrene monomer in North America.

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INEOS NOVA produces SPS (which is sold in various grades, including crystal and high-impact) in North America and
SPS and EPS in Europe.

INEOS NOVA's
styrenic polymer feedstock requirements can currently be satisfied through internal styrene monomer production and purchase agreements and the agreement with INEOS to
provide 50% of the joint venture's European styrene monomer requirements.



INEOS NOVA has three SPS manufacturing facilities in North America: Decatur, Alabama; Joliet, Illinois, and Indian Orchard at
Springfield, Massachusetts. Total SPS production capacity for North America is 1,630 million pounds per year, consisting of both crystal and impact polystyrene.

Crystal
polystyrene end-use applications include CD jewel boxes, food packaging, one-time-use foodservice ware (cups/plates/bowls/utensils), medical
applications, quick-service/convenience packaging and insulation. Impact polystyrene resins are used in applications such as office/desk supplies, small appliances, industrial spools, bathroom
accessories, electronics housings, food packaging and one-time-use foodservice ware.



INEOS NOVA has five facilities in Europe with total rated annual styrenic polymer production capacity of approximately
1,875 million pounds. INEOS NOVA has an aggregate SPS capacity of 975 million pounds per year produced at facilities in Marl, Germany; Wingles, France; and Trelleborg, Sweden. In
December 2009, INEOS NOVA closed its SPS production facilities in Breda, The Netherlands. The plant had a capacity of 200 million pounds per year.

INEOS NOVA
has the capability to produce EPS at four of its five European sites, with aggregate annual capacity of approximately 900 million pounds.

Distribution of Products

Our products are marketed primarily through our sales force, with support from established distributors, agents and traders. Canadian
products are sold into the United States primarily through our subsidiary, NOVA Chemicals Inc., for resale through distribution arrangements. Our subsidiary, NOVA Chemicals
(International) S.A., sells in Europe, Asia, Africa, Australia, and Latin America either directly or through distribution arrangements. Distribution agreements among our affiliates provide for
arm's length pricing.

The
following table summarizes, for the years ended December 31, 2009, 2008 and 2007, the geographic segments in which we sell our products and the percentage of sales in
each segment.

Percentage of Sales, Year Ended December 31,Geographic Segment

2009

2008

2007(1)Canada


29%


36%


35%United States


50%


45%


43%Europe and Others


21%


19%


22%


Notes: (1)The
2007 sales include: (i) the results from the first nine months of our former STYRENIX business unit and NAS and ZYLAR resins that were formerly
included in our Performance Styrenics business unit and contributed to the expanded joint venture; and (ii) our 50% share of INEOS NOVA's sales for the last three months of 2007.


No significant portion of our business is dependent upon a single customer. Sales to Canadian and United States federal, state, provincial
and local governmental bodies account for less than 1% of annual sales.

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We
and INEOS NOVA have entered into certain non-competition and distribution agreements. Pursuant to these agreements, we distribute INEOS NOVA's European
produced EPS in North America for INEOS NOVA and INEOS NOVA distributes our ARCEL resins and EPS for us in Europe.

We
lease or own approximately 5,800 rail hopper and tank cars for use in transportation and delivery of our polyethylene, co-products and styrenic polymer products to
customers in North America. Trucks are used for distributing products sold in bags and boxes and smaller loads of bulk products. Marine vessels are used to transport bulk product and products sold in
bags and boxes, mostly to Asia. We do not own or lease trucks or ships, but do pay transportation fees under short-term arrangements.

Competition

We compete with other chemical producers on the basis of price, service, product quality, performance and deliverability. Among our
competitors are some of the world's largest plastics and chemical companies and major integrated oil companies that are larger and have greater financial resources. Some also have their own raw
material resources. The keys to competing successfully in this industry are scale of facilities, low-cost feedstocks and differentiated product and process technologies.

Prices
for our standard chemical and polymer products are determined in part by market factors, such as supply/demand balances and feedstock costs that are beyond our control. We
generally sell these products at prevailing market prices but, on occasion, products are sold based on negotiated prices.

Cyclicality

Our historical operating results reflect the cyclical and volatile nature of the plastics and chemical businesses. The markets for
ethylene, polyethylene, styrene monomer and styrenic polymers historically experience alternating periods of inadequate capacity and tight supply, causing prices and profit margins to increase,
followed by periods of oversupply resulting from capacity additions. Prolonged oversupply leads to declining capacity utilization rates, prices and profit margins. Because we derive nearly all of our
revenue from sales of these products, our operating results are more sensitive to this cyclical nature than many of our competitors that have more diversified businesses. Currently, known ethylene and
styrene monomer chain capacity additions in North America over the next several years are
limited. On a global basis, we expect announced ethylene and polyethylene capacity additions in the Middle East and Asia to start up during 2010 and beyond. The primary driver of cyclical upswings in
the ethylene and styrenics sectors is generally the combination of limited supply growth and improved demand growth, which is driven by sustained gross domestic product and industrial production
growth.

Cyclicality
is exacerbated by volatility in feedstock prices. In response to higher feedstock prices and other market factors, plastics and chemical producers will generally announce
price increases. However, the implementation of announced price increases depends on many factors, including market conditions, the supply/demand balance for a particular product and feedstock costs,
which may be beyond our control.

Seasonality

We sell primarily to non-durable markets such as flexible packaging, containers, plastic bags, and housewares. As a result,
the effect of seasonality is minimal.

Intellectual Property



We own directly, or license from affiliates, a large number of patents in Canada, the United States and other countries. We also
own or license a number of trademarks, which are used to identify various chemical and plastic products. While these patents and trademarks constitute valuable assets, we do not regard any single
patent or trademark as being material to our operations as a whole.

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We
actively support all of our technologies to maintain our competitive position, including technologies developed by us and those licensed from third parties. Some of the technologies
licensed from third parties are subject to certain restrictions on use.

We
were initially a licensee of the technology used in our manufacturing operations. However, over time, we have acquired a variety of business units with associated technology assets in
areas including process and catalyst technology, as well as polymer technologies. In addition, since 1994 we have expanded our research and development activities. The result is a technology portfolio
with approximately 600 patents (excluding INEOS NOVA owned patents), margin-enhancing polyethylene process technologies such as Advanced SCLAIRTECH technology and proprietary
single-site catalyst positions.

We
own two key technologies for the production of polyethyleneSCLAIRTECH technology and Advanced SCLAIRTECH technology. In addition to these technologies, we conduct
research and development on other polyethylene technologies including gas-phase and high-pressure technology.

We
acquired our proprietary SCLAIRTECH technology and a global SCLAIRTECH technology licensing business from DuPont Canada Inc. in 1994. Our St. Clair River site utilizes
SCLAIRTECH technology to produce SCLAIR HDPE resins. In addition, our SCLAIRTECH technology is currently licensed for use at 11 plants worldwide.

In
2001, we began commercial operation of our new, proprietary Advanced SCLAIRTECH technology for the production of polyethylene. The first step in the introduction of this technology
was to utilize a proprietary Z-N catalyst to manufacture new polyethylene products. In 2002, a line of new, Z-N catalyzed, octene-based SCLAIR resins was launched intended for
higher-value polyethylene film applications.

In
April 2003, we announced the commercial introduction of our first polyethylene resins produced with Advanced SCLAIRTECH technology and utilizing our new proprietary
single-site catalyst. We manufacture and sell these polyethylene resins under the trademark SURPASS. SURPASS resins have been commercialized for film, rotational molding and thin wall
injection molding applications.

We
continue to focus on developing and commercializing higher value polyethylene manufactured using Advanced SCLAIRTECH technology, including those used in film, injection molding and
rotational molding.



We have developed three key proprietary families of catalyst technologies for polyethylene production. The first is a family of
proprietary single-site catalysts for Advanced
SCLAIRTECH technology and other polymer technologies including gas-phase polyethylene. These single-site catalysts impart unique properties and create products that compete
with many metallocene-based polyethylene products. The second family of catalysts includes proprietary Z-N catalysts used for SCLAIRTECH technology and Advanced SCLAIRTECH technology.
Finally, the NOVACAT family of catalysts was developed by us and our catalyst development partner, INEOS, for use in gas-phase polyethylene. NOVACAT catalysts provide enhanced throughput,
product range and properties when compared to traditional Z-N catalysts in commercial gas-phase polyethylene production facilities. Variants of the catalyst are available for
the manufacture of conventional and higher value LLDPE and narrow molecular weight HDPE. The NOVACAT family of catalysts is currently being run on several different gas-phase technologies
by us and licensees.



We and INEOS NOVA own or have the rights to a significant portfolio of styrenics technology, in the fields of both polymer
production and styrenic polymer applications. Prior to 1999, we licensed technology from a number of other companies and also developed our own technology for the polymerization of styrene monomer. As
part of our acquisition of styrenics assets from Huntsman and Shell, we acquired additional access to a broad range of styrenic product and process technology, as well as knowledge in polystyrene and
styrenic polymers. The technologies acquired include the one-step Shell process technology for EPS and polystyrene manufacturing and compounding technology relating to a number of styrenic
polymers.

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Examples
of styrenic polymer technologies are ARCEL resins that are sold into the protective packaging market, EPS Silver resins that are sold primarily into the European construction
and building marketplace and DYLITE premium cup and container grade resins used for EPS cups.

Research and Development

The following table summarizes, for the years ended December 31, 2009, 2008 and 2007, the amount we spent on research and
development activities and technical support, including activities to improve our existing products.

Year Ended December 31,2009

2008

2007Research and Development

$
32 million

$
42 million

$
42 millionTechnical Support

$
8 million

$
10 million

$
8 million


In
2009, the amount that we spent on research and development and technical support was lower due to cost cutting efforts, which were primarily in styrenics.



Our Olefins/Polyolefins business unit conducts research at the NOVA Chemicals Research & Technology Center and the
NOVA Chemicals Technical Center, both located in Calgary, Alberta. Both centers are equipped with state of the art facilities for the development of new catalysts, olefin and polyolefin
processes as well as full scale testing of new products. The demonstration plant for Advanced SCLAIRTECH technology is located at the St. Clair River site in Corunna, Ontario and is capable of
testing new catalysts, new polyethylene products and reactor processes.



NOVA Chemicals operates a technical center located at the Beaver Valley site in Monaca, Pennsylvania. The Performance Styrenics
business unit also operates a pilot plant at the Beaver Valley site.

Responsible Care® and Environmental Regulations

In 1985, we adopted the Responsible Care initiative as the basis for our overall safety, health, environment, security and risk
program. Responsible Care is a global chemical industry performance initiative created by the Chemistry Industry Association of Canada in 1985 and adopted by the American Chemistry Council in the
United States in 1988. Responsible Care is currently practiced by chemical industry associations in over 50 countries worldwide. Responsible Care requires participants to commit to the
responsible management of the total life cycle of their products.

Since
1990, we have utilized an internal environment, health and safety audit program to manage regulatory compliance at our operating facilities. Our Responsible Care Audit Program was
evaluated by a leading international environment, health and safety consulting firm in 1997, 2001, 2003 and 2007. Based on the 2007 assessment, the consulting firm concluded that the Responsible Care
Audit Program is a top quartile program that has all of the hallmarks of an industry leading program.

Like
other companies in our industry, we are subject to extensive environmental laws and regulations at all levels of government. These laws and regulations concern the manufacture,
processing and importation of certain chemical substances, discharges or releases to air, land or water and the generation, handling, storage, transportation, treatment, disposal and
clean-up of regulated materials.

Although
we believe that our businesses, operations and facilities are being operated in material compliance with applicable environmental laws and regulations, the operation of any
petrochemical facility and

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the
distribution of chemical products involve the risks of accidental discharges of hazardous materials, personal injury and property and environmental damage.

United States
and Canadian generally accepted accounting principles require companies to record liabilities associated with future plant decommissioning and site restoration costs
on both active and inactive plants at their fair value based on a discounted value of the expected costs to be paid when the assets are retired. On December 31, 2009, NOVA Chemicals had
$37 million of accumulated reserve for activities anticipated to be required for the decommissioning and site restoration of currently active plant sites.

We
review our accumulated reserves for decommissioning and site restoration quarterly to determine if adjustments are required. Because these plants may be in operation in excess of
40 years, significant uncertainty exists concerning the nature of the decommissioning and site restoration activities that may be required. Furthermore, significant judgment is involved in the
estimation process because the degree of natural attenuation, evolution of new technologies and potential future land uses may mitigate future environmental liabilities and potential costs.

Our
environmental capital expenditures, including pollution abatement and remedial programs, were approximately $2 million in 2009 (2008: $4 million; 2007:
$19 million). Operating expenses relating to environmental protection were approximately $7 million in 2009 (2008: $6 million; 2007: $9 million). Total remedial
expenditures to dismantle and remediate discontinued facilities and sites totaled approximately $1 million in 2009 (2008: $1 million; 2007: $2 million).

Foreign Operations

Foreign operations are subject to various risks differing from those in Canada and the United States including political events,
tax changes, labor difficulties, price controls and other governmental actions. We actively address these risks as part of our risk management system.

We
sell our products worldwide. We have established our international commercial headquarters in Switzerland to coordinate commercial activities outside of North America and maintain
sales support operations globally.

Legal Proceedings

We are involved in litigation from time to time in the ordinary course of business. Among these items is a claim for approximately
$120 million by Dow and its European affiliate. In October 2000, we and Union Carbide Canada Inc. (now Dow) commenced operation of a jointly owned, third ethylene plant in
Joffre, Alberta, E3. Dow sued us in 2006 alleging that we violated certain provisions of the contracts governing E3, by converting or otherwise taking ethylene that should have been delivered to Dow.
We strongly disagree with Dow's interpretation of the contracts, and have counterclaimed in the same action for approximately $300 million, on the basis that it is Dow who is in breach of these
contracts by acting in a manner both contrary to the interests of the joint venture and intended to undermine our ability to carry out our duties as the operator of E3. No amount has been
accrued at December 31, 2009 with respect to this claim.

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4.C. ORGANIZATIONAL STRUCTURE

IPIC is the ultimate parent of the NOVA Chemicals group of companies. The following list includes all significant subsidiaries
of NOVA Chemicals and indicates their respective jurisdictions of incorporation, continuance or organization. All of the voting securities of each significant subsidiary are held directly or
indirectly by NOVA Chemicals:

Name

JurisdictionNOVA Chemicals (Canada) Ltd./NOVA Chimie (Canada) Ltée.

CanadaNOVA Chemicals Inc.

Delaware, USANOVA Chemicals (International) S.A.

SwitzerlandNovacor Chemicals Investments B.V.

The NetherlandsNOVA Petrochemicals Ltd.

Alberta, CanadaNOVA Chemicals Cooperatief U.A.

The NetherlandsNC Holdings USA Inc.

Delaware, USA


NOVA Chemicals'
50% equity interest in its joint venture with INEOS is held as follows. In North America, NOVA Chemicals' subsidiary, NOVA Chemicals Inc., holds a
50% equity interest in INEOS NOVA LLC (a Delaware limited liability company). North American joint venture operations are conducted either through INEOS NOVA LLC or
INEOS NOVA Ltd. (a corporation governed by the laws of Canada that is wholly owned by INEOS NOVA LLC). In Europe, NOVA Chemicals' subsidiary, NOVA Chemicals
(International) S.A., owns a 50% equity interest in each of INEOS NOVA European Holdings B.V. (a corporation governed by the laws of the Netherlands) and INEOS NOVA
International S.A. (a corporation governed by the laws of Switzerland). European joint venture operations are conducted through INEOS NOVA International S.A. and
subsidiaries of INEOS NOVA European Holdings B.V.

4.D. PROPERTY, PLANTS AND EQUIPMENT

We own a number of plants and facilities for the production of chemicals and plastics. For a detailed discussion regarding the use,
capacity and products of these facilities, see "Item 4.B.Business Overview". In addition to our production facilities, we lease or own approximately
547,000 square feet of office space in numerous locations, mostly in North America. Our head office is located in Calgary, Alberta. Our United States commercial center is located
in Moon Township, Pennsylvania. For further information on environmental issues that may affect our utilization of our assets, see "Item 3.D.Risk Factors" and
"Item 4.B.Business OverviewResponsible Care and Environmental Regulations".

Item 4A.    Unresolved Staff Comments



Item 5.    Operating and Financial Review and Prospects

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the information
contained in the Annual Audited Consolidated Financial Statements and the notes thereto included in this Form 20-F. This MD&A is based upon financial statements prepared in
accordance with Canadian Generally Accepted Accounting Principles ("GAAP"). These accounting principles are different in some respects from those generally accepted in the United States, and
the significant differences are described in Note 23 to the Annual Audited Consolidated Financial Statements. References are made to certain non-GAAP measures throughout this
MD&A. These measures are discussed in Supplemental Measures. Unless otherwise indicated or required by the context, as used in this MD&A, the terms "NOVA Chemicals," the "Corporation," "we,"
"our" and "us" refer to NOVA Chemicals Corporation and all of its subsidiaries and joint ventures that are consolidated under Canadian GAAP. All amounts are presented in U.S. dollars
unless otherwise noted.

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NOVA Chemicals Corporation

We are a plastics and chemical company whose products are used in a wide variety of applications, including food and electronics
packaging, industrial materials, appliances and a variety of consumer goods. On July 6, 2009, a wholly-owned subsidiary of International Petroleum Investment Company ("IPIC") completed the
acquisition of all of our issued and outstanding common shares.

We
operate two business units and hold a 50% interest in a joint venture with INEOS Group Limited ("INEOS"), called INEOS NOVA.

Business Units



INEOS NOVA

INEOS NOVA is a 50:50 joint venture between us and INEOS that manufactures and sells styrene, solid polystyrene ("SPS")
and EPS.

IPIC Transaction

On February 23, 2009, we entered into an arrangement agreement (the "Arrangement Agreement") with IPIC, which is wholly
owned by the government of the Emirate of Abu Dhabi, providing for the acquisition by IPIC of all of our outstanding common shares for cash consideration of $6.00 per share. On July 6, 2009,
IPIC completed the acquisition of NOVA Chemicals and, through a wholly owned subsidiary, acquired all of our issued and outstanding common shares (the "Acquisition"). Prior to
July 6, 2009, IPIC provided us with $350 million of interim debt financing that was converted into our common equity at the closing of the Acquisition. We refer to the Acquisition and
the conversion of the interim debt financing into equity collectively as the "IPIC Transaction". Our common shares were delisted from the New York Stock Exchange ("NYSE") and the Toronto Stock
Exchange on July 6, 2009.

We
elected to use push-down accounting under the Canadian Institute of Chartered Accountants ("CICA")1625, Comprehensive revaluation of assets and
liabilities, which resulted in our assets and liabilities being comprehensively revalued to be consistent with the values recorded by IPIC in accordance with business
combination accounting standards. In this respect, we have applied, for the first time and prospectively, the principles of CICA 1582,Business
combinations, in connection with the push-down accounting. As a result, the carrying values of all identifiable assets and liabilities have been adjusted to their
respective estimated fair values on July 6, 2009 as reflected in Note 3 of the Annual Audited Consolidated Financial Statements.

Although
we continued as the same legal entity after the IPIC Transaction, our consolidated financial information for 2009 is presented for two periods: Predecessor and Successor, which
relate to the periods preceding and succeeding the Acquisition on July 6, 2009. These separate periods are presented to reflect the new accounting basis established for our company as of
July 6, 2009, and highlight the fact that the financial information for these periods has been prepared under two different historical-cost bases of accounting. The Successor
portion of the financial information also reflects the equity contributions from IPIC.

Refinancing

During October and November 2009, we refinanced a substantial portion of our outstanding debt scheduled to mature in 2010. On
October 16, 2009, we issued $350 million of 8.375% senior notes due 2016 and $350 million of 8.625% senior notes due 2019. We used $496 million of the offering proceeds to
repay debt under our senior secured credit facility and bilateral credit facilities, and plan to use the balance of the proceeds, to repay outstanding debt under our total return swap and for general
corporate purposes. On November 17,

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2009,
we entered into a new $350 million senior secured revolving credit facility to replace our prior facility that was scheduled to expire on March 31, 2010. In addition, we amended
two of our senior unsecured bilateral credit facilities (which were previously amended to shorten their maturity dates to March 2010) to revert back to their original maturity dates. As a
result of these transactions, we now have four revolving credit facilities totaling $615 million in borrowing capacity. These facilities include:



In
February 2010, we entered into two new accounts receivable securitization programs (one in the U.S. and one in Canada) to replace our prior programs before they expired.
The new programs expire in February 2012 and each allow for a maximum funding of $100 million.

After
the above refinancings, we now have a $75 million total return swap, which terminates on March 31, 2010, and Cdn$250 million (US$237 million, based on a
forward exchange rate of 0.9494 entered on January 22, 2010) of 7.85% senior notes, which mature in August 2010. We intend to repay our total return swap upon termination and pay
off the 7.85% Senior Notes upon maturity using a portion of the proceeds from our October 2009 offering of senior notes, cash on hand and borrowings under our credit facilities.

Key Drivers of Financial Performance

Our earnings and cash flow primarily are influenced by the margins earned on the products we manufacture. Margin is the difference
between the selling price of products and the direct cost to produce and distribute them. Margins for companies in the plastics and chemical industry are driven by the supply/demand balance and tend
to be cyclical.

Supply/Demand BalanceThe Key Driver of Profitability

The supply/demand balance, as measured by industry operating rates, is generally the best indicator of profitability in the plastics
and chemical industry. During peak conditions, when operating rates tend to be high, prices and margins generally increase as customers attempt to secure scarce supply to meet their production needs.
Conversely, during trough conditions, which tend to occur when operating rates are low, margins generally decrease since there is ample supply to meet customer demand.

Plastics and Chemical Industry Earnings are Cyclical

By its nature, profitability in the plastics and chemical industry is cyclical. Demand growth is driven by economic growth, which tends
to be relatively consistent over time. In contrast, new product supply grows in large increments through the construction of large, complex new plants, which generally require significant capital and
lead-time of four to six years to complete.

As
industry operating rates increase, prices and producers' margins tend to increase. Extended periods of profitability encourage new investment in plants to serve growing demand. New
supply added in excess of demand growth causes industry operating rates and profitability to decline. Periods of reduced profitability deter investment in new plants and force high-cost,
unprofitable producers to rationalize capacity. Continued demand growth and lack of new investment lead to tightening capacity utilization and a return to increased profitability. This alternating
pattern of supply surplus and shortage creates the earnings cycles that are typical in commodity industries.

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Price, Volume and Cost Influence Profitability



Pricing for our polymer and chemical products is based on the amount our customers are willing to pay for these products compared to
similar available or competing products. Prices can rapidly change as a result of feedstock costs and fluctuations in the supply/demand balance. While feedstock costs heavily influence the price of
our products, margins drive profitability.



Sales volumes for plastics and chemical products are most heavily influenced by economic growth, a key driver of demand. Sales volumes
also may be influenced by short-term changes in customer buying patterns which primarily are driven by expectations of price volatility. Anticipation of higher prices or limited product
availability can motivate customers to purchase beyond short-term needs and build inventories. Conversely, expectations of lower prices can motivate customers to delay purchases and
consume inventories. These short-term buying patterns can create quarterly earnings volatility for plastics and chemical producers and are not necessarily representative of
longer-term profitability.



Feedstock costs are the single largest component of our costs and account for 70-80% of the total cost of our products. Our
primary feedstocks include ethane, other natural gas liquids, crude oil, and condensates, while INEOS NOVA's primary feedstocks are benzene and
ethylene. Feedstock costs heavily influence the price of our products, and in recent years, feedstock cost volatility has led to rapid changes in product prices. Since feedstock costs represent the
most significant portion of total production costs, a feedstock cost advantage can lead to enhanced profitability relative to industry peers and is the key to our profitability throughout
the cycle.

The
remaining 20-30% of the total cost of our products consists of variable conversion costs and fixed costs such as: plant operating and distribution costs; selling, general
and administrative costs ("SG&A"); and research and development costs ("R&D"). SG&A costs represent all direct and most indirect expenses incurred in directing and managing the company. R&D costs
relate to technical activities that support the development and commercialization of new products, technologies and applications.

The
following table illustrates how changes in various feedstock costs could affect our after-tax income assuming all other factors are held constant. The sensitivity is
based on 2009 actual consumption volumes (excluding hedged items and respective hedging instruments) and the periodic effects are determined by relating a reasonably possible change in the
risk variables.

(millions of dollars, except as noted)

Change

Increase/Decrease
in After-Tax
IncomeCrude oil


10%

$
30Natural gas


10%

$
28Propane


10%

$
10Butane


10%

$
25




Our investing, financing and operating activities continue to be exposed to currency risks which effective October 1, 2008,
includes both translation and transaction effects. As of December 31, 2009 and 2008, NOVA Chemicals had a net monetary liability position of $675 million and $857 million,
respectively in non-U.S. dollar currencies at their respective current exchange rates. Each 1% weakening (strengthening) of the Canadian dollar against the U.S. dollar would
decrease (increase) the value of the net liability by $5 million and $7 million after-tax, respectively. Any change in the Euro would not be material. Once the
Cdn$250 million of 7.85% senior notes are either locked at a forward exchange rate or paid off each 1% weakening (strengthening) of the Canadian dollar against the U.S. dollar would
decrease (increase) the value of the remaining net liability by $3 million after-tax.

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(millions of U.S. dollars)

July 6Dec. 31,
2009

Jan. 1July 5,
2009

2008(1)

2007(1)Successor

PredecessorTotal assets

$
5,533


N/A

$
4,007

$
4,816Total long-term liabilities

$
2,743


N/A

$
1,949

$
2,304Revenue

$
2,179

$
1,871

$
7,366

$
6,732Operating income (loss)(2)Olefins/PolyolefinsJoffre Olefins

$
105

$
87

$
621

$
531Corunna Olefins


(27
)

(78
)

(243
)

152Polyethylene


149


42


(43
)

127Eliminations


(4
)

(8
)

36


(18
)Total Olefins/Polyolefins


223


43


371


792Performance Styrenics


(2
)

(27
)

(69
)

(30
)INEOS NOVA Joint Venture(3)


(2
)

6


(103
)

(5
)Corporate


(130
)

(236
)

(143
)

(202
)Operating income (loss)(2)

$
89

$
(214
)
$
56

$
555Net (loss) income

$
(2
)
$
(239
)
$
(40
)
$
348


Notes: (1)Certain
prior year information has been restated due to the adoption of CICA 3064 on January 1, 2009. See "Management's Discussion and
Analysis of Financial Condition and Results of OperationsAccounting Standards."(2)See
Supplemental Measures.(3)As
of October 1, 2007, the results reflect our 50% share in INEOS NOVA. Prior to that period, results reflected our North American styrene and
SPS business and 50% of our interest in the European styrenics joint venture with INEOS.




(millions of U.S. dollars)

July 6 to Dec. 31,
2009 vs. 2008(1)

Jan. 1 to July 5,
2009 vs. 2008(1)

2008 vs. 2007(1)Successor

PredecessorLower operating margin(2)

$
(47
)
$
(326
)
$
(621
)Lower (higher) research and development


32


32


(2
)Lower (higher) selling, general and administrative


126


54


(18
)Foreign exchange (losses) gains


(222
)

(156
)

117Lower (higher) restructuring charges


14


(5
)

49Lower (higher) depreciation and amortization


130


131


(24
)Lower interest expense


71


62


19Higher (lower) gains and losses


3


8


(22
)(Higher) lower income tax expense


(69
)

1


114Increase (decrease) in net income

$
38

$
(199
)
$
(388
)


Notes: (1)Certain
prior year information has been restated due to the adoption of CICA 3064 on January 1, 2009. See "Management's Discussion and
Analysis of Financial Condition and Results of OperationsAccounting Standards."(2)Operating
margin equals Revenue less Feedstock and operating costs (includes impact of realized and unrealized gains and losses on
mark-to-market feedstock derivatives).


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Discussion of Consolidated Financial Results of Operations



Net (Loss) Incomefor the period from July 6 to December 31, 2009 was a
net loss of $2 million compared to a net loss of $40 million in 2008. The improvement in net loss was a result of
economic and business conditions beginning to stabilize, which resulted in steadier feedstock costs, selling prices and sales volumes. Lower operating costs also contributed to the decrease in
net loss.

Revenuefor the period from July 6 to December 31, 2009 was $2,179 million, significantly down from
$7,366 million in 2008 primarily due to the shorter time period and lower sales prices and volumes.

Feedstock and Operating Costsfor the period from July 6 to December 31, 2009 were $1,712 million compared to
$6,852 million during 2008. The steep decline in feedstock and operating costs was due to the shorter time period and significantly lower average crude oil, benzene and natural gas prices
during the period in 2009 compared to 2008 that occurred as a result of the reset in commodity and materials prices triggered by the global recession that started in the second half of 2008.

Foreign Exchange (Losses) Gainsfor the period from July 6 to December 31, 2009 were a loss of $105 million compared
to a gain of $117 million in 2008. The difference was due to the effect of a strengthening Canadian dollar on Canadian-denominated liabilities in the 2009 period and the change of our
functional currency during 2008.

Depreciation and Amortizationexpense was $131 million for the period from July 6 to December 31, 2009, down from
$261 million in 2008, due to the shorter time period. The application of push-down accounting did not impact depreciation as we reassessed and revised the estimated useful lives of
our assets in the Olefins/Polyolefins businesses at the same time (see "Application of Critical Accounting EstimatesProperty, Plant and Equipment").

Selling, General and Administrativeexpenses were $99 million for the period from July 6 to December 31, 2009
compared to $225 million during 2008 primarily due to the shorter period.

Research and Developmentexpenses were $20 million for the period from July 6 to December 31, 2009, down from
$52 million during 2008 due to the shorter time period and targeted cost savings in the 2009 period, primarily in our styrenics business.

Restructuring Chargeswere $23 million for the period from July 6 to December 31, 2009, compared to
$37 million during 2008. With the IPIC Transaction complete, previously planned restructuring activities, including workforce reductions in the Corporate and Olefins/Polyolefins business units,
were resumed in the 2009 period.

Interest Expense (Net)for the period from July 6 to December 31, 2009 was $85 million compared to
$156 million in 2008, primarily lower due to the shorter time period; however, Interest Expense (Net) was higher on a percentage basis due to accretion of discount on notes due to push-down
accounting and costs associated with existing and new financings offset to a small degree as a result of the repayment of $250 million of 7.4% notes due April 1, 2009.

Income Tax Expense (Recovery)was a $7 million expense for the period from July 6 to December 31, 2009, compared to a
recovery of $62 million in 2008 due to the increase in net income before taxes. In 2008, the tax recovery as a percent of income before income taxes was higher than would be expected due to
permanent differences on foreign exchange gains and losses.



Net (Loss) Incomefor the period from January 1 to July 5, 2009 was a net
loss of $239 million compared to a net loss of $40 million in 2008. The significant increase in net loss was due to weak economic and business conditions in the 2009 period that resulted
in lower selling prices and sales volumes that more than offset lower feedstock and operating costs. Higher foreign exchange losses due to a strengthening Canadian dollar in the 2009 period on
Canadian-denominated liabilities also contributed to the increase in net loss.

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Revenuewas $1,871 million for the period from January 1 to July 5, 2009, significantly down from
$7,366 million in 2008 due to the shorter time period. In addition, weak economic and business conditions during the first half of 2009 resulted in lower average selling prices for products in
all business segments as well as lower sales volumes that more than offset lower feedstock and operating costs compared to 2008.

Feedstock and Operating Costswere $1,683 million during the period from January 1 to July 5, 2009 compared to
$6,852 million during 2008. The steep decline in feedstock and operating costs was due to the shorter time period and significantly lower average crude oil, benzene and natural gas prices
during the 2009 period compared to 2008 as a result of the reset in commodity and materials prices triggered by the global recession that started in the second half of 2008.

Foreign Exchange (Losses) Gainsfor the period from January 1 to July 5, 2009 were a loss of $39 million compared to
a gain of $117 million in 2008. The difference was due to the effect of a strengthening Canadian dollar on Canadian-denominated liabilities in the period in 2009.

Depreciation and Amortizationexpense was $130 million in the period from January 1 to July 5, 2009, down from
$261 million in 2008, due to the shorter time period.

Selling, General and Administrativeexpenses were $171 million during the period from January 1 to July 5, 2009
compared to $225 million during 2008. This is higher on a percentage basis primarily due to financial advisor and legal fees of $46 million incurred with respect to the IPIC Transaction
during the 2009 period.

Research and Developmentexpenses were $20 million during the period from January 1 to July 5, 2009, down from
$52 million during 2008 due to the shorter time period and targeted cost savings, primarily in our styrenics business.

Restructuring Chargeswere $42 million during the period from January 1 to July 5, 2009 compared to
$37 million during 2008. Contributing to the increased restructuring charges during the period in 2009 was our decision to exit the DYLARK® engineering resin business during the
second quarter of 2009.

Interest Expense (Net)during the period from January 1 to July 5, 2009 was $94 million compared to
$156 million in 2008. The overall decrease was due to the shorter time period, but interest expense (net) increased on a percentage basis primarily due to additional amortization expense of
debt issue costs as a result of amendments to existing financings and additional financings completed in the first and second quarters of 2009 and debt advisory fees recorded in the first quarter
of 2009.

Income Tax (Recovery) Expensewas a $63 million recovery in the period from January 1 to July 5, 2009 compared to a
$62 million recovery in 2008 due to a net loss before taxes in both periods. In 2008, the tax recovery as a percent of income before income taxes was higher than would be expected due to
permanent differences on foreign exchange gains and losses.



Net Losswas $40 million in 2008 compared to net income of $348 million
in 2007. Net income was lower in 2008 primarily due to lower margins resulting from the effects of the dramatic drop in energy and petrochemical prices in the fourth quarter of 2008. Sharp selling
price declines led to lower sales volumes in the fourth quarter of 2008, and the precipitous drop in the cost of feedstocks resulted in a negative inventory flow-through impact and
year-end inventory write-down totaling $384 million after-tax. This was partially offset by a change in functional currency that resulted in a gain of
$142 million after-tax, due to the sharp drop in the Canadian dollar in the fourth quarter.

Revenuewas $7,366 million in 2008, up from $6,732 million in 2007. Average selling prices for products in all business
segments were higher in 2008 than in 2007, despite the declines in the fourth quarter. In addition, PE sales volumes were 2% higher in 2008 despite a sharp decline in October and November.

Feedstock and Operating Costswere $6,852 million in 2008, up from $5,597 million in 2007. Feedstock, utility and fuel costs
increased in 2008 as average crude oil, benzene and natural gas prices rose significantly during the first three quarters of 2008. While industry feedstock costs increased significantly, our feedstock
costs increased less in comparison due largely to our advantaged Alberta based feedstock.

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Foreign Exchange (Losses) Gainsin 2008 were a gain of $117 million compared to no gain or loss in 2007. The difference was due to
the change in our functional currency during 2008. See Market and Regulatory Risk".

Depreciation and Amortizationexpense was $261 million in 2008, up from $237 million in 2007. Depreciation expense was
$24 million higher in 2008 as compared to 2007 due to additional depreciation recorded in the INEOS NOVA joint venture, increased amortization of other joint venture start-up costs
and $6 million of additional depreciation expense in connection with our change in functional currency.

Selling, General and Administrativeexpenses were $225 million in 2008, up from $207 million in 2007, primarily due to
increased stock-based compensation expenses related to our forward transactions which were ineffective in the last half of 2008 and increased professional and consulting fees.

Research and Developmentexpenses were $52 million in 2008, up slightly from $50 million in 2007.

Restructuring Chargeswere $37 million before-tax ($33 million after-tax) in 2008, down from
$86 million before-tax ($55 million after-tax) in 2007. In 2007, restructuring costs were higher due to actions linked to the formation of the INEOS NOVA
joint venture and Sterling Chemicals' permanent shut down of its styrene monomer plant at Texas City, TX. (See Note 15 to the Annual Audited Consolidated Financial Statements
for details.)

Interest Expense (Net)was $156 million in 2008, down from $175 million in 2007. Interest expense declined in 2008 due to
lower interest rates and a reduction in debt.

Other Losseswere $2 million before-tax ($1 million after-tax) in 2008, compared to other gains of
$20 million before-tax ($14 million after-tax) in 2007. In 2007, we recorded a gain as a result of the sale of the previously shut-down Chesapeake,
Virginia, facility and other incidental land.

Income Tax Expense (Recovery)was a $62 million recovery in 2008, compared to a $52 million expense in 2007 primarily due to
lower taxable income. In 2008, the tax recovery as a percent of income before income taxes was higher than would be expected due to permanent differences on foreign exchange gains and losses. Income
tax expense is lower than expected in 2007 due to recording the benefit of the enactment of lower future income tax rates in Canada.

Olefins/Polyolefins Business Unit

Our Olefins/Polyolefins business unit produces and sells ethylene, PE and co-products from its two manufacturing centers
located in Alberta and Ontario, Canada. The business is built on its cost advantaged feedstock (because of lower ethane prices in Alberta when compared to the U.S. Gulf Coast ("USGC")) and world-scale
and energy-efficient manufacturing facilities in Alberta and proprietary technology such as Advanced SCLAIRTECH ("AST") and gas-phase PE process technology as well as
PE catalyst technology.

Our
Olefins/Polyolefins business unit contains three reporting segments:



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Reporting Segment

Primary Products

Capacity

Manufacturing Sites

Primary FeedstockJoffre Olefins

Ethylene
Co-Products(1)

4.8 Blbs
0.8 Blbs

Joffre, Alberta

EthaneCorunna Olefins

Ethylene
Co-Products(1)

1.8 Blbs
4.7 Blbs

Corunna, Ontario

Crude oil, Condensate,
Propane and ButanePolyethylene

Linear low-density PE
AST based PE
Low-density PE
High-density PE

3.6 Blbs

Joffre, Alberta
Mooretown, Ontario
St. Clair River, Ontario

Ethylene
(Internally supplied)


(1)The
choice of ethylene feedstock mix determines the type and volume of co-products manufactured.




Ethyleneis the most widely produced petrochemical in the world and is the primary
feedstock used in the production of PE. It is a key building block for a variety of polymers and other chemicals used to manufacture products such as packaging, containers, films and construction
products. Ethylene is primarily transported via pipeline and is regionally traded. Ethylene margins typically expand when operating rates are at or above 90% of nameplate capacity.

Polyethyleneis used to produce everyday, consumer staple oriented items such as food packaging, packaging for personal care items, toys
and bottles, and is the most widely used plastic material in the world. Industrial applications include storage drums, industrial wrap, retail packaging and building products. PE resin is globally
traded in established merchant markets. PE margins typically expand when operating rates are at or above 90% of nameplate capacity.

Co-productsare produced in the ethylene manufacturing process and can be grouped into two categories: chemical
co-products and energy co-products. Chemical co-products include propylene, benzene and butadienebuilding blocks that are used to make items such as
tires, carpet and clothing fibers, and household goods. Energy co-products include gasoline blending components and fuel oil. The profitability of co-products depends on energy
prices and the supply/demand balance for each co-product. The choice of ethylene feedstock mix determines the type and volume of co-products manufactured.



Our largest volume product is ethylene, which is the key feedstock for the production of PE. We produce ethylene and
co-products at our Joffre, Alberta, and Corunna, Ontario, manufacturing facilities.



Joffre Olefins produces and sells ethylene and co-products and includes three world-scale ethylene crackers in Joffre,
Alberta. Our share of production capacity from the Joffre crackers, which excludes Dow Chemical Canada ULC's ("Dow's") 50% interest in the Ethylene 3 ("E3") cracker, is 4.8 billion
pounds per year and represents approximately 75% of our total nameplate ethylene production capacity. Approximately half of our production capacity at Joffre supports internal PE production, while the
remainder is sold to third parties. The Joffre crackers have the capacity to produce
approximately 830 million pounds per year of ethylene co-products such as hydrogen, propylene and other hydrocarbons.

The
primary feedstock of the Joffre ethylene crackers is ethane, which is extracted from natural gas by third-party straddle plant operators and delivered to the Joffre site via
pipeline. The majority of ethane used at the Joffre site is extracted and delivered under mediumto long-term contracts. We can also directly purchase ethane and have the
flexibility to use propane to meet a portion of our feedstock requirements when the economics are favorable.

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The
only major use for ethane is as a feedstock for production of ethylene. Given the dynamics of the Alberta ethane markets, we acquire ethane at cost by purchasing natural gas to
replace the energy content of the ethane removed from the gas stream plus pay a fee for extraction and delivery. Therefore, our feedstock costs are directly linked to the natural gas price in Alberta.
Alberta's historically lower cost of natural gas, due to structural transportation differentials, and more efficient ethane extraction plant infrastructure compared to the USGC contributes to our
feedstock cost advantage. In comparison, USGC ethane prices generally follow the prices of other ethylene feedstocks such as propane and naphtha, which typically track crude oil prices. Ethane prices
are also influenced by more traditional supply and demand dynamics. As a result, the price for ethane on the USGC can be at a substantial premium to the underlying natural gas value.



Corunna Olefins produces and sells ethylene and co-products that result from the manufacture of ethylene and processing of
crude oil and other feedstocks. The Corunna ethylene flexi-cracker has annual production capacity of 1.8 billion pounds of ethylene and 4.7 billion pounds of co-products,
depending on the feedstock used. Most of Corunna's ethylene production is consumed by our PE plants and INEOS NOVA's styrene monomer plant in Sarnia, Ontario, while the majority of its
co-products are sold to third parties.

Corunna's
manufacturing assets have the flexibility to process a large range of feedstocks and produce diverse chemical and energy co-products. We are able to adjust
Corunna's feedstock slate between crude oil, crude oil derivatives and natural gas liquids, or NGL's, as market conditions fluctuate. Corunna's crude oil processing unit allows us to
purchase crude oil and produce our own naphtha when it is economically favorable to do so. The Corunna facility can access NGL's, such as propane and butane from local producers,
Western Canada or the United States. The Corunna facility can also access crude oil and condensates from North America and overseas via marine transportation and pipelines.



The Polyethylene segment produces and sells linear low-density polyethylene ("LLDPE"), low-density polyethylene
("LDPE") and high-density polyethylene ("HDPE").

We
have approximately 3.6 billion pounds of annual PE production capacity from our two units in Joffre, Alberta, and our Mooretown and St. Clair River sites in Ontario. We
plan to complete a modernization and expansion project at our Mooretown, Ontario LDPE asset. We expect this project to be completed by late 2010 and expect to add up to 120 million pounds of
annual production capacity, as well as upgrade the product slate, improve reliability and reduce production costs.



One of the Joffre PE plants, PE2, utilizes Advanced SCLAIRTECH technology to manufacture and sell higher value SURPASS® and
SCLAIR® PE resins. SURPASS resins deliver a unique combination of properties not found in traditional PE resins and are used in film applications, such as food packaging; injection molding
applications, such as ice cream containers and packaging lids; and rotational molding applications, such as dumpsters and industrial storage containers. SCLAIR resins are used in a variety of flexible
packaging applications.

We
are one of only three PE companies worldwide with independent, patented process and single-site catalyst technologies which enable us to produce differentiated higher
value PE resins on a commercial scale. Made with patented Advanced SCLAIRTECH technology and proprietary single-site catalysts, our octene co-polymer resins deliver enhanced
value to customers because of their performance attributes and processing benefits.



Our PE is primarily sold into North American markets. We have also historically sold up to 20% of our total sales volume outside North
America to China, Southeast Asia, Central and Latin America and Europe. We own

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part
of a packaging joint venture located in Tianjin, China. We ship bulk PE resin out of the Port of Vancouver to Tianjin where it is bagged for distribution to customers in China.



We license our proprietary SCLAIRTECH technology and NOVACAT® family of catalysts. Our SCLAIRTECH technology
is licensed for use in 11 plants around the world.

NOVACAT
catalysts are a series of advanced Ziegler-Natta catalysts designed specifically for gas-phase PE reactors that can produce butene and hexene LLDPE with
improved performance characteristics and manufacturing economics.

Outlook for Olefins/Polyolefins Business Unit

We believe that there are several factors that affect the long-term earnings potential of our Olefins/Polyolefins
business unit.

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Olefins/Polyolefins Financial Highlights

(millions of U.S. dollars, except as noted)

July 6Dec. 31,
2009

Jan. 1July 5,
2009

2008(1)

2007(1)Successor

PredecessorRevenueJoffre Olefins(2)

$
564

$
503

$
2,159

$
1,803Corunna Olefins(2)


526


437


2,537


2,075Polyethylene(2)


803


698


2,383


2,022Eliminations


(411
)

(380
)

(1,778
)

(1,367
)$
1,482

$
1,258

$
5,301

$
4,533Operating Income (Loss)(3)Joffre Olefins

$
105

$
87

$
621

$
531Corunna Olefins


(27
)

(78
)

(243
)

152Polyethylene


149


42


(43
)

127Eliminations(4)


(4
)

(8
)

36


(18
)$
223

$
43

$
371

$
792Polyethylene Sales Volumes(Millions of Pounds)


1,525


1,536


3,432


3,375


Notes: (1)Certain
prior year information has been restated due to the adoption of CICA 3064 on January 1, 2009. See "Management's Discussion and
Analysis of Financial Condition and Results of OperationsAccounting Standards."(2)Before
inter-segment eliminations between the business units.(3)See
Supplemental Measures.(4)Represents
inter-segment profit eliminations.




2009

Annual(U.S. dollars per pound, except where noted)

Q1

Q2

Q3

Q4

2009

2008

2007Benchmark Principal Product Prices:(1)Ethylene(2)

$
0.32

$
0.32

$
0.32

$
0.41

$
0.34

$
0.59

$
0.49PElinear low-density butene liner(3)

$
0.49

$
0.50

$
0.55

$
0.57

$
0.53

$
0.79

$
0.65PEweighted-average benchmark(3)

$
0.39

$
0.43

$
0.58

$
0.61

$
0.56

$
0.81

$
0.68Benchmark Raw Material Prices:(1)AECO natural gas (dollars per mmBTU)(4)

$
3.96

$
2.95

$
2.68

$
4.26

$
3.46

$
7.74

$
5.99NYMEX natural gas (dollars per mmBTU)(4)

$
4.86

$
3.60

$
3.41

$
4.27

$
4.05

$
8.95

$
6.92WTI crude oil (dollars per barrel)(5)

$
43.08

$
59.62

$
68.30

$
76.19

$
61.80

$
99.65

$
72.34


Notes: (1)Average
benchmark prices do not necessarily reflect actual prices realized by us or any other petrochemical company.(2)Source:
Chemical Market Associates, Inc. (CMAI)USGC Net Transaction Price.(3)Source:
Townsend Polymer Services Information (TPSI); Benchmark prices weighted according to our sales volume mix in North America.(4)Source:
Canadian Gas Price Reporter. AECO gas is weighted-average daily spot gas price. NYMEX gas is Henry Hub 3-Day Average Close.(5)Source:
Platt's. NYMEX WTI daily spot-settled price average for calendar month.


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Discussion of Financial Results of Olefins/Polyolefins Business Unit



July 6 to December 31, 2009 Versus Full Year 2008

Revenuewas $564 million in the period from July 6 to December 31,
2009, down from $2,159 million in 2008 due to the shorter time period and lower selling prices and sales volumes. Industry average prices for ethylene were 38% lower in the time period in 2009
compared to full year 2008.

Feedstock and Operating Costswere $383 million in the period from July 6 to December 31, 2009, down from
$1,454 million in 2008. Costs decreased in the time period in 2009 due to the shorter time period, lower volumes and lower natural gas and utility costs, and the lower Canadian dollar exchange
rate. Average AECO natural gas prices were over 50% lower in the time period in 2009 compared to full year 2008.

Operating incomewas $105 million in the period from July 6 to December 31, 2009, down from $621 million in
2008. Margins in the time period in 2009 were reduced as sales price declined further than feedstock and operating costs.

January 1 to July 5, 2009 Versus Full Year 2008

Revenuewas $503 million in the period from January 1 to July 5,
2009, down from $2,159 million in 2008 due to the shorter time period and lower selling prices and lower sales volume. Industry average prices for ethylene were 46% lower in the time period in
2009 compared to full year 2008.

Feedstock and Operating Costswere $374 million in the period from January 1 to July 5, 2009, down from
$1,454 million in 2008. Costs decreased in the time period in 2009 due to the shorter time period, lower sales volume and lower natural gas and utility costs, and the lower Canadian dollar
exchange rate. Average AECO natural gas prices were over 50% lower in the time period in 2009 compared to full year 2008.

Operating incomewas $87 million in the period from January 1 to July 5, 2009, down from $621 million in 2008.
Margins in the time period in 2009 were reduced as sales price declined further than feedstock and operating costs.

2008 Versus 2007

Revenuewas $2,159 million in 2008, up from $1,803 million in 2007 due to
higher selling prices which more than offset higher feedstock costs and lower sales volume. Selling prices were 29% higher in 2008 as sharply higher feedstock costs in the first nine months of the
year led to price increases by producers. Total sales volume of ethylene and co-products was 7% lower in 2008 primarily due to a sharp reduction in ethylene demand in the
fourth quarter.

Feedstock and Operating Costswere $1,454 million in 2008, up from $1,205 million in 2007. Costs increased in 2008 due to
Alberta natural gas prices which were 31% higher in 2008. Weaker consumption of feedstocks partially offset the impact of higher natural gas costs.

Operating incomewas $621 million in 2008, up from $531 million in 2007. Margins in 2008 expanded as price increases
outpaced higher feedstock and operating costs.



July 6 to December 31, 2009 Versus Full Year 2008

Revenuewas $526 million in the period from July 6 to December 31,
2009, down from $2,537 million in 2008. The change was due primarily to the shorter time period and a reduction in product prices and decreased sales volumes. Co-product pricing
fell in response to lower WTI crude oil prices, which averaged almost 30% lower than in 2008.

Feedstock and Operating Costswere $537 million in the period from July 6 to December 31, 2009, down from
$2,708 million in 2008. Feedstock prices were down along with the average WTI crude oil price, which was almost 30% lower than in 2008. Feedstock costs were lower due to the shorter time period
and lower sales

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volumes.
Operating costs were lower mainly due the shorter time period, lower utility costs, and to a lower Canadian dollar exchange rate.

Operating losswas $27 million in the period from July 6 to December 31, 2009, compared to a loss of
$243 million in 2008. The improvement was primarily due to lower feedstock costs and more stable flow-through of costs with no need to adjust the value of our inventory. Margins in
the time period in 2009 were higher as sales price increased more than feedstock and operating costs.

January 1 to July 5, 2009 Versus Full Year 2008

Revenuewas $437 million in the period from January 1 to July 5,
2009, down from $2,537 million in 2008. The change was due primarily to the shorter time period and a reduction in product prices and decreased sales volumes. Co-product pricing
fell in response to lower WTI crude oil prices, which averaged almost 50% lower than in 2008.

Feedstock and Operating Costswere $478 million in the period from January 1 to July 5, 2009, down from
$2,708 million in 2008. Feedstock prices were down along with the average WTI crude oil price, which was almost 50% lower than in 2008. Feedstock costs were lower due to the shorter time period
and lower sales volumes. Operating costs were lower mainly due the shorter time period, lower utility costs, and to a lower Canadian dollar exchange rate.

Operating losswas $78 million in the period from January 1 to July 5, 2009, compared to a loss of
$243 million in 2008. The improvement was primarily due to lower feedstock costs and more stable flow-through of costs with no need to adjust the value of our inventory.

2008 Versus 2007

Revenuewas $2,537 million in 2008, up from $2,075 million in 2007. The
year-over-year improvement was due primarily to an increase in product prices that was partly offset by decreased sales volumes. Energy co-product pricing rose in
response to higher WTI crude oil prices, which averaged $27.31/bbl higher than 2007. Higher energy co-product pricing more than offset lower sales volumes. Chemical co-product
revenue was also up due to higher pricing, with sales volumes down slightly. Ethylene prices were up 30% over 2007, and other chemical co-product pricing was up 23% over 2007.

Feedstock and Operating Costswere $2,708 million in 2008, up from $1,856 million in 2007. Feedstock prices were up along
with the average WTI crude oil price, which was 38% higher in 2008 versus 2007. In addition, realized losses of $22 million from our feedstock purchase program contributed to higher feedstock
costs.

Operating losswas $243 million in 2008, down from a gain of $152 million in 2007. The
year-over-year decline was primarily due to increased feedstock costs for the full year and product price erosion in the second half of 2008. A spike in WTI crude oil prices to
record levels in mid-2008 increased feedstock costs and flow-through of costs through the second half of 2008, which delayed the cost benefits of the dramatic decrease in
industry WTI crude oil costs that occurred in the second half of 2008. Higher flow-through costs in the second half of 2008 were accompanied by lower product pricing on falling WTI crude
oil prices, reduced demand, and lower product pricing in response to a global economic slowdown.



July 6 to December 31, 2009 Versus Full Year 2008

Revenuewas $803 million in the period from July 6 to December 31,
2009, down from $2,383 million in 2008. The change primarily was due to the shorter time period and lower PE sales prices. The average PE sales price was almost 30% lower, as the economic
downturn reduced both feedstock costs and demand for products as compared to 2008. In the time period in 2009, demand was steady, but customers did not rebuild their low inventories due to continued
economic uncertainty.

Feedstocks and Operating Costswere $588 million in the period from July 6 to December 31, 2009, down from
$2,298 million in 2008. Feedstock and operating costs were lower in the time period in 2009 primarily due

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to
the shorter time period, lower sales volumes and lower ethylene costs, which were 38% lower than 2008, and lower utility costs.

Operating incomein the period from July 6 to December 31, 2009 was $149 million, up from a loss of
$43 million in 2008. The increase was due to prices increasing more than feedstock costs and lower operating costs.

January 1 to July 5, 2009 Versus Full Year 2008

Revenuewas $698 million in the period from January 1 to July 5,
2009, down from $2,383 million in 2008. The change primarily was due to the shorter time period and lower PE sales prices. The average PE sales price was almost 40% less, as the economic
downturn reduced both feedstock costs and demand for products. Destocking occurred early in the time period in 2009 and was followed by steady demand and stable, low inventory in the second half of
the time period due to continued economic uncertainty.

Feedstocks and Operating Costswere $597 million in the period from January 1 to July 5, 2009, down from
$2,298 million in 2008. Feedstock and operating costs were lower in the time period in 2009 primarily due to the shorter time period, lower sales volumes and lower ethylene costs, which were
46% lower than 2008, and lower utility costs.

Operating incomein the period from January 1 to July 5, 2009 was $42 million, up from a loss of $43 million
in 2008. The increase was due to prices increasing more than feedstock costs and lower operating costs.

2008 Versus 2007

Revenuewas $2,383 million in 2008, up from $2,022 million in 2007. The
year-over-year improvement primarily was due to higher PE sales prices. The average PE sales price was up 9¢ per pound, or 16%,
year-over-year in 2008 as record oil prices and energy costs drove up plastic prices.

Feedstocks and Operating Costswere $2,298 million in 2008, up from $1,772 million in 2007. Feedstock and operating costs
were higher in 2008 due to higher ethylene costs, which were 32% higher than 2007, and higher distribution costs.

Operating lossin 2008 was $43 million, down from a gain of $127 million in 2007. The year-over-year
decline was due to higher feedstock costs outpacing higher prices.

INEOS NOVA Joint Venture

INEOS NOVA is a 50:50 joint venture with INEOS that manufactures and sells styrene and SPS in North America and SPS and
EPS in Europe. INEOS NOVA was created on October 1, 2007, when we expanded our 50:50 European joint venture, formerly NOVA INNOVENE, to include the North American styrene and SPS
businesses of both companies.



Styrene is a globally-traded commodity and a key feedstock in the production of styrenic polymers, such as SPS and EPS. SPS and EPS are
used to make products such as electronics packaging, small appliances, construction components and food packaging. While SPS and EPS resin production accounts for approximately 60% of global styrene
demand, styrene is also used in other styrenic polymers such as acrylonitrile butadiene styrene, synthetic rubber and unsaturated polyesters.

Margins
in the styrene and SPS industries are primarily driven by supply/demand dynamics. Styrene is the supply bottleneck in the styrenics chain and therefore the key indicator of
supply/demand tightness for both styrene and SPS. Industry operating rates in excess of 92% for styrene generally lead to margin expansion.

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Capacity (Billions Of Pounds)North America

Europe

GlobalStyrene


3.8





3.8SPS


1.6


1.0


2.6EPS





0.9


0.9


Styrene.INEOS NOVA has the capacity to produce approximately 3.8 billion pounds of styrene from its three production sites
in Bayport
and Texas City, Texas, and Sarnia, Ontario. The majority of styrene production is consumed internally to manufacture styrenic polymers, principally SPS, with the balance sold to third parties.

The
primary raw materials for the production of styrene are benzene and ethylene. INEOS NOVA has entered into long-term supply agreements with us and INEOS to supply
virtually all of its ethylene and a portion of its benzene feedstock requirements. The balance of feedstock is obtained through purchases in the open market.

While
INEOS NOVA has roughly the same capacity to consume styrene as it does to produce it, the joint venture has a long styrene position in North America and a short position in
Europe. INEOS NOVA purchases styrene in Europe through purchase agreements, spot purchases, or when it is cost effective, supply from North America to make up the shortfall. When market
conditions are sufficient, the excess North American styrene production is sold into domestic merchant and export markets.

SPS/EPS.INEOS NOVA has the capacity to produce approximately 1.6 billion pounds per year of SPS from its three production
sites in
North America and 1.9 billion pounds per year of SPS and EPS from its five sites in Europe.



Profitability in the global styrenics industry has been poor in the last several years, primarily due to the oversupply of styrene and
relatively high cost of benzene feedstock. However, we believe that the efficiency enhancing actions taken by INEOS NOVA and others in the industry and lower feedstock costs, which could result
in demand growth, ultimately will lead to higher operating rates and improved industry profitability.



Since its inception in 2005, INEOS NOVA has aggressively reduced costs through asset rationalizations, reductions in corporate
overhead expenses and operating synergies. The expanded joint venture has continued to reduce costs in Europe and North America. The benefit of these cost reductions is shared equally between INEOS
and us. In 2009, INEOS NOVA continued to reduce costs by closing its SPS production facilities on the Breda, The Netherlands site at the end of year. The plant had an annual capacity of about
200 million pounds. The closure of the SPS capacity is not expected to impact the manufacturing of EPS and high performance polystyrene at the Breda site and no change to EPS is planned.



The INEOS NOVA joint venture will continue to reduce costs and conserve cash to position it for positive cash flows in future
years. The owners expect the joint venture to manage the business to at least a breakeven cash flow position in 2010 and beyond through a series of actions.

First,
the joint venture will continue to manage its production to minimize inventory and working capital and reduce costs. Costs will be reduced by minimizing corporate overhead
expenses and maximizing operating synergies.

Second,
the INEOS NOVA management team will continue to explore strategic options for further industry consolidation which could lead to further cost reductions and additional
synergies. Given the size of the INEOS NOVA joint venture, margin improvements can have a meaningful impact on INEOS NOVA's earnings and cash flow.

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(millions of U.S. dollars, except as noted)

July 6Dec. 31,
2009

Jan. 1July 5,
2009

2008(1)

2007(1)Successor

PredecessorRevenue

$
635

$
552

$
1,942

$
2,092Operating (loss) income(2)

$
(2
)
$
6

$
(103
)
$
(5
)Sales Volumes (millions of pounds)(3)


1,516


1,183


2,502


2,953


Notes: (1)As
of October 1, 2007, the results reflect our 50% share in INEOS NOVA. Prior to that period, results reflected our North American styrene and
SPS business and 50% of our interest in the European styrenics joint venture.(2)See
Supplemental Measures.(3)Third-party
sales. Polystyrene sales consist of SPS sales in North America and SPS and EPS sales in Europe.




2009

Annual(U.S. dollars per pound, except where noted)

Q1

Q2

Q3

Q4

2009

2008

2007Benchmark Principal Product Prices:(1)Styrene(2)

$
0.40

$
0.46

$
0.56

$
0.55

$
0.50

$
0.73

$
0.68SPS(2)North America

$
0.77

$
0.84

$
0.96

$
0.97

$
0.89

$
1.08

$
0.98Europe

$
0.43

$
0.52

$
0.64

$
0.64

$
0.56

$
0.82

$
0.81Benchmark raw material prices:(1)Benzene (dollars per gallon)(2)

$
1.22

$
1.98

$
3.12

$
2.81

$
2.28

$
3.57

$
3.62


Notes: (1)Average
benchmark prices do not necessarily reflect actual prices realized by INEOS NOVA or any other petrochemical company.(2)Source:
CMAI Contract Market.




July 6 to December 31, 2009 Versus Full Year 2008

Revenuewas $635 million in the period July 6 to December 31,
2009, down from $1,942 million in 2008. Revenue declined due to the shorter time period and lower sales volumes and prices. Volume declined due to weaker construction and consumer durables
markets, such as those for automobiles and electronics, due to the economic recession. Pricing for SPS was down 22% in Europe and 10% in the North America.

Feedstock and Operating Costswere $613 million in the period July 6 to December 31, 2009, down from
$1,981 million in 2008. The reduction was due to the shorter time period, lower sales volumes and lower costs for feedstocks. Benzene cost was 17% lower in the period in 2009
versus 2008.

Operating losswas $2 million in the period July 6 to December 31, 2009, compared to a loss of $103 million in
2008. The improvement was mainly due to higher margins in North American styrene and SPS. Margins were higher in the period in 2009 versus the prior year due to flow-through feedstock
costs that fell more than selling prices.

January 1 to July 5, 2009 Versus Full Year 2008

Revenuewas $552 million in the period January 1 to July 5, 2009,
down from $1,942 million in 2008. Revenue declined due to the shorter time period and lower sales volumes and prices. Volume declined due to weaker construction and consumer durables markets,
such as those for automobiles and electronics, due to the economic recession. Pricing for SPS was down 42% in Europe and 25% in the North America.

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Table of Contents

Feedstock and Operating Costswere $514 million in the period January 1 to July 5, 2009, down from
$1,981 million in 2008. The reduction was due to the shorter time period, lower sales volumes and lower costs for feedstocks. Benzene cost was 55% lower in the period in 2009
versus 2008.

Operating incomewas $6 million in the period January 1 to July 5, 2009, compared to a loss of $103 million in
2008. The improvement was mainly due to higher margins in North American styrene and SPS. Margins were higher in the period in 2009 versus the prior year due to flow-through feedstock
costs
that fell more than selling prices. In Europe, SPS margins declined as sharply lower sales volumes more than offset higher unit margins resulting from flow-through feedstock costs that
fell more than selling prices.

2008 Versus 2007

Revenuewas $1,942 million in 2008, down from $2,092 million in 2007.
Despite modestly higher prices in 2008, revenue declined due to significantly lower sales volumes. Volume declined due to weaker construction and consumer durables markets, such as those for
automobiles and electronics, as the recession in the United States deepened in the latter half of 2008 and broadened to include other regions such as Europe where the company operates. In
addition, high costs for feedstock such as benzene limited the opportunity for profitable export of styrene out of North America, further weakening demand.

Feedstock and Operating Costswere $1,981 million, down slightly from $2,042 million in 2007. Although average benzene costs
were slightly lower in 2008, costs generally were higher during the first nine months of 2008 when production was higher. The rapid decline in feedstock costs in the fourth quarter, which pulled down
the average cost for the year, occurred in parallel with weaker sales volumes due to the weakness in product markets and the reduction in chain inventory caused by the steep energy and petrochemical
price declines in the last three months of 2008.

Operatingloss was $103 million in 2008, compared to a loss of $5 million in 2007. In 2008, margins were compressed as
significantly lower sales volumes and higher flow-through feedstock costs more than offset higher selling prices.

Performance Styrenics Business Unit

Our Performance Styrenics business unit produces standard EPS resin in North America and ARCEL® resins. It also has
EPS-based downstream ventures and businesses that aim to create and capture value beyond the sale of EPS resin.



Standard EPS resins are used in packaging for food and consumer products and in insulation for the building and construction industry.
Currently, sales of our standard EPS resins
account for the majority of Performance Styrenics' revenue. As a result, profitability of this business unit is dependent on the cyclical supply/demand balance for EPS.

ARCEL
resins and our ventures apply proprietary and licensed technology to enable customers to reduce their costs and environmental impact.



Styrene is the primary feedstock for the production in this business unit. Our minority interest in LyondellBasell Industries'
Channelview, Texas, propylene oxide/styrene monomer facility supplies 400 million pounds per year of cost-based styrene to our Performance Styrenics business unit, which is
sufficient to meet our anticipated styrene requirements.



We have the capacity to produce 350 million pounds per year of standard EPS and ARCEL resins at our production facilities in
Monaca (Beaver Valley), Pennsylvania, and Painesville, Ohio. In 2009, we reduced our

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EPS
capacity by approximately 25% as a result of the restructuring efforts of the Performance Styrenics business unit.

ARCEL
resin is a performance polymer that is molded into foam for protective packaging and used by producers of damage sensitive goods such as computers, printers, electronics,
appliances and furniture. Due to its unique properties, ARCEL resin can earn higher margins over standard, non-differentiated products.

In
2009, we ended commercial production of our DYLARK engineering resin due to the long-term market deterioration.



We attempt to leverage our intellectual property and market expertise by entering into downstream businesses and ventures, either
directly or by entering into strategic relationships with partners. These businesses and ventures are principally for building and construction applications and are in the development or
start-up stage. The strategic objective of these initiatives is to capture value beyond the sale of resin. As part of the restructuring of our Performance Styrenics business unit in 2009,
we eliminated certain of these downstream businesses and ventures, and we may eliminate, consolidate or sell others in the future.



In 2009, we restructured this business to a level that we believe can be successful going forward. These changes included the
rationalization of EPS capacity toward more sustainable business segments, exiting the DYLARK resin business, and exiting some of our ventures. We are continuing to evaluate this business unit and are
exploring strategic options.



(millions of U.S. dollars, except as noted)

July 6Dec. 31,
2009

Jan. 1July 5,
2009

2008

2007Successor

PredecessorRevenue

$
156

$
105

$
433

$
412Operating loss(1)

$
(2
)
$
(27
)
$
(69
)
$
(30
)Sales Volumes(2) (millions of pounds)


152


132


366


418


Notes: (1)See
Supplemental Measures.(2)Third-party
sales.




2009

Annual(U.S. dollars per pound)

Q1

Q2

Q3

Q4

2009

2008

2007Benchmark Principal Product Prices:(1)Styrene(2)

$
0.40

$
0.46

$
0.56

$
0.55

$
0.50

$
0.73

$
0.68EPS(2)

$
0.82

$
0.84

$
0.93

$
0.91

$
0.87

$
1.07

$
0.99


Notes: (1)Average
benchmark prices do not necessarily reflect actual prices realized by us or any other petrochemical company.(2)Source:
CMAI Contract Market.


56

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Table of Contents




Discussion of Financial Results of Performance Styrenics

July 6 to December 31, 2009 Versus Full Year 2008

Revenuewas $156 million in the period July 6 to December 31,
2009, down from $433 million in 2008. The reduction was due to the shorter time period, lower volumes and lower selling prices. Resin sales volume was low due to the impact of the economic
recession and reduced demand in most construction and packaging markets. Average EPS pricing was down 14% in the 2009 period versus 2008.

Feedstock and Operating Costsin the period July 6 to December 31, 2009 were $138 million, down from
$435 million in 2008. Costs were lower in the period in 2009 primarily due to the shorter time period, lower sales volumes and the 24% decrease in the cost of styrene. Operating costs were
lower due to restructuring in the business.

Operating lossin the period July 6 to December 31, 2009 was $2 million compared to a loss of $69 million in
2008. In the 2009 period, margins rose as prices declined less than flow-through feedstock costs and operating costs were lower due to restructuring.

January 1 to July 5, 2009 Versus Full Year 2008

Revenuewas $105 million in the period January 1 to July 5, 2009,
down from $433 million in 2008. The reduction was due to the shorter time period, lower volumes and lower selling prices. Resin sales volume was low due to the impact of the economic recession
and reduced demand in most construction, automotive and packaging markets. Average EPS pricing was down 23% in the 2009 period versus 2008.

Feedstock and Operating Costsin the period January 1 to July 5, 2009 were $101 million, down from
$435 million in 2008. Costs were lower in the 2009 period primarily due to the shorter time period, lower sales volumes and the 40% decrease in the cost of styrene.

Operating lossin the period January 1 to July 5, 2009 was $27 million compared to a loss of $69 million in
2008. In the 2009 period margins rose as prices declined less than flow-through feedstock costs.

2008 Versus 2007

Revenuein 2008 was $433 million, up from $412 million in 2007. The
improvement was due to higher selling prices, particularly for EPS and DYLARK resins. Resin sales volume grew in the first half of 2008, but dropped off sharply in the second half due to declines in
domestic and international demand in most construction, automotive and packaging markets.

Feedstock and Operating Costsin 2008 were $435 million, up from $380 million in 2007. Costs were higher in 2008 primarily
due to the 7% increase in the cost of styrene.

Operating lossin 2008 was $69 million compared to a loss of $30 million in 2007. The first half of 2008 saw growth in sales
volumes and margins, while the second half of 2008 saw unprecedented declines in global demand.

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Table of Contents

Corporate Operating Loss and Other Items

A listing of before-tax corporate and other items for the periods presented is as follows:

(millions of U.S. dollars)

July 6Dec. 31,
2009

Jan. 1July 5,
2009

2008(1)

2007(1)Successor

PredecessorCorporate operating costs

$
(53
)
$
(66
)
$
(87
)
$
(97
)Stock-based compensation and profit sharing





(26
)

58


(52
)Forward transactions on stock-based compensation





(9
)

(100
)

16Mark-to-market feedstock derivatives


51


6


(87
)

21IPIC Transaction costs


(1
)

(61
)




Restructuring charges


(23
)

(42
)

(37
)

(86
)Foreign exchange (losses) gains


(102
)

(35
)

117


Insurance credit


2








4Depreciation and amortization


(4
)

(3
)

(7
)

(8
)Operating loss

$
(130
)
$
(236
)
$
(143
)
$
(202
)


Note: (1)Certain
prior year information has been restated due to the adoption of CICA 3064 on January 1, 2009. See "Management's Discussion and
Analysis of Financial Condition and Results of OperationsAccounting Standards."


July 6 to December 31, 2009 Versus Full Year 2008

Corporate operating costs were lower during the period from July 6 to December 31, 2009 as compared to 2008, primarily
due to the shorter time period.

January 1 to July 5, 2009 Versus Full Year 2008

Corporate operating costs were lower in the period from January 1 to July 5, 2009 compared to 2008, primarily due to the
shorter time period, despite an increase in settlement charges related to payments from our supplemental employee retirement plan.

2008 Versus 2007

Corporate operating costs were $87 million in 2008, as compared to $97 million in 2007.



We had three cash-settled, stock-based incentive compensation plans that were marked to market with changes in the value of
our common stock price. In November 2005, we entered into cash-settled share forward transactions to manage our exposure to fluctuations in stock-based compensation costs related to
the stock-based compensation plans. Compensation costs associated with these plans fluctuated as a result of changes in the market price of our common stock. The forward transactions were to be
cash-settled by November 2008, based on the difference between our common stock price on the NYSE, and the average execution price. In 2008, we extended the forward transactions
until November 2009.

The
intention of these transactions was to give us the same economic effect as if we had borrowed money, purchased our common shares and held them as assets. As our stock price changed,
the mark-to-market impact related to the stockbased compensation liability would be offset by the mark-to-market impact related to the
forward transactions until such time as our stock price fell below the grant price of the stock-based compensation units.

Unrealized
gains and losses associated with the forward transactions were recorded as part of Selling, general and administrative expenses, offsetting unrealized gains or losses on the
cash-settled stock-based incentive compensation plans. At December 31, 2008, the mark-to-market value of the forward transactions was a $118 million
unrealized loss (December 31, 2007$19 million), resulting in a liability. At December 31, 2008

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and
2007, this liability is reported in accrued liabilities, since the forward transactions were due to expire in November 2008 and subsequently extended for a one-year term.

The
forward transactions included an interest component which was accrued and payable by us on settlement or extension of the forward transactions. Accrued interest for the initial
three-year term totaling $29 million was paid in November 2008 when the forward transactions were extended.

Prior
to December 31, 2008, we agreed to terminate one of the forward transactions for 1,300,000 notional common shares. This forward transaction was cash settled for
$42 million in January 2009. The counterparty had the election to terminate the remaining forward transaction (2,312,100 notional common shares) if the closing price of our common
shares on any three consecutive trading days commencing February 1, 2009, was $8 or less. This stock price trigger was met and the counterparty elected to terminate the agreement on
February 4, 2009. We paid the counterparty $88 million on February 12, 2009.

The
three cash-settled stock-based compensation plans included the Equity Appreciation Plan, the Restricted Stock Unit Plan and the Deferred Share Unit Plans. At closing of
the IPIC Transaction, these plans were terminated. Therefore, no income or expense was recorded during the period July 6, 2009 through December 31, 2009 (see below for
cash-settlements). Because we no longer have publicly traded common stock and the stock-based compensation plans have been terminated, we are no longer exposed to fluctuations in
stock-based compensation costs. During the period January 1, 2009 through July 5, 2009, we recorded expense of $0 million, $25 million and $1 million, respectively,
related to each of those plans. In 2008, we recorded income of $29 million, $14 million and $17 million, respectively, related to each of those plans (expense of
$20 million, $15 million and $1 million in 2007). During the periods July 6, 2009 through December 31, 2009 and January 1, 2009 through July 5, 2009,
we expensed $0 million and $9 million, respectively, related to the forward transactions. In 2008, we expensed $100 million (income of $16 million in 2007).

Stock-based
compensation also included the amount expensed related to the fair value of stock options earned by employees. During the periods July 6, 2009 through
December 31, 2009 and January 1, 2009 through July 5, 2009, we had no expenses related to stock option grants. In 2008, we expensed $2 million ($2 million
in 2007).

We
have a profit sharing program that is available to most employees. The profit sharing targets were not achieved in 2009 or 2008, thus there is no profit sharing expense during either
reporting period in 2009 or in 2008. Profit sharing expense in 2007 was $14 million.

Expenses
during the period January 1, 2009 through July 5, 2009, were primarily due to the recognition of stock-based compensation costs for the full vesting of all
previously unvested restricted share units upon closing of the IPIC Transaction. At closing of the IPIC Transaction, outstanding units of the stock- based compensation plans were canceled and the
restricted share units and deferred share units were cash-settled in July 2009 for $6.00 per unit (outstanding stock options and equity appreciation units had no value). The total
cash settlement for these units was $34 million.

Stock-based
compensation and profit sharing expenses net of forward transactions were $42 million in 2008, $6 million higher than 2007 due to the ineffectiveness of the
hedge, partially offset by lower profit sharing expense and the mark-to-market on the Deferred Share Unit plan.



We maintain a derivative program to manage risk associated with feedstock purchases. We lock in a portion of our propane and butane
feedstock requirements as a percentage of crude oil using forward contracts that extend to 2012. The gain or loss resulting from changes in the market value of these derivatives is recorded through
earnings each period. We classify mark-to-market adjustments on feedstock derivative positions as corporate items, as they are non-cash items and are not relevant
in measuring business performance. Once positions are realized, any income effects are recorded in business results.

The
mark-to-market value of our open feedstock positions increased during the periods July 6, 2009 through December 31, 2009 and January 1,
2009 through July 5, 2009, resulting in an unrealized gain of $51 million and $6 million, respectively.

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Table of Contents

On
January 1, 2009, we adopted EIC 173,Credit Risk and the Fair Value of Financial Assets and Liabilities, which requires the
mark-to-market value of our open feedstock positions to include consideration of our own credit risk and the credit risk of our counterparties. The adoption of EIC
173 resulted in a one-time credit on January 1, 2009 to opening retained earnings and a corresponding decrease in the mark-to-market liability of
$18 million ($12 million after-tax). The mark-to-market impact to earnings was an $87 million loss in 2008 versus a $21 million gain in
2007. The $108 million decline was a result of decreases in forward propane and butane prices relative to crude oil and the number of feedstock positions put in place.



Costs incurred during the period January 1, 2009 through July 5, 2009 include $61 million for financial advisor
fees, legal fees and other related transaction costs triggered by the change in control of NOVA Chemicals on July 6, 2009. During the period July 6 to December 31, 2009, an
additional $1 million in costs were incurred. No costs were incurred in 2008 or 2007.



July 6 to December 31, 2009

With the IPIC Transaction complete, previously planned restructuring activities for workforce reductions in the Corporate and
Olefins/Polyolefins business units were resumed. Restructuring charges of $23 million ($17 million after-tax) were recorded during the period July 6, 2009 through
December 31, 2009 and related to the following:



January 1 to July 5, 2009

During the period January 1, 2009 through July 5, 2009 restructuring charges were $42 million ($42 million
after-tax) related to the following:



As
of December 31, 2009, $20 million of the severance costs due to restructuring activities across the Corporation have been paid to employees. This includes $11 million
attributed to the Olefins/Polyolefins and Corporate business units, $5 million attributed to the Performance Styrenics segment, and $4 million related to the DYLARK engineering
resin business.

2008

In 2008, we recorded restructuring charges of $37 million before-tax ($33 million after-tax)
related to the following:



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Table of Contents



2007

In 2007, we recorded total restructuring charges of $86 million ($55 million after-tax) related to actions
taken by INEOS NOVA, as well as us, to reduce costs as follows:





In the third quarter of 2008, the INEOS NOVA joint venture obtained independent financing through a North American accounts
receivable securitization program. This substantially eliminated the joint venture's potential reliance on us to fund operations. As a result of this change in circumstances, we undertook a review of
the functional currency exposures of all of our businesses and concluded that the currency exposures of our Canadian entities are predominately in U.S. dollars. Accordingly, as required by
GAAP, we commenced recording transactions in our Canadian entities using U.S. dollars as the functional currency effective October 1, 2008. This results in foreign currency impacts of
holding Canadian dollar denominated financial assets and liabilities being recorded through the income statement rather than being included in translation gains and losses deferred in accumulated
other comprehensive income ("AOCI"). We accounted for this change prospectively and any amounts that were previously deferred in AOCI continue to be included in AOCI unless there is a realized
reduction in the net investment in the Canadian entities.

The
Canadian to U.S. dollar exchange rate changes resulted in $117 million of foreign exchange gain during the fourth quarter of 2008 that was recorded in corporate
results. We will continue to recognize such foreign exchange gains and losses that flow through earnings in the future and will separately report these amounts on the Consolidated Statement of
Income (Loss).

Foreign
currency losses in the periods from July 6, 2009 to December 31, 2009 and from January 1, 2009 to July 5, 2009 were higher than the the full year 2008
due to increased foreign currency losses on Canadian-denominated liabilities due to a strengthening Canadian dollar.

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Table of Contents



We are one of many participants in OIL and sEnergytwo mutual insurance companies formed to insure against catastrophic
risks. We continue to participate in OIL, an insurance pool for property and liability; however, sEnergy, an insurance pool for business interruption, is in the process of winding-up its
operations. The earliest this process is likely to be complete is the second quarter of 2010. We believe our reserves are adequate to cover any outstanding claims. We expect to receive the full amount
of our investment prior to the dissolution of sEnergy.

July 6 to December 31, 2009

We recorded a $2 million ($1 million after-tax) credit due to the reduction of estimated future claims
payments during the period July 6, 2009 through December 31, 2009.

January 1 to July 5, 2009

No insurance charges were incurred during the period January 1, 2009 through July 5, 2009.



No insurance charges were incurred during 2008.



We recorded a $4 million ($3 million after-tax) credit due to the reduction of estimated future claims
payments.



July 6 to December 31, 2009 Versus Full Year 2008

Corporate depreciation expense decreased $3 million during the period July 6, 2009 through December 31, 2009 as
compared to 2008 due to the shorter time period and despite the application of push-down accounting did not impact depreciation as we undertook to relife our assets in the
Olefins/Polyolefins businesses at the same time (see "Application of Critical Accounting EstimatesProperty, Plant and Equipment").

January 1, 2009 to July 5, 2009 Versus Full Year 2008

Corporate depreciation expense decreased $4 million during the period January 1, 2009 through July 5, 2009 as
compared to 2008 primarily due to a shorter time period.

2008 Versus 2007

Corporate depreciation expenses were virtually unchanged during 2008 as compared to 2007.



July 6 to December 31, 2009

During the period July 6, 2009 through December 31, 2009, we recognized a gain of $1 million ($1 million
after-tax).

January 1 to July 5, 2009

During the period January 1, 2009 to July 5, 2009, we recognized a gain of $6 million ($6 million
after-tax) primarily related to the disposition of our interest in LRM Industries, LLC (joint venture).

2008

In 2008, we recognized other losses of $2 million ($1 million after-tax).

2007

In 2007, we recognized other gains of $20 million ($14 million after-tax) related to the sale of the
previously shut-down Chesapeake, Virginia, facility and other incidental land. We received cash proceeds of $6 million and a $14 million note receivable, bearing interest of
8.75% per annum and due in full in 2012.

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Table of Contents

Liquidity and Capital Resources

Our principal sources of liquidity are cash flows from operations, cash on-hand, borrowings under our revolving credit
facilities and accessing capital markets. We utilize our accounts receivable securitization programs as additional sources of financing. Our principal uses of cash are operating expenditures, capital
expenditures and debt service.



The following is a summary of cash flow:

Year ended December 31July 6Dec. 31,
2009

Jan. 1July 5,
2009(millions of U.S. dollars)

2008(1)

2007(1)Successor

PredecessorFunds from Operations

$
163

$
(53
)
$
99

$
550Operating working capital and other


(183
)

(204
)

173


(221
)Cash (used in) provided by operating activities


(20
)

(257
)

272


329Proceeds on sale of assets











6Capital expenditures and turnaround costs


(79
)

(50
)

(210
)

(198
)Acquisition of production rights











(30
)Cash used in investing activities


(79
)

(50
)

(210
)

(222
)(Decrease) increase in long-term debt and bank loans


(235
)

493


(91
)

(13
)Common shares issued


350





3


8Options retired for cash











(6
)Common share dividends





(7
)

(31
)

(31
)Cash from (used in) financing activities


115


486


(119
)

(42
)Increase (decrease) in cash due to exchange rates


1


(3
)

13


Increase (decrease) increase in cash and cash equivalents


17


176


(44
)

65Cash and cash equivalents, beginning of period


250


74


118


53Cash and cash equivalents, end of period

$
267

$
250

$
74

$
118


Note: (1)Certain
prior year information has been restated due to the adoption of CICA 3064 on January 1, 2009. See "Management's Discussion and
Analysis of Financial Condition and Results of OperationsAccounting Standards."




As a result of our refinancing activities during the fourth quarter of 2009 and the beginning of 2010, we expect our working capital
will be sufficient for our present requirements.

During
the time period January 1, 2009 through July 5, 2009, we consumed $53 million in funds from operations. Additionally, working capital increased by
$204 million primarily due to the cash settlement of the share forward transactions in January and February 2009 (see "Stock-Based Compensation, Forward Transactions and Profit
Sharing") and a $74 million reduction in the balance outstanding on our accounts receivable securitization programs. The result was $257 million used in operating activities. Capital
expenditures during the period were $41 million, which was lower than past years due to an effort to conserve cash to aid liquidity. Turnaround spending was also reduced from prior years at
$9 million. In order to repay the $250 million of 7.4% notes that were due in April 2009 and to pay for other cash expenses during the period, we drew heavily on our revolvers and
entered into the backstop credit facility with IPIC (see "2009 Refinancing" below). The net result after repayment of the notes in April was an increase in cash and cash equivalents during the
period of $176 million.

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During
the time period July 6, 2009 through December 31, 2009, we generated $163 million in funds from operations. This improvement in funds was offset by a large
increase in working capital due to increased inventory, higher raw material prices and higher accounts receivable values in the period resulting in a use of cash from operating activities of
$20 million. Capital expenditures during the period were $60 million, which
were lower than past years due to a need to conserve cash in 2009 to aid liquidity. Turnaround spending was $19 million in the period, lower than past years as well.

During
this period we also issued $700 million of debt, of which $496 million was used to fully repay all borrowings under our revolving credit facilities. The remainder
was designated for repayment in 2010 of the $75 million outstanding on the total return swap and other general corporate purposes. In addition, IPIC converted its two outstanding debt
facilities with us into equity resulting in $350 million of common shares being issued. Overall, $115 million of cash from financing activities was reported in the period. There were no
dividend payments during the period. The net result was an increase in cash and cash equivalents during the period of $17 million.

In
2008, we generated $99 million in funds from operations. During the year, working capital was reduced by $173 million primarily due to a sharp decline in feedstock costs
during the fourth quarter which caused a reduction in the value of inventory, as well as product price decreases which significantly decreased receivables. We recorded a $129 million
write-down in inventory to reflect the net realizable value of inventory at year-end. The decline in inventory and receivables was partially offset by the decrease in accounts
payable which also reflects the decline in feedstock costs. Capital expenditures for 2008 were $166 million and turnaround costs were $44 million. In 2008, we repaid our
$125 million of 7.25% debentures that were scheduled to mature in 2028, but were redeemed early at our option. This debt repayment was funded by cash on hand and borrowings on revolving credit
facilities. The total use of cash in financing activities was $119 million primarily made up of the repayment of the debentures and dividend payments. The net use of cash and cash equivalents
in 2008 was $44 million.

In
2007, we generated $550 million in funds from operations. Operating working capital increased by $221 million in 2007 due to rapidly rising feedstock costs which
increased the value of inventory, as well as product price increases which increased receivables. In total, $329 million of cash was provided by operating activities. In 2007, capital
expenditures were $156 million and turnaround costs were $42 million. In addition, INEOS NOVA acquired the exclusive rights to production from the Sterling Chemicals' Texas City, Texas,
styrene plant for $60 million, of which our 50% share was $30 million. During the year, cash used in financing activities was $42 million, the majority of which was dividends. The
net increase in cash and cash equivalents was $65 million.



We have various contractual cash obligations, including long-term debt repayments and associated interest, contributions to
pension plans, operating leases for office space and railcars and unconditional purchase obligations related to minimum amounts of feedstock and other raw material purchases pursuant to agreements
entered into to secure short- and long-term supply. For a description of the sources to repay the long-term debt due in 2010, see "Current Debt Maturities or
Redemptions" in the "Liquidity" section below. Associated interest, contributions to pension plans, operating leases for office space and railcars and unconditional purchase obligations will be paid
for using cash flow from normal operations.

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Payments Due By Periodas of Dec. 31, 2009 (millions of U.S. dollars)

Total

2010

2011 to
2012

2013 to
2014

After
2015Long-term debt(1)

$
1,954

$
317

$
411

$
405

$
821Interest payments(2)


865


156


245


154


310Contributions to defined benefit plans(3)


33


33








Contributions to defined contribution plans(3)


12


12








Operating leases(4)


425


51


86


76


212Unconditional purchase obligations(5)


6,780


1,760


1,779


1,032


2,209Total contractual cash obligations

$
10,069

$
2,329

$
2,521

$
1,667

$
3,552


Notes: (1)Includes
current portion and bank loans.(2)Interest
payments were calculated using interest rates that were in effect as of December 31, 2009.(3)Includes
estimate for 2010 only.(4)Includes
property, railcar and other equipment leasing commitments.(5)Raw
material agreements are typically market-based. Obligations have been calculated using current pricing.




We define liquidity as total available revolving credit facilities, less utilization (including letters of credit), plus cash and cash
equivalents. As of December 31, 2009, our total liquidity was $831 million. Our future liquidity is dependent on many factors such as cash generated from ongoing operations, internal
actions taken to reduce costs and conserve cash, and the availability of existing credit facilities and of other potential sources of financing.

A
significant portion of our operations is conducted by our subsidiaries, and we are dependent to a large extent upon cash dividends and distributions or other transfers from our
subsidiaries. Accordingly, our ability to service indebtedness and fund operations is dependent upon the results of operations of our subsidiaries and their ability to provide cash to us. Payments of
any dividends, loans or other distributions from our subsidiaries are not currently subject to material contractual, restrictive governmental regulations or other restrictions.



During October and November 2009, we refinanced a substantial portion of our outstanding debt scheduled to mature in 2010.
Effective October 15, 2009, we terminated our undrawn $150 million credit facility with Export Development Canada and a syndicate of three Canadian banks that we secured in
February 2009 (the "EDC Facility"). On October 16, 2009, we issued $350 million of 8.375% senior notes due 2016 at an issue price of 99.34%, and $350 million of
8.625% senior notes due 2019 at an issue price of 99.168%. The 2016 notes and 2019 notes have an effective yield to maturity of 8.5% and 8.75%, respectively. Net proceeds from the offering were
$681 million (after deducting discounts of $5 million and fees of $14 million). The net proceeds were used to repay $242 million outstanding under our
$350 million secured revolving credit facility and $254 million outstanding under our bilateral credit facilities. The remaining cash balance of $185 million will be used to repay
the total return swap when it terminates in March 2010 and for general corporate purposes.

On
November 17, 2009, we entered into a new $350 million senior secured revolving credit facility to replace our prior secured facility that was scheduled to expire on
March 31, 2010. In addition, we amended two of our senior unsecured bilateral credit facilities (which were previously amended to shorten their maturity dates

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to
March 2010) to revert back to their original maturity dates. As a result of these transactions, we now have four revolving credit facilities totaling $615 million in borrowing
capacity. These facilities include:



In
connection with the Arrangement Agreement, IPIC provided us with a $250 million unsecured backstop credit facility (the "Backstop Facility"). The Backstop Facility could
only be used as a single draw to assist us in repaying our $250 million, 7.4% notes due on April 1, 2009. On March 31, 2009, we drew $150 million on the Backstop Facility
to repay the 7.4% notes on April 1, 2009. The amount drawn on the Backstop Facility and all related interest and fees were to be payable upon maturity of the Backstop Facility on
June 30, 2010 or other termination of the Backstop Facility.

On
July 3, 2009, IPIC provided us with an additional $200 million credit facility with substantially the same terms and conditions as the Backstop Facility to enable us to
complete certain inter-company pre-closing reorganization transactions. We drew the full $200 million available under this credit facility on July 3, 2009 and, subsequent to
the closing of the Acquisition on July 6, 2009, repaid the $200 million credit facility and IPIC's holding company subscribed for $200 million of our common stock. We then repaid
the $150 million outstanding under the Backstop Facility and IPIC's holding company subscribed for an additional $150 million of our common stock.

Related
accrued interest and fees totaling $17 million ($12 million after-tax) on the $200 million credit facility and the Backstop Facility were
forgiven by IPIC and reclassified to Contributed surplus. We removed the balance in common shares of $508 million as of July 6, 2009, before push-down adjustments, and
recorded the cash paid by IPIC to acquire all of our issued and outstanding common shares for $499 million.



Our previous $350 million secured revolving credit facility, which was replaced in November 2009, the total return swap,
which will be terminated and repaid on March 31, 2010 (see "Series A Preferred Shares and Total Return Swap"), and our prior accounts receivable securitization programs
(see "Off-Balance Sheet Accounts Receivable Securitization Programs"), which were replaced in the first quarter of 2010, were governed by the following financial covenants, which
required quarterly compliance computed on a rolling 12-month basis.



See
Supplemental Measures for a discussion of the computations used to calculate these ratios. We were in compliance with these financial covenants for each quarter-end in
2008. The following table shows our actual financial covenant ratios as of the end of each quarter in 2008.

2008Q1

Q2

Q3

Q4Net Debt-to-Cash Flow Ratio


2.1


2.0


1.9


3.1Interest Coverage Ratio


5.2


5.5


5.8


3.5


As
a result of declining North American and global economic activity, demand for crude oil and intermediate products dropped dramatically in the fourth quarter of 2008, causing their
prices and the selling prices of our finished products to also drop dramatically. Because we had higher-cost third quarter inventory flowing through our income statement in the fourth
quarter of 2008, we incurred large flow through losses. In addition, we wrote down the value of our year-end inventory by $129 million before-tax ($90 million
after-tax) to

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reflect
market prices as of December 31, 2008. Due to these exceptional factors resulting in the large loss incurred by us in the fourth quarter of 2008, we expected to be in breach of our
financial covenants at the end of the first quarter of 2009 when compliance was due to be tested. Accordingly, on January 28, 2009, we and our counterparties agreed to amendments to the
financial covenants in the $350 million secured revolving credit facility and the total return swap for the quarter ending March 31, 2009, to exclude the quarter ending
December 31, 2008 results and include the quarter ending March 31, 2008 results.

These
amendments allowed us to maintain access to our major credit lines during the first half of 2009, subject to complying with certain conditions subsequent, which included
the following:



If
we were not able to negotiate the amendments to these financial covenants and were unable to remedy the defaults that would have resulted, our lenders could have declared all amounts
outstanding to be due and payable and terminated all commitments to extend further credit. Moreover, such defaults could have triggered cross acceleration and/or cross default provisions in our other
financing arrangements, including our public debt.

We
entered into the EDC Facility and the Backstop Facility subsequent to January 28, 2009, and, these credit facilities contained the same amended financial covenants.

We
were in compliance with these amended financial covenants for the quarter ended March 31, 2009. The following table shows our actual financial covenant ratios as of the end of
the quarter ended March 31, 2009.

Q1 2009Net Debt-to-Cash Flow Ratio(1)


3.2Interest Coverage Ratio(1)


3.8


Note: (1)Maximum
net debt-to-cash flow ratio required to be less than 5.0 and interest coverage ratio required to be greater than
2.0 using rolling fifteen months, excluding three months ended December 31, 2008.


At the time of these amendments in January 2009 and during the first quarter and the early second quarter of 2009, we anticipated that
further amendments to our financial covenants would be required with an effective date no later than June 30, 2009. These amendments were expected to be required due to the continuing effect of
the large loss incurred in the fourth quarter of 2008 and the weak economic and business conditions continuing in early 2009 resulting in our customers reducing inventories, buying only what they
needed for the current timeframe and waiting for pricing and demand to stabilize. Therefore, during this time period, we negotiated with our core group of banks to amend these covenants. Because we
had not completed these negotiations with our core group of banks as of the time of our quarterly report for the quarter ended March 31, 2009, we were required as a technical matter in
accordance with EIC-59,Long-term Debt with Covenant Violations, to classify all of our outstanding long-term debt
subject to these financial covenants and revolving credit facilities that contained cross defaults as current liabilities at March 31, 2009.

During
the second quarter of 2009, we negotiated the following amendments to the agreements that were governed by the financial covenants:



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Because
we were able to negotiate these amendments, and we expected to be able to remain in compliance with the covenants over the upcoming 12 months, pursuant to applicable
accounting principles, we were again able to classify certain outstanding debt subject to these financial covenants, and revolving credit facilities, which contain cross defaults, as long term.

Starting
in March 2009 destocking began to subside and pricing stabilized, resulting in more stable buying patterns. We were in compliance with the amended financial covenant for
the quarters ended June 30, 2009, September 30, 2009, and December 31, 2009.

Our
total return swap is governed by the old financial covenants described above. However, we intend to terminate the total return swap and repay the equity notional amount on
March 31, 2010 with the result that the old covenants will no longer apply to us. All other programs that were tied to the old financial covenants described above have been terminated or
replaced with new programs tied to new covenants listed below. Therefore, there will be no further checks against the old covenants.

The
following table shows our actual minimum consolidated cash flow as of the end of the June, September and December quarters. See Supplemental Measures for a discussion of the
computations used to calculate minimum consolidated cash flow.

2009(U.S. dollars in millions)

Q2

Q3

Q4Minimum Consolidated Cash Flow

$
63

$
94

$
126


Our
new $350 million senior secured revolving credit facility and our new accounts receivable securitization programs are governed by the following financial covenants, which
require quarterly compliance:



See
Supplemental Measures for a discussion of the computations used to calculate these financial ratios.

During
the latter half of 2009 and the beginning of 2010, feedstock costs slowly increased, but were more than offset by rising selling prices. We do not currently expect a further
deterioration in the economic environment during 2010, and we do not expect our anticipated future restructuring charges to materially impact our ability to comply with these financial covenants.
Accordingly, we expect to be in compliance with the new financial covenants over the next twelve month period and do not expect any amendments to these covenants during 2010. As a result, we do not
anticipate any impact on our debt classification.

The
table below summarizes the applicable financial covenants for each of our financing facilities during 2008, 2009 and 2010.

20082009

2010Q1 to Q4Financial Covenants
(checked at end of quarter)

Q1

Q2

Q3

Q4

Q1Prior Senior Secured Revolving Facility

1


2


3


4

N/A

N/ATotal Return Swap

1


2


3


4

4

N/APrior A/R Securitization Programs

1


2


3


4

4

N/AEDC Facility

N/A


2


3


4

N/A

N/ABackstop Facility

N/A


2


3


N/A

N/A

N/ANew Senior Secured Revolving Facility

N/A


N/A


N/A


N/A

5

5New A/R Securitization Programs

N/A


N/A


N/A


N/A

N/A

5


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As
of February 2010, we have $200 million ($130 million at December 31, 2009 and $300 million at December 31, 2008) in accounts receivable
programs that expire in February 2012. The balances as of December 31, 2009 and December 31, 2008 were $122 million and $175 million, respectively. We do not include
any undrawn amounts under the accounts receivable securitization programs as part of liquidity.

The
INEOS NOVA joint venture has two accounts receivable securitization programs, a $150 million North American program and a €100 million
(€120 million as of December 31, 2008) European program. NOVA Chemicals' 50% share of the balances as of December 31, 2009 and December 31, 2008, were
$31 million and $27 million, respectively, under the North American program and €24 million and €25 million, respectively, under the
European program.



Our subsidiary, NOVA Chemicals Inc., has issued Series A preferred shares with a 0.5% dividend rate. We have the
right to repurchase the Series A preferred shares at any time. However, any such repurchase may obligate us to pay an early termination fee under the terms of the total return swap described
below.

We
also entered into a total return swap with respect to the Series A preferred shares. On the initial closing date of the total return swap in 2001, the counterparty through its
hedge providers purchased the Series A preferred shares for $191 million plus accrued and unpaid dividends. We subsequently reduced the equity notional amount of the total return swap to
$126 million and, in February 2009, reduced the equity notional amount to $75 million. On settlement of the total return swap at the end of the term, we will owe the counterparty
the difference between the actual sale price received by the counterparty for the Series A preferred shares and the equity notional amount if the sale price is less than the equity notional
amount. Upon termination of the total return swap, we expect that we will exercise our right to repurchase the Series A preferred shares for a net price equal to the equity notional amount.

Under
the terms of the total return swap: (i) the counterparty pays us the total return on the Series A preferred shares (periodic dividends plus positive changes in the
equity value of the Series A preferred shares upon termination of the swap); and (ii) we pay the counterparty a spread to LIBOR, as well as any negative changes in the equity value of
the Series A preferred shares upon termination of the swap. All periodic dividends, changes in equity value of the Series A preferred shares and interest payments are charged to earnings
as incurred.

If
the average price of our outstanding 6.5% medium-term notes due 2012 decreases by a certain amount, we are required to post maintenance collateral. Once the margin-posting
requirement is triggered, if the average price increases by 5% or more, any excess collateral may be returned us. If the average price decreases by 5% or more, we would be required to post additional
collateral.

If
we default on other debt of at least $25 million and upon certain other events, the counterparty would have the right to sell the Series A preferred shares to a third
party and terminate the swap. We would then owe the counterparty the difference between the actual sale price received by the counterparty and the equity notional amount if the sale price is less than
the equity notional amount. If the sale price is greater than the equity notional amount, the counterparty would owe us the difference between the sale price and the equity notional amount. Subsequent
to such termination of the swap, we may, at our option, exercise our call right and repurchase the preferred shares from the third party for a purchase price of $198 million.

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In
February 2009, we and the counterparty agreed to extend the term of the total return swap until June 30, 2010 and reduce the equity notional amount. In May 2009,
we and the counterparty amended the total return swap to change the termination date to March 31, 2010. Because the term expires within the next 12 months, the Series A preferred
shares are classified under Long-term debt due within one year on our consolidated balance sheets. We do not intend to extend the maturity date of the total return swap or replace it. We
intend to allow the total return swap to terminate on March 31, 2010 and to repay the equity notional amount of $75 million.



NOVA Chemicals.Our off-balance sheet financing activities are limited to participation in accounts receivable securitization
programs. We engage in accounts receivable securitization programs to obtain lower financing rates than those available from other sources. As of December 31, 2009, the maximum availability of
the programs was $130 million, which represented a $170 million decrease in the programs as compared to December 31, 2008. At December 31, 2009 and December 31,
2008, $122 million and $175 million, respectively, were funded under the programs. Of the total amount, $63 million and $84 million, respectively, were funded via a special
purpose entity ("SPE") that is 100% owned by us. The SPE isolates the sold receivables and the related cash collections for the exclusive benefit of the purchasers. We have no right to any cash
collected from these receivables; therefore, neither the receivables nor any obligation to the purchasers is reflected in our consolidated financial statements. No other business is conducted
through SPE's.

The
programs were scheduled to expire on June 30, 2010. On February 13, 2009, the maximum amount of the programs was reduced from $300 million to $190 million
and the expiration date was changed to February 2010. In June 2009, the maximum amount of the programs was reduced from $190 million to $130 million.

In
February 2010, we entered into two new accounts receivable securitization programs (one in the U.S. and one in Canada) to replace our prior programs before they expired.
The new programs each allow for a maximum funding of $100 million, which represent an increase of $70 million in our accounts receivable securitization programs. The accounts receivable
sold under the U.S. program are sold via our SPE. The new programs each have an initial term of two years. As of March 1, 2010, approximately $140 million of receivables were
funded under the programs.

INEOS NOVA Joint Venture (North America).INEOS NOVA entered into a $150 million accounts receivable securitization
program in
the third quarter of 2008 which expires in July 2010. At December 31, 2009 and December 31, 2008, $62 million and $54 million, respectively were funded under the
program. Our 50% share of the receivables funded was $31 million and $27 million, respectively. The INEOS NOVA joint venture has no right to any cash collected from these
receivables; therefore, neither the receivables nor any obligation to the purchasers is reflected in either the INEOS NOVA joint venture financial statements or our Consolidated Financial
Statements.

INEOS NOVA Joint Venture (Europe).In November 2006, the INEOS NOVA joint venture (formerly NOVA Innovene European joint
venture) entered into a five-year, €120 million accounts receivable securitization program. This program expires in November 2011. In November 2009 the
program was reduced from €120 million to €100 million. At December 31, 2009 and December 31, 2008, €48 million and
€50 million, respectively, were funded under the program. Our 50% share of the receivables funded was €24 million and €25 million,
respectively. The INEOS NOVA joint venture has no right to any cash collected from the sold receivables and control of the accounts receivable has been effectively transferred to the purchaser;
therefore, neither the receivables nor any obligation to the purchaser is reflected in either the INEOS NOVA joint venture financial statements or our Consolidated Financial Statements.



Our subsidiary, NOVA Chemicals (Canada) Ltd., entered into a loan agreement for a loan in the principal amount of
Cdn$10,000,000 made available by Her Majesty the Queen in right of the Province of Ontario as represented by the Minister of Economic Development and Trade under Ontario's Advanced Manufacturing
Investment Strategy. We may use the loan proceeds only to finance certain eligible costs associated with the

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modernization
and expansion of our LDPE capability at our Mooretown facility. We drew down the full Cdn$10,000,000 in the fourth quarter of 2009 (the "Disbursement"). The maturity date of the
loan is December 1, 2019 and the interest rate is 4.92% per annum calculated monthly. Provided that there is no event of default and we fully achieve certain cumulative job targets at the
Mooretown facility, the interest accruing during the first five years (the "Incentive Period") will be fully forgiven at the end of the Incentive Period. In the event that the cumulative job
target is not met during the Incentive Period, interest based on 4.92% per annum rate and adjusted downward depending on the actual jobs achieved during the Incentive Period will be payable on the
60th day following the last day of the Incentive Period. Interest accruing during the post Incentive Period calculated from the last day of the Incentive Period shall be due and
payable annually, in arrears, for the remainder of the term. Provided there is no event of default, principal repayment will be deferred during the Incentive Period. Thereafter, principal in the
amount of 20% of the amount advanced and outstanding on the last day of the Incentive Period will be due and payable annually commencing on the sixth anniversary of the Disbursement. We may
prepay the full principal amount of the loan plus any accrued interest without any premium or penalty. NOVA Chemicals Corporation guaranteed the loan.



After the refinancings in the fourth quarter of 2009 and the first quarter of 2010, we have the following financings that are maturing
or may be redeemed in the next 12 months: (i) Cdn$250 million (US$237 million, based on a forward exchange rate of 0.9494 entered on January 22, 2010)
relating to 7.85% senior notes due August 30, 2010 and (ii) $75 million relating to the total return swap with respect to the Series A preferred shares of NOVA
Chemicals Inc.

We
currently expect to pay off the 7.85% senior notes and the total return swap upon maturity using a portion of the proceeds from our October 2009 offering of senior notes, cash
on hand and available capacity on our credit facilities, which were paid down using proceeds from the notes offering. After the expiration of the $95 million of senior unsecured bilateral
facilities on March 20, 2010, we will have $520 million of available capacity on our remaining three credit facilities (less $51 million of letters of credit as of
December 31, 2009).

Supplemental Measures

We present certain supplemental measures below, which do not have any standardized meaning prescribed by Canadian GAAP and are
therefore unlikely to be comparable to similar measures presented by other companies. We believe that certain non-GAAP financial measures, when presented in conjunction with comparable
GAAP financial measures, are useful to readers because the information is an appropriate measure for evaluating our operating performance. Internally, we use this non-GAAP financial
information as an indicator of business performance, with specific reference to these indicators. These measures should be considered in addition to, and not as a substitute for or superior to,
measures of financial performance prepared in accordance with GAAP.

Operating
(Loss) Incomenet (loss) income before interest expense, income taxes and other gains and losses, assists readers in analyzing our income (loss) from operations.

Year Ended
December 31,Reconciliation of Operating (Loss) Income
to Consolidated Net (Loss) IncomeJuly 6Dec. 31,
2009

Jan. 1July 5,
20092008(1)

2007(1)(millions of U.S. dollars)Successor

PredecessorOperating income (loss)

$
89

$
(214
)
$
56

$
555Interest expense (net)


(85
)

(94
)

(156
)

(175
)Other gains (losses)


1


6


(2
)

20Income tax (expense) recovery


(7
)

63


62


(52
)Net (loss) income

$
(2
)
$
(239
)
$
(40
)
$
348


Note: (1)Certain
prior year information has been restated due to the adoption of CICA 3064 on January 1, 2009. See "Management's Discussion and
Analysis of Financial Condition and Results of OperationsAccounting Standards".


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Consolidated Cash Flowequals consolidated net (loss) income, plus interest expense, income taxes and depreciation amortization, less all
non-cash items. This measure excludes any extraordinary gains and losses (including gains and losses resulting from the sale of assets) and excludes certain subsidiaries. This measure is
provided to assist readers in calculating our prior financial covenant.

Net
Debt to Cash Flowequals consolidated debt (including accounts receivable securitization funding), less preferred shares and cash and cash equivalents, divided by consolidated net
(loss) income, plus interest expense, income taxes, depreciation and amortization expense, other gains/losses, market-to-market feedstock derivatives, IPIC Transaction costs
and restructuring charges. Respective amounts from the INEOS NOVA joint venture are excluded for this calculation. This measure is provided to assist readers in calculating our prior financial
covenant.

Interest
Coverage Ratioequals consolidated net (loss) income, plus interest expense, income taxes, depreciation and amortization expense, other gains/losses,
market-to-market feedback derivatives, IPIC Transaction costs and restructuring charges, divided by interest expense for the preceding twelve-month period. Respective amounts
from the INEOS NOVA joint venture are excluded for this calculation. This measure is provided to assist readers in calculating our prior financial covenant.

Senior
Debt to Cash Flowequals the drawn amount on any secured credit facilities of the Company (including letters of credit), plus the funded amount of our accounts receivable
securitization programs, divided by Consolidated Cash Flow. The Consolidated Cash Flow calculation is performed on a rolling twelve months, except at December 31, 2009, Consolidated Cash Flow
is equal to Consolidated Cash Flow for the preceding nine month period multiplied by 4/3. This measure is provided to assist readers in calculating our financial covenant.

Debt
to Capitalizationequals Net Consolidated Debt, divided by the aggregate of Consolidated Shareholders' Equity, Net Consolidated Debt and Subordinated Shareholder Debt. This measure is
provided to assist readers in calculating our financial covenant.

Net
Consolidated Debtequals long-term debt due within one year and long-term debt as reflected on the most recent quarterly Consolidated Balance Sheet of the
Corporation (excluding debt of certain subsidiaries and any non-recourse debt), plus the funded amount of our accounts receivable securitization programs, less cash and cash equivalents as
reflected on the Consolidated Balance Sheet of the Corporation (excluding cash and cash equivalents of certain subsidiaries) and the outstanding balance of the total return swap. This measure is
provided to assist readers in calculating our Debt to Capitalization financial covenant.

Consolidated
Shareholders' Equityequals consolidated shareholders' equity as reflected on the most recent quarterly Consolidated Balance Sheet of the Corporation (excluding shareholder's
equity allocable to certain subsidiaries or equity allocable to assets that secure non-recourse debt), plus the outstanding balance of the total return swap. This measure is provided to
assist readers in calculating our Debt to Capitalization financial covenant.

Application of Critical Accounting Estimates

The following represents the estimates most critical to the application of our accounting policies. For a summary of our significant
accounting policies, see Note 2 to the Annual Audited Consolidated Financial Statements.

Purchase Accounting.On July 6, 2009, IPIC acquired 100% of our outstanding common shares for consideration of $6.00 per share. We
elected to
use push-down accounting under CICA 1625,Comprehensive Revaluation of Assets and Liabilities, which resulted in our assets and liabilities
being comprehensively revalued to be consistent with the values recorded by IPIC in accordance with business combination accounting standards. In this respect, we applied prospectively, the principles
of CICA 1582,Business Combinations, in connection with the push-down accounting. As a result, the carrying values of all identifiable
assets and liabilities have been adjusted to their respective fair values on July 6, 2009. In accordance with CICA 1582, the $929 million excess of the acquisition date fair values of
our identifiable assets and liabilities over the total purchase consideration is considered a bargain purchase by IPIC and is recorded as a component of Contributed surplus.

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In
determining the fair values for all identifiable assets and liabilities, management applied judgments in many areas for the period from mid 2009 to 2015 with terminal values beyond
that date. These judgments were made with data available on the July 6, 2009 acquisition date. Assumptions were made regarding product selling prices, feedstock costs, future supply/demand
dynamics, inflation, discount rate, foreign exchange rates and others. We based these assumptions on our industry knowledge and Chemical Market Associates, Inc. data or other outside sources.
In all cases, we believe the assumptions are fair and reasonable.

Inventories.We carry inventories at the lower of cost or net realizable value. The cost of inventories comprise all costs of purchase,
costs of
conversion and other costs incurred in bringing the inventories to their present location and condition. The costs of purchase include the purchase price (net of discounts and rebates), import
duties and other taxes and transport and handling costs. The costs of conversion include costs directly related to the units of production, such as labor, and a systematic allocation of fixed
(i.e., depreciation) and variable production overhead costs that are incurred in converting the materials into finished goods. Other costs may include non-production overhead costs
or the costs of designing products for specific customers. Financing costs are not included in production costs. Cost is determined on a first-in, first-out (FIFO) basis as we
believe this basis is the best method to match actual costs incurred with related revenue. Prior to January 1, 2008, the date of adoption of CICA 3031, Inventories, there was no allocation of fixed
production overhead costs to inventory.

In
the fourth quarter of 2008, there were significant decreases in prices of crude oil and other liquid petroleum products used to produce polyethylene, ethylene and
co-products at our Corunna facility. As a result, Corunna's commodity feedstocks and manufactured ethylene, co-products and polyethylene finished goods inventory were written
down to the lower of cost or estimated net realizable value as of December 31, 2008, and a write-down of $129 million was recorded in Feedstock and operating costs in 2008.
Estimated net realizable value was determined using accepted benchmark indices. No such write-down occurred in 2009 or 2007.

Property, Plant and Equipment ("PP&E").Our PP&E consists primarily of land, buildings for producing petrochemicals and
manufacturing equipment. We
value PP&E at historical cost. Financing costs incurred during major construction projects are capitalized as part of the cost of the asset until the asset is available for use. Costs related to
turnaround activities are capitalized and amortized over the period remaining until the next turnaround activity, while maintenance and repair costs are expensed as incurred.

Judgmental
aspects of accounting for PP&E involves estimates of the life of the assets, the selection of an appropriate method of depreciation and determining whether an impairment of
our assets exists and measuring such an impairment. These assessments are critical due to their potential impact on earnings and equity.

We
are able to choose from alternative methods of depreciation. The straight-line method was chosen rather than other methods, such as units of production, because the
straight-line method is more conservative, requires less estimation and judgment and is a systematic and rational basis reflecting the period over which the assets' benefit
is realized.

We
periodically review the estimated useful lives of PP&E and make adjustments when appropriate. During July 2009, we reassessed the remaining useful lives of our plant and
equipment which resulted in increasing certain asset estimated useful lives for our Western Canada assets to 20 years and decreasing our Eastern Canada assets to 10 years. This change
was made after a thorough analysis by company engineers familiar with the plant sites and management's assessment of economic utility. Total depreciation expense recorded during the third and fourth
quarters of 2009 based on revalued property, plant and equipment and revised estimated useful lives was approximately $52 million lower than if original estimated useful lives
were retained.

Net
PP&E at December 31, 2009, totaled approximately $4 billion. PP&E is tested for impairment at the lowest level for which identifiable cash flows exist. Impairment
testing of the plant assets occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. We assess recoverability by comparing the
carrying amount of the asset group to the estimated future cash flows expected to be generated by the assets, undiscounted and without interest charges. If an asset is considered impaired, the
impairment loss to be recognized would be measured as the amount by which the asset's carrying amount exceeds its fair value.

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The
estimate of PP&E fair value is based on estimated discounted future cash flows expected to be generated by the asset. The assumptions underlying cash flow projections represent
management's best estimates at the time of the impairment review. Factors that management must estimate include: industry and market conditions, sales volume and prices, costs to produce, inflation,
etc. Changes in key assumptions or actual conditions, which differ from estimates, could result in an impairment charge. We use reasonable, supportable and, where available, third-party, industry
expert assumptions when performing impairment reviews.

In
connection with the IPIC Transaction, we applied push-down accounting as described in Note 3 of the Annual Audited Consolidated Financial Statements, and the
carrying value of PP&E was adjusted to its fair value of $3,602 million on July 6, 2009. Based on current assets value and expected future cash flows of all business units, we concluded
that the carrying value of PP&E of the business units in all segments as of December 31, 2009 was appropriate.

Intangibles.Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets as a
result of
push-down accounting applied for the IPIC Transaction as described in Note 3 of the Annual Audited Consolidated Financial Statements is fair value as at the closing date of the
Acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. Internally generated intangible assets,
excluding capitalized development costs, are not capitalized and the expenditure is reflected in the consolidated income statement in the year in which the expenditure is incurred.

The
amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year end. These are assessed for impairment
whenever there is an indication that the intangible assets may be impaired. NOVA Chemicals has no intangible assets with indefinite useful lives.

Asset Retirement Obligations.United States and Canadian GAAP require companies to record liabilities associated with future plant
decommissioning and site restoration costs on both active and inactive plants at their fair value, based on a discounted value of the expected costs to be paid when the assets are retired. At
December 31, 2009, we had approximately $42 million of accumulated reserve for these activities.

During
2009, as a result of push-down accounting as described in Note 3 of the Annual Audited Consolidated Financial Statements, we increased our asset retirement
obligations by $12 million. The obligations were also increased as a result of the accretion of the liabilities.

As
a result of the commencement of the INEOS NOVA joint venture on October 1, 2007, the asset retirement obligations associated with the plants that were contributed to the
joint venture were removed from our liabilities. However, the joint venture was required to establish asset retirement obligations associated with the assets contributed by us and INEOS, and we
included 50% of this obligation through proportionate consolidation in our results.

During
2008 and 2007, there were no business conditions or decisions that resulted in a requirement to increase or decrease the asset retirement obligations associated with active or
divested sites. The obligations were increased as a result of the accretion of the liabilities. For inactive sites or sites that became inactive in 2008 and 2007, the reserves were generally
considered adequate for the environmental remediation work required.

We
undertook an evaluation of the costs to conduct decommissioning and site restoration to satisfy the projected obligations under applicable environmental requirements upon termination
of operations at currently operating plant sites in 2003. Canadian GAAP required that the present value of inflation-adjusted decommissioning and site restoration costs be recorded as increases to the
carrying values of the assets at that time and that this amount be depreciated over the estimated remaining lives of the assets. Because the decommissioning may not take place for 25 years or
more, significant uncertainty exists concerning the nature of the decommissioning and site restoration activities that may be required. Furthermore, significant judgment is involved in the estimation
process, because the degree of natural attenuation, evolution of new technologies and potential land uses may mitigate future environmental liabilities and potential costs. In 2007, we engaged a
third-party to perform an in-depth review of our active plant sites and required clean-up and restoration activities. The third party concluded that our current estimates of
the costs to complete these obligations were reasonable

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at
December 31, 2007. Management has reviewed these cost estimates and believes they are still valid as of December 31, 2009.

The
present value of this future obligation (using a credit-adjusted risk-free rate of 10.5% to discount the estimated future cash flows) was approximately $22 million
prior to the July 6, 2009 IPIC Acquisition. On July 6, 2009, the obligation was reassessed in connection with the IPIC Transaction and push-down accounting exercise
(see Note 3 of the Annual Audited Consolidated Financial Statements) and it was determined that the discount rate be increased. In addition, the timing of the obligation was adjusted to
match the assets revised estimated useful lives. This estimated liability will increase, or accrete, each year over the lives of the active plants until it reaches the $160 million expected to
be incurred on closure of the plants. The resulting expense is referred to as accretion expense and is included in operating expenses. In the year ended December 31, 2009, accretion expense was
$3 million. In each of 2008 and 2007, this expense was $2 million.

Pension Plans.We sponsor both defined benefit and defined contribution pension arrangements covering substantially all of our
employees. For the
defined contribution plans, the cost is expensed as earned by employees. For the defined benefit plans, obligations and expense are determined using actual discount rates and assumptions for
mortality, termination, retirement and other rates, as well as the expected return on plan assets and the rate of increase for future compensation. We use current mortality rate tables commonly used
for actuarial calculations and select other assumptions in line with past experience and current economic conditions. The return on plan assets is not the actual return, but an expected rate based on
estimates of long-term rates of return for various asset classes and the investment strategy of the plans. The discount rate is based on actual market interest rates at the measurement
date on high quality debt instruments with a duration or projected cash flows that match the timing and amount of expected benefit payments of our plans.

Canadian
GAAP requires that actuarial gains and losses be recognized in our income using a systematic and consistent methodology. For defined benefit pensions, we amortize such gains and
losses over the estimated remaining service lifetime of the employee group to the extent these gains or losses exceed 10% of the greater of the accrued benefit obligation or market value of assets.
This alternative avoids recognizing into income large unrealized gains or losses in individual years. Immediate recognition of such gains and losses would introduce significant volatility into our
earnings. Cumulative unrealized actuarial gains and losses have
ranged from a $61 million gain at December 31, 1999, to a $235 million loss at December 31, 2008. In connection with the IPIC Transaction, we applied push-down
accounting as described in Note 3 of the Annual Audited Consolidated Financial Statements. As a result of the push-down accounting, pension assets were decreased by
$65 million and pension liabilities were increased by $219 million to reflect funded status of the plans on July 6, 2009. On December 31, 2009, the net unrealized actuarial
gain was $13 million.

On
September 28, 2007, we amended certain defined benefit pension plans in the United States. The amendments provided for benefits to be frozen as of January 1,
2008, and transition relief to be provided to plan participants meeting certain age and service requirements. At the same time, we also enhanced benefits under one of our defined contribution plans.
These actions serve to ascertain more certainty with regards to pension cost.

A
total of $32 million, $39 million and $52 million was contributed in 2009, 2008, and 2007, respectively, to all of our defined benefit pension plans. The
contributions were based on the most recently filed valuations with pension regulators in various countries. We contributed $12 million, $14 million and $8 million in 2009, 2008
and 2007, respectively, to the defined contribution plans.

Funding
for our defined benefit pension plans is largely driven by the North American pension plans, as they constitute a significant portion of our pension plan assets and obligations.
For 2010, funding for the defined benefit plans is expected to be approximately $33 million as employees accrue additional pension benefits and special payments are made to cover the shortfall
between assets and liabilities. Contributions to defined contribution plans for 2010 are expected to be $12 million.

Income Taxes.The objective of accounting for income taxes is to recognize the amount of taxes payable or refundable for the current and
future years
for events that have been recognized in our financial statements or tax returns. Judgment is required in assessing current and future tax consequences. Variations in the actual outcome of tax
consequences could materially impact our financial position or results of operations. In connection with the IPIC Transaction, we applied push-down accounting as described in Note 3
of the Annual Audited Consolidated Financial Statements, which increased future tax liabilities by $499 million.

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We
have a valuation allowance and a tax reserve to provide for uncertain tax positions. The valuation allowance primarily relates to the ability of the Corporation to utilize tax loss
carry-forwards. The amount of loss carry-forward available to the Corporation, has been reduced as required by applicable tax rules due to the IPIC Transaction. Accordingly, the valuation allowance
was reduced by $205 million in 2009. The allowance was increased by $41 million in 2008 and $14 million in 2007. A tax reserve is used to provide for
potential tax liabilities associated with uncertain tax positions and potential disputes with tax authorities. For 2009, the reserve was increased by $22 million. During 2008, the reserve was
reduced by $20 million. During 2007, the reserve was reduced by $13 million due to the successful resolution of a dispute with the Belgian tax authorities.

Accounting Standards

Description

Date of adoption

ImpactCANADIAN GAAPFurther amendments to Canadian Institute of Chartered Accountants ("CICA") 3862,Financial Instruments: Disclosures, requires enhanced disclosures for financial instruments
including classification of fair value measurements and methods using a fair value hierarchy and, when a valuation technique is used, the assumptions used in determining fair value of each class of financial assets and liabilities. These amendments
are to be applied prospectively.

December 31, 2009

Disclosure only, see Note 22 to our Annual Audited Consolidated Financial StatementsFurther amendments to CICA 3855,Financial InstrumentsRecognition and Measurement, provide criteria with regard to determining whether an embedded prepayment option is
closely related to its host contract. Specifically the amendment provides that an option that compensates the lender for lost interest on reinvestment will be considered closely related to a debt host instrument. This amendment will further harmonize
Canadian GAAP with International Financial and Reporting Standards ("IFRS") and U.S. GAAP.

October 1, 2009

NOVA Chemicals applied this amendment and determined that senior notes issued in October 2009 do not contain embedded derivatives. (See Note 10 to our Annual Audited Consolidated Financial
Statements)Scope amendments to CICA 1506,Accounting Changes,provide that this Section shall be applied to a change in individual accounting policies but not to changes in accounting
policies upon the complete replacement of an entity's primary basis of accounting.

Annual and interim financial statements relating to fiscal years beginning on or after July 1, 2009

NOVA Chemicals' adoption of IFRS on January 1, 2011 will not qualify as an accounting change under CICA 1506Emerging Issues Committee ("EIC") 173,Credit Risk and the Fair Value of Financial Assets and Financial Liabilities, provides that an entity's own credit risk and the
credit risk of the counterparty should be taken into account in determining the fair value of derivative instruments. The accounting treatment in this Abstract should be applied retrospectively with or without restatement of prior periods to all
financial assets and liabilities measured at fair value in interim and annual financial statements for periods ending on or after the date of issuance of this Abstract.

March 31, 2009

Resulted in a one-time credit to opening retained earnings on January 1, 2009 and a corresponding decrease in mark-to-market feedstock liabilities of $18 million ($12 million after-tax)
During the 2009 Predecessor period, the initial EIC 173 impact was reduced by $16 million ($11 million after-tax) and decreased an additional $9 million ($6 million after-tax) during the 2009 Successor period.


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Description

Date of adoption

ImpactAmendments to CICA 1625,Comprehensive Revaluation of Assets and Liabilities, and CICA 3251,Equity, and new standards CICA
1582,Business Combinations, CICA 1601,Consolidated Financial Statements, and CICA 1602,Non-controlling Interests, provide guidance on business combinations and the methodology to be used in the accounting therefor, including the revaluation of assets and liabilities. As a result of the IPIC Transaction, NOVA Chemicals early adopted these
standards.

January 1, 2009

See Note 3 to our Annual Audited Consolidated Financial Statements for the impact of the IPIC Acquisition under CICA 3251, CICA 1582 and CICA 1625; No material impact from CICA 1601 and CICA 1602; however this
guidance may impact potential future business transactionsCICA 3064,Goodwill and Intangible Assets, replaced CICA 3062,Goodwill and Other Intangible Assets, and results
in withdrawal of CICA 3450,Research and Development Costs, and amendments to Accounting Guideline ("AcG") 11,Enterprises in the Development Stageand CICA
1000,Financial Statement Concepts. The Standard intends to reduce the differences with IFRS in the accounting for intangible assets and results in closer alignment with U.S. GAAP. Under current
Canadian standards, more items are recognized as assets than under IFRS or U.S. GAAP. The objectives of CICA 3064 are to reinforce the principle-based approach to the recognition of assets only in accordance with the definition of an asset
and the criteria for asset recognition; and clarify the application of the concept of matching revenues and expenses such that the current practice of recognizing as assets items that do not meet the definition and recognition criteria is
eliminated. The standard also provides guidance for the recognition of internally developed intangible assets (including research and development activities), ensuring consistent treatment of all intangible assets, whether separately acquired or
internally developed.

January 1, 2009

See discussion belowEIC 172,Presentation of a Tax Loss Carryforward Recognized Following an Unrealized Gain Recorded in Other Comprehensive Income, provides the tax benefit from
the recognition of previously unrecognized tax loss carryforwards, consequent to the recording of unrealized gains on available-for-sale financial assets in Other Comprehensive Income ("OCI"), should be recognized in income. This Abstract will also
apply in other circumstances when an unrealized gain is recognized in OCI.

September 30, 2008

No material impactAmendments to CICA 3855,Financial InstrumentsRecognition and Measurement, and CICA 3862,Financial InstrumentsDisclosures, permits reclassification of financial assets in specified circumstances. The amendments are intended to ensure consistency of Canadian GAAP with IFRS and U.S. GAAP and allow entities to move financial assets out of categories that
require fair value changes to be recognized in net income. These assets will remain subject to impairment testing and the amendments involve extensive disclosure requirements.

Effective for reclassifications made on
or after July 1, 2008

No material impact


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Description

Date of adoption

ImpactCICA 1535,Capital Disclosures, specifies disclosures of (1) information about the entity's objectives, policies and processes for managing capital structure;
(2) quantitative data about what the entity regards as capital; and (3) whether the entity has complied with externally imposed capital requirements and if it has not complied, the consequences of such non-compliance.

January 1, 2008

Disclosure only, see Note 22 to our Annual Audited Consolidated Financial StatementsCICA 1400,General Standards of Financial Statement Presentation, was amended to include requirements to assess and disclose an entity's ability to continue as a
going concern.

January 1, 2008

No material impactCICA 3031,Inventories, replaces CICA 3030,Inventories. The new Standard is the Canadian equivalent to IFRS IAS 2,Inventories. The main features of CICA 3031 are: (1) measurement of inventories at the lower of cost and net realizable value, with guidance on the determination of cost, including allocation
of overheads and other costs to inventory; (2) cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects assigned by using a specific identification of their
individual costs; (3) consistent use (by type of inventory with similar nature and use) of either first-in, first-out (FIFO) or weighted-average cost formula; (4) reversal of previous write-downs to net realizable value when there is a
subsequent increase in value of inventories; and (5) possible classification of major spare parts and servicing stand-by equipment as property, plant and equipment (CICA 3061Property, Plant and
Equipment, was amended to reflect this change).

January 1, 2008

One-time credit on January 1, 2008 to opening retained earnings and a corresponding increase in opening inventory of $47 million ($39 million after-tax)NOVA Chemicals' inventories are carried at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis and beginning January 1, 2008, includes all costs of
purchase, costs of conversion (direct costs and an allocation of fixed and variable production overhead costs) and other costs incurred in bringing the inventories to their present location and condition.EIC 169,Determining Whether a Contract is Routinely Denominated in a Single Currency, provides guidance on how under CICA 3855,Financial
InstrumentsRecognition and Measurement, to define or apply the term "routinely denominated in commercial transactions around the world" when assessing contracts for embedded foreign currency derivatives. It also
determines what factors can be used to determine whether a contract for the purchase or sale of a non-financial item such as a commodity is routinely denominated in a particular currency in commercial transactions around the world. EIC 169 must
be applied retrospectively to embedded foreign currency derivatives in host contracts that are not financial instruments accounted for in accordance with CICA 3855.

January 1, 2008

No material impact


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Description

Date of adoption

ImpactCICA 3862,Financial InstrumentsDisclosure, and CICA 3863,Financial InstrumentsPresentation, replace
CICA Section 3861,Financial InstrumentsDisclosure and Presentation, and revises and enhances the disclosure requirements and carry forward, substantially unchanged, the presentation
requirements. These Standards emphasize the significance of financial instruments for the entity's financial position and performance, the nature and extent of risks arising from financial instruments and how these risks are managed. These Standards
are applicable to interim and annual periods relating to fiscal years beginning on or after October 1, 2007. NOVA Chemicals chose to early adopt these Standards.

December 31, 2007

Disclosure onlyEIC 166,Accounting Policy for Transaction Costs, requires an entity to disclose the accounting policy for transaction costs for all financial assets and
liabilities other than those classified as held for trading. Transaction costs can either be recognized in net income or added to the initial carrying amount of the asset or liability it is directly attributable to. The same accounting policy must be
chosen for all similar financial instruments, but a different accounting policy may be chosen for financial instruments that are not similar. EIC 166 should be applied retrospectively to transaction costs accounted for in accordance with CICA
Section 3855 in financial statements issued for interim and annual periods ending on or after September 30, 2007. NOVA Chemicals' accounting policy with respect to transaction costs has been to capitalize all transaction costs for all
financial instruments (except for those classified as held for trading). This policy did not change as a result of adopting EIC 166.

September 30, 2007

No material impactCICA 1506,Changes in Accounting Policies and Estimates and Errors, provides that an entity is permitted to change accounting policies only when it is required
by a primary source of GAAP, or when the change results in a reliable and more relevant presentation in the financial statements.

January 1, 2007

No material impactCICA 1530,Comprehensive Income, establishes standards for reporting and presentation of comprehensive income (loss), which is defined as the change in equity
from transactions and other events and circumstances from non-owner sources. As a result of adopting CICA Section 1530, two new statements, Consolidated Statements of Changes in Shareholders' Equity and Consolidated Statements of Comprehensive
Income (Loss), have been presented. Comprehensive income (loss) is composed of NOVA Chemicals' net income (loss) and OCI. OCI includes unrealized gains (losses) on available-for-sale financial assets, foreign currency translation gains (losses)
on the net investment in self-sustaining foreign operations and changes in the fair market value of derivative instruments designated as cash flow hedges (not including the amount of ineffectiveness, if any), all net of income taxes. The
components of Comprehensive Income (Loss) are disclosed in the Consolidated Statements of Changes in Shareholders' Equity and Consolidated Statements of Comprehensive Income (Loss).

January 1, 2007

Disclosure only


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Description

Date of adoption

ImpactCICA 3251,Equity, establishes rules for the presentation of equity and changes in equity during the reporting periods. The requirements of this Section have
been effected in the presentation of the Consolidated Statements of Changes in Shareholders' Equity.

January 1, 2007

Disclosure onlyCICA 3855,Financial InstrumentsRecognition and Measurement, is intended to harmonize Canadian GAAP, U.S. GAAP and IFRS and establishes standards for recognition
and measurement of financial assets, liabilities and non-financial derivatives. Previous standards addressed disclosure and presentation matters only. All financial instruments are included on the Consolidated Balance Sheets and are measured at fair
value, except for held-to-maturity investments, loans and receivables and other financial liabilities, which are measured at amortized cost. CICA 3855 also requires financial and non-financial derivative instruments to be measured at fair value
and recorded as either assets or liabilities, with the exception of non-financial derivative contracts that were entered into and continue to be held for the purpose of receipt or delivery of a non-financial item in accordance with
NOVA Chemicals' expected purchase, sale or usage requirements. Certain derivatives embedded in non-derivative contracts must also be measured at fair value. Any changes in fair value of recognized derivatives are included in net income in the
period in which they arise unless specific hedge accounting criteria are met. Also, it is NOVA Chemicals' policy that transaction costs related to all financial assets and liabilities be added to the acquisition or issue cost, unless the
financial instrument is classified as held-for-trading, in which case the transaction costs are expensed.

January 1, 2007

Because the Standard requires long-term debt to be measured at amortized cost, certain deferred debt discount and issuance costs that were previously reported as long-term assets on the Consolidated Balance Sheets were
reclassified on a prospective basis and are now being reported as a reduction of the respective debt obligations ($17 million was reclassified as of January 1, 2007). Also, certain investments in non-affiliated entities classified as
available- for-sale are now measured at fair value. Previously, these investments were measured at cost. On January 1, 2007, the impact of this change was not material.CICA 3865,Hedges, replaces and expands AcG-13,Hedging Relationships, and the hedging guidance in CICA 1650,Foreign Currency Translation, and sets the standards for when and how hedge accounting may be applied, further restricting which hedging relationships qualify for hedge accounting. Also included in the Standard is
the concept that the ineffective portion of an otherwise qualifying hedging relationship would be included in earnings of the period. Hedge accounting ensures the recording, in the same period, of counterbalancing gains, losses, revenues and expenses
from designated derivative financial instruments as those related to the hedged item.

January 1, 2007

On January 1, 2007, NOVA Chemicals reclassified, on a prospective basis from various current and long-term liability accounts to Long- term debt on the Consolidated Balance Sheets, a deferred gain of
$4 million which represented the remaining gain on settlement of a derivative instrument previously (under AcG-13) designated as a hedge.


NOVA Chemicals adopted CICA 3064 on January 1, 2009. Assets such as pre-production costs and start-ups costs, which
no longer meet the definition of intangible assets as prescribed by CICA 3064 were removed from the balance sheet and in accordance with CICA 1506,Accounting
Changes, these changes have been applied retrospectively. The effect of the restatement at December 31, 2006 was to decrease Other non-current assets by
$37 million, decrease Future income tax liability by $12 million, increase Accumulated other comprehensive income by $1 million and increase the Deficit by $26 million. The
after-tax impact to net income in 2008 and 2007 was $8 million and $1 million, respectively.

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The following summarizes the impact of the adoption of CICA 3064 in the periods presented:

As Previously
Reported

Change in
Accounting
Policy

As RestatedDeficit at Dec. 31, 2006

$
(354
)
$
(26
)
$
(380
)Net income for the year ended Dec. 31, 2007


347


1


348Other changes during the year ended Dec. 31, 2007


(36
)




(36
)Deficit at Dec. 31, 2007

$
(43
)
$
(25
)
$
(68
)Net loss for the year ended Dec. 31, 2008


(48
)

8


(40
)Other changes during the year ended Dec. 31, 2008


8





8Deficit at Dec. 31, 2008

$
(83
)
$
(17
)
$
(100
)Other non-current assets at Dec. 31, 2008

$
182

$
(27
)
$
155Future income taxes at Dec. 31, 2008

$
385

$
(8
)
$
377Accumulated other comprehensive income (loss) at Dec. 31, 2008

$
464

$
(2
)
$
462


FUTURE CHANGES IN ACCOUNTING POLICIES

Transition to IFRS

In October 2009, the Canadian Accounting Standards Board issued a third and final IFRS Omnibus Exposure Draft which confirmed
that the use of International Financial Accounting Standards will be required for interim and annual financial statements of publicly accountable enterprises relating to fiscal years beginning on or
after January 1, 2011. IFRS will replace Canadian GAAP for listed companies and other profit oriented enterprises that are responsible to large or diverse groups of stakeholders. We will be
adopting IFRS commencing January 1, 2011 and will publish our first consolidated financial statements prepared in accordance with IFRS for the quarter ended March 31, 2011. These interim
financial statements will include comparative data for the comparative quarter of the prior year and an opening statement of financial position on the date of transition to IFRS.

We
developed our IFRS convergence plan in 2008 and are continuing to assess the impacts of adopting IFRS with regard to our financial reporting, information technology, business policies
and our control environment. An IFRS Technical Steering Team was established in 2008 to provide overall project governance and approval of decisions on accounting policies and selection of optional
exemptions. As a result of the IPIC Acquisition, the framework of our IFRS convergence plan now includes the requirement that policy decisions need to be in compliance with accounting and disclosure
policies of IPIC. All accounting policy determinations are reviewed and discussed with the our external auditors to confirm our interpretation of the standards.

IFRS Convergence Project:The following is an update of our progress to date on the key activities that were identified in our
convergence plan:



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Accounting Policy Impacts and Decisions:

We have completed an initial assessment of the impacts of adopting IFRS based on the standards as they currently exist, and have
identified that the following standards represent the key accounting differences between Canadian GAAP and IFRS for NOVA Chemicals:





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Market and Regulatory Risk

The Audit Committee of our Board of Directors regularly reviews foreign exchange, interest rate and commodity hedging activity and
monitors compliance with the our hedging policy. Our policy prohibits the use of financial instruments for speculative purposes and limits hedging activity to the underlying net economic exposure. See
Note 22 to our Annual Audited Consolidated Financial Statements for additional information.

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We have U.S., Canadian and European-based petrochemical operations which expose us to both translation and transaction effects
resulting from changes in currency exchange rates. Through September 30, 2008, all of our operations were considered self-sustaining and were translated into U.S. dollars for
reporting purposes using the current rate method. Resulting translation gains or losses were deferred in AOCI until there was a realized reduction of the net investment in the foreign operation.
Transaction currency effects occur when we incur monetary assets or liabilities in a currency different from its functional currency.

In
the third quarter of 2008, the INEOS NOVA joint venture obtained independent financing through a North American accounts receivable securitization program. This significantly
eliminated the joint venture's reliance on us to fund operations. As a result of this change in circumstances, we undertook a review of the functional currency exposures of all of our businesses and
concluded that the currency exposures of our Canadian entities predominately are now U.S. dollars. Accordingly, as required by GAAP, we commenced
recording transactions in our Canadian entities using U.S. dollars as the functional currency effective October 1, 2008. This results in all foreign currency impacts of holding Canadian
dollar denominated financial assets and liabilities being recorded through the income statement rather than being included in translation gains and losses deferred in AOCI. We accounted for this
change prospectively and any amounts that had been previously deferred in AOCI continue to be included in AOCI unless there is a realized reduction in the net investment in the Canadian entities. The
translated amount on September 30, 2008, became the historical basis for all items as of October 1, 2008. We continue to hold investments in joint ventures and other subsidiaries with
differing functional currencies and these will continue to be classified as self-sustaining operations, with translation gains and losses deferred in AOCI.

Through
September 30, 2008, our functional currency was the Canadian dollar which exposed us to currency risks from our investing, financing and operating activities. We have
established a policy which provides a framework for foreign currency management, hedging strategies and defines approved hedging instruments. Hedging instruments may be used to minimize the gains and
losses due to short-term foreign currency exchange rate fluctuations. The exposure that may be hedged in accordance with our foreign exchange policy is limited to operational transaction
exposure and is generally used only to balance out our cash positions. Foreign currency risks resulting from the translation of assets and liabilities of foreign operations into our functional
currency are generally not hedged; however, we may hedge this risk under certain circumstances. We have not changed our policies as a result of the change in functional currency. To address the risks
associated with now having the U.S. dollar as our functional currency, NOVA Chemicals has:



A
sensitivity analysis is provided below for both before and after we entered into the foreign currency forwards.

Foreign
currency risks also may result from certain investing activities such as the acquisition and disposal of investments in foreign companies and may be caused by financial
liabilities in foreign currencies and loans in foreign currencies that are extended to affiliated entities for financing purposes. In recent years, these risks generally have not been hedged.

Our
subsidiaries and affiliated entities generally execute their operating activities in their respective local currencies. We historically have not used currency derivatives to hedge
such payments.

At
December 31, 2009 and December 31, 2008, we had no outstanding foreign currency derivative instruments.

At
December 31, 2009 and December 31, 2008, the INEOS NOVA joint venture also had several short-term foreign currency swaps outstanding, maturing through
January 14, 2010 and January 29, 2009, respectively. Our 50% share of the swaps fair value was not material to our Consolidated Financial Statements.

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Our
investing, financing and operating activities continue to be exposed to currency risks, which effective October 1, 2008, includes both translation and transaction effects. As
of December 31, 2009 and December 31, 2008, we had a net liability position of $675 million and $857 million, respectively, in non-U.S. dollar currencies
at their respective current exchange rates. Each 1% weakening (strengthening) of the Canadian dollar against the U.S. dollar would decrease (increase) the value of the net liability by
$5 million and $7 million after-tax respectively. Any change in the Euro would not be material. Once the Cdn$250 million 7.85% notes are either locked at a
forward exchange rate or paid off each 1% weakening (strengthening) of the Canadian dollar against the U.S. dollar would decrease (increase) the value of the remaining net liability by
$3 million after-tax.

Currency
risks, as defined by CICA Section 3862, arise when a monetary financial instrument is denominated in a currency that is not the functional currency.



We use commodity-based derivatives to manage our exposure to price fluctuations on crude oil, refined products and natural gas
transactions. The instruments are used to moderate the risk of adverse short-term price movements. Occasionally, longer-term positions will be taken to manage price risk for
anticipated supply requirements. The extent to which commodity-based derivatives are used depends on market conditions and requires adherence to our hedging policy. We limit our positions in futures
markets to proprietary feedstock requirements and do not use derivative instruments for speculative purposes.

Commodity
swaps are sometimes used and designated as fair value hedges intended to hedge the fair value of our crude inventory against changes in the market price. As of
December 31, 2009 and December 31, 2008, we had no outstanding commodity-based derivatives designated as fair value hedges. Unrealized gains and losses on derivative instruments
designated and qualifying as fair value hedging instruments, as well as the
offsetting unrealized gains and losses on the hedged items, are included in income in the same accounting period within Feedstock and operating costs in the Consolidated Statements of
Income (Loss).

In
addition, we utilize options, swaps and futures instruments as economic hedges of commodity price exposures, but do not meet the hedge accounting criteria of CICA Section 3865, Hedges, or are not
designated as qualifying hedges. Gains and losses on these commodity-based derivatives are included in Feedstock and operating costs
in the Consolidated Statements of Income (Loss).

The
notional volume and fair value of outstanding derivative contracts for crude oil and refined products that do not qualify for hedge accounting are as follows:

December 31, 2009

December 31, 2008(millions of U.S. dollars, except as noted)

Crude oil

Propane

Butane

Crude oil

Propane

ButaneNotional volumemm bbls


2.9


2.7


1.9


5.9


7.2


2.0Weighted-average price per bbl

$
88.61

$
45.75

$
72.25

$
90.65

$
50.28

$
78.37Fair value(1)

$
16

$
17

$
(15
)
$
162

$
(145
)
$
(82
)Term to maturitymonths


1 - 36


1 - 36


4 - 36


1 - 48


1 - 48


4 - 48


(1)Fair
value at December 31, 2008 does not include an adjustment for credit risk. EIC-173, was adopted on January 1, 2009 and did
not require restatement of prior periods


NOVA Chemicals locks in a portion of its propane and butane feedstock requirements as a percentage of crude oil using forward contracts
that extend to 2012. Changes in forward propane and butane prices as a percentage of forward crude oil prices and a decrease in the notional volumes drove the mark-to-market
improvement in 2009 as compared to 2008. As of December 31, 2009, each 10% change in the price of crude oil, propane and butane would impact the value of our derivative contracts and change net
income by approximately $14 million, $10 million and $5 million, after tax, respectively. As of December 31, 2008, each 10% change in the price of crude oil, propane and
butane would impact the value of our derivative contracts and change net income by approximately $26 million, $15 million and $5 million, after tax, respectively. The sensitivity
analysis of NOVA Chemicals' commodity derivative contracts does not consider any adjustments for credit risk. See "Price, Volume and Cost Influence Profitability" for further sensitivity analysis of
NOVA Chemicals' primary feedstocks, which

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does
not include the above commodity derivatives. There are no other items except as noted, that are excluded or partially excluded from this analysis. As of December 31, 2009, we remain
exposed to price risk on open commodity derivatives until their maturity. There have been no other changes in our market risk exposure or how this risk is managed.



Equity forward contracts were used to manage exposures to fluctuations in our stock based compensation costs, as the costs of the plans
varied as the market price of the underlying common shares changed. As a result of the IPIC Transaction on July 6, 2009, all stock based compensation plans were terminated; therefore, we are no
longer exposed to fluctuations in stock based compensation costs. For further details on our equity forward contracts, see Stock Based Compensation, Forward Transactions and Profit Sharing.



Liquidity risk is the risk that we will not have sufficient funds available to meet our liabilities. We seek to maintain liquidity
within a targeted range in the form of cash and cash equivalents and undrawn revolving credit facilities to position us to make scheduled cash payments, pay down debt, ensure ready access to capital,
and assist in the solvency and financial flexibility of company operations. Adjustments to the liquidity reserve are made upon changes to economic conditions, anticipated future debt maturities,
underlying risks inherent in our operations and capital requirements to maintain and grow operations. Liquidity totaled $831 million at December 31, 2009 and $573 million at
December 31, 2008.

Repayment
of amounts due within one year may be funded by cash flows from operations, cash on-hand, undrawn revolving credit facilities, accounts receivable securitization
programs and internal actions taken to reduce costs and conserve cash. Capital markets transactions may also be used in managing the balance between maturing obligations and available liquidity. Our
future liquidity is dependent on factors such as cash generated from ongoing operations, internal actions taken to reduce costs and conserve cash and other potential sources of financing.



Counterparty credit risk on financial instruments arises from the possibility that a counterparty to an instrument in which we are
entitled to receive payment fails to perform on its obligations under the contract. This includes any cash amounts owed to us by those counterparties, less any amounts owed to the counterparty by us
where a legal right of offset exists and also includes the fair value of contracts with individual counterparties which are recorded in the Consolidated Financial Statements.

For
derivative financial instruments, we have established a limit on contingent exposure for each counterparty based on the counterparty's credit rating. Credit exposure is managed
through credit approval and monitoring procedures. We do not anticipate that any counterparties we currently transact with will fail to meet their obligations. At December 31, 2009 and
December 31, 2008, we had no credit exposure for foreign currency, interest rate or share-based instruments. At December 31, 2009 we had $17 million of credit exposure for
commodity-based instruments (December 31, 2008$1 million).

In
order to manage credit and liquidity risk, we invest only in highly rated instruments that have maturities of nine months or less. Limits on the term of an investment, the type of
investment and concentration limits per institution are established. Typically we invest only in overnight bank term deposits.

Trade
credit risk includes an unexpected loss in cash and earnings if a customer is unable to pay its obligations or the value of security provided declines. Trade receivables over
30 days were down from 5% at December 31, 2008 to 3% at December 31, 2009. There is no indication as of December 31, 2009, that the
debtors will not meet their obligations. Historically, trade receivable credit losses (bad debt write-offs) have been immaterial and bad debt expense continued to be immaterial
in 2009.

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We are committed to the Responsible Care initiative as the basis for our overall safety, health, environment, security and risk
program. Responsible Care is a global industry initiative that is currently practiced by chemical industry in over 50 countries worldwide. Responsible Care was created by the Chemistry Industry
Association of Canada in 1985 and adopted by the American Chemistry Council in the United States in 1988. As a participant in Responsible Care, we are committed to the responsible management of
our products through their life cycle, the safety of our operations, the continuous reduction of the emissions and wastes from our facilities and sustainability.

Similar
to other companies that manufacture and sell plastics and chemicals, we are subject to extensive environmental laws and regulations. These laws and regulations concern the
manufacturing, processing and importation of certain substances, discharges or releases to air, land or water and the generation, handling, storage, transportation, treatment, disposal and
clean-up of regulated materials.

Although
we believe that our businesses, operations and facilities are being operated in material compliance with applicable environmental laws and regulations, the operation of any
petrochemical facility and the distribution of petrochemical products involve the risk of accidental discharges of hazardous materials, personal injury and property and environmental damage.

From
time to time, we have entered into consent agreements or have been subject to administrative orders for pollution abatement or remedial action. Under some environmental laws, we may
be subject to strict and, under certain circumstances, joint and several liability for the costs of environmental contamination on or from our properties and at off-site locations where we
disposed of or arranged for disposal or treatment of hazardous substances and may also incur liability for related damages to natural resources. We have been named as a potentially responsible party
under the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, or its state equivalents, at several third-party sites. Provision has been made in our financial
statements to cover the estimated costs. Nevertheless, we cannot provide any assurance that we will not incur substantial costs and liabilities resulting from future events or unknown circumstances
which exceed our reserves or will be material.

In
2002, Canada ratified the Kyoto Protocol, and agreed to regulate reductions in air emissions that contribute to climate change. In 2007, the Canadian federal government released its
plan for reducing
industrial air emissions, including an ultimate goal of reducing greenhouse gas ("GHG") emissions by 20% from 2006 levels by the year 2020 and by 60 to 70% by 2050. Since then, the Canadian federal
government released information indicating that the climate change regulations for the Energy Intensive Trade Exposed industries were under review and that Canada intends to work closely with the
U.S. to establish a North American GHG emission cap and trade system. As a result, legally binding federal GHG emission reduction requirements are expected to be imposed on our operations in
Canada, although the scope and timing for such requirements and the related impacts are uncertain.

Many
Canadian provinces are also considering GHG emissions reduction legislation. In Alberta, theSpecified Gas Emitters Regulationunder
theClimate Change and Emissions Management Actcame into effect in 2007, imposing annual reductions requirements on facilities that emit over
100,000 tones of GHG per year. In compliance with the regulations, we submitted the required GHG emission reports and have satisfied the requirements associated with reducing greenhouse gas
emission intensity by 12% from the 2003-2005 baseline.

Although
the United States has not ratified the Kyoto Protocol, a number of federal laws and regulations related to GHG emissions are being considered by the
U.S. Environmental Protection Agency and in Congress. In addition, various state and regional laws, regulations and initiatives have been enacted or are being considered, including the Regional
Greenhouse Gas Initiative, the Midwestern Regional Greenhouse Gas Reduction Accord, and the Western Climate Initiative.

Regardless
of the status of the potential laws and regulations, we are developing and implementing a variety of initiatives to reduce GHG emissions and improve energy efficiency across
our operations.

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Summarized Quarterly Financial Information

2009

2008(1)(millions of U.S. dollars)

Oct. 1 to
Dec. 31

July 6 to
Sept. 30

July 1 to
July 5

Apr. 1 to
Jun. 30

Jan 1. to
Mar. 31

Oct. 1 to
Dec. 31

July 1 to
Sept. 30

Apr. 1 to
Jun. 30

Jan 1. to
Mar. 31Successor

PredecessorRevenue

$
1,124

$
1,055

$
48

$
1,005

$
818

$
1,153

$
2,088

$
2,213

$
1,912Operating income (loss)

$
73

$
16

$
(45
)
$
(49
)
$
(120
)
$
(315
)
$
191

$
70

$
110Net income (loss)

$
17

$
(19
)
$
(33
)
$
(83
)
$
(123
)
$
(212
)
$
100

$
20

$
52


Note: (1)Restated
for adoption of CICA 3064.


In 2009, business results for the first quarter were weak as customers waited for prices to stabilize and reduced their inventories. Starting in
the second quarter, prices stabilized and began to rise, and customers began to purchase product as required. Throughout the remainder of the year, prices slowly rose and customers continued to
purchase for their current needs. Customer inventories remained constant throughout the last three quarters of the year; however, they were maintained at lower levels than in the previous year.
Revenue for each of the quarters was lower than in 2008 as raw material prices fell in the fourth quarter of 2008 and remained at lower average levels, resulting in lower average selling prices. The
first and second quarters were impacted by costs resulting from amendments to our existing financings and additional financings done during the quarters, restructuring costs resulting from our
decision to exit the DYLARK engineering resin business, and costs associated with the IPIC Transaction. In the second half of the year, costs were lower as the value of our
mark-to-market feedstock derivatives program increased; however, a strengthening Canadian dollar increased foreign exchange losses.

In
2008, business results for the first three quarters were characterized by solid margins, strong domestic and export sales volumes, high oil to gas ratio, against a backdrop of rising
feedstock and selling prices. In the fourth quarter, an unprecedented drop in commodity prices and rapid deterioration in the global economy combined to cause all business segments to report much
weaker results. As compared to the first quarter, operating income from the businesses remained flat in the second and third quarters due to higher margins in the Olefins/Polyolefins business that
were offset by weaker margins for the INEOS NOVA joint venture and Performance Styrenics businesses. Selling price increases outpaced higher feedstock costs in Olefins/ Polyolefins, while the
opposite was true for the Styrenics-related businesses, which were negatively affected
by greater exposure to weakening construction and consumer durables markets. Additionally, feedstock costs on the USGC rose much faster than natural gas prices in Alberta, supporting price increases,
while Alberta's feedstock costs did not increase as much. While operating income for the businesses was relatively stable in the second and third quarters, net income was more volatile, driven by
swings in unrealized gains and losses on mark-to-market feedstock derivatives. Net income fell in the second quarter primarily due to $61 million in
after-tax unrealized losses on mark-to-market feedstock derivatives, whereas net income increased in the third quarter due to $15 million in
after-tax unrealized gains on mark-to-market feedstock derivatives, a favorable change of $76 million quarter-over-quarter. In the
fourth quarter, net income declined due to the unprecedented correction in energy and petrochemical prices, historic sharp selling price reductions that outpaced flow-through feedstock
cost decreases and much lower sales volumes. Atypical factors accelerated the decline. The precipitous drop in the cost of feedstocks like crude oil and benzene resulted in a large negative inventory
flow-through impact of $294 million after-tax and a $90 million after-tax write-down to adjust inventories to net realizable values. These
negative impacts were only partially offset by a $142 million after-tax gain related to a change in functional currency effective October 1, 2008.

Fourth Quarter 2009 Overview

Net income for the fourth quarter of 2009 was $17 million compared to a net loss of $212 million for the fourth quarter
of 2008. In the fourth quarter of 2008, earnings were lower due to the impact of the economic downturn and the resulting drop in demand and prices that led to a large negative inventory
flow-through impact and a year-end inventory write down and partially offset by a change in the functional currency. In the fourth

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quarter
of 2009, the effects of the economic downturn were starting to be overcome and demand had returned relative to the fourth quarter of 2008. Pricing had stabilized and was rising and operating
costs were lower due to lower utility costs.

Three Months Ended(millions of U.S. dollars)

Dec. 31, 2009

Dec. 31, 2008Successor

PredecessorRevenue

$
1,124

$
1,153Operating income (loss)(1)Olefins/Polyolefins(2)

$
111

$
(262
)INEOS NOVA Joint Venture


(7
)

(84
)Performance Styrenics


(2
)

(41
)Corporate


(29
)

72Operating income (loss)

$
73

$
(315
)Net income (loss)

$
17

$
(212
)


Note: (1)See
Supplemental Measures.(2)Olefins/Polyolefins
consists of Joffre Olefins, Corunna Olefins, and Polyethylene segments.


The Olefins/Polyolefins business unit reported operating income was $373 million higher in the fourth quarter of 2009 compared to the
fourth quarter of 2008. This increase was due to the recovery in demand and the more stable feedstock and selling prices that did not result in flow-through losses or an inventory
write down.

The
Joffre Olefins segment reported operating income of $48 million in the fourth quarter of 2009 compared to operating income of $91 million in the fourth quarter of 2008.
Operating income was lower quarter over quarter due to sales prices that fell more than feedstock costs.

The
Corunna Olefins segment reported an operating loss of $3 million in the fourth quarter of 2009, which was an improvement from an operating loss of $238 million in the
fourth quarter of 2008. Operating income was higher quarter over quarter due to lower feedstock costs in the 2009 quarter with higher sales prices. In the 2008 quarter, the loss was due to
flow-through feedstock costs that lagged a precipitous drop in sales prices and a year-end write down of inventory to net realizable value.

The
Polyethylene segment reported operating income of $75 million in the fourth quarter of 2009, improved from an operating loss of $139 million in the fourth quarter of
2008. The increase quarter over quarter was due to sales prices that increased, feedstock costs that declined and higher sales volumes.

NOVA Chemicals'
50% share of INEOS NOVA reported an operating loss of $7 million in the fourth quarter of 2009, improved from an operating loss of $84 million
in the fourth quarter of 2008. Operating income was higher quarter over quarter due to lower feedstock costs in the 2009 quarter with higher sales prices and volumes. In the 2008 quarter, the loss was
due to flow-through feedstock costs that lagged a precipitous drop in sales prices.

The
Performance Styrenics segment reported an operating loss of $2 million in the fourth quarter of 2009, improved from an operating loss of $41 million in the fourth
quarter of 2008. The quarter over quarter improvement was due to increased margins as feedstock prices fell more than sales prices and lower operating costs due to restructuring within
the segment.

Corporate
operating cost was $29 million in the fourth quarter of 2009 compared to a gain of $72 million in the fourth quarter of 2008. The higher quarter over quarter cost
was primarily due to the effect of the functional currency change in the fourth quarter of 2008 partially offset by lower restructuring costs and improved unrealized mark-to market
feedstock derivative value.

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Item 6.    Directors, Senior Management and Employees

6.A. DIRECTORS AND SENIOR MANAGEMENT

Directors

The following table sets forth as of December 31, 2009 the name of each of our directors, his age, his residence, principal
occupation(s) during the five preceding years and the period during which he has served as a director. The terms of office of the directors continue until their successors are elected
or appointed.

Name and Residence

Age

Period During
Which a Director
of NOVA Chemicals

Principal Occupation During
The Preceding Five YearsGerhard Roiss, Chairman
Vienna, Austria


57

Since November 10, 2009

Deputy Chief Executive Officer, OMV; Managing Director, OMV Refining & Marketing GmbH; Vice Chairman, Borealis Supervisory BoardMohamed Al Mehairi,
Vice Chairman, Abu Dhabi, United Arab Emirates


34

Since July 6, 2009

DirectorInvestment Department, IPICPhilip J. Brown
New York, U.S.A.


54

Since July 6, 2009

Attorney, Torys LLPDavid C. Davies
Vienna, Austria


54

Since November 10, 2009

Chief Financial Officer, OMV; member of Borealis Supervisory BoardMark Garrett
Vienna, Austria


47

Since November 10, 2009

Chief Executive Officer, Borealis; prior to January 2008, Executive Vice President Water and Paper Treatment, Ciba Specialty ChemicalsGeorg F. Thoma
Dusseldorf, Germany


65

Since July 6, 2009

Attorney, Shearman & Sterling LLPRandy G. Woelfel
Pennsylvania, U.S.A


54

Since November 10, 2009

Chief Executive Officer, NOVA Chemicals; prior to November 16, 2009, Chief Executive Officer, Designate, NOVA Chemicals; prior to October 2009, President and Chief Operating Officer, Cereplast,
 Inc.; prior to March 2008, Managing Director Energy, Houston Technology Center; prior to January 2007, President, Basell North America


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Table of Contents

Executive Officers

The following table sets forth the name of each of our executive officers, his or her residence, present positions within the
Corporation and his or her principal occupations during the five preceding years.

Name and Residence

Age

Present Principal
Occupation

Principal Occupation During
The Preceding Five YearsRandy G. Woelfel
Pennsylvania, U.S.A

54

Chief Executive Officer

Chief Executive Officer, NOVA Chemicals; prior to November 16, 2009, Chief Executive Officer Designate, NOVA Chemicals; prior to October 2009, President and Chief Operating Officer, Cereplast,
 Inc.; prior to March 2008, Managing Director Energy, Houston Technology Center; prior to January 2007, President, Basell North AmericaTodd D. Karran
Pennsylvania, U.S.A.

45

Senior Vice President, Chief Financial Officer and Treasurer

Senior Vice President, Chief Financial Officer and Treasurer, NOVA Chemicals; prior to November 2009, Vice President, Corporate Development and Treasurer, NOVA Chemicals; prior to November 2007,
Vice President, Treasury and Corporate Development, NOVA Chemicals; prior to September 2007, Vice President and Chief Information Officer, NOVA Chemicals; prior to September 2006, Vice President IT Applications and Decision
Support, NOVA ChemicalsWilliam G. Greene
Pennsylvania, U.S.A

55

Senior Vice President, Operations

Senior Vice President, Operations, NOVA Chemicals; prior to December 2009, Vice President, Manufacturing and Corporate Engineering, NOVA Chemicals; prior to November 2007, Vice President,
Manufacturing, NOVA Chemicals; prior to September 2006, Vice President, Manufacturing Olefins/Polyolefins, NOVA ChemicalsMarilyn N. Horner
Pennsylvania, U.S.A.

52

Senior Vice President and Chief Human Resources Officer

Senior Vice President and Chief Human Resources Officer, NOVA Chemicals; prior to September 2008, Vice President, Human Resources and Corporate Effectiveness, NOVA Chemicals; prior to
September 2006, Vice President, Human Resources, NOVA Chemicals; prior to October 2005, Vice President and Controller, Olefins/Polyolefins, NOVA ChemicalsGrant Thomson
Alberta, Canada

55

Senior Vice President and President, Olefins and Feedstock

Senior Vice President and President, Olefins and Feedstock, NOVA Chemicals; prior to December 2009, Vice President, President Feedstock and Olefins, NOVA Chemicals; prior to April 2008, Senior Vice
President, Olefins and Feedstocks, NOVA Chemicals; prior to September 2006, Vice President, Natural Gas and NGL, NOVA Chemicals


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There
are no family relationships among any of our directors or executive officers. Other than the Agreement in Principle as discussed below, there are no material arrangements or
understandings between any two or more directors or executive officers pursuant to which any person was selected as a director or officer.

Each
of the officers is appointed by the Board of Directors, or Board, to serve, subject to the discretion of the Board, until their successors are appointed or they resign.

Recent Changes to Organizational Structure, Board of Directors and Executive Officers

IPIC, OMV and Borealis entered into an Agreement in Principle (the "AiP") in August 2009 to define our future corporate
governance structure, including the composition of our Board of Directors and the creation of an owners' committee ("Owners' Committee") that will consist of four memberstwo nominated by
IPIC and two nominated by OMV. Pursuant to the terms of the AiP, the four members of the Owners' Committee shall also be members of our Board of Directors and, in each such capacity, will effectively
control, to the extent permitted by law, matters to be determined by our Board of Directors and shareholders. Through this arrangement, OMV will share control of our company with IPIC.

The
AiP contemplates that Borealis will acquire from IPIC 24.9% of our share capital pursuant to a share purchase agreement still to be negotiated between IPIC and Borealis. The AiP
received the antitrust clearance of the European Commission on October 27, 2009.

In
accordance with the AiP, our Board of Directors consists of seven membersfour nominated by IPIC, two nominated by OMV and one nominated by Borealis. Dr. Gerhard
Roiss (deputy Chief Executive Officer of OMV and Vice Chairman of Borealis' supervisory board), David Charles Davies (Chief Financial Officer of OMV and a member of Borealis' supervisory board), Mark
Garrett (Chief Executive Officer of Borealis) and Randy G. Woelfel (our Chief Executive Officer) joined our Board of Directors effective November 10, 2009.

Effective
November 16, 2009, our Board of Directors appointed Randy G. Woelfel as Chief Executive Officer and Todd D. Karran as Senior Vice President, Chief Financial Officer and
Treasurer upon the resignation of our former Chief Executive Officer, Christopher Pappas, and Senior Vice President and Chief Financial Officer, Larry MacDonald. Effective December 15, 2009,
our Board of Directors created the NOVA Chemicals Management Board and, in addition to Messrs. Woelfel and Karran, appointed William G. Greene, Senior Vice President, Operations, Marilyn
N. Horner, Senior Vice President and Chief Human Resources Officer,
and Grant Thomson, Senior Vice President and President, Olefins and Feedstock, as members of the Management Board, reporting directly to our Board of Directors.

6.B. COMPENSATION

EXECUTIVE COMPENSATION

For purposes of this annual report, "Named Executive Officer" or "NEO" means an individual who, at any time during the
year, was:



Based
on the foregoing definition, during our last completed fiscal year, there were eight Named Executive Officers, namely: CEO, Randy G. Woelfel; former CEOs, Jeffrey M. Lipton and
Chris D. Pappas; CFO, Todd D. Karran; former CFO, Larry A. MacDonald; former Senior Vice President, Chief Legal Officer and Corporate

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Secretary,
Jack S. Mustoe; Senior Vice President, Chief Human Resources Officer, Marilyn N. Horner; and Senior Vice President, Operations, William G. Greene.

Unless
otherwise noted, all compensation amounts paid in Canadian dollars are expressed in U.S. dollars using the following exchange rates:



On
July 6, 2009 (the "Effective Date"), pursuant to the terms of the Arrangement Agreement, IPIC purchased all of the outstanding common shares of NOVA Chemicals
(the "Common Shares") for $6.00 per share. The Arrangement constituted a change of control and the Key Employee Termination Benefits Agreements (the "COC Agreements") became effective
(see "NEO AgreementsCOC Agreements"). In 2009, Mr. Lipton retired pursuant to a letter agreement with NOVA Chemicals (see "NEO AgreementsEmployment
Contracts"), and Messrs. Pappas, MacDonald and Mustoe's employment terminated under their COC Agreements (see "Summary Compensation Table" and "Payments on Separation
of Service").

As
of the Effective Date, the directors elected at the Annual and Special Meeting of the Shareholders held on April 14, 2009, Dr. Boer, Mmes. Brlas and Creighton,
Messrs. Blumberg, Bougie, Dineen, Fischer, Hawkins, Ludwick and Stanford, other than Mr. Pappas, resigned; and Messrs. Mohamed Al Mehairi, Philip Brown and Georg Thoma were
appointed as directors. On November 13, 2009, Dr. Gerhard Roiss and Messrs. David Davies, Mark Garrett and Randy Woelfel, NOVA Chemicals' current CEO, were appointed directors,
and Mr. Pappas resigned from the Board.

Under
the Arrangement, NOVA Chemicals' shareholders received $6.00 in cash for each Common Share. Stock options (including any tandem share appreciation rights) and equity appreciation
units ("EAUs") of NOVA Chemicals were cancelled. The value of all outstanding options and EAUs on the Effective Date was nil. Restricted stock units ("RSUs") and deferred share units ("DSUs") were
cancelled and the holders of RSUs and DSUs received $6.00 for each unit. Immediately after all RSUs and DSUs were paid, NOVA Chemicals terminated all equity based plans including the Employee
Incentive Stock Option Plan, the Employee Appreciation Plan, the Restricted Share Unit Plan and the Deferred Share Unit Plans.

Remuneration Committee Information

Composition of the Remuneration Committee

The Remuneration Committee of the Board of Directors (formerly the Human Resources Committee) is responsible for overseeing key
compensation and human resources policies including the overall executive compensation strategy of NOVA Chemicals and the on-going monitoring of the strategy's implementation. Prior to the
Effective Date, the Remuneration Committee was composed of Jerry Blumberg (Chairman), Peter Boer, Joanne Creighton, Charlie Fischer and Kerry Hawkins. The Remuneration Committee is currently composed
of Mohamed Al Mehairi (Chairman), David Davies, Gerhard Roiss and Georg Thoma. None of the members of the Remuneration Committee is or was formerly an executive or employee of NOVA Chemicals and there
are or were no interlocking relationships between the members of the Remuneration Committee or between any Remuneration Committee member and any of NOVA Chemicals' executives.

Governance

The Remuneration Committee recognizes the importance of maintaining sound governance practices for the development and administration
of executive compensation and compensation programs, and has instituted processes that enhance the Remuneration Committee's ability to effectively carry out its responsibilities. Examples
include:



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The
Remuneration Committee directs management to gather information and provide initial analyses and commentary. The Remuneration Committee reviews this material along with other
information received from external consultants in its deliberations when making executive compensation and other decisions. All matters considered, approved or recommended by the Remuneration
Committee are reported to the full Board.

External Advice

The Remuneration Committee Chairman has direct access to an independent external compensation consultant, Towers Watson (formerly,
Towers Perrin) on executive compensation and human resources matters. Towers Watson provides objective and expert analysis, advice and information on executive compensation trends, regulatory changes
and evolving best practices. They also provide advice on compensation program design and compensation recommendations to assist the Remuneration Committee in making informed, fair and reasonable
decisions. Towers Watson also provides actuarial services for the Corporation's North American defined benefit pension plans, and retirement and benefits consulting services, as required.

Compensation Discussion and Analysis

The following is the Compensation Discussion and Analysis which outlines and explains all significant elements of compensation awarded
to, earned by, or paid to the Named Executive Officers during 2009.

Compensation Philosophy

NOVA Chemicals' executive compensation policies and programs are designed to attract, retain and motivate key executives through
competitive and cost effective approaches that reinforce executive accountability and reward the achievement of business results. Executive compensation consists of four main elements: (a) base
salary, (b) annual incentive compensation awarded under NOVA Chemicals' Incentive Compensation Plan, (c) long-term incentive compensation, and (d) retirement, benefit
and perquisite programs. The relative weighting of each element is aligned with the Corporation's philosophy of linking pay to performance. A substantial percentage of executives' compensation is
provided in the form of performance-based variable compensation with a greater emphasis on variable components for NOVA Chemicals' senior executives. Actual incentive compensation awards are directly
linked to corporate and business unit results and many of the performance measures are aligned with shareholder and other key stakeholders interests, including financial and non-financial
goals (see "Incentive Compensation Plan" and "Long-Term Incentive Plans"). Executive retirement and benefits programs are generally consistent with broader employee programs in the
same country. Where certain programs, such as perquisites, are only provided to executives or senior management, they reflect competitive practice and particular business needs and objectives.

The
compensation level for all executives, including the NEOs, is reviewed annually by the Remuneration Committee of the Board. A benchmarking process that assesses the policy or target
levels of base salary, annual incentive compensation and long-term incentive compensation is conducted each year by Towers Watson (see "Benchmark Review"). In addition, the
Remuneration Committee seeks and obtains input from the CEO on base salary, and targeted annual incentive and long-term incentive compensation, for executives other than the CEO. The
overall objective in setting executive compensation is to ensure that the total targeted value and mix of compensation for each executive compares at the median (50th percentile)
of the comparator group (see "Benchmark Review") for the same or similar role. In setting target total compensation, the Remuneration Committee does not consider compensation previously awarded
to an individual. The Remuneration Committee does consider other factors such as each individual's experience and expertise before approving adjustments to compensation. In the case of the CEO, the
Remuneration Committee determines the value and mix of compensation with input from Towers Watson and makes a recommendation to the Board for approval.

Benefits,
retirement programs and perquisites are reviewed periodically by the Remuneration Committee to ensure these programs continue to offer competitive benefits that are cost
effective and valued by the organization.

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Benchmark Review

The Remuneration Committee annually monitors comparative total compensation information, using data prepared by Towers Watson, to
ensure that target levels of overall compensation are competitive with similar North American chemical companies. Comparator group information is also used in determining base salary ranges, annual
incentive compensation target awards and assessing the competitiveness of NOVA Chemicals' long-term incentive compensation awards for all executives, including the NEOs.

NOVA
Chemicals benchmarks against North American chemical companies with whom it competes for talent. Many positions are similar across the industry, and the comparator group effectively
represents competitive pay levels for comparable positions. In certain cases, the comparator group is expanded to include a broader chemical company comparator group or general industry to ensure
sufficient data is considered and to reflect the broader market for staff positions.

The
Remuneration Committee reviews the composition of the comparator group periodically for continued relevance. In September 2007, Towers Watson conducted a review of the
comparator group. This review was initiated due to the consolidation of the companies in the comparator group and the desire to ensure that the comparator group continued to be representative of those
companies with which NOVA Chemicals competes for talent. As a result of this review, four additional companies were added to the comparator group. For determining 2009 compensation, NOVA Chemicals'
comparator group included the following 16 North American chemical companies:

Air Products and Chemicals, Inc.

Georgia Gulf CorporationAshland Inc.

Hercules IncorporatedCabot Corporation

The Lubrizol CorporationChemtura Corporation

Lyondell Chemical CompanyThe Dow Chemical Company

Methanex CorporationE.I. du Pont de Nemours and Company

PPG Industries, Inc.Eastman Chemical Company

Praxair, Inc.FMC Corporation

Rohm and Haas Company


Key Elements of Compensation

The major elements of the executive compensation program are base salary, annual incentive compensation awards, and
long-term incentive compensation. In addition, the NEOs are eligible to and participate in group benefit and retirement plans. In any particular year, NOVA Chemicals' NEOs and other
executives may be paid more or less than executives at comparable chemical companies depending on corporate and individual performance, as well as their relative experience.

The
following table summarizes each component of the total direct compensation(1) ("TDC") for the NEOs and other executives:

Base Salary

Incentive Compensation Plan

Long-Term Incentive PlansThe fixed portion of compensation tied to market competitiveness, level of responsibility and demonstrated experience

Annual variable compensation which provides awards contingent on achievement of financial and non-financial metrics that support NOVA Chemicals' corporate and individual performance

Long-term variable compensation where grants are awarded to align the interests of management with the long term interests of NOVA Chemicals' shareholders and other key stakeholders


(1)NOVA
Chemicals does not consider retirement benefits, benefits programs or perquisites direct compensation.


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The targeted mix of TDCbase salary, targeted annual incentive compensation and targeted annual value of long-term
incentive compensationfor 2009 for each Named Executive Officer who is a member of the current NOVA Chemicals Management Board is as follows:

R.G. Woelfel

M.N. Horner

T.D. Karran

W.G. GreeneGRAPHIC

GRAPHIC

GRAPHIC

GRAPHIC


Based
on the benchmark review for 2009, the Remuneration Committee and the Board of Directors determined that the NEO's TDC remained competitive and no increases were made to the NEOs'
TDC for 2009.



Base salaries for all executives, including the NEOs, are paid within salary ranges established for each position on the basis of the
level of responsibility relative to other positions in
NOVA Chemicals. The salary range for each position is determined through an annual comparative salary survey of NOVA Chemicals' North American chemical companies comparator group.

Base
salary is targeted at the median (50th percentile) of the comparator group for each executive, except Mr. Lipton whose base salary was targeted at the
75th percentile. Individual salaries within each range are determined by each executive's experience, expertise and contribution to NOVA Chemicals.

In
2009, based on the benchmark analysis, base salaries for Messrs. Lipton, Pappas, MacDonald, Mustoe and Ms. Horner were not increased. Mr. Woelfel was appointed
CEO (Designate) on October 19, 2009 and CEO on November 16, 2009. Mr. Karran was appointed CFO on November 16, 2009. Messrs. Woelfel and Karran's base salaries were
set based on an analysis of their responsibilities as CEO and CFO of a private company.



Annual incentive compensation is awarded to executives, including the NEOs, senior managers and other leaders under the Incentive
Compensation Plan, which is designed to align incentive compensation awards to actual business results, address uncontrollable elements and motivate participants. This plan provides cash awards based
on corporate and business/functional/individual performance, measured against objectives which are typically determined prior to the beginning of each performance period. As an executive's
responsibility level increases, incentive compensation represents an increasing portion of total cash compensation. The Incentive Compensation Plan constitutes a significant part of total cash
compensation for the NEOs.

Incentive
Compensation Plan awards are based on two categories:



The
2009 targeted awards for the NEOs, other than Messrs. Woelfel, Karran and Greene, were weighted 50% on corporate performance and 50% on business/functional/individual
performance. For all other Incentive Compensation Plan participants, including Messrs. Karran and Greene, the weightings were 30% on corporate

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performance
and 70% on business/functional/individual performance. Mr. Woelfel's 2009 incentive compensation award was determined in accordance with his Employment Contract (see "NEO
AgreementsEmployment Contracts").

Objectives
under corporate performance and business/functional/individual performance are typically set prior to the performance period by the Remuneration Committee. For 2009, the
Remuneration Committee evaluated corporate performance based on the three corporate objectives identified above that NOVA Chemicals believed were important to successfully drive the 2009 operating
plan. The Remuneration Committee determined the significance of the objectives and weighted each accordingly as follows:

Weighting

Performance Objective

Reason for Objective65%

EBITDAbased on the 2009 business plan as approved by the Board

    Measured the profitability in the context of operating performance and market conditions. The Board believed that the exclusion of extraordinary items, which represent events outside of the
Corporation's normal operations, provided meaningful year to year comparison and better reflected the Corporation's normal operations. The emphasis was on delivering strong, recurring profits relative to the industry, and defining and delivering a
clear path for EBITDA growth that was stronger than the industry25%

CFCT
    (Inventory + Accounts Receivable - Accounts Payable) ÷ Average Sales

    Measured how well the Corporation managed its cash flow. NOVA Chemicals consistently aims to manage its working capital efficiently and demonstrate prudent cash management10%

Responsible Care includes two objectives, each weighed equally:

    Measured NOVA Chemicals' commitment to providing a safe working environment    Total Recordable Case Rate

    Measured the number of recordable employee injuries or illnesses    Process fires

    Measured any fire or evidence of a flame-reducing process fires reduces the risk of serious injury, or major equipment or environmental damage


Business/functional/individual
performance is measured using financial, operational and strategic objectives specific to each participant's role. These objectives are a mix of
quantitative and qualitative measures and may relate to:



The
Remuneration Committee sets minimum, target and maximum thresholds for all objectives. The target threshold is meant to be challenging yet achievable and, if met, the payout for that
objective is 100%. If minimum thresholds are not achieved, no payout is awarded. Maximum thresholds are meant to be stretch objectives resulting in exceptional results. If maximum thresholds are met
or exceeded, the payout is 250% of target for that objective.

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The
actual incentive compensation award paid each year, if any, is determined with reference to achievement of the various objectives in the performance categories described above.
Following the performance period, actual performance is assessed against target for each objective. The performance rating by which the incentive compensation award is calculated is
pro-rated between the minimum, target and maximum award depending on actual performance under each of the objectives.

The
corporate EBITDA performance objective was based on the Corporation's business plan using industry consultant forecasts for polyethylene and ethylene chain margins and other expected
business results for 2009. EBITDA performance was assessed in light of current business circumstances, including key initiatives critical to NOVA Chemicals' success, and in light of the Corporation's
external environment relative to the industry.

The
Incentive Compensation Plan provides that an award modifier may be applied to increase or decrease overall awards to address affordability, relative to market conditions, in any
particular performance period. Provision is also made in the Incentive Compensation Plan to pay incentive compensation awards in excess of the target award, to a maximum established by the
Remuneration Committee, if performance in a performance period is exceptional.

For
2009, corporate objectives before polyethylene and ethylene chain margin adjustments were 137% of target. In accordance with the terms of the Incentive Compensation Plan, the
Remuneration Committee adjusted the corporate component of the awards downward to 78% based on NOVA Chemicals' performance relative to the industry.

In
accordance with the COC Agreement entered into with Mr. Pappas, 2009 incentive compensation for Mr. Pappas, who left NOVA Chemicals on November 13, 2009, was paid
at target and pro-rated for the period in 2009 that he was employed by NOVA Chemicals. In accordance with the COC Agreements entered into with Messrs. MacDonald and Mustoe, both of
whom were employed by NOVA Chemicals for the entire year, incentive compensation was paid at the average of their 2008, 2007 and 2006 incentive compensation awards (see "NEO
AgreementsChange of Control Agreements").

Mr. Woelfel's
2009 incentive compensation award of $51,700 was paid at target pro-rated for the time he was employed with NOVA Chemicals in 2009 in accordance with his
employment contract (see "NEO AgreementsEmployment Contracts"). Based on overall performance of 154%, 181% and 139% of target for Ms. Horner and Messrs. Karran and
Greene, respectively, their 2009 incentive compensation awards were $272,300, $228,400 and $216,700.



A significant portion of an executive's compensation is awarded as long-term incentives. This supports the compensation
objective of linking pay to long term corporate performance by putting compensation at risk.

Until
the Effective Date, NOVA Chemicals sponsored three equity based long-term incentive plans to provide long-term incentives and compensation to key employees
at a competitive level with other comparable North American chemical organizations and to align the interests of management more closely with those of shareholders. The equity based
long-term incentive plans included:



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As
of the Effective Date, the value of all outstanding Options and EAUs was nil, and all Options and EAUs were cancelled pursuant to the terms of the Arrangement Agreement. All
outstanding RSUs were cancelled in exchange for a cash payment of $6.00 (See "Equity Based Long-Term Incentive Awards and Exercises"). The Option Plan, EAP and RSUP were terminated
in July 2009.

Equity
based long-term incentive grants awarded to the NEOs (other than Mr. Woelfel who was hired after the equity based long-term incentive plans were
terminated) and other key employees were determined by the Board on the recommendation of the Remuneration Committee. The Remuneration Committee's recommendation for the NEOs' grants was based on
information from Towers Watson's annual comparator group analysis of the value and mix of total direct compensation, including base salary, incentive compensation and long-term incentives.
Based on this analysis, the Remuneration Committee examined the long-term incentive practices of the Corporation's comparator group to determine the 50th percentile
(75th percentile for Mr. Lipton) long-term incentive award for each executive position. In determining equity based long-term incentive compensation
awards, the Board did not consider the number or the terms of outstanding awards.

Annual
reviews were and will continue to be conducted to ensure that NOVA Chemicals' long-term incentive plans provide comparable expected value to similar North American
chemical companies.



The NEOs and other executives participate, on a contributory and non-contributory basis, in the retirement plans offered to
NOVA Chemicals' salaried employees. Canadian employees hired prior to January 1, 2000 participate in a registered plan that offers either defined contribution or defined benefit provisions.
Canadian employees hired on or after January 1, 2000 participate only in the defined contribution component of the Canadian plans. U.S. salaried employees who were hired prior to
January 1, 2008 have accrued pension benefits under NOVA Chemicals' U.S. salaried defined benefit plan and participate in the U.S. salaried defined contribution plan.
U.S. salaried employees hired on or after January 1, 2008 participate only in the U.S. defined contribution plan.

NOVA
Chemicals' salaried employees, including the NEOs, may also participate in supplemental executive retirement plans ("SERPs") which are non-registered, unfunded
supplemental retirement plans. The primary purpose of the SERPs is to provide retirement benefits that cannot be paid from registered plans due to tax limits. The SERPs also provide retirement
benefits to NEOs and other key employees who have cross-border or special pension arrangements. In addition, U.S. executives may participate in the U.S. Savings and Profit Sharing
Restoration Plan (the "Restoration Plan"), the purpose of which is to continue defined contributions for executives who exceed legislated maximums.



Non-cash compensation includes employee benefits and perquisites. NOVA Chemicals' non-cash compensation
programs are designed to approximate the median of North American chemical companies and are periodically benchmarked against NOVA Chemicals' comparator group. NEOs do not receive any
non-cash compensation that is different from that received by other executives, other than annual perquisite allowance. In addition, retirement benefits as described under "Supplemental
Executive Retirement Plans and Supplemental Pension Agreements", annual financial and tax planning services and club memberships have been provided to certain NEOs.

Deferred Share Unit Plans

NOVA Chemicals implemented a Key Employee Deferred Share Unit Plan ("Original DSUP") in 1999 as a means to further link the interest of
key employees, specifically members of its former Executive Leadership Team ("ELT") (the ELT consisted of Messrs. Lipton, MacDonald, Mustoe and Pappas, and Ms. Horner) and
directors (see "Compensation of DirectorsDirector Deferred Share Unit Plans") to the interests of shareholders. In 2005, NOVA Chemicals adopted a new Deferred Share Unit Plan for
key employees who are

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United States
taxpayers to comply with the requirements of Section 409A of the Internal Revenue Code (the "Code") ("409A DSUP" and collectively with the Original DSUP, the
"DSUPs"). On the Effective Date, all DSUs were cancelled in exchange for $6.00 per DSU, and the DSUPs were terminated.

Under
the DSUPs, key employees could elect on an annual basis to receive all or a portion of their award under the Incentive Compensation Plan in DSUs economically equivalent to NOVA
Chemicals' Common Shares. The amount of the incentive compensation award that a key employee elected to allocate to the DSUPs was converted to an equivalent number of DSUs based on the market value of
NOVA Chemicals' Common Shares as at a specified time (the average of the closing price for the Common Shares over five consecutive trading days preceding the year end prior to the performance
period). When a dividend was
declared on Common Shares, dividend equivalents were credited to each DSU account based on the number of DSUs in the account on the dividend date, the dividend payment paid to shareholders per Common
Share and the closing price of Common Shares on the dividend payment date.

Summary Compensation Table

The following table sets forth the compensation the Named Executive Officers earned in the fiscal years ended December 31, 2008
and December 31, 2009.

Equity/Share Based
Long-Term Incentive
Compensation(2)

Incentive
Compensation
Awards
(Non-Equity)(5)(6)

Compensatory Changes to
Pension Value(7)Name and Principal Position

Year

Salary(1)
(US$)

Options(3)
(US$)

RSUs(4)
(US$)

Cash
(US$)

DB Value
(US$)

DC Employer
Contributions(8)
(US$)

All Other
Compensation(9)(10)
(US$)

Total
Compensation
(US$)J.M. Lipton(11)


2009


410,959


N/A


6,000,000


410,959


N/A


475,029


132,114


7,429,061Chief Executive Officer


2008


1,250,000


N/A


6,000,000


2,900,000


7,230,000


704,090


445,910


18,530,000C.D. Pappas


2009


694,795
(12)

N/A


2,440,000


625,315


0
(13)

257,610


7,364,382
(14)

11,382,101President and Chief Operating Officer


2008


800,000


N/A


2,440,000


720,000


11,000


201,671


109,288


4,281,959L.A. MacDonald


2009


520,000


N/A


1,040,000


433,778


0
(13)

132,383


3,497,205
(15)

5,623,366Senior Vice President and Chief Financial Officer


2008


520,000


N/A


1,040,000


338,000


0
(13)

139,194


148,935


2,186,129J.S. Mustoe


2009


415,000


N/A


767,750


362,200


0
(13)

96,097


2,361,115
(16)

4,002,161Senior Vice President, Chief Legal Officer,
    and Corporate Secretary


2008


415,000


N/A


767,750


249,000


0
(13)

136,473


92,123


1,660,346M.N. Horner


2009


340,000


N/A


527,000


272,300


0
(13)

87,628


32,222


1,295,150Senior Vice President and Chief Human
    Resources Officer


2008


319,000
(17)

N/A


312,000


206,830


58,000


84,141


69,327


1,049,298R.G. Woelfel(18)


2009


86,164


N/A


N/A


51,700


N/A
(19)

8,091


53,598


199,553Chief Executive Officer


2008


N/A


N/A


N/A


N/A


N/A


N/A


N/A


N/AT.D. Karran(20)


2009


276,167


N/A


189,700


228,400


0
(21)

39,362


243,104
(22)

976,734Senior Vice President, Chief Financial Officer
    and Treasurer


2008


260,865


N/A


180,215


159,300


0
(21)

44,328


21,064


665,773W.G. Greene


2009


312,000


N/A


312,000


216,700


0
(13)

71,774


20,571


933,044Senior Vice President, Operations(23)


2008


312,000


N/A


312,000


165,450


0
(13)

77,126


34,161


900,737


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Notes:



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2008

2009RSUs

US$

RSUs

US$J. M. Lipton


231,596


1,389,576


1,065,720


6,394,320C. D. Pappas


94,183


565,097


433,393


2,600,358L. A. MacDonald


40,144


240,865


184,725


1,108,350J. S. Mustoe


29,635


177,810


136,368


818,208M. N. Horner


12,043


72,260


93,606


561,636T. D. Karran


6,957


41,740


33,695


202,170W.G. Greene


12,043


72,258


55,418


332,508




2008

2009DSUP

Restoration
Plan

DSUP

Restoration
PlanJ. M. Lipton


0%


6%


0%


6%C. D. Pappas


0%


25%


0%


6%L. A. MacDonald


0%


6%


0%


6%J. S. Mustoe


0%


6%


0%


6%M. N. Horner


N/A


8%


0%


8%T. D. Karran


N/A


6%


N/A


6%W.G. Greene


N/A


6%


N/A


6%






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Equity Based Long-Term Incentive Awards and Exercises

As of the Effective Date, the value of all outstanding Options and EAUs was nil, and all Options and EAUs were cancelled pursuant to
the terms of the Arrangement Agreement. All outstanding RSUs were cancelled in exchange for a cash payment of US$6.00.

In
February 2009, the Board decided that notwithstanding the elections made by employees, it was appropriate to award the 2009 equity based long-term incentives as
RSUs. The following grants were made to the NEOs, other than Mr. Woelfel who was not an employee at that time:

RSU AWARDName

Number of Unvested
RSUs

Expected Value on Grant
Date (US$)J.M. Lipton


1,065,720

$
6,000,000C.D. Pappas


433,393

$
2,440,000L.A. MacDonald


184,725

$
1,040,000J.S. Mustoe


136,368

$
767,750M.N. Horner


93,606

$
527,000T.D. Karran


33,695

$
189,700W.G. Greene


55,418

$
312,000


The
table below shows for 2009, (a) the number and value of Options that vested in 2009; (b) the number and value of Options and EAUs cancelled in 2009; and (c) the
number and value of RSUs that vested and were paid in 2009 for each NEO other than Mr. Woelfel who was not a participant in NOVA Chemicals' equity based long-term incentive plans.

Options Vested

Options/EAUs Cancelled

RSUs Vested and PaidName

Number of
Options Vested

Value of Vested
Options(1)

Number of
Options/EAUs
Cancelled

Value Realized(2)

Number of
Vested RSUs

Aggregate Value
Paid (US$)(2)J. M. Lipton


109,875

$
0


2,200,100

$
0


1,499,439

$
8,996,634C. D. Pappas


0

$
0


58,300

$
0


569,685

$
3,418,110L. A. MacDonald


0

$
0


71,500

$
0


259,048

$
1,554,288J. S. Mustoe


0

$
0


135,750

$
0


191,970

$
1,151,820M. N. Horner


0

$
0


26,300

$
0


115,650

$
693,900T. D. Karran


0

$
0


6,900

$
0


46,400

$
278,400W. G. Greene


0

$
0


0

$
0


77,462

$
464,722


Notes: (1)No
EAUs vested in 2009.(2)Values
of cancelled Options/EAUs and RSUs vested and paid have been determined using the Arrangement purchase price of $6.00.


Securities Authorized for Issuance Under Equity Compensation Plan

The only equity compensation plan maintained by NOVA Chemicals pursuant to which equity securities were authorized for issuance was the
Option Plan. The Option Plan was adopted with the approval of holders of Common Shares and authorized a maximum of 13,000,000 Common Shares to be issued. The maximum number of Common Shares
that could be (i) issued to insiders within any one-year period, or (ii) reserved for issuance to insiders at any time, under the Option Plan and any other security based
compensation arrangement, was limited to 10% of the issued and outstanding Common Shares. The total number of Common Shares that could be

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issued
to any one individual under the Option Plan was limited to a maximum of 5% of the issued and outstanding Common Shares. As of the Effective Date, the Option Plan was terminated.

Retirement Plans

Defined Benefit Programs

NOVA Chemicals sponsors defined benefit programs in Canada and the United States both of which have been redesigned and are not
available to new hires. The NEOs, other than Messrs. Lipton, Karran and Woelfel, were hired prior to the redesign of the U.S. defined benefit plan and meet the eligibility requirements
for transition benefits in the United States. These NEOs accrued benefits under the applicable programs in 2009. Pursuant to the Letter Agreement (see "NEO
AgreementsEmployment Contracts"), Mr. Lipton ceased accruing defined benefits as of December 31, 2008. Mr. Karran participates in the U.S. defined benefit plan
but was not eligible for transition benefits. His benefit was frozen as of December 31, 2007. Mr. Woelfel was hired after the U.S. defined benefit plan redesign and does not
participate in NOVA Chemicals' defined benefit programs.



The Canadian defined benefit pension component under NOVA Chemicals' Canadian pension plans for salaried employees provides retirement
income based on the employee's years of service and the average base salary of the highest 36 consecutive months of the employee's final 10 years of service ("Highest Average Earnings")
adjusted to reflect benefits payable under government sponsored plans.

NOVA
Chemicals' Canadian defined benefit pension component provides a benefit formula that is integrated with the Canada Pension Plan. The non-contributory annual benefit is
equal to the sum of (a) plus (b) where:



Average
Maximum Pensionable Earnings is the three year average of the year's maximum pensionable earnings as determined in accordance with theCanada Pension
Plan Act.

Married
retirees receive a 60% joint and survivor pension benefit, and single retirees receive an annuity for life guaranteed for five years after the pension benefits commence. Pension
benefits are indexed, as applicable, after retirement based on a formula of 75% of the increase in the national Canadian consumer price index minus 1% up to a maximum of 5%.

Normal
retirement age under the defined benefit pension component is 65, however, a member can retire with full benefits at age 62. Members may also elect early retirement and receive a
reduced pension if they are between ages 55 and 62.

On
December 31, 1999, NOVA Chemicals introduced a defined contribution pension component to its Canadian pension plans for salaried employees. Employees were permitted to make a
one-time irrevocable election to convert their defined benefits to the defined contribution pension or remain with their defined benefit pension. Messrs. MacDonald and Mustoe, and
Ms. Horner were residents of Canada at that time and elected to remain in the defined benefit pension component. Mr. Karran was also a Canadian resident at that time and elected to
convert his defined benefit to defined contribution pension. All Canadian employees who joined NOVA Chemicals after December 31, 1999 are members of the defined contribution pension component
of the Canadian pension plans for salaried employees (see "Defined Contribution Programs").

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All U.S. salaried employees hired prior to December 31, 2007 participate in a defined benefit pension plan. Effective
December 31, 2007, NOVA Chemicals froze this defined benefit plan
and amended the defined contribution plan (see "Defined Contribution Programs") to provide certain enhancements. Employees who had attained the age of 50 with at least one year of
service as of December 31, 2007 ("Transition Employees") qualify for transition benefits, including earnings escalation for purposes of calculating defined benefits, for up to five years. All
of the NEOs, other than Mr. Karran who did not qualify for transition benefits and Mr. Woelfel who is not eligible to participate in the Corporation's defined benefit programs, were
eligible for these transition benefits.

The
benefit formula for the U.S. defined benefit plan is 1.2% of the Final Average Earnings multiplied by credited service. Final Average Earnings, other than for senior
U.S. executives, is the average of the highest 36 consecutive months of base salary in the 10 years prior to December 31, 2007 or for Transition Employees, the earlier of
December 31, 2012 and the Transition Employee's termination date. The pension benefit for a single retiree is a whole life benefit while a married retiree's benefit is a 100% joint and survivor
benefit. Such benefit is provided by reducing the whole life benefit during the life of the retiree in order to provide 100% of that reduced benefit to the surviving spouse.

Normal
retirement age under the U.S. defined benefit plan is 65, however, a member can retire with full benefits at age 62. Members may also elect early retirement and receive a
reduced pension if they are between the ages of 55 and 62 and have at least five years service.



NOVA Chemicals' defined benefit pension programs are subject to theIncome
Tax Actor the Internal Revenue Code ("IRC") maximum annual benefit accrual limits. NOVA Chemicals has adopted Supplemental Executive Retirement Plans ("SERPs") to
provide supplementary pension payments, computed with reference to the earned pension under NOVA Chemicals' defined benefit pension programs. These supplementary payments are above the maximum annual
benefit accrual permitted by theIncome Tax Actor the IRC and, therefore, are not deductible for income tax purposes by NOVA Chemicals until
paid to the respective executive or employee. The aggregate supplementary pension benefits are generally equivalent to the benefit which would be earned under NOVA Chemicals' pension plans without the
maximum annual benefit accrual limit described above. For senior U.S. executives, including the NEOs, other than Mr. Woelfel who is not eligible to participate in the Corporation's
defined benefit programs, Final Average Earnings are calculated using base salary plus incentive compensation awards under the U.S. SERP. Consistent with the redesign of the U.S. defined
benefit pension plan, the U.S. SERP was frozen as of December 31, 2007 other than for transition benefits, and relocation and special pension arrangements as detailed below.

The
SERPs also provide supplementary pension payments to executives who have relocation or special pension arrangements. Messrs. MacDonald, Mustoe and Greene, and
Ms. Horner relocated from Canada to the U.S. and are entitled to the relocation pension arrangement. Under this arrangement, executives receive the greater of the total of their accrued
benefits under each defined benefit program in which they have participated and the accrued benefit under the defined benefit program from which they retire assuming credited service under that plan
recognizes all of the executive's service with the Corporation.

Mr. Lipton's
employment contract provided that NOVA Chemicals make up any short-fall should the value of retirement benefits provided through NOVA Chemicals and
Mr. Lipton's previous employer be less than the value of pension benefits that Mr. Lipton would have received had he remained with his previous employer until retirement. In addition,
Mr. Lipton's employment contract provided that he receive two years' pensionable service for every year that he served as CEO of NOVA Chemicals. In December 2008, Mr. Lipton
announced his retirement effective May 1, 2009 and in connection with this announcement, the Corporation entered into a letter agreement with Mr. Lipton (the "Letter Agreement")
(for further details, see "NEO AgreementsEmployment Contracts"). Pursuant to the Letter Agreement, Mr. Lipton's pensionable service and earnings were frozen as of
December 31, 2008, and Mr. Lipton elected to receive his pension as a lump sum payment in 2009.

105

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Mr. Pappas'
employment contract provided that NOVA Chemicals would recognize his 22 years of industry service prior to joining NOVA Chemicals for purposes of calculating
his pension benefits.



The following table summarizes the defined benefit pensions as of December 31, 2009 for each NEO, other than
Messrs. Lipton and Woelfel. Pursuant to the Letter Agreement, Mr. Lipton did not accrue pension benefits in 2009. Mr. Lipton elected to receive his defined benefit as a lump sum
payment in 2009. Mr. Karran participates in the U.S. defined benefit programs but his benefits were frozen as of December 31, 2007. Mr. Woelfel does not participate in NOVA
Chemicals' defined benefit programs. The values in the following tables are based on the same actuarial assumptions, methods and measurement dates used by NOVA Chemicals for financial reporting
purposes and do not represent the value of the pension benefit an NEO would receive on retirement.

Years of Credited Service(1)

Final Average
Earnings

Accrued (Projected)
Annual Pension Benefit(2)

Estimated Annual
Pension Benefit at Age 65(3)(4)Name

Under the U.S.
Defined Benefit
Pension Plan (#)

Under the
Canadian
Defined Benefit
Component (#)

U.S.
(US$)

Canada
(US$)

U.S. Defined
Benefit
Pension Plan
(US$)

Canadian
Defined Benefit
Component(10)
(US$)

U.S.
SERP
(US$)

Canadian SERP
(US$)

U.S. Defined
Benefit
Pension Plan
(US$)

Canadian
Defined Benefit
Pension Plan
(US$)

U.S.
SERP
(US$)

Canadian
SERP
(US$)C.D. Pappas


29.5
(5)

N/A


1,378,100


N/A


20,900


N/A


466,900


N/A


20,900


N/A


466,900


N/AL.A. MacDonald(6)(7)


3.2


25.2


927,800


506,700


8,800


53,600


26,500


148,100


8,800


53,600


26,500


148,100J.S. Mustoe(6)(8)


6.3


13.3


772,200


235,400


17,700


28,200


90,600


20,000


17,700


28,200


90,600


20,000M.N. Horner(6)


7.8


14.2


533,800


300,900


21,900


30,200


28,200


35,700


21,900


30,200


28,200


35,700T.D. Karran


4.7


N/A


311,500


N/A


11,800


N/A


33,600


N/A


11,800


N/A


33,600


N/AW.G. Greene(6)


8.3


14.6


496,800


289,700


23,300


31,100


26,300


33,900


23,300


31,100


26,300


33,900


Notes: (1)Years
of credited service is the service used to calculate the defined benefit pension benefit. Service under the U.S. defined benefit programs
includes service while resident in the U.S. prior to December 31, 2007, the date the U.S. defined benefit pension programs were frozen. Credited service under the Canadian defined
benefit component includes service while resident in Canada.(2)These
values represent the single life annuity payable at age 65 for the U.S. programs and a 60% joint and survivor annuity for the Canadian
defined benefit pension component reflecting pay and service as of December 31, 2009 for all NEOs except for Mr. Pappas where the amounts are as of November 13, 2009.(3)Age
62 is the earliest age an individual can receive full retirement benefits.(4)Assuming
each NEO remains with NOVA Chemicals until his normal retirement date reflecting projected service, if applicable, and pay as of
December 31, 2009, other than Messrs. MacDonald and Mustoe both of whom retired on December 31, 2009 and Mr. Pappas who retired November 13, 2009.(5)Mr. Pappas
is credited with 22 years of additional service. Mr. Pappas elected to receive a lump sum payment of his U.S. SERP at
age 55 (see following table).(6)Messrs. Mustoe
and Greene, and Ms. Horner are entitled to receive the greater of: the sum of their Canadian and U.S. pension benefits,
and their U.S. pension benefit assuming all of their service was in the U.S. Mr. MacDonald is entitled to receive the greater of the sum of his Canadian and U.S. pension
benefits and his Canadian benefit assuming all of his service was in Canada.(7)Mr. MacDonald
elected to receive his benefit as a lump sum payment (see following table).(8)Mr. Mustoe
elected to receive his benefit as a lump sum payment (see following table).


106

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The change in the defined benefit pension for each NEO participating in a defined benefit program for 2009 is as follows:

Annual Benefits
Payable ($)





Non-Compensatory
Changes Related to
Financing Costs and
Non-Compensation
Assumption Changes
(US$)(3)

Change in
Obligation
since
Dec. 31,
2008
(US$)Accrued
(Projected)
Obligation
at Dec. 31,
2008 (US$)(2)

Compensatory
Changes Related to
Current Service
Cost and Earnings
Increases (US$)(1)(2)

Accrued
(Projected)
Obligation at
Dec. 31, 2009
(US$)(2)Number
of Years
Credited
Service(1)Name

At Year
End(2)

At Age
65(2)C.D. Pappas(4)(5)


29.5


N/A
(6)

487,800


4,247,000


(710,000)
(7)

88,000


(622,000
)

3,625,000L.A. MacDonald(5)


28.4


212,800
(8)

237,000


2,984,000


(42,000)
(7)

548,000


506,000


3,490,000J.S. Mustoe(5)


19.6


156,500


156,500


2,014,000


(51,000)
(7)

401,000


350,000


2,364,000M.N. Horner


22.0


N/A
(6)

116,000


824,000


(1,000)
(7)

384,000


383,000


1,207,000T.D. Karran


4.7


N/A
(6)

45,400


192,000


0


58,000


58,000


250,000W.G. Greene


22.9


104,000
(8)

114,600


931,000


(18,000)
(7)

348,000


330,000


1,261,000


Notes: (1)Years
of credited service is the service used to calculate the defined pension benefit. Service under the U.S. defined benefit pension programs was
frozen as of December 31, 2007. Years of credited service under the Canadian defined benefit pension component represents credited service as of date of transfer to the U.S.(2)These
values are based on the same actuarial assumptions, methods and measurement date used by NOVA Chemicals for financial statement reporting purposes
which may be different than the assumptions used to calculate pension benefits payable to an NEO. The values reflect service as of the measurement date and future increases in salaries, as applicable.
These values do not represent the value of the pension benefit that an NEO would receive on retirement.(3)Reflects
the impact of interest on prior year's obligations, changes in discount rates used to measure the obligations and the impact of assumption and
employee demographic changes.(4)Mr. Pappas
left employment on November 13, 2009. His benefit was frozen at that time.(5)Messrs. Pappas,
MacDonald and Mustoe elected to receive their benefit as a lump sum payment.(6)Messrs. Pappas
and Karran, and Ms. Horner, none of whom were early retirement eligible, were not eligible to receive an annual benefit as at
December 31, 2009.(7)The
assumptions used to calculate pension values for accounting purposes assume future salary increases. These NEOs did not receive a salary increase in
2009. Messrs. Pappas, MacDonald and Mustoe left employment in 2009 which negatively impacted the future salary increase assumption.(8)These
values represent Messrs. MacDonald and Greene's early retirement annuity immediately payable as at December 31, 2009.(9)The
key actuarial assumptions used in calculating these values are as follows:


U.S. Defined Benefit Programs

December 31, 2008

December 31, 2009Discount Rate

5.50%

4.70%Salary Increase

4.50%

4.50%Percent Electing a Lump Sum

100%

100%Lump sum interest rate    Other NEOs

    5.50%

    4.70%Mortality    Other NEOs

    IRS Prescribed Table for 2009 Lump Sum Distributions

    IRS Prescribed Table for 2010 Lump Sum DistributionsRetirement    Other NEOs

    Age-related table with an average retirement age of 63

    Age-related table with an average retirement age of 63


Canadian Defined Benefit Programs

December 31, 2008

December 31, 2009Discount Rate

6.60%

5.80%Salary Increase

4.00%

4.00%Indexing

0.50%

0.50%


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Table of Contents

Canadian Defined Benefit Programs

December 31, 2008

December 31, 2009Escalation of ITA Maximum Pension for Registered Plan

$2,444 in 2009 per year of service, escalating 2.75% thereafter

$2,444 in 2009 per year of service, escalating 2.75% thereafterMortality

UP 1994 projected to 2020 using Scale AA

UP 1994 projected to 2020 using Scale AAPercent of Retiring Members Electing a Lump Sum

25%

Eastern Region Plan20%
Western Region Plan40%Retirement

Age-related table with an average retirement age of 62

Age-related table with an average retirement age of 62


The
method used to determine estimated pension benefits may not be identical to the method used by other companies. Therefore, the estimated pension benefits may not be directly
comparable to other companies' estimated pension benefits.

Defined Contribution Programs

NOVA Chemicals sponsors defined contribution programs in Canada and the United States.



Canadian employees who joined NOVA Chemicals after December 31, 1999, and employees who elected to convert their defined
benefits to the defined contribution component of the Canadian pension plans as explained above, participate in the Canadian defined contribution program.
NOVA Chemicals contributes 6% of a Canadian employee's base salary to a defined contribution account and the employee may elect to make voluntary contributions. Contributions are locked in until the
employee terminates from NOVA Chemicals. Mr. Karran was an active participant until he relocated to the U.S. in 2000. He continues to maintain an account in the Canadian program.



The U.S. Savings and Profit Sharing Plan (the "U.S. Savings Plan") was redesigned when the U.S. defined
benefit pension plan was frozen. Effective January 1, 2008, NOVA Chemicals makes contributions to each U.S. employee's account of 3% of total pay and matching contributions of up to 6%
of total pay for total Corporation contribution of up to 9% of total pay. Transition Employees receive, until the earlier of December 31, 2012 and the Transition Employee's termination date, an
additional transition contribution of 5% of total pay. Total pay includes base salary, incentive compensation awards, profit sharing, shift differential and overtime. In addition, employees may make
voluntary employee contributions to the plan. All of the NEOs participate in the U.S. Savings Plan.



NOVA Chemicals' defined contribution programs are also subject to maximum annual contributions under theIncome
Tax Actand the IRC. NOVA Chemicals has adopted a SERP in Canada and the Restoration Plan to provide a mechanism to continue defined contributions for employees who
exceed the legislated maximums.

The
Canadian SERP provides a notional account for contributions or conversion amounts that exceed the legislated maximums. The accounts are credited with earnings equivalent to the
earnings of the balanced fund that is offered as an investment under the Canadian defined contribution program. Mr. Karran has a notional defined contribution account under the
Canadian SERP.

108

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Table of Contents

In the U.S., when total pay of an executive, including the NEOs, exceeds the legislated maximum, excess Corporation contributions are made to the Restoration
Plan. In addition, participants may elect, prior to each performance year, to make voluntary employee contributions to the Restoration Plan of their base salary, incentive compensation award and
profit sharing. If an employee elects to make voluntary contributions, Corporation matching contributions are made to the Restoration Plan after total pay exceeds the Internal Revenue Code maximums.
All of the NEOs, other than Mr. Woelfel, participated in the Restoration Plan in 2009.



The following table summarizes each NEO's defined contribution account for 2009:

COMPENSATORY

NON-COMPENSATORYAccount Balance
Jan. 1, 2009

2009 Corporation Contributions(1)

2009 Employee Contributions

2009 Investment Earnings

Account Balance
Dec. 31, 2009Savings
Plan
(US$)

Restoration
Plan /
Canadian
SERP (US$)

Savings
Plan(1)(2)
(US$)

Restoration
Plan /
Canadian
SERP (US$)

Savings
Plan
(US$)

Restoration
Plan /
Canadian
SERP (US$)

Savings
Plan
(US$)

Restoration
Plan /
Canadian
SERP (US$)

Savings
Plan
(US$)

Restoration
Plan /
Canadian
SERP (US$)J.M. Lipton


58,121


314,721


34,300


440,729


22,000


201,115


76,023


10,295



(2)


(2)C.D. Pappas


97,262


249,596


34,300


223,310


22,000


223,692


93,908


243,517



(3)


(3)L.A. MacDonald


67,584


140,837


36,053


96,330


22,000


40,800


33,955


51,259


159,592


329,226J.S. Mustoe


270,133


132,572


34,300


61,797


22,000


39,744


95,269


60,353


421,702


294,465M.N. Horner


98,588


68,618


34,300


53,328


22,000


43,957


42,689


27,860


197,577


193,763R.G. Woelfel








8,091





19,885





(106
)




27,870


T.D. Karran


162,097


32,422


22,050


17,313


16,500


26,149


66,441


22,160


267,088


98,043W.G. Greene


87,264


41,179


34,300


37,474


20,450


28,647


44,921


65,492


186,935


172,791


Notes: (1)Includes
NOVA Chemicals contributions: 3% basic contributions, 5% transition contributions, if applicable, and up to 6% matching contributions for
all NEOs.(2)Mr. Lipton
received a distribution of his accounts in 2009.(3)Mr. Pappas
received a distribution of his accounts in 2009.


NEO Agreements

Change of Control Agreements

NOVA Chemicals entered into Key Employee Termination Benefit Agreements (which we also refer to as the "COC Agreements") with
executives, including Messrs. Pappas, MacDonald, Mustoe and Greene, and Ms. Horner, to induce them to remain with NOVA Chemicals in the event of a change of control. The Arrangement
constituted a change of control and the COC Agreements became effective on the Effective Date. The COC Agreements provide that on the termination without cause or constructive dismissal of such NEO
within three years following the change of control, the NEO is entitled to receive a lump sum severance payment (based on base salary, incentive compensation and other compensation) and continuation
of certain benefits during the severance period, which is 30 months for Messrs. Pappas, MacDonald, Mustoe and Ms. Horner, and 21 months for Mr. Greene. The COC
Agreements for Messrs. Pappas, MacDonald and Mustoe, and Ms. Horner, provide for a tax equalization payment in the event the executive is subject to the change of control golden
parachute excise tax, except that in the event that the value of the payments to the executive do not exceed 110% of the maximum amount payable without triggering the excise tax, the payments are
reduced to the maximum amount that can be paid without triggering the tax. The COC Agreements for Messrs. Pappas, MacDonald and Mustoe, and Ms. Horner also provide that they may
terminate their employment within 30 days following the first anniversary of a change of control in order to receive the severance benefits. In addition, Ms. Horner is entitled to
relocation costs to Calgary or equivalent location as set out in NOVA Chemicals'

109

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Table of Contents

Relocation
Guidelines, and Mr. Greene is entitled to receive $100,000 upon termination of employment. Messrs. Pappas, MacDonald and Mustoe's employment was terminated in 2009 and each of
these individuals received severance payments pursuant to their COC Agreements (see "Summary Compensation Table" and "Payments on Separation from Service").

Employment Contracts

NOVA Chemicals and its subsidiaries have entered into employment contracts with certain NOVA Chemicals' executives, including
Messrs. Woelfel and Karran. The employment contracts provide for a three year term of service for Mr. Woelfel and an indefinite term of service for Mr. Karran.

In
the event of termination of Messrs. Woelfel or Karran's employment other than for cause (as defined in the employment contract), resignation or retirement, each is
entitled to be paid a lump sum payment, conditional upon his execution and delivery of a release. For both of these individuals, these lump sum payments are based on: a) base salary in effect
at the time of termination; b) Incentive Compensation Plan award calculated at target; c) Savings Plan contributions; and d) perquisite allowance. This lump sum amount equals six
months for Mr. Woelfel if he is terminated prior to December 31, 2010, and 12 months if he is terminated after December 31, 2010 and prior to December 31, 2012; and
18 months for Mr. Karran. Mr. Woelfel's employment agreement requires Mr. Woelfel to relocate to Calgary, Alberta on or before December 31, 2010. When he relocates,
Mr. Woelfel is entitled to relocation costs, other than housing guarantee, as set out in NOVA Chemicals' Relocation Guidelines. Mr. Karran's employment agreement stipulates that
Mr. Karran will relocate to Calgary, Alberta at which time he will be entitled to relocation costs as set out in NOVA Chemicals' Relocation Guidelines. In addition, both NEOs are entitled to
continued medical, dental and life insurance coverage, financial counseling and outplacement support if they are terminated without cause.

Each
NEO has also agreed not to disclose or use for his or her own benefit confidential information, except as necessary to perform his or her duties to NOVA Chemicals or as required by
law. Also, during his or her employment with NOVA Chemicals, no NEO may engage in or render services to a competing business and for a one year period after termination of employment, no NEO may
solicit customers, suppliers or employees to terminate their relationship with NOVA Chemicals.

On
December 5, 2008, NOVA Chemicals entered into the Letter Agreement with Mr. Lipton addressing various compensation and other matters in connection with
Mr. Lipton's retirement from active service with NOVA Chemicals. Pursuant to the Letter Agreement, Mr. Lipton continued to serve on the Board of Directors until the 2009 Annual and
Special Meeting of the Shareholders and retired from employment and resigned from all other positions with NOVA Chemicals on May 1, 2009.

The
Letter Agreement provided for an annual incentive compensation payment for 2008 equal to 232% of target under NOVA Chemicals' Incentive Compensation Plan and provided that
Mr. Lipton would be eligible to receive a pro-rata incentive compensation award for 2009, with an annualized target level of 100% of Mr. Lipton's base salary. The Letter
Agreement also provided for the standard 2009 equity based long-term incentive grant with a grant date value of 480% of Mr. Lipton's annual base salary. In addition,
Mr. Lipton ceased to participate in NOVA Chemicals' qualified and supplemental pension arrangements, and his rights thereunder were converted into the right to receive two payments, on
February 16, 2009 and May 1, 2009, of his accrued supplemental pension benefits as of December 31, 2008.

Payments on Separation of Service

The following tables set forth the circumstances that trigger payments or provision of benefits under the NEO Agreements and the
estimated value of the payments assuming the triggering event occurred on December 31, 2009.

Mr. Lipton
retired on May 1, 2009 pursuant to his Letter Agreement. He was not entitled to any severance amount on his retirement. Mr. Pappas' employment terminated
on November 13, 2009, and Messrs. MacDonald and Mustoe's employment terminated December 31, 2009 pursuant to their COC Agreements. Ms. Horner and Mr. Greene are the
only NEOs with a COC Agreement as of December 31, 2009.

110

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Table of Contents

For
Messrs. Pappas, MacDonald and Mustoe, who terminated from NOVA Chemicals in 2009 pursuant to their COC Agreements, only the value of their payments following change of control
are disclosed.

SEVERANCE AMOUNTC.D. Pappas

Severance
Period (#
of months)

Base
Salary
(US$)

Incentive
Compensation
Amount (US$)

Other
Employee
Benefits
(US$)(1)

Additional Lump
Sum Value of
Pension (US$)(2)

Excise Tax
Payment
(US$)

Total
Incremental
Obligation
(US$)Termination Following Change of Control


30


2,000,000


1,656,792


661,318


2,987,768


0


7,305,878




SEVERANCE AMOUNTL.A. MacDonald

Severance
Period (#
of months)

Base
Salary
(US$)

Incentive
Compensation
Amount (US$)

Other
Employee
Benefits
(US$)(1)

Additional Lump
Sum Value of
Pension (US$)(2)

Excise Tax
Payment
(US$)(3)

Total
Incremental
Obligation
(US$)Termination Following Change of Control


30


1,300,000


1,084,446


468,531


607,300


0


3,460,277




SEVERANCE AMOUNTJ.S. Mustoe

Severance
Period (#
of months)

Base
Salary
(US$)

Incentive
Compensation
Amount (US$)

Other
Employee
Benefits
(US$)(1)

Additional Lump
Sum Value of
Pension (US$)(2)

Excise Tax
Payment
(US$)(3)

Total
Incremental
Obligation
(US$)Termination Following Change of Control


30


1,037,500


905,500


364,346





0


2,307,346




SEVERANCE AMOUNTM.N. Horner

Severance
Period (#
of months)

Base
Salary
(US$)

Incentive
Compensation
Amount (US$)

Other
Employee
Benefits
(US$)(1)

Additional Lump
Sum Value of
Pension (US$)(2)

Excise Tax
Payment
(US$)(3)

Total
Incremental
Obligation
(US$)Retirement


N/A


N/A


N/A


N/A


N/A


N/A


0Resignation


N/A


N/A


N/A


N/A


N/A


N/A


0Involuntary Termination without Cause


30


850,000


547,793


242,802


69,100


N/A


1,709,694Involuntary Termination for Cause


N/A


N/A


N/A


N/A


N/A


N/A


0Termination Following Change of Control(4)


30


850,000


547,793


242,802


69,100


0


1,709,694


SEVERANCE AMOUNTR.G. Woelfel(5)

Severance
Period (#
of months)

Base
Salary
(US$)

Incentive
Compensation
Amount (US$)

Other
Employee
Benefits
(US$)(1)

Additional Lump
Sum Value of
Pension (US$)(2)

Excise Tax
Payment
(US$)

Total
Incremental
Obligation
(US$)Retirement


N/A


N/A


N/A


N/A


N/A


N/A


0Resignation


N/A


N/A


N/A


N/A


N/A


N/A


0Involuntary Termination without Cause


6
12


212,500
425,000


127,500
255,000


46,237
92,474


N/A
N/A


N/A
N/A


386,237
772,474Involuntary Termination for Cause


N/A


N/A


N/A


N/A


N/A


N/A


0Termination Following Change of Control


6
12


212,500
425,000


127,500
255,000


46,237
92,474


N/A
N/A


0
0


386,237
772,474


111

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Table of Contents



SEVERANCE AMOUNTT.D. Karran

Severance
Period (#
of months)

Base
Salary
(US$)

Incentive
Compensation
Amount (US$)

Other
Employee
Benefits
(US$)(1)

Additional Lump
Sum Value of
Pension (US$)(2)

Excise Tax
Payment
(US$)

Total
Incremental
Obligation
(US$)Retirement


N/A


N/A


N/A


N/A


N/A


N/A


0Resignation


N/A


N/A


N/A


N/A


N/A


N/A


0Involuntary Termination without Cause


18


468,000


234,000


150,206


13,860


N/A


866,066Involuntary Termination for Cause


N/A


N/A


N/A


N/A


N/A


N/A


0Termination Following Change of Control


18


468,000


234,000


150,206


13,860


0


866,066


SEVERANCE AMOUNTW.G. Greene

Severance
Period (#
of months)

Base
Salary
(US$)

Incentive
Compensation
Amount (US$)

Other
Employee
Benefits
(US$)(1)

Additional Lump
Sum Value of
Pension (US$)(2)

Excise Tax
Payment
(US$)

Total
Incremental
Obligation
(US$)Retirement


N/A


N/A


N/A


N/A


N/A


N/A


0Resignation


N/A


N/A


N/A


N/A


N/A


N/A


0Involuntary Termination without Cause


21


546,000


339,180


184,366


190,083


N/A


1,259,629Involuntary Termination for Cause


N/A


N/A


N/A


N/A


N/A


N/A


0Termination Following Change of Control(4)


21


546,000


339,180


184,366


190,083


0


1,259,629


Notes: (1)NOVA
Chemicals pays annual premiums for post-retirement benefits up to an annual maximum of $6,000 for single retirees and $12,000 for married
retirees for U.S. employees hired prior to January 1, 2008, who are age 55 or older with five years service at the time of separation.(2)Does
not include pension values accrued under the Retirement Planssee "Retirement PlansDefined Benefit Pension Obligations".(3)Messrs. Pappas,
MacDonald and Mustoe, and Ms. Horner's COC Agreements provide that NOVA Chemicals will reimburse these executives amounts owed
under Section 280G of the IRC due to excess "parachute" payments.(4)Ms. Horner
and Mr. Greene's termination of employment is governed by their COC Agreements until July, 2012.(5)Mr. Woelfel's
employment contract provides that he is entitled to 6 months severance if he is involuntarily terminated without cause or
constructively dismissed on or before December 31, 2010, and 12 months severance if he is involuntary terminated or constructively dismissed between January 1, 2011 and
December 31, 2012.


COMPENSATION OF DIRECTORS

Directors who are not full time employees of NOVA Chemicals receive compensation for their service as directors. Prior to the Effective
Date, NOVA Chemicals compensated directors according to the same philosophy used to compensate senior management (See "Executive CompensationCompensation Discussion and Analysis").
An annual survey was conducted to determine the median compensation for directors in similar companies in the North American chemical industry and NOVA Chemicals' total compensation for directors was
targeted at the median value of those companies' total compensation. Total compensation was delivered in approximately equal proportions between cash and equity based awards. After the Effective Date,
the Corporation decided that non-employee director compensation would be comprised of: (i) an annual retainer; (ii) annual committee membership retainer; and
(iii) annual committee chair retainer.

Prior
to the Effective Date, the total compensation for non-employee directors included an annual retainer; an additional retainer for chairs of Board committees and Audit
Committee (formerly the Audit, Finance and Risk Committee) members; and equity based awards. Non-employee directors could elect to receive their equity based awards as Options, EAUs or
RSUs. Options entitled non-employee directors to purchase Common Shares

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at
a price equal to the closing trading price for Common Shares on the TSX or the NYSE on the day on which the Options were granted. EAUs and RSUs allowed non-employee directors to benefit
from appreciation in the price of Common Shares. Upon redemption of an EAU, a non-employee director was paid, in cash, less applicable withholdings, the difference between the closing
prices of the Common Shares on the NYSE on the date of redemption and the date of grant. RSUs were valued using the closing price of the Common Shares on the TSX or the NYSE on the vesting date
(generally the third anniversary of the grant date) and paid in cash, less applicable withholdings, by the end of the year in which they vested (See "Executive
CompensationLong-Term Incentive Plans" for additional information on equity based awards).

Non-employee
directors who were on the Board prior to the Effective Date received the following compensation and equity based awards during 2009:

Fees Earned(1)

Equity Based
AwardsName

Annual Retainer
(US$)

Committee Chair
Retainer (US$)

AFR Additional
Retainer (US$)

RSUs (US$)(2)

All Other
Compensation(3)
(US$)

Total
(US$)J.A. Blumberg


45,217


5,652





80,000


7,615
(4)

138,484F.P. Boer


45,217


5,652





80,000


8,723
(4)

139,592J. Bougie


45,217





3,674


80,000


1,792


130,684L. Brlas


45,217





3,674


80,000


93


128,985J.V. Creighton


45,217








80,000


944


126,162R.E. Dineen


45,217





3,674


80,000


529


129,421C.W. Fischer


45,217








93,334
(5)

0


138,551L.Y. Fortier(6)


26,667








80,000


1,906


108,573K.L. Hawkins


45,217


7,065





80,000


1,539


133,822A.M. Ludwick


45,217





3,674


80,000


1,750


130,642J.M. Stanford(7)


107,391








110,000


15,689
(8)

233,081


Notes: (1)These
directors resigned as of the Effective Date. Fees were pro-rated for the period in 2009 that they were directors.(2)RSUs
were granted in February, 2009 and vested on the Effective Date.(3)Includes
RSU and DSU dividend equivalents (See "Director Deferred Share Unit Plans").(4)Mr. Blumberg
and Dr. Boer were members of the Technical Advisory Committee ("TAC") and were paid a fee of US$7,000 for each meeting attended.
In 2009, one TAC meeting was held. Mr. Blumberg and Dr. Boer both attended the meeting.(5)Mr. Fischer
joined the Board on November 13, 2008 but was not awarded equity based compensation in 2008. Includes RSUs valued at $13,334
representing equity based compensation pro-rated for the period in 2008 that Mr. Fischer was a director.(6)Mr. Fortier
retired from the Board on April 14, 2009. His annual retainer was pro-rated for the period in 2009 that he was
a director.(7)Mr. Stanford
was Chairman of the Board until the Effective Date. Mr. Stanford was not paid an additional retainer fee for chairing the
Corporate Governance Committee during 2009.(8)Mr. Stanford
was reimbursed US$14,235.47 for the cost of office and support services attributable to NOVA Chemicals.


As of the Effective Date, non-employee directors, other than the Chairman of the Board, are paid an annual retainer of $175,000. The
Chairman of the Board is paid an annual retainer of $350,000. Committee members who are not the Chair of the Committee receive an additional $50,000 retainer. Committee Chairs

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receive
an additional $80,000 retainer. The compensation for non-employee directors who were appointed to the Board on or after the Effective Date is as follows:

Name

Annual Retainer
Fee (US$)

Annual Committee
Retainer Fee (US$)

Annual Committee
Chair Fee (US$)

Total
(US$)Mohamed Al Mehairi(1)


175,000


50,000


80,000


305,000Philip J. Brown


175,000








175,000David C. Davies(2)


175,000


50,000


80,000


305,000Mark Garrett


175,000








175,000Gerhard Roiss(3)


350,000


100,000





450,000Georg F. Thoma(4)


175,000


100,000





275,000


Notes: (1)Mr. Al
Mehairi is a member of the Audit Committee and Chair of the Remuneration Committee.(2)Mr. Davies
is a member of the Remuneration Committee and Chair of the Audit Committee.(3)Dr. Roiss
is Chairman of the Board, and a member of the Audit and Remuneration Committees.(4)Mr. Thoma
is a member of the Audit and Remuneration Committees.


Director Share Purchase Plan

Prior to the Effective Date, non-employee directors were eligible to participate in the Director Share Purchase Plan under
which each participating director could elect to have some or all of his or her director fees paid to a custodian at the end of each calendar quarter. The custodian used the funds to purchase Common
Shares in the open market on behalf of the participating director. The Director Share Purchase Plan was terminated as of the Effective Date of the Arrangement.

Director Deferred Share Unit Plans

Prior to the Effective Date, non-employee directors were also eligible to participate in the Director Deferred Share Unit
Plans (the "Director DSUP"). Under the Director DSUP, non-employee directors could elect, on an annual basis, to receive all or a portion of director fees for the upcoming year in
DSUs economically equivalent to the Common Share value. The amount of the fees that a director elected to defer into a Director DSUP was converted to an equivalent number of DSUs based on the market
value of Common Shares at a specified time (the average of the closing price for the Common Shares over the five consecutive trading days preceding the end of each fiscal quarter in which the
fees were earned). When a dividend was declared on Common Shares, the value of the dividend was added, as full or part units, to a director's DSU account. DSUs were not Common Shares and did not carry
rights of Common Shares.

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A
non-employee director held DSUs until he or she was no longer a director of NOVA Chemicals. Pursuant to the terms of the Arrangement Agreement, all DSUs were valued at
$6.00, the purchase price under the Arrangement Agreement, and paid on the Effective Date. The value received by each director was as follows:

Number of DSUs

Value of DSUs
(US$)J.A. Blumberg


3,961


23,766F.P. Boer


29,387


176,322J. Bougie


24,993


149,598J.V. Creighton


8,646


51,876K.L. Hawkins


27,173


163,038A.M. Ludwick


37,246


223,476J.M. Stanford


33,820


202,920


Notes: (1)Ms. Brlas,
and Messrs. Dineen and Fischer did not participate in the Director DSUPs.(2)Mr. Fortier
retired on April 14, 2009 at which time he held 27,457 DSUs. His DSUs were redeemed and he received Cdn.$196,264, based on
an average closing price of the Common Shares on the five consecutive trading days prior to his retirement date.


Non-Employee Director Equity Based Awards

As of the Effective Date, the value of all outstanding Options and EAUs was nil, and all Options and EAUs were cancelled pursuant to
the Arrangement Agreement. All outstanding RSUs were cancelled in exchange for cash payment of $6.00 per RSU.

The
table below shows as of the Effective Date, (a) the number and value of Options that vested in 2009; (b) the number and value of Options and EAUs cancelled in 2009; and
(c) the number and value of RSUs that vested and were paid in 2009.

Options Vested

Options/EAUs Cancelled

RSUs Vested and PaidName

Number of
Options Vested

Value of
Options Vested
(US$)

Number of
Options/EAUs
Cancelled

Value of
Options/EAUs
Cancelled (US$)

Number of
Vested RSUs

Value Paid
(US$)J.A. Blumberg


0

$
0


24,350

$
0


19,931


119,586F.P. Boer


0

$
0


27,250

$
0


17,071


102,426J. Bougie


0

$
0


7,000

$
0


19,930


119,580L. Brlas


0

$
0


0

$
0


15,434


92,604J.V. Creighton


0

$
0


10,000

$
0


19,931


119,586R.E. Dineen


0

$
0


22,550

$
0


19,931


119,586C. Fischer


0

$
0


0

$
0


16,578


99,468K.L. Hawkins


0

$
0


30,100

$
0


16,842


101,052A.M. Ludwick


0

$
0


24,000

$
0


17,298


103,788J.M. Stanford


0

$
0


33,950

$
0


23,786


142,716


Notes: (1)No
EAUs vested in 2009.(2)Values
of cancelled Options/EAUs and RSUs vested and paid have been determined using the Arrangement purchase price of S$6.00.(3)Mr. Fortier,
who retired from the Board prior to the Effective Date, held 19,931 RSUs on the Effective Date and received $119,586 in July,
2009 ($6.00 per RSU).


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At December 31, 2009, there were no outstanding Options, EAUs or RSUs held by any directors.

Indebtedness of Directors and Executives

As at March 11, 2010 and during fiscal 2009, none of the current or former directors and executives of NOVA Chemicals or any
associate of any such director or executive was indebted to NOVA Chemicals.

6.C. BOARD PRACTICES



The Board of Directors currently consists of seven members. Directors are elected annually serve until their successors are appointed
or they resign, unless their office is earlier vacated in accordance with the by-laws of the Corporation or with the provisions of the Business Corporations Act (New Brunswick).
Each of the directors has served in his respective capacity since his election; see the tables above in Item 6.A. for the period during which each director and member of senior management has
served in that office.



There are no director service contracts between us and our directors providing for benefits upon termination of employment, other than
an employment agreement with Randy G. Woelfel.



The Board has established two standing committees (the "Committees") and has delegated certain of its responsibilities to each
of the Committees. In this regard, each Committee has been mandated to perform certain advisory functions, and to make recommendations and report to the Board. The two standing committees of the Board
are the Audit Committee and the Remuneration Committee. Effective November 10, 2009, the Public Policy and Responsible Care Committee of the Board of Directors and the Corporate Governance
Committee of the Board of Directors were dissolved, with the responsibilities of such committees reassigned to the full board of directors.

Each
of the Committees has the authority to retain outside advisors to assist in the discharge of its respective responsibilities. Each of the Committees reviews its respective charter
at least annually and, as required, recommends changes to the Board. Each of the Committees has a charter; a brief summary of the Committee charters follows, together with current Committee
membership.



Chairman:
David Davies
Vice Chairman: Mohamed Al Mehairi
Other Members: Gerhard Roiss, Georg Thoma

The
Audit Committee of the Board (formerly known as the Audit, Finance and Risk Committee) reviews and inquires into matters affecting our financial reporting, our system of internal
accounting and financial controls and procedures and our financial audit procedures and plans; oversees the policies and practices relating to corporate compliance and risk management strategies;
recommends to the Board the appointment and remuneration of the external auditors and reviews with management the mandate and appointment of internal auditors; oversees the funding, administration and
investment of the trust funds associated with our retirement plans; and reviews with management and reports to the Board of Directors on our financing plans and objectives.

The
Board approves, on the recommendation of the Audit Committee, all fees paid to the external auditors in respect of audit services. In addition, in accordance with applicable rules
regarding audit committees, the Audit Committee reviews and approves (in advance) the scope and related fees for all non-audit services that are to be provided by the external
auditors. In doing so, the Audit Committee considers whether the provision of these non-audit services may impact the objectivity and independence of the external auditor.

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All
members of the Audit Committee are financially literate, and Mr. Davies is an audit committee financial expert as defined by the U.S. Securities and Exchange Commission
("SEC") rules.



Chairman:
Mohamed Al Mehairi
Vice Chairman: David Davies
Other Members: Gerhard Roiss, Georg Thoma

The
Remuneration Committee of the Board (formerly known as the Human Resources Committee) is responsible for overseeing our policies and practices with respect to human resources. In
this regard, the Remuneration Committee reviews recommendations for the appointment of persons to senior executive positions, and considers terms of employment including succession planning and
matters of compensation. This Committee recommends to the Board the goals and objectives used to determine executive leadership compensation, and evaluates the NOVA Management Board's performance. For
additional information relating to the compensation of our senior executives in 2009, see "Item 6.B. Compensation".

6.D. EMPLOYEES

As of December 31, 2009, we employed approximately 2,500 full-time employees globally.

Collective
bargaining agreements with various unions, covering approximately 350, or 14%, of the approximately 2,475 North American employees, are in place at certain plants
located in Ontario and Pennsylvania. A collective bargaining agreement involving approximately 225 employees at our olefins plant in Corunna, Ontario was re-negotiated in 2007 with
an expiration date of March 31, 2010. We expect to renew the Corunna contract through collective bargaining. A collective bargaining agreement involving approximately 128 employees at
the polystyrene plant at the Beaver Valley site in Monaca, Pennsylvania was re-negotiated in 2009 with an expiration date of March 15, 2012. We engage in continuous dialogue with
the unions to address current issues and proactively address potential bargaining items.

We
provide medical, health, life insurance, retirement plans and other benefits to our employees, which are comparable with other companies in the chemical industry where our operations
are located.

6.E. SHARE OWNERSHIP

IPIC's subsidiary, NOVA Chemicals Holding GmbH, holds all of our issued and outstanding Common Shares, which are our only
class of shares issued and outstanding.

Item 7.    Major Shareholders and Related Party Transactions

7.A. MAJOR SHAREHOLDERS

IPIC's subsidiary, NOVA Chemicals Holding GmbH, holds all of our issued and outstanding Common Shares.

IPIC,
OMV and Borealis entered into an the AiP in August 2009 to define our future corporate governance structure, including the composition of our Board of Directors and the
creation of an Owners' Committee that will consist of four memberstwo nominated by IPIC and two nominated by OMV. Pursuant to the terms of the AiP, the four members of the Owners'
Committee shall also be members of our Board and, in each such capacity, will effectively control, to the extent permitted by law, matters to be determined by our Board of Directors and shareholders.
Through this arrangement, OMV will share control of our company with IPIC.

The
AiP contemplates that Borealis will acquire from IPIC 24.9% of our share capital pursuant to a share purchase agreement still to be negotiated between IPIC and Borealis. The AiP
received the antitrust clearance of the European Commission on October 27, 2009.

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7.B. RELATED PARTY TRANSACTIONS

Transaction Agreements

Prior to July 6, 2009, IPIC provided us with $350 million of interim debt financing that was converted into common equity
at the closing of the IPIC Transaction. Related accrued interest and fees totaling $17 million ($12 million after-tax) on the interim debt financing were forgiven by IPIC and
reclassified to Contributed surplus. We removed the balance in Common Shares of $508 million as of July 6, 2009, before push-down adjustments, and recorded the cash paid by
IPIC to acquire all of our issued and outstanding Common Shares for $499 million.

Our Agreements with Executive Officers

For a description of the change of control agreements and employment agreements with the NEOs, see
"Item 6.B. CompensationNEO Agreements".

Directors' and Officers' Insurance

We maintain directors' and officers' liability insurance with policy limits of $150 million in the aggregate, subject to a
deductible in respect of corporate reimbursement of Cdn$1 million for each loss. We are generally to be reimbursed for payments made under corporate indemnity provisions on behalf of our
directors and officers, and individual directors and officers (or their heirs and legal representatives) are generally covered for losses arising during the performance of their duties for
which they are not indemnified by us. Major exclusions from coverage include claims arising from illegal acts, those acts which result in illegal personal profit, violation of any fiduciary duty under
the U.S. Employee Retirement Income Security Act of 1974, pollution damage (except for resultant shareholder actions) and claims brought by a director or officer against another of our
directors or officers or by us against one of our directors or officers, except for derivative actions.

Effective
as of the closing of the IPIC acquisition ("IPIC Closing"), we obtained and fully paid the premium for the extension of the directors and officers' insurance policies for a
claims reporting or run-off and extended reporting period of seven years from and after the IPIC Closing with respect to any claim related to any period or time at or prior to the IPIC
Closing, and with terms, conditions, retentions and limits of liability that were no less advantageous to each present and former director, officer, trustee and employee of the company and our
subsidiaries than the coverage provided under our existing policies prior to the IPIC Closing (which terms are consistent with our current policy described above) with respect to any actual or alleged
error, misstatement, misleading statement, act, omission, neglect, breach of duty or any matter claimed against a director, officer or employee of the company or any of our subsidiaries by reason of
him or her serving in such capacity that existed or occurred at or prior to the IPIC Closing (including in connection with the approval or completion of the IPIC Transaction.

Director Indemnity Agreements

Prior to the IPIC Transaction, we entered into indemnity agreements with our former directors containing provisions that may require us
to, among other things, indemnify such directors against certain liabilities that may arise by reason of their status or service as our former directors, to obtain the approval of a court, if
required, to meet such indemnity obligations, to reimburse such directors for related taxes and duties, and to advance their expenses incurred as a result of any proceeding against them as to which
they could be indemnified, provided that any expenses advanced not actually required shall be repaid. The right to indemnification will only apply where the director acted honestly and in good faith
with a view to the best interest of the entity that he served and, in the case of a criminal or administrative action, had reasonable grounds for believing that his conduct was lawful. The indemnity
agreements further provide that such former directors must give written notice upon becoming aware of any proceeding which may give rise to the indemnification obligation and that such directors have
the right to independent legal counsel at their expense, unless we have approved such independent counsel, upon which we are obligated to pay such approved counsel's legal fees.

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Following
the IPIC Transaction, we entered into indemnity agreements with each of our current directors containing provisions that may require us and from time to time, certain of our
affiliates, to, among other things, indemnify such directors against certain liabilities that may arise by reason of their status or service as our directors, and obtain the approval of a court, if
required, to meet such indemnity obligations. The directors are entitled to reimbursement for time spent responding to or testifying in connection with any proceedings involving us, tax
gross-up payments to the extent such directors are not entitled to certain tax deductions related to the indemnification payments, and reimbursement of their expenses incurred as a result
of any proceeding against them as to which they could be indemnified, provided that any expenses not actually incurred shall be repaid. The right to indemnification will only apply where the director
acted honestly and in good faith with a view to the best interest of the entity that it serves and, in the case of a criminal or administrative action, had reasonable grounds for believing that his
conduct was lawful. The indemnity agreements further provide that we shall be the indemnitor of first resort and that we are required to advance the full amount of expenses incurred by
the directors.

7.C. INTERESTS OF EXPERTS AND COUNSEL

Not
Applicable

Item 8.    Financial Information

8.A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

See "Item 17. Financial Statements" for our financial statements, related notes and other financial information filed with this
annual report on Form 20-F.

8.B. SIGNIFICANT CHANGES

Except as otherwise disclosed in this annual report, there have been no material changes in our financial position, operations or cash
flows since December 31, 2009.

Item 9.    The Offer and Listing

9.A. OFFER AND LISTING DETAILS

Not
Applicable

9.B. PLAN OF DISTRIBUTION

Not
Applicable

9.C. MARKETS

Not
Applicable

9.D. SELLING SHAREHOLDERS

Not
Applicable

9.E. DILUTION

Not
Applicable

9.F. EXPENSES OF THE ISSUE

Not
Applicable

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Item 10.    Additional Information

10.A. SHARE CAPITAL

Not
Applicable

10.B. MEMORANDUM AND ARTICLES OF ASSOCIATION

REGISTOR

NOVA Chemicals was continued under the provisions of the Business Corporations Act (New Brunswick) (the "Act") on
July 6, 2009, with a corporation number of 645481. Our Articles of Continuance ("Articles") do not restrict the business which we may carry on.

ARTICLES AND BY-LAWS

The following brief description of provisions of the Act, our Articles and General By-Law No. 3
("By-Laws") does not purport to be complete and is subject in all respects to the provisions of the Act and our Articles and By-Laws.



Our By-Laws provide that a director who is a party to a material transaction or material contract, or proposed material
transaction or material contract with us, is a director of, or acts in a capacity similar to a director of, or has a material interest in any person who is a party to a material transaction or
material contract or proposed material transaction or material contract with us shall disclose the nature and extent of his interest at the time and in the manner provided in the Act. Except as
provided in the Act and explained in the following paragraph, no such director shall vote on any resolution to approve any such transaction. If a material transaction or material contract is made
between us and one or more of its directors, or between us and another person of which a director of NOVA Chemicals is a director or in which he has a material interest, the transaction is neither
void nor voidable by reason only of that relationship, or by reason only that a director with an interest in the transaction or contract is present at
or is counted to determine the presence of a quorum at a meeting of directors or committee of directors that authorized the transaction, if the director disclosed his interest in accordance with the
provisions of the Act and the transaction or contract was approved by the directors or the shareholder and it was reasonable and fair to us at the time it was approved.

The
Act provides that a director who is materially interested in a contract may not vote on any resolution to approve the contract unless the contract is (i) an arrangement by way
of security for money lent to or obligations undertaken by the director for the benefit of us or an affiliate, (ii) relates primarily to the director's remuneration as a director, officer,
employee or agent of the Company or an affiliate, (iii) is for indemnity or insurance for the director against liability incurred by the director acting in his or her capacity as director, or
(iv) is with an affiliate.



Our By-Laws provide that the directors may from time to time: (i) borrow money on our credit, (ii) issue,
re-issue, sell or pledge debt obligations or guarantee of NOVA Chemicals, (iii) to the extent permitted by the Act, give, directly or indirectly, financial assistance to any person
by means of a loan, a guarantee to secure the performance of an obligation or otherwise, and (iv) mortgage, hypothecate, pledge or otherwise create a security interest in or other interest in
or charge upon all or any property (including the undertaking and rights) of NOVA Chemicals, owned or subsequently acquired, to secure any obligation of NOVA Chemicals.



A holding company controlled by IPIC and its affiliates currently owns all of our equity. Our By-Laws provide that a
resolution in writing signed by all the shareholders or signed counterparts of such resolution by all the shareholders entitled to vote on that resolution at a meeting of shareholders is as valid as
if it had been passed at a meeting of the shareholders duly called, constituted and held.

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Our
By-Laws provide that, subject to the Act, an annual meeting of shareholders shall be held on such day and at such time in each year as the Board may from time to time
determine, for the purpose of considering the financial statements and reports required by the Act to be placed before the annual meeting, electing directors, appointing auditors and for the
transaction of such other business as may
properly be brought before the meeting. The Act requires that, subject to certain exceptions, the directors must call a special meeting of shareholders upon the requisition of at least ten percent of
our issued shares entitled to vote at the meeting being requisitioned.

The
Act provides that for purposes of determining shareholders entitled to receive notice of a meeting of shareholders, the directors may fix a record date in advance so long as the date
is not more than 50 or less than 21 days before the date of the meeting. Where no record date is fixed, the record date is the close of business on the day immediately preceding the day notice
is given or the day of the meeting itself if no notice is given. The Act and our By-Laws provide that notice of the time and place of each shareholder meeting shall be sent not less than
21 nor more than 50 days before the meeting to (i) each shareholder entitled to vote, (ii) each director, and (iii) our auditor. If special business is to be
transacted, the notice must state or be accompanied by a statement of the nature of that business in sufficient detail to permit the shareholder to form a reasoned judgment on the proposal. All
business transacted at a special meeting of shareholders and all business transacted at an annual shareholder meeting, except consideration of the financial statements and auditor's report, election
of directors and reappointment of the auditor constitutes special business.

Our
By-Laws provide that a quorum for the transaction of business at any meeting of shareholders shall be met if the holders of not less than 10% of the shares entitled to
vote at the meeting are present in person or represented by proxy.

Our
By-laws also state that the only persons entitled to be present at a meeting of shareholders shall be those persons entitled to vote thereat, the directors and our
auditors and others who, although not entitled to vote, are entitled or required under any provision of the Act or our Articles or By-Laws to be present at the meeting. Any other person
may be admitted only on the invitation of the Chairman of the meeting or with the consent of the meeting.



We are authorized to issue an unlimited number of Common Shares, first preferred shares and second preferred shares. Currently, only
Common Shares are issued and outstanding.



Each Common Share has one vote and our directors stand for election on an annual basis. The holders of the Common Shares are entitled
to attend and vote at all meetings of shareholders except meetings of only the holders of another class or series of our shares. In addition, subject to the preferential rights attaching to any of our
shares ranking in priority to the Common Shares, the holders of the Common Shares are entitled to receive any dividends that may be declared by the Board of
Directors on the Common Shares. Subject to the rights of the holders of shares of the Corporation ranking in priority to the Common Shares, the holders of the Common Shares are entitled to participate
rateably amongst themselves and rateably with the holders of any shares ranking on a parity with the Common Shares in any distribution of the remaining property of the Corporation in the event of the
dissolution, liquidation or winding-up of NOVA Chemicals or any other distribution of its property amongst its shareholders for the purposes of winding-up its affairs.



Subject to the following and to applicable law, the first preferred shares as a class are not entitled to receive notice of, attend or
vote at meetings of the shareholders of the Corporation. The first preferred shares may from time to time be issued in one or more series, and the Board of Directors may fix from time to time before
such issue the number of first preferred shares that is to comprise each series and the designation, rights, privileges, restrictions and conditions attaching to each series of first preferred shares,
including any voting rights, the rate or amount of dividends or the method of calculating dividends, the dates of payment thereof, the terms and conditions of redemption, purchase and conversion, if
any, and any sinking fund or other provisions. If issued,

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the
first preferred shares of each series will, with respect to the payment of dividends and the distribution of assets on return of capital in the event of liquidation, dissolution or
winding-up of NOVA Chemicals, whether voluntary or involuntary, or any other return of capital or distribution of the assets of the Corporation amongst its shareholders for the purpose of
winding-up its affairs, have preference over the Common Shares, the second preferred shares and over any other shares of the Corporation ranking by their terms junior to the first
preferred shares of the series. The first preferred shares of any series may also be given such other preferences over the Common Shares, the second preferred shares and any other shares ranking
junior to such first preferred shares as may be established by the Board of Directors.



Subject to the following and to applicable law, the second preferred shares as a class are not entitled to receive notice of, attend or
vote at meetings of the shareholders of the Corporation. The second preferred shares may from time to time be issued in one or more series, and the Board of Directors may fix from time to time before
such issue the number of second preferred shares that is to comprise each series and the designation, rights, privileges, restrictions and conditions attaching to each series of second preferred
shares, including any voting rights, the rate or amount of dividends or the method of calculating dividends, the dates of payment thereof, the terms and conditions of redemption, purchase and
conversion, if any, and any sinking fund or other provisions. If issued, the second preferred shares of each series will, with respect to the payment of dividends and the distribution of assets on
return of capital in the event of liquidation, dissolution or winding-up of NOVA Chemicals, whether voluntary or involuntary, or any other return of capital or distribution of the assets
of the Corporation amongst its
shareholders for the purpose of winding-up its affairs, have preference over the Common Shares and over any other shares of the Corporation ranking by their terms junior to the second
preferred shares of the series. The second preferred shares of any series may also be given such other preferences over the Common Shares and any other shares ranking junior to such second preferred
shares as may be established by the Board of Directors.



Our Articles provide that the number of directors comprising the entire Board is a minimum of one and a maximum of 15. We currently
have a fixed number of seven directors. All of our directors have been elected to serve until the next annual meeting or until his successor is elected or appointed.

Under
the Act and provided that a quorum of directors remains in office, vacancies may be filled by the directors. If less than a quorum of directors remains in office, or if there has
been a failure to elect the required fixed number of directors, any vacancy must be filled by the shareholders and the directors are required to call a special meeting of the shareholders to fill the
vacancy. No person is required to hold any equity of the Corporation to qualify as a director.

10.C. MATERIAL CONTRACTS

The following is a summary of each material contract, other than contracts entered into in the ordinary course of business, to which we
are a party:

$350 million senior secured revolving credit facility

We have $350 million senior secured revolving credit facility provided by a syndicate of lenders, which matures on
November 17, 2012 and is available for Prime Loans, USBR Loans, LIBOR Loans, Swingline Advances, Bankers' Acceptances, and Letters of Credit.

Loans
under our $350 million senior secured revolving credit facility bear interest at a floating rate, which is calculated as a base rate plus an applicable pricing margin. The
applicable pricing margins vary with the type of loan and range between 2.50% and 4.75%. The base rate depends on the type of advance we choose.

Our
$350 million senior secured revolving credit facility contains financial covenants, which require quarterly compliance. The covenants require a maximum senior debt to cash
flow ratio of 3:1 and a debt to capitalization ratio not to exceed 60% at the end of each quarter. In addition to the financial covenants, this

122

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credit
facility also limits our ability to, among other things, incur additional liens, sell certain assets, make distributions on or repurchase equity, incur additional debt, enter into hedging
arrangements, enter into operating leases, engage in reorganizations or mergers, or change the character of our business. Certain of these covenants are subject to exceptions and materiality
qualifiers. Moreover, this credit facility limits distributions during any four consecutive fiscal quarters equal to the greater of (A) 55% of consolidated free cash flow for such four fiscal
quarters, and (B) $10,000,000.

Borrowings
under our $350 million senior secured revolving credit facility are secured by a fixed and floating charge on certain of our real property and a security interest in
certain of our personal property. Further, we have provided a guarantee to the lenders covering certain hedging transactions entered into with our restricted subsidiaries. Our obligations under our
$350 million senior secured revolving credit facility have also been guaranteed by our restricted subsidiaries.

Voluntary
prepayments of principal amounts outstanding and voluntary reductions of the unutilized portion of the credit facilities are permitted at any time, upon the giving of proper
notice and subject to minimum dollar amounts.

Our
$350 million senior secured revolving credit facility contains customary events of default, including, but not limited to, payment defaults, breach of covenant, incorrect
representations or warranties, cross default of other indebtedness, cross default of secured swap obligations, certain events of bankruptcy, insolvency or dissolution, judgment defaults, change of
control, and invalidity of any loan documents or provisions thereof supporting the credit facilities. Certain of the events of default are subject to exceptions and materiality qualifiers.

The
terms used in this summary have specific meanings as used in the $350 million senior secured revolving credit facility.

Arrangement Agreement, dated as of February 23, 2009, by and between NOVA Chemicals Corporation and International Petroleum Investment Company

On February 23, 2009, the Corporation and IPIC entered into an agreement providing for the acquisition by IPIC of all of our
outstanding Common Shares for cash consideration of
$6.00 per share. The Acquisition was implemented by way of a court-approved plan of arrangement under the Canada Business Corporations Act. IPIC completed the acquisition on
July 6, 2009.

Indemnity Agreements

Reference is made to "Item 7.B. Related Party TransactionsDirector Indemnity Agreements".

10.D. EXCHANGE CONTROLS

There are currently no limitations imposed by Canadian federal or provincial laws on the rights of non-resident or foreign
owners of our securities to hold or vote the securities held. There are also no such limitations imposed by the our Articles and By-Laws with respect to our Common Shares.

10.E. TAXATION

Not
Applicable

10.F. DIVDENDS AND PAYING AGENTS

Not
Applicable

10.G. STATEMENT BY EXPERTS

Not
Applicable

123

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Table of Contents

10.H. DOCUMENTS ON DISPLAY

We file periodic reports and other information with the SEC. These reports include certain financial and statistical information about
us and may be accompanied by exhibits. You may read and copy this information at the SEC's Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549,
or obtain copies of this information by mail from the public reference room at the prescribed rates. You may call the SEC at 1-800-SEC-0330 for
further information on the SEC's Public Reference Room. The SEC also maintains an Internet website that contains reports and other information about companies like us who file electronically with the
SEC. The URL of that website is http://www.sec.gov.

10.I. SUBSIDIARY INFORMATION

Not
Applicable

Item 11.    Quantitative and Qualitative Disclosures About Market Risk

The Audit Committee of our Board regularly reviews foreign exchange, interest rate and commodity hedging activity and monitors
compliance with the our hedging policy. Our policy prohibits the use of financial instruments for speculative purposes and limits hedging activity to the underlying net economic exposure. See
"Item 5Operating and Financial Review and Prospects" and Note 22 to our Annual Audited Consolidated Financial Statements contained in this
Form 20-F for quantitative and qualitative disclosure of market risk.

Item 12.    Description of Securities Other than Equity Securities

12.A. DEBT SECURITIES

Not
Applicable

12.B. WARRANTS AND RIGHTS

Not
Applicable

12.C. OTHER SECURITIES

Not
Applicable

12.D. AMERICAN DEPOSITORY SHARES

Not
Applicable

PART II

Item 13.    Defaults, Dividend Arrearages and Delinquencies

Not
Applicable

Item 14.    Material Modifications to the Rights of Security Holders and Use of Proceeds

Not
Applicable.

Item 15.    Controls and Procedures

(a)   Disclosure Controls and Procedures

Based
on our management's evaluation (with the participation of our principal executive officer and principal financial officer), as of December 31, 2009, our principal executive officer and
principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and

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forms
and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.

(b)   Management's Annual Report on Internal Control over Financial Reporting

The
report of management on our internal control over financial reporting is located under the heading "Management's Annual Report on Internal Control Over Financial Reporting" in our Annual Audited
Consolidated Financial Statements included in this annual report on Form 20-F.

(c)   Attestation Report of the Registered Public Accounting Firm

The
attestation report on internal control over financial reporting is located under the heading "Independent Auditors' Report on Internal Controls" in our Annual Audited Consolidated Financial
Statements included in this annual report on Form 20-F.

(d)   Changes in Internal Control Over Financial Reporting

There
were no changes in our internal control over financial reporting identified in connection with the above evaluation that occurred during the period covered by this annual report on
Form 20-F
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 16A.    Audit Committee Financial Expert

Our Board of Directors has determined that David Davies is an "audit committee financial expert" (as defined in Item 16A
of Form 20-F) serving on our Audit Committee. David Davies is an "independent" director, as defined under NYSE rules.

Item 16B.    Code of Ethics

We have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions. You can view our Code of Ethics for CEO and Senior Financial Officers on the Governance page on our website at
http://www.novachemicals.com/governance.

Item 16C.    Principal Accountant Fees and Services

The following fees were billed to us by Ernst & Young LLP and approved by the Board of Directors during the prior
two years:

2009

2008(U.S. dollars)Audit Fees

$
2,583,957

$
1,989,959Audit-Related Fees


1,595,598


301,488Tax Fees


45,761


99,396All Other Fees





Total Fees

$
4,225,316

$
2,390,843


Audit
fees include fees for the audit of our consolidated financial statements, the external auditor's reporting on the effectiveness of internal controls over financial reporting,
statutory audits of subsidiaries, review of quarterly reports, provision of consent letters and comfort letters in connection with certain regulatory matters and review of prospectuses and
professional services related to our $700 million debt offering. Fee amounts for 2009 are based on invoices relating to the 2009 year-end audit that have been received and
those expected to be billed.

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Table of Contents

Audit-related
fees include fees for services that are related to the audit of the consolidated financial statements. These services include assistance with the fair value exercise
conducted in 2009, the IPIC opening balance sheet audit, consultation with respect to IFRS, non-statutory audits of subsidiaries and affiliates, and consultation on accounting and
disclosure matters.

Tax
fees include fees for the preparation of income tax returns, customs filings for us and our subsidiaries, and advice on tax-related matters.

Our
Board of Directors approves, on the recommendation of the Audit Committee, all fees paid to the external auditors. In addition, in accordance with applicable rules regarding audit
committees, the Audit Committee reviews and approves (in advance) the scope and related fees for all non-audit services which are to be provided by the external auditors. In
considering whether to approve non-audit services, the Audit Committee considers whether the provision of these non-audit services may impact the objectivity and independence
of the external auditor and, in respect of non-audit services provided by Ernst & Young LLP in 2009, the Audit Committee has concluded that it does not.

Item 16D.    Exemptions from the Listing Standard for Audit Committees

Not
Applicable

Item 16E.    Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not
Applicable

Item 16F.    Change of Registrant's Certifying Accountant

Not
Applicable

Item 16G.    Corporate Governance

Not
Applicable

PART III

Item 17.    Financial Statements

Our Annual Audited Financial Statements for the fiscal year ending December 31, 2009, including the notes thereto and together
with auditor's report thereon, are included in this annual report beginning on page F-1.

Item 18.    Financial Statements

Not
Applicable

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Table of Contents

Item 19.    Exhibits

Exhibit No.

Description1.1

Certificate and Articles of Continuance of NOVA Chemicals Corporation dated July 6, 2009 (1)1.1

General By-Law No. 3 of NOVA Chemicals Corporation dated July 6, 2009 (1)2.1

Indenture, dated as of October 16, 2009, between NOVA Chemicals Corporation, as Issuer and U.S. Bank National Association, as Trustee in respect of the 8.375% Senior Notes due 2016 and 8.625% Senior Notes
due 2019 (2)2.2

Indenture, dated as of September 21, 1995, between NOVA Chemicals Corporation, as successor to NOVACOR Chemicals Ltd., and JP Morgan Trust Company, N.A., as successor trustee to The First National Bank of
Chicago (3)2.3

Indenture, dated as of August 28, 2000, between NOVA Chemicals Corporation, as Issuer and CIBC Mellon Trust Company, as Trustee (4)2.4

Indenture, dated as of January 13, 2004, between NOVA Chemicals Corporation, as Issuer and U.S. Bank National Association, as Trustee (5)2.5

Indenture, dated as of October 31, 2005, between NOVA Chemicals Corporation, as Issuer and U.S. Bank National Association, as Trustee (6)2.6

Registration Rights Agreement, dated as of October 16, 2009, by and among NOVA Chemicals Corporation, and Barclays Capital Inc., HSBC Securities (USA) Inc., RBC Capital Markets Corporation, and
TD Securities (USA) LLC, as Representative of the Initial Purchasers in respect of the 8.375% Senior Notes due 2016 and 8.625% Senior Notes due 2019 (7)4.1

Restated Credit Agreement, dated as of November 17, 2009, among the Company, as Borrower, The Toronto-Dominion Bank, as Administrative Agent and the lenders from time to time party thereto (8)4.2

Arrangement Agreement, dated as of February 23, 2009, by and between NOVA Chemicals Corporation and International Petroleum Investment Company (9)4.3

Form of Indemnity Agreement by and among NOVA Chemicals Corporation and former directors (10)4.4

Form of Indemnity Agreement by and among NOVA Chemicals Corporation and Directors (11)7.1
*
Computation of Earnings to Fixed Charges8.1
*
List of Subsidiaries12.1
*
Certification of Randy Woelfel, Chief Executive Officer of NOVA Chemicals Corporation, pursuant to 15 U.S.C. Section 78(m)(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
200212.2
*
Certification of Todd Karran, Senior Vice President, Chief Financial Officer and Treasurer of NOVA Chemicals Corporation, pursuant to 15 U.S.C. Section 78(m)(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 200213.1
*
Certification of Randy Woelfel, Chief Executive Officer of NOVA Chemicals Corporation, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


127

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Table of Contents

Exhibit No.

Description13.2
*
Certification of Todd Karran, Senior Vice President, Chief Financial Officer and Treasurer of NOVA Chemicals Corporation, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002


(1)Incorporated
by reference from the Report on Form 6-K of NOVA Chemicals Corporation filed on August 6, 2009.(2)Incorporated
by reference from Exhibit 4.1 to the Registration Statement on Form F-4 of NOVA Chemicals Corporation,
File No. 333-163915.(3)Incorporated
by reference from Exhibit 7.1 to the Registration Statement on Form F-9 of NOVA Chemicals Corporation,
File No. 333-6108.(4)Incorporated
by reference from Exhibit 4.3 to the Registration Statement on Form F-4 of NOVA Chemicals Corporation,
File No. 333-163915.(5)Incorporated
by reference from Exhibit 7.1 to the Registration Statement on Form F-10 of NOVA Chemicals Corporation,
File No. 333-113038.(6)Incorporated
by reference from the Report on Form 6-K of NOVA Chemicals Corporation filed on November 1, 2005.(7)Incorporated
by reference from Exhibit 4.6 to the Registration Statement on Form F-4 of NOVA Chemicals Corporation,
File No. 333-163915.(8)Incorporated
by reference from Exhibit 10.1 to the Registration Statement on Form F-4 of NOVA Chemicals Corporation,
File No. 333-163915.(9)Incorporated
by reference from Schedule B to Material Change Report filed as Exhibit 99.1 to the Report on
Form 6-K of NOVA Chemicals Corporation filed on February 25, 2009.(10)Incorporated
by reference from Exhibit 10.3 to the Registration Statement on Form F-4 of NOVA Chemicals Corporation,
File No. 333-163915.(11)Incorporated
by reference from Exhibit 10.4 to the Registration Statement on Form F-4 of NOVA Chemicals Corporation,
File No. 333-163915.*Filed
herewith.


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Table of Contents

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has
duly caused and authorized the undersigned to sign this annual report on its behalf.

NOVA Chemicals CorporationBy:

/s/ TODD D. KARRANName: Todd D. Karran
Title: Senior Vice President, Chief Financial
           Officer and Treasurer


Date:
March 15, 2010.

129

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INDEX TO CONSOLIDATED FINANCIAL STATEMENT



PageManagement's Report

F-1Management's Annual Report on Internal Control Over Financial
Reporting

F-2Independent Auditors' Report on Financial Statements

F-3Independent Auditors' Report on Internal Controls

F-4Consolidated Statements of Income (Loss)

F-6Consolidated Statements of Comprehensive Income (Loss)

F-6Consolidated Balance Sheets

F-7Consolidated Statements of Cash Flows

F-8Consolidated Statements of Changes in Shareholders' Equity

F-9Notes to Consolidated Financial Statements

F-10


F-i

---





MANAGEMENT'S REPORT

To
the Shareholder of NOVA Chemicals Corporation

The
Consolidated Financial Statements and other financial information included in this annual report have been prepared by management. It is management's responsibility to ensure that
sound judgment, appropriate accounting principles and methods and reasonable estimates have been used in the preparation of this information. They also ensure that all information presented
is consistent.

Management
also is responsible for establishing and maintaining internal controls and procedures over the financial reporting process. The internal control system includes an internal
audit function and an established business conduct policy that applies to all employees. In addition, the Company has adopted a code of ethics that applies to its Chief Executive Officer, Chief
Financial Officer and Corporate Controller. The business conduct policy and the code of ethics can be viewed on NOVA Chemicals' website (www.novachemicals.com). Management believes the system of
internal controls, review procedures and established policies provide reasonable assurance as to the reliability and relevance of financial reports.
Management also believes that NOVA Chemicals' operations are conducted in conformity with the law and with a high standard of business conduct.

During
the past year, we have continued our efforts to improve and document the design and operating effectiveness of internal control over external financial reporting. The
effectiveness of internal control over financial reporting has been subjected to audit by the shareholders' auditors. As at year-end, we have reported that internal control over financial
reporting is effective. In compliance with Section 302 of the United States Sarbanes-Oxley Act of 2002, NOVA Chemicals' Chief Executive Officer and Chief Financial Officer will provide
to the Securities and Exchange Commission a certification related to NOVA Chemicals' annual disclosure document in the U.S. (Form 20-F). The same certification will be
provided to the Canadian Securities Administrators.

The
Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and internal control. The Board carries out this responsibility
principally through its Audit Committee. The Audit Committee reviews the financial statements and annual report and recommends them to the Board for approval. The Audit Committee meets with
management, internal auditors and external auditors to discuss internal controls, auditing matters and financial reporting issues. Internal and external auditors have full and unrestricted access to
the Audit Committee. The Audit Committee also recommends a firm of external auditors to be appointed by the shareholder.

/s/ Randy Woelfel RANDY WOELFELChief Executive Officer

/s/ Todd Karran TODD KARRANSenior Vice President, Chief Financial Officer & TreasurerMarch 15, 2010
Calgary, Canada


F-1

---





MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The following report is provided by management in respect of NOVA Chemicals' internal control over financial reporting
(as defined in Rules 13a-15f and 15d-15f under the United States Securities Exchange Act of 1934):

/s/ Randy Woelfel RANDY WOELFELChief Executive Officer

/s/ Todd Karran TODD KARRANSenior Vice President, Chief Financial Officer & TreasurerMarch 15, 2010
Calgary, Canada


F-2

---





INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS    Under Canadian Generally Accepted Auditing Standards and the Standards of  the Public Company Accounting Oversight Board (United States)

TO THE SHAREHOLDER OF NOVA CHEMICALS CORPORATION

We
have audited the Consolidated Balance Sheets of NOVA Chemicals Corporation as at December 31, 2009 and 2008, and the related Consolidated Statements of Income (Loss),
Comprehensive Income (Loss), Changes in Shareholders' Equity, and Cash Flows for the periods from January 1, 2009 to July 5, 2009 and from July 6, 2009 to December 31, 2009
and for each of the years in the two-year period ended December 31, 2008 and 2007. These financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with Canadian Generally Accepted Auditing Standards and the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that
we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, these Consolidated Financial Statements present fairly, in all material respects, the financial position of NOVA Chemicals Corporation as at December 31, 2009 and
2008, and the results of its operations and its cash flows for the periods from January 1, 2009 to July 5, 2009 and from July 6, 2009 to December 31, 2009 and for each of
the years in the two-year period ended December 31, 2008 and 2007, in conformity with Canadian Generally Accepted Accounting Principles.

As
discussed in Note 2 to the Consolidated Financial Statements, in 2009 the Corporation made changes to its methods of accounting for goodwill and intangible assets,
credit risk and the fair value of financial assets and financial liabilities, business combinations and financial instruments relating to recognition, measurement and disclosure. In 2008 the
Corporation made changes to its methods of accounting for inventories and its Deferred Share Units Plan and in 2007 made changes to its methods of accounting for stock-based compensation, financial
instruments and hedges and also changed its presentation of equity and changes in equity, including reporting of comprehensive income. As discussed in Note 23 in 2007, the Corporation made
changes for reporting under United States Generally Accepted Accounting Principles to its methods of accounting for uncertainty in income taxes and defined benefit pension and other
post-retirement plans.

We
have also audited, in accordance with the Standards of the Public Company Accounting Oversight Board (United States), NOVA Chemicals Corporation's internal control over
financial reporting as of December 31, 2009, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated March 15, 2010, expressed an unqualified opinion thereon.

GRAPHICERNST & YOUNG LLPChartered Accountants
March 15, 2010
Calgary, Canada


F-3

---





INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROLS    Under Standards of the Public Company Accounting Oversight Board (United States)

TO THE SHAREHOLDER OF NOVA CHEMICALS CORPORATION

We
have audited NOVA Chemicals Corporation (NOVA Chemicals or the Corporation) internal control over financial reporting as of December 31, 2009, based on criteria established in
Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). NOVA Chemicals' management is responsible
for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an
opinion on the effectiveness of the Corporation's internal control over financial reporting based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with Generally Accepted Accounting Principles. A company's internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Generally Accepted Accounting Principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As
indicated in Management's Annual Report on Internal Control Over Financial Reporting, management's assessment of and conclusion on the effectiveness of internal control over financial
reporting did not include the internal controls of the INEOS NOVA joint venture, included in NOVA Chemicals' 2009 Consolidated Financial Statements and constituting $270 million and
$29 million of total and net assets, respectively, as of December 31, 2009, $617 million and $4 million of revenues and net loss, respectively, for the period from
July 6, 2009 to December 31, 2009 and $520 million and $7 million of revenues and net income, respectively, for the period from January 1, 2009 to July 5,
2009. Our audit of internal control over financial reporting of NOVA Chemicals did not include an evaluation of the internal controls over financial reporting of the INEOS NOVA joint venture.

In
our opinion, NOVA Chemicals maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the
COSO criteria.

F-4

---



We
have also audited, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), the
Consolidated Balance Sheets of NOVA Chemicals Corporation as at December 31, 2009 and 2008, and the Consolidated Statements of Income (Loss), Comprehensive Income (Loss), Changes in
Shareholders' Equity, and Cash Flows for the
periods from January 1, 2009 to July 5, 2009 and from July 6, 2009 to December 31, 2009 and for each of the years in the two-year period ended
December 31, 2008 and 2007, and our report dated March 15, 2010, expressed an unqualified opinion thereon.

GRAPHICERNST & YOUNG LLPChartered Accountants
March 15, 2010
Calgary, Canada


F-5

---





CONSOLIDATED STATEMENTS OF INCOME (LOSS)

Year ended Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
2009

2008
Restated(1)

2007
Restated(1)(millions of U.S. dollars)

Successor

PredecessorRevenue

$
2,179

$
1,871

$
7,366

$
6,732Feedstock and operating costs (excluding depreciation)


1,712


1,683


6,852


5,597Selling, general and administrative


99


171


225


207Research and development


20


20


52


50Foreign exchange loss (gain) (Note 22)


105


39


(117
)

Restructuring charges (Note 15)


23


42


37


86Depreciation and amortization


131


130


261


2372,090


2,085


7,310


6,177Operating income (loss)


89


(214
)

56


555Interest expense, net (Note 10)


(85
)

(94
)

(156
)

(175
)Other gains (losses) (Note 16)


1


6


(2
)

20(84
)

(88
)

(158
)

(155
)Income (loss) before income taxes


5


(302
)

(102
)

400Income tax (expense) recovery (Note 17)


(7
)

63


62


(52
)Net (loss) income

$
(2
)
$
(239
)
$
(40
)
$
348


(1)Restated
for adoption of CICA 3064,Goodwill and Intangible Assets, see Note 2.


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Year ended Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
2009

2008
Restated(1)

2007
Restated(1)(millions of U.S. dollars)

Successor

PredecessorNet (loss) income

$
(2
)
$
(239
)
$
(40
)
$
348Other comprehensive income (loss):Unrealized gain (loss) on available-for-sale securities, net of tax of $0








1


(1
)Unrealized gain (loss) on translation of self-sustaining foreign operations


5


4


(147
)

2315


4


(146
)

230Comprehensive income (loss)

$
3

$
(235
)
$
(186
)
$
578


(1)Restated
for adoption of CICA 3064,Goodwill and Intangible Assets, see Note 2.


See accompanying Notes to Consolidated Financial Statements

F-6

---





CONSOLIDATED BALANCE SHEETS

December 31 (millions of U.S. dollars)

2009

2008
Restated(1)Successor

PredecessorASSETSCurrent assetsCash and cash equivalents

$
267

$
74Accounts receivable (Note 4)


370


290Inventories (Note 5)


622


529Prepaid expenses and other assets


48


34Future income taxes (Note 17)


3


68Restricted cash (Note 10)





491,310


1,044Intangible assets, net (Note 6)


493


Other non-current assets (Note 7)


101


155Future income taxes (Note 17)


59


Property, plant and equipment, net (Note 8)


3,570


2,808$
5,533

$
4,007LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilitiesBank loans

$
1

$
2Accounts payable and accrued liabilities (Note 9)


678


781Future income taxes (Note 17)


6


Long-term debt due within one year (Note 10)


312


380997


1,163Long-term debt (Note 10)


1,512


1,270Deferred credits and long-term liabilities (Note 11)


420


302Future income taxes (Note 17)


811


3773,740


3,112SHAREHOLDERS' EQUITYCommon shares (Note 3 and 12)


849


508Contributed surplus (Note 3)


941


25Accumulated other comprehensive income


5


462Deficit (Note 3)


(2
)

(100
)1,793


895$
5,533

$
4,007Contingencies and commitments (Notes 10, 20 and 22)


(1)Restated
for adoption of CICA 3064,Goodwill and Intangible Assets, see Note 2.


On behalf of the Board:

/s/ David Davies DAVID DAVIESChairman of the Audit Committee

/s/ Randy Woelfel RANDY WOELFELDirector


See
accompanying Notes to Consolidated Financial Statements

F-7

---





CONSOLIDATED STATEMENTS OF CASH FLOW

Year Ended Dec. 31(millions of U.S. dollars)

July 6Dec. 31,
2009

Jan. 1July 5,
2009

2008
Restated(1)

2007
Restated(1)Successor

PredecessorOPERATING ACTIVITIESNet (loss) income

$
(2
)
$
(239
)
$
(40
)
$
348Depreciation and amortization


131


130


261


237Future income tax (recovery) expense (Note 17)


(13
)

6


(119
)

(57
)Other (gains) losses (Note 16)


(1
)

(6
)

2


(20
)Stock option expense (Note 13)








2


2Unrealized (gain) loss on derivatives (Note 22)


(51
)

(6
)

87


(21
)Unrealized foreign exchange loss (gain)


86


45


(119
)

Amortization on bond discounts


13








Non-cash restructuring charges (Note 15)





17


25


61163


(53
)

99


550Changes in non-cash working capitalAccounts receivable


(36
)

(83
)

281


(53
)Inventories


(142
)

44


317


(232
)Accounts payable and accrued liabilities


25


(133
)

(354
)

176Other current assets





(5
)

(40
)

(4
)(153
)

(177
)

204


(113
)Changes in non-current assets and liabilities


(30
)

(27
)

(31
)

(108
)Cash (used in) provided by operating activities


(20
)

(257
)

272


329INVESTING ACTIVITIESCapitalized interest


(1
)







Proceeds on sales of assets, investments and other capital transactions











6Property, plant and equipment additions


(60
)

(41
)

(166
)

(156
)Turnaround costs, long-term investments and other assets


(18
)

(9
)

(44
)

(42
)Acquisition of production rights











(30
)Cash used in investing activities


(79
)

(50
)

(210
)

(222
)FINANCING ACTIVITIES(Decrease) increase in current bank loans





(2
)

(1
)

2(Decrease) increase in revolving debt


(736
)

546


37


(4
)Long-term debt additions


704


201


1


1Long-term debt repayments


(203
)

(252
)

(128
)

(12
)Common shares issued (Note 3)


350





3


8Options retired for cash (Note 13)











(6
)Common share dividends





(7
)

(31
)

(31
)Cash provided by (used in) financing activities


115


486


(119
)

(42
)Increase (decrease) in cash due to exchange rates


1


(3
)

13


Increase (decrease) in cash and cash equivalents


17


176


(44
)

65Cash and cash equivalents, beginning of period


250


74


118


53Cash and cash equivalents, end of period

$
267

$
250

$
74

$
118Cash tax payments, net of refunds

$
(5
)
$
(28
)
$
47

$
62Cash interest payments

$
62

$
80

$
190

$
172


(1)Restated
for adoption of CICA 3064,Goodwill and Intangible Assets, see Note 2.
See
accompanying Notes to Consolidated Financial Statements


F-8

---





CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

Year Ended Dec. 31(millions of U.S. dollars)

July 6Dec. 31,
2009

Jan. 1July 5,
2009

2008
Restated(1)

2007
Restated(1)Successor

PredecessorCommon sharesBalance at beginning of period

$
508

$
508

$
505

$
497Common shares issued


350





3


8Push-down adjustment (Note 3)


(9
)







Balance at end of period

$
849

$
508

$
508

$
505Contributed surplusBalance at beginning of period

$
27

$
25

$
27

$
25Push-down adjustment (Note 3)


902








Forgiveness of IPIC fees/interest (Note 3)


12








Contribution of post-retirement plans to INEOS NOVA (Note 18)








(4
)

Stock option compensation cost








2


2Other





2


Balance at end of period

$
941

$
27

$
25

$
27DeficitBalance at beginning of period


(327
)
$
(100
)
$
(68
)
$
(380
)Net (loss) income


(2
)

(239
)

(40
)

348Push-down adjustment (Note 3)


327Adoption of inventory full costing (Note 2)








39


Adoption of EIC-173 (Note 2)





12





Common share dividends








(31
)

(31
)Stock options retired for cash











(5
)Balance at end of period

$
(2
)
$
(327
)
$
(100
)
$
(68
)Accumulated other comprehensive incomeBalance at beginning of period

$
466

$
462

$
608

$
378Push-down adjustment (Note 3)


(466
)







Other comprehensive income (loss):Unrealized gain (loss) on translation of self-sustaining foreign operations


5


4


(147
)

231Unrealized gain (loss) on available-for-sale securities








1


(1
)Balance at end of period

$
5

$
466

$
462

$
608Total shareholders' equity

$
1,793

$
674

$
895

$
1,072Common shares(2)Balance at beginning of period


83,160,889


83,160,889


83,054,528


82,561,272Common shares issuedIPIC (Note 3)


58,333,333


Common shares issued for cash on exercise of stock options (Note 13)








105,197


357,683Common shares issued as share appreciation rights on exercise of stock options (Note 13)








1,164


135,573Balance at end of period


141,494,222


83,160,889


83,160,889


83,054,528


(1)Restated
for adoption of CICA 3064,Goodwill and Intangible Assets, see Note 2.(2)Unlimited
number of authorized voting common shares without par value, non-voting first preferred shares and non-voting second
preferred shares. Currently only common shares are issued and outstanding.
See
accompanying Notes to Consolidated Financial Statements


F-9

---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        All amounts in U.S. dollars, unless otherwise noted.

1.     BASIS OF PRESENTATION



F-10

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

1.     BASIS OF PRESENTATION (Continued)



2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Description

Date of adoption

ImpactCANADIAN GAAPAmendments to CICA 3862,Financial Instruments: Disclosures, requires enhanced disclosures for financial instruments including classification of fair value measurements and
methods using a fair value hierarchy and, when a valuation technique is used, the assumptions used in determining fair value of each class of financial assets and liabilities. These amendments are to be applied prospectively.

Dec. 31, 2009

Disclosure only, see Note 22Amendments to CICA 3855,Financial InstrumentsRecognition and Measurement, provide criteria with regard to determining whether an embedded prepayment option is
closely related to its host contract. Specifically the amendment provides that an option that compensates the lender for lost interest on reinvestment will be considered closely related to a debt host instrument. This amendment will further harmonize
Canadian GAAP with International Financial and Reporting Standards (IFRS) and U.S. GAAP.

Oct. 1, 2009

NOVA Chemicals applied this amendment and determined that senior notes issued in October 2009 (See Note 10) do not contain embedded derivatives.Scope amendments to CICA 1506,Accounting Changes,provide that this Section shall be applied to a change in individual accounting policies but not to changes in
accounting policies upon the complete replacement of an entity's primary basis of accounting.

Annual and interim financial statements relating to fiscal years beginning on or after July 1, 2009

NOVA Chemicals' adoption of IFRS on Jan. 1, 2011 will not qualify as an accounting change under CICA 1506


F-11

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Description

Date of adoption

ImpactEmerging Issues Committee (EIC) 173,Credit Risk and the Fair Value of Financial Assets and Financial Liabilities, provides that an entity's own credit risk and the
credit risk of the counterparty should be taken into account in determining the fair value of derivative instruments. The accounting treatment in this Abstract should be applied retrospectively with or without restatement of prior periods to all
financial assets and liabilities measured at fair value in interim and annual financial statements for periods ending on or after the date of issuance of this Abstract.

March 31, 2009

Resulted in a one-time credit to opening retained earnings on Jan. 1, 2009 and a corresponding decrease in mark-to-market feedstock liabilities of $18 million ($12 million after-tax). During the 2009
Predecessor period, the initial EIC 173 impact was reduced by $16 million ($11 million after-tax), and decreased an additional $9 million ($6 million after-tax) during the 2009 Successor period.Amendments to CICA 1625,Comprehensive Revaluation of Assets and Liabilities, and CICA 3251,Equity, and new standards
CICA 1582,Business Combinations, CICA 1601,Consolidated Financial Statements, and CICA 1602,Non-controlling
Interests, provide guidance on business combinations and the methodology to be used in the accounting therefor, including the revaluation of assets and liabilities. As a result of the IPIC transaction, NOVA Chemicals early
adopted these standards.

Jan. 1, 2009

See Note 3 for the impact of the IPIC acquisition under CICA 3251, CICA 1582 and CICA 1625; No material impact from CICA 1601 and CICA 1602; however this guidance may impact potential future business
transactionsCICA 3064,Goodwill and Intangible Assets, replaced CICA 3062,Goodwill and Other Intangible Assets, and results in
withdrawal of CICA 3450,Research and Development Costs, and amendments to Accounting Guideline (AcG) 11,Enterprises in the Development Stage, and CICA
1000,Financial Statement Concepts. The Standard intends to reduce the differences with IFRS in the accounting for intangible assets and results in closer alignment with U.S. GAAP. Under current
Canadian standards, more items are recognized as assets than under IFRS or U.S. GAAP. The objectives of CICA 3064 are to reinforce the principle-based approach to the recognition of assets only in accordance with the definition of an asset
and the criteria for asset recognition; and clarify the application of the concept of matching revenues and expenses such that the current practice of recognizing as assets items that do not meet the definition and recognition criteria is eliminated.
The Standard also provides guidance for the recognition of internally developed intangible assets (including research and development activities), ensuring consistent treatment of all intangible assets, whether separately acquired or internally
developed.

Jan. 1, 2009

See discussion on page F-17


F-12

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Description

Date of adoption

ImpactEIC 172,Presentation of a Tax Loss Carryforward Recognized Following an Unrealized Gain Recorded in Other Comprehensive Income, provides the tax benefit
from the recognition of previously unrecognized tax loss carryforwards, consequent to the recording of unrealized gains on available-for-sale financial assets in Other Comprehensive Income (OCI), should be recognized in income. This Abstract will
also apply in other circumstances when an unrealized gain is recognized in OCI.

Sep. 30, 2008

No material impactAmendments to CICA 3855,Financial InstrumentsRecognition and Measurement, and CICA 3862,Financial
InstrumentsDisclosures, permits reclassification of financial assets in specified circumstances. The amendments are intended to ensure consistency of Canadian GAAP with IFRS and U.S. GAAP and allow entities to move
financial assets out of categories that require fair value changes to be recognized in net income. These assets will remain subject to impairment testing and the amendments involve extensive disclosure requirements.

Effective for reclassifications made on or after July 1, 2008

No material impactCICA 1535,Capital Disclosures, specifies disclosures of (1) information about the entity's objectives, policies and processes for managing capital structure;
(2) quantitative data about what the entity regards as capital; and (3) whether the entity has complied with externally imposed capital requirements and if it has not complied, the consequences of such non-compliance.

Jan. 1, 2008

Disclosure only, see Note 22CICA 1400,General Standards of Financial Statement Presentation, was amended to include requirements to assess and disclose an entity's ability to continue
as a going concern.

Jan. 1, 2008

No material impact


F-13

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Description

Date of adoption

ImpactCICA 3031,Inventories, replaces CICA 3030,Inventories. The new Standard is the Canadian equivalent to IFRS IAS 2,Inventories. The main features of CICA 3031 are: (1) measurement of inventories at the lower of cost and net realizable value, with guidance on the determination of cost, including allocation
of overheads and other costs to inventory; (2) cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects assigned by using a specific identification of their
individual costs; (3) consistent use (by type of inventory with similar nature and use) of either first-in, first-out (FIFO) or weighted-average cost formula; (4) reversal of previous write-downs to net realizable value when there is a
subsequent increase in value of inventories; and (5) possible classification of major spare parts and servicing stand-by equipment as property, plant and equipment (CICA 3061Property, Plant and
Equipment, was amended to reflect this change).

Jan. 1, 2008

One-time credit on Jan. 1, 2008 to opening retained earnings and a corresponding increase in opening inventory of $47 million ($39 million after-tax)NOVA Chemicals' inventories are carried at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis and beginning Jan. 1, 2008, includes all costs of purchase,
costs of conversion (direct costs and an allocation of fixed and variable production overhead costs) and other costs incurred in bringing the inventories to their present location and condition.EIC 169,Determining Whether a Contract is Routinely Denominated in a Single Currency, provides guidance on how under CICA 3855,Financial InstrumentsRecognition and Measurement, to define or apply the term "routinely denominated in commercial transactions around the world" when assessing contracts for embedded foreign currency
derivatives. It also determines what factors can be used to determine whether a contract for the purchase or sale of a non-financial item such as a commodity is routinely denominated in a particular currency in commercial transactions around the
world. EIC 169 must be applied retrospectively to embedded foreign currency derivatives in host contracts that are not financial instruments accounted for in accordance with CICA 3855.

Jan. 1, 2008

No material impact


F-14

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Description

Date of adoption

ImpactCICA 3862,Financial InstrumentsDisclosure, and CICA 3863,Financial InstrumentsPresentation,
replace CICA Section 3861,Financial InstrumentsDisclosure and Presentation, and revises and enhances the disclosure requirements and carry forward, substantially unchanged, the presentation
requirements. These Standards emphasize the significance of financial instruments for the entity's financial position and performance, the nature and extent of risks arising from financial instruments and how these risks are managed. These Standards
are applicable to interim and annual periods relating to fiscal years beginning on or after Oct. 1, 2007. NOVA Chemicals chose to early adopt these Standards.

Dec. 31, 2007

Disclosure onlyEIC 166,Accounting Policy for Transaction Costs, requires an entity to disclose the accounting policy for transaction costs for all financial assets and
liabilities other than those classified as held for trading. Transaction costs can either be recognized in net income or added to the initial carrying amount of the asset or liability it is directly attributable to. The same accounting policy must be
chosen for all similar financial instruments, but a different accounting policy may be chosen for financial instruments that are not similar. EIC 166 should be applied retrospectively to transaction costs accounted for in accordance with CICA
Section 3855 in financial statements issued for interim and annual periods ending on or after Sept. 30, 2007. NOVA Chemicals' accounting policy with respect to transaction costs has been to capitalize all transaction costs for all financial
instruments (except for those classified as held for trading). This policy did not change as a result of adopting EIC 166.

Sep. 30, 2007

No material impactCICA 1506,Changes in Accounting Policies and Estimates and Errors, provides that an entity is permitted to change accounting policies only when it is
required by a primary source of GAAP, or when the change results in a reliable and more relevant presentation in the financial statements.

Jan. 1, 2007

No material impact


F-15

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Description

Date of adoption

ImpactCICA 1530,Comprehensive Income, establishes standards for reporting and presentation of comprehensive income (loss), which is defined as the change in
equity from transactions and other events and circumstances from non-owner sources. As a result of adopting CICA Section 1530, two new statements, Consolidated Statements of Changes in Shareholders' Equity and Consolidated Statements of
Comprehensive Income (Loss), have been presented. Comprehensive income (loss) is composed of NOVA Chemicals' net income (loss) and OCI. OCI includes unrealized gains (losses) on available-for-sale financial assets, foreign currency translation gains
(losses) on the net investment in self-sustaining foreign operations and changes in the fair market value of derivative instruments designated as cash flow hedges (not including the amount of ineffectiveness, if any), all net of income taxes.
The components of Comprehensive Income (Loss) are disclosed in the Consolidated Statements of Changes in Shareholders' Equity and Consolidated Statements of Comprehensive Income (Loss).

Jan. 1, 2007

Disclosure onlyCICA 3251,Equity, establishes rules for the presentation of equity and changes in equity during the reporting periods. The requirements of this Section
have been effected in the presentation of the Consolidated Statements of Changes in Shareholders' Equity.

Jan. 1, 2007

Disclosure only


F-16

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Description

Date of adoption

ImpactCICA 3855,Financial InstrumentsRecognition and Measurement, is intended to harmonize Canadian GAAP, U.S. GAAP and IFRS and establishes standards for recognition
and measurement of financial assets, liabilities and non-financial derivatives. Previous standards addressed disclosure and presentation matters only. All financial instruments are included on the Consolidated Balance Sheets and are measured at fair
value, except for held-to-maturity investments, loans and receivables and other financial liabilities, which are measured at amortized cost. CICA 3855 also requires financial and non-financial derivative instruments to be measured at fair value
and recorded as either assets or liabilities, with the exception of non-financial derivative contracts that were entered into and continue to be held for the purpose of receipt or delivery of a non-financial item in accordance with NOVA Chemicals'
expected purchase, sale or usage requirements. Certain derivatives embedded in non-derivative contracts must also be measured at fair value. Any changes in fair value of recognized derivatives are included in net income in the period in which they
arise unless specific hedge accounting criteria are met. Also, it is NOVA Chemicals' policy that transaction costs related to all financial assets and liabilities be added to the acquisition or issue cost, unless the financial instrument is
classified as held-for-trading, in which case the transaction costs are expensed.

Jan. 1, 2007

Because the standard requires long-term debt to be measured at amortized cost, certain deferred debt discount and issuance costs that were previously reported as long-term assets on the Consolidated Balance Sheets
were reclassified on a prospective basis and are now being reported as a reduction of the respective debt obligations ($17 million was reclassified as of Jan. 1, 2007). Also, certain investments in non-affiliated entities classified as
available- for-sale are now measured at fair value. Previously, these investments were measured at cost. On Jan. 1, 2007, the impact of this change was not material.CICA 3865,Hedges, replaces and expands AcG-13,Hedging Relationships, and the hedging guidance in CICA 1650,Foreign Currency Translation, and sets the standards for when and how hedge accounting may be applied, further restricting which hedging relationships qualify for hedge accounting. Also included in the Standard is
the concept that the ineffective portion of an otherwise qualifying hedging relationship would be included in earnings of the period. Hedge accounting ensures the recording, in the same period, of counterbalancing gains, losses, revenues and expenses
from designated derivative financial instruments as those related to the hedged item.

Jan. 1, 2007

On Jan. 1, 2007, NOVA Chemicals has reclassified, on a prospective basis from various current and long-term liability accounts to Long- term debt on the Consolidated Balance Sheets, a deferred gain of
$4 million which represented the remaining gain on settlement of a derivative instrument previously (under AcG-13) designated as a hedge.




F-17

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



As Previously
Reported

Change in
Accounting
Policy

As RestatedDeficit at Dec. 31, 2006

$
(354
)
$
(26
)
$
(380
)Net income for the year ended Dec. 31, 2007


347


1


348Other changes during the year ended Dec. 31, 2007


(36
)




(36
)Deficit at Dec. 31, 2007

$
(43
)
$
(25
)
$
(68
)Net loss for the year ended Dec. 31, 2008


(48
)

8


(40
)Other changes during the year ended Dec. 31, 2008


8





8Deficit at Dec. 31, 2008

$
(83
)
$
(17
)
$
(100
)Other non-current assets at Dec. 31, 2008

$
182

$
(27
)
$
155Future income taxes at Dec. 31, 2008

$
385

$
(8
)
$
377Accumulated other comprehensive income (loss) at Dec. 31, 2008

$
464

$
(2
)
$
462




F-18

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



F-19

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



F-20

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



F-21

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Software

3 to 5 yearsContracts

6 to 20 yearsLicenses and technology

10 to 20 years




F-22

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



F-23

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



F-24

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



F-25

---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

3.     IPIC ACQUISITION



(millions of dollars)

July 6, 2009
before
push-down
adjustment

Push-down
adjustments



IPIC
additional
equity
contribution



July 6, 2009
adjustedAssetsCurrent assetsCash and cash equivalents

$
250

$





$





$
250Accounts receivable


316














316Inventories


486


(2
)

(a)








484Prepaid expenses and other assets


37














37Future income taxes


19


(19
)

(a)








1,108


(21
)










1,087Intangibles





510


(a)








510Other non-current assets


180


(84
)

(a)








96Future income taxes


64


(4
)

(a)








60Property, plant and equipment, net


2,714


888


(a)








3,602$
4,066

$
1,289




$





$
5,355Liabilities and Shareholders' EquityCurrent liabilitiesBank loans

$
1

$





$





$
1Accounts payable and accrued liabilities


657


11


(a)


(17
)

(c)


651Future income taxes


1


12


(a)








13Long-term debt due within one year


980








(350
)

(c)


6301,639


23





(367
)




1,295Long-term debt


1,129


(106
)

(a)








1,023Future income taxes


336


464


(a)


5


(c)


805Deferred credits and long-term liabilities


288


154


(a)








4423,392


535





(362
)




3,565Shareholders' equityCommon shares


508


(9
)

(b)


350


(c)


849Contributed surplus


27


902


(b)


12


(c)


941Accumulated other comprehensive income


466


(466
)

(b)








Deficit


(327
)

327


(b)








674


754





362





1,790$
4,066

$
1,289




$





$
5,355






F-26

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

3.     IPIC ACQUISITION (Continued)





(millions of dollars)Share price$/share

$
6Shares outstandingmillions


83.2$
499Cash


(250
)Long-term debt


2,003Other liabilities


519Total purchase price

$
2,771




(millions of USD)

Fair Value
Adjusted
AmountsCurrent assets

$
1,087Intangibles


510Other non-current assets


96Future income taxes


60Property, plant and equipment


3,602Total assets acquired by IPIC

$
5,355Current liabilities


(669
)Long-term debt


(2,003
)Future income taxes


(813
)Unfavorable supply contracts


(12
)Other long-term liabilities


(430
)Total liabilities assumed

$
(3,927
)Net assets acquired by IPIC

$
1,428Cash paid


(499
)IPIC bargain purchase

$
929




F-27

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

3.     IPIC ACQUISITION (Continued)



F-28

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

3.     IPIC ACQUISITION (Continued)



Land

Indefinite lifePlant and equipment

5 - 20 yearsNon-facility equipment

3 - 20 years




Balance sheet line item

Push-down adjustment
increase (decrease)Other non-current assets

$
(65
)Accounts payable and accrued liabilities


7Deferred credits and long-term liabilities


212


F-29

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

3.     IPIC ACQUISITION (Continued)



Balance sheet line item

Push-down adjustment
increase (decrease)Accounts payable and accrued liabilities

$
(2
)Deferred credits and long-term liabilities


(70
)$
(72
)




4.     ACCOUNTS RECEIVABLE

December 31 (millions of dollars)

2009

2008Trade(1)

$
130

$
125Affiliate trade(1)


18


13148


138Allowance for doubtful accounts(1)


(11
)

(14
)137


124Trade accruals(1)


71


79Recoverable taxes


15


14Fair value of commodity-based derivatives(2)


6


Other(1)(3)


90


2319


219Income taxes receivable


51


71$
370

$
290


(1)Classified
as loans and receivables. See Note 22.(2)Classified
as held-for-trading. See Note 22.(3)2009
includes a short-term note receivable of $86 million due from the special purpose entity associated with one of NOVA Chemicals
accounts receivable securitization programs, see below.


F-30

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

4.     ACCOUNTS RECEIVABLE (Continued)



December 31 (millions of dollars, unless otherwise noted)

2009

2008

2007Amount sold at end of year

$
122

$
175

$
264Loss, dilution and other reserves (as a % of eligible accounts receivable)


35%


22%


23%Interest expense, net of servicing fees

$
7

$
10

$
20




December 31 (millions of dollars)

2009

2008

2007Proceeds from (repayment of) new securitizations

$
(21
)
$
(44
)
$
(23
)Proceeds from collections reinvested in revolving period securitizations(1)

$
671

$
1,809

$
1,800Servicing fees received(2)

$
1

$
2

$
2Other cash flows received(3)

$
661

$
538

$
598


(1)Collections
received by the SPE on accounts receivable previously sold are used by the SPE to purchase interests in new accounts receivable.(2)Servicing
fees are considered to be immaterial on an annual basis and as such are recorded as received.


F-31

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

4.     ACCOUNTS RECEIVABLE (Continued)

(3)Sales
proceeds from trade receivables that are ineligible under the terms of the banks securitization agreement due to items such as age.




December 31 (millions of dollars)

2009

2008Amount sold at end of year

$
31

$
27Interest expense

$
1

$
1




December 31 (millions of euros)

2009

2008

2007Amount sold at end of year

€
24

€
25

€
37Interest expense

€
1

€
3

€
5




5.     INVENTORIES

December 31 (millions of dollars)

2009

2008Materials and supplies

$
34

$
45Raw materials


321


218Finished goods


267


266$
622

$
529


F-32

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

5.     INVENTORIES (Continued)



Year ended December 31
(millions of dollars)

2009

2008Cost of inventories included in Feedstock and operating costs and Depreciation and amortization(1)

$
3,325

$
6,754


(1)Refer
to accounting policy on Inventories in Note 2.




6.     INTANGIBLES

December 31 (millions of dollars)

2009

2008Software

$
17

$
Contracts


376


Licenses and technology


117


510


Accumulated amortization


(17
)

$
493

$



7.     OTHER NON-CURRENT ASSETS

December 31 (millions of dollars)

2009

2008(1)Investments(2)

$
28

$
26Advances receivable from affiliate(3)(4)


34


57Other assets(5)


39


72$
101

$
155


(1)Restated
for adoption of CICA 3064, see Note 2.(2)Includes
an investment of $15 million (2008$15 million) in an affiliated special purpose entity with respect to the accounts
receivable securitization program described in Note 4. Also includes a $12 million (2008$11 million) investment in sEnergy, classified as
available-for-sale securities with no published market price and recorded at cost and other miscellaneous investments classified as available-for-sale
securities with no published market price and recorded at cost. In 2008, an impairment charge of $5 million was charged to Restructuring (see Note 15) for the investment in common
shares of Envirokare Tech Inc.(3)2009
and 2008 includes $29 million and $43 million, respectively, of unsecured notes receivable, bearing interest at 4.5% per annum.
$5 million (2008$5 million) of the advance is subordinated to certain notes receivable.(4)Classified
as loans and receivables. See Note 22.(5)See
schedule of other assets below.


F-33

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

7.     OTHER NON-CURRENT ASSETS (Continued)



December 31 (millions of dollars)

2009

2008(1)Note receivable(2)(3)


13


13Fair value of commodity-based derivatives(4)


12


Other assets and deferred costs(1)


9


4Pension asset (Note 3 and 18)


5


55$
39

$
72


(1)Restated
for adoption of CICA 3064, see Note 2.(2)Note
receivable in connection with the sale of the Chesapeake, Virginia, facility in 2007. The note bears interest at 8.75%, requires a balloon payment in
November 2012 and is secured by the Chesapeake, Virginia, facility.(3)Classified
as loans and receivables. See Note 22.(4)Classified
as held-for-trading. See Note 22.




F-34

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

7.     OTHER NON-CURRENT ASSETS (Continued)



Year ended Dec. 31July 6Dec. 31,
2009

Jan 1.July 5,
2009(millions of dollars)

2008(1)

2007(1)Successor

PredecessorRevenue

$
779

$
644

$
2,393

$
1,480Operating expenses, depreciation and income taxes


(742
)

(614
)

(2,387
)

(1,430
)Net income

$
37

$
30

$
6

$
50


F-35

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

7.     OTHER NON-CURRENT ASSETS (Continued)



December 31
(millions of dollars)

2009

2008(1)Current assets

$
283

$
262Plant, property and equipment and other assets


903


717Current liabilities


(166
)

(138
)Long-term liabilities


(125
)

(151
)Venturers' equity

$
895

$
690




Year ended Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
2009(millions of dollars)

2008

2007Successor

PredecessorCash inflows (outflows) from:Operating activities

$
10

$
(13
)
$
150

$
139Financing activities

$
(1
)
$


$
(8
)
$
(8
)Investing activities

$
17

$
(12
)
$
(22
)
$
(48
)


(1)Restated
for adoption of CICA 3064, see Note 2.




Year ended Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
2009(millions of dollars)

2008(1)

2007(1)Successor

PredecessorRevenue

$
624

$
526

$
1,874

$
1,032Operating expenses, depreciation and income taxes


(628
)

(514
)

(1,998
)

(1,095
)Net income

$
(4
)
$
12

$
(124
)
$
(63
)




December 31
(millions of dollars)

2009

2008(1)Current assets

$
242

$
228Plant, property and equipment and other assets


38


314Current liabilities


(138
)

(110
)Long-term liabilities


(106
)

(134
)Venturers' equity

$
36

$
298


F-36

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

7.     OTHER NON-CURRENT ASSETS (Continued)



Year ended Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
2009(millions of dollars)

2008

2007Successor

PredecessorCash inflows (outflows) from:Operating activities

$
5

$
(14
)
$
(11
)
$
74Financing activities

$


$


$


$
Investing activities

$
21

$
(9
)
$
(21
)
$
(47
)


(1)Restated
for adoption of CICA 3064, see Note 2.


8.     PROPERTY, PLANT AND EQUIPMENT

December 31 (millions of dollars)

2009(1)

2008(1)Successor

PredecessorPlant and equipment

$
3,528

$
6,317Assets under capital lease


6


19Land


49


25Assets under construction(2)


98


1923,681


6,553Accumulated depreciation(3)


(111
)

(3,745
)$
3,570

$
2,808


(1)See
Note 10 for discussion of the collateral provided under the revolving credit facility.(2)Assets
under construction are not depreciated until they are available for commercial production.(3)Accumulated
depreciation for plant and equipment at Dec. 31, 2009, was $111 million (Dec. 31, 2008$3,736 million).
Accumulated depreciation for assets under capital lease at Dec. 31, 2009, was $0 million (Dec. 31, 2008$9 million).




Land

Indefinite lifePlant and equipment

5 - 20 yearsNon-facility equipment

3 - 20 years


F-37

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

9.     ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

December 31 (millions of dollars)

2009

2008Accounts payableTrade(1)

$
442

$
397Accrued taxes


4


7Other(1)


50


18496


422Accrued liabilitiesInterest(1)


32


24Pension and post-retirement benefit obligations (Note 18)


16


40Income taxes payable


7


7Accrued mark-to-market liability on equity derivative(2)





118Fair value of commodity-based derivatives(2)(3)





12Dividends(1)





7Advances and notes due to affiliate(1)





6Deferred share unit plan obligations (Note 14)





3Deferred gain on sale of asset





2Restricted stock unit plan obligations (Note 13)





1Notes payable(1)





1Trade accruals and other accrued liabilities(1)


127


138182


359$
678

$
781


(1)Classified
as other financial liabilities. See Note 22.(2)Classified
as held-for-trading. See Note 22.(3)Balance
at Dec. 31, 2008 is net of a $5 million margin call.


F-38

---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

10.   LONG-TERM DEBT

2009

2008December 31 (millions of dollars, unless otherwise noted)

Maturity

Amount

Weighted-
average
year-end
interest
rate

Amount

Weighted-
average
year-end
interest
rateRevolving credit facilities(1)


2010 - 2013

$





$
143


3.7
%Unsecured debentures and notes(1)(2)


2012 - 2025


1,709


6.9
%

1,104


6.6
%Medium-term notes(1)











250


7.4
%Preferred shares(1)


2010


75


5.2
%

126


3.9
%Other unsecured debt(3)


2010 - 2020


40


4.6
%

34


5.7
%Transaction costs and other(4)











(7
)

1,824





1,650Less amounts due within one year





(312
)




(380
)$
1,512




$
1,270


(1)Classified
as other financial liabilities (excluding obligations under capital leases 2009$13 million and
2008$16 million). See Note 22.(2)On
July 6, 2009, in connection with push-down accounting for the IPIC acquisition (See Note 3), these notes were recorded
at their then market prices. The related discounts recorded on July 6, 2009 are being accreted using the effective interest rate method.(3)Composed
primarily of non-recourse joint venture secured debt (2009$17 million and 2008$17 million),
whereby security is limited to NOVA Chemicals' net investment in the Joffre co-generation joint venture, obligations under capital leases (2009$13 million at 2.48% and
2008$16 million at 2.69%) and the Advanced Manufacturing Investment Strategy Loan for Cdn $10 million drawn in November 2009 with a maturity date of Dec. 1,
2019 (2009$10 million). The non-recourse joint venture debt and the Advanced Manufacturing Investment Strategy Loan are classified as other financial liabilities. See
Note 22.(4)Through
July 5, 2009, certain deferred debt discount and issuance costs and deferred gains on interest swaps were reclassified as of Jan. 1,
2007, on a prospective basis in accordance with CICA Section 3855. See Note 2. These transaction costs were removed from the consolidated balance sheet on July 6, 2009, in
connection with push-down accounting for the IPIC acquisition (see Note 3). At Dec. 31, 2009, all issuance costs and debt discounts have been included in the
corresponding long-term debt balance and are being accreted using the effective interest rate method.




F-39

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

10.   LONG-TERM DEBT (Continued)



December 31 (millions of dollars, unless otherwise noted)

Face
amount

Stated
interest rate2009

2008Maturity2010(1)

$
239


7.85%

$
234

$
2042012(2)

$
400


6.5%


378


4002013(2)

$
400


Floating(3)


342


4002016(2)

$
350


8.375%


340


2019(2)

$
350


8.625%


339


2025(2)

$
100


7.875%


76


100$
1,709

$
1,104


(1)$250 million
Canadian dollars, callable at the option of the Corporation at any time.(2)Callable
at the option of the Corporation at any time.(3)LIBOR + 3.125%;
3.60% at Dec. 31, 2009 (5.725% at Dec. 31, 2008).






F-40

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

10.   LONG-TERM DEBT (Continued)





F-41

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

10.   LONG-TERM DEBT (Continued)







F-42

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

10.   LONG-TERM DEBT (Continued)







2008

2009

2010Financial Covenants
(checked at end of quarter)

Q1 to Q4

Q1

Q2

Q3

Q4

Q1Prior Senior Secured Revolving Facility

1


2


3


4

N/A

N/ATotal Return Swap

1


2


3


4

4

N/APrior A/R Securitization Programs

1


2


3


4

N/A

N/AEDC Facility

N/A


2


3


4

N/A

N/ABackstop Facility

N/A


2


3


N/A

N/A

N/ANew Senior Secured Revolving Facility

N/A


N/A


N/A


N/A

5

5New A/R Securitization Programs

N/A


N/A


N/A


N/A

N/A

5


(1)Maximum
net debt-to-cash flow ratio less than 5.0 and interest coverage ratio greater than 2.0 using rolling
twelve months.(2)Maximum
net debt-to-cash flow ratio less than 5.0 and interest coverage ratio greater than 2.0 using rolling fifteen months,
excluding three months ended December 31, 2008.(3)Minimum
consolidated cash flow not less than $0.(4)Minimum
consolidated cash flow not less than $50 million.(5)Maximum
senior debt to cash flow ratio of 3:1 and debt to capitalization ratio not to exceed 60%.


F-43

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

10.   LONG-TERM DEBT (Continued)



F-44

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

10.   LONG-TERM DEBT (Continued)



(millions of dollars)2010

$
3172011


102012


4012013


4022014


3Thereafter


821$
1,954




Year ended
Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
2009(millions of dollars)

2008

2007Successor

PredecessorInterest on long-term debt

$
67

$
73

$
125

$
142Interest on bank loans, securitizations and other


21


25


43


4488


98


168


186Interest capitalized during plant construction


(1
)







(1
)Interest income


(2
)

(4
)

(12
)

(10
)$
85

$
94

$
156

$
175


F-45

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

11.   DEFERRED CREDITS AND LONG-TERM LIABILITIES

December 31 (millions of dollars)

2009

2008Deferred credits(1)Deferred income

$


$
22Deferred gain on sale of investments(2)





29Deferred gain on sale of asset(3)





10Deferred gain on sale of railcars





6Other deferred credits





3


70Long-term liabilitiesPension and post-retirement benefit obligations (Note 18)


315


87Fair value of commodity-based derivatives(4)





48Notes payable(5)(6)


27


40Asset retirement obligations (Note 19)


39


20Restricted stock unit plan obligations (Note 13)





5Other long-term liabilities(5)


39


32420


232$
420

$
302


(1)Represented
amounts realized on the sale of certain investments and other long-term assets that were being recognized in income (loss) on a
straight-line basis over the terms of the related contracts. All amounts were removed from the consolidated balance sheet on July 6, 2009, in connection with push-down
accounting for the IPIC acquisition (see Note 3).(2)Represented
the long-term portion of deferred gains realized on the 2003 sale of a 50% interest in Fort Saskatchewan Ethylene Storage Limited
Partnership.(3)Represented
the long-term portion of a deferred gain realized on the sale of an ethylene pipeline system.(4)Classified
as held-for-trading. See Note 22.(5)Classified
as other financial liabilities. See Note 22.(6)2009
and 2008 include $21 million and $34 million, respectively, of unsecured notes payable, bearing interest at 4.5% per annum.


12.   COMMON SHARES



December 31 (number of shares)

2009

2008

2007Under the employee incentive stock option plan(1)(2)





7,078,735


7,185,096Under the director compensation plan





47,800


47,800


7,126,535


7,232,896


(1)At
the closing of the IPIC transaction (see Note 1), the employee incentive stock option plan was cancelled. There are no options outstanding
to officers and employees at Dec. 31, 2009.(2)Prior
to July 6, 2009, a total of 13 million common shares were approved by shareholders for issuance under the employee incentive stock
option plan.


F-46

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

12.   COMMON SHARES (Continued)



13.   STOCK-BASED COMPENSATION



F-47

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

13.   STOCK-BASED COMPENSATION (Continued)



Year ended Dec. 31Period from
Jan. 1July 5, 20092008

2007Options

Weighted-
Average
Exercise
Price
(Canadian $)

Options

Weighted-
Average
Exercise
Price
(Canadian $)

Options

Weighted-
Average
Exercise
Price
(Canadian $)Outstanding at beginning of period


2,544,533

$
30.58


2,826,041

$
30.47


4,286,234

$
29.48Granted




$



122,700

$
28.21


97,200

$
36.69Exercisedsettled in shares




$



(105,197
)
$
26.05


(357,683
)
$
25.25Exercisedretired for cash




$



(18,921
)
$
25.57


(670,781
)
$
29.28Exercisedsettled as SARs(1)




$



(10,594
)
$
26.35


(507,221
)
$
28.03Cancelled


(2,544,533
)
$
30.58


(269,496
)
$
30.60


(21,708
)
$
43.19Outstanding at end of period




$



2,544,533

$
30.58


2,826,041

$
30.47Exercisable at end of period




$



2,367,886

$
30.39


2,640,162

$
29.84


(1)In
2009, no shares were issued to settle options exercised as SARs (20081,164 and 2007135,573).




Year ended Dec. 31Period from
Jan. 1July 5, 20092008

2007Options

Weighted-
Average
Exercise
Price
(U.S. $)

Options

Weighted-
Average
Exercise
Price
(U.S. $)

Options

Weighted-
Average
Exercise
Price
(U.S. $)Outstanding at beginning of period


1,296,826

$
37.47


1,228,526

$
38.16


1,192,463

$
38.60Granted




$



97,650

$
27.89


76,900

$
31.05Exercisedretired for cash




$





$



(12,011
)
$
33.57Cancelled


(1,296,826
)
$
37.47


(29,350
)
$
34.50


(28,826
)
$
39.25Outstanding at end of period




$



1,296,826

$
37.47


1,228,526

$
38.16Exercisable at end of period




$



1,023,873

$
38.87


711,965

$
39.60




F-48

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

13.   STOCK-BASED COMPENSATION (Continued)



Year ended Dec. 31Period from
Jan. 1July 5,
2009Weighted-Average Assumptions

2008

2007Expected dividend yield (%)





1.4


1.1Expected volatility (%)





32.5


33.6Risk-free interest rate (%)





3.0


4.4Expected life (years)





4.0


4.0Fair value of options granted during the year

$


$
6.6

$
9.3




Year ended Dec. 31Period from
Jan. 1July 5, 20092008

2007Units

Weighted-
Average
Redemption
Price
(U.S. $)

Units

Weighted-
Average
Redemption
Price
(U.S. $)

Units

Weighted-
Average
Redemption
Price
(U.S. $)Outstanding at beginning of period


2,560,677

$
22.05


2,574,352

$
22.08


3,505,591

$
21.20Granted




$





$





$
Redeemed




$



(1,250
)
$
17.42


(930,514
)
$
18.78Cancelled


(2,560,677
)
$
22.05


(12,425
)
$
27.90


(725
)
$
27.90Outstanding at end of period




$



2,560,677

$
22.05


2,574,352

$
22.08Exercisable at end of period




$



2,560,677

$
22.05


2,574,352

$
22.08


F-49

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

13.   STOCK-BASED COMPENSATION (Continued)



Year ended Dec. 31Period from
Jan. 1July 5, 20092008

2007Restricted Stock Units

Units

Units

UnitsOutstanding at beginning of period


1,498,521


994,980


591,377Granted


3,750,661


702,911


554,850Dividend equivalents credited


89,682


26,504


10,127Redeemed


(5,324,294
)

(223,182
)

(131,006
)Cancelled


(14,570
)

(2,692
)

(30,368
)Outstanding at end of period





1,498,521


994,980




14.   DEFERRED SHARE UNIT PLANS



F-50

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

14.   DEFERRED SHARE UNIT PLANS (Continued)



Year ended Dec. 31Period from
Jan. 1July 5, 20092008

2007Employee Deferred Share Units

Units

Weighted-
Average
Price
(U.S. $)

Units

Weighted-
Average
Price
(U.S. $)

Units

Weighted-
Average
Price
(U.S. $)Outstanding at beginning of period


576,924

$
4.58


564,701

$
21.42


547,643

$
19.90Earned


31,290

$
5.95


12,223

$
20.94


179,249

$
28.07Redeemed


(608,214
)
$
6.00




$



(162,191
)
$
23.65Outstanding at end of period




$



576,924

$
4.58


564,701

$
21.42




Year ended Dec. 31Period from
Jan. 1July 5, 20092008

2007Non-Employee Directors Deferred Share Units

Units

Weighted-
Average
Price
(U.S. $)

Units

Weighted-
Average
Price
(U.S. $)

Units

Weighted-
Average
Price
(U.S. $)Outstanding at beginning of period


165,892

$
4.60


117,427

$
31.73


101,131

$
31.35Earned


26,730

$
6.00


48,465

$
12.14


18,023

$
34.09Redeemed


(192,622
)
$
6.00




$



(1,727
)
$
33.87Outstanding at end of period




$



165,892

$
4.60


117,427

$
31.73




15.   RESTRUCTURING CHARGES



F-51

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

15.   RESTRUCTURING CHARGES (Continued)







F-52

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

15.   RESTRUCTURING CHARGES (Continued)



16.   OTHER (LOSSES) GAINS

Year ended Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
20092008

2007(millions of dollars)

Before-Tax

After-Tax

Before-Tax

After-Tax

Before-Tax

After-Tax

Before-Tax

After-TaxSuccessor

PredecessorGain on sale of Chesapeake(1)

$


$


$


$


$


$


$
17

$
12Gain on sale of Cambridge




















1


1Other


1


1


6


6


(2
)

(1
)

2


1$
1

$
1

$
6

$
6

$
(2
)
$
(1
)
$
20

$
14


(1)The
Corporation sold the land and plant facility at Chesapeake, Virginia which had ceased operations in June 2006.


F-53

---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

17.   INCOME TAXES



Year ended Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
2009(millions of dollars, except as noted)

2008(1)

2007(1)Successor

PredecessorIncome (loss) before income taxes

$
5

$
(302
)
$
(102
)
$
400Statutory income tax rate


29.0%


29.0%


29.50%


32.12%Computed income tax (recovery) expense


1

$
(88
)
$
(30
)
$
128(Decrease) increase in taxes resulting from:Permanent difference on capital gains and losses





8





(Higher) lower effective foreign tax rates


3


2


(4
)

(9
)Income tax rate adjustments(2)


(22
)







(65
)(Decrease) increase in valuation allowance(3)


(5
)

15


41


14Permanent difference on foreign exchange gains and losses(4)








(56
)

Increase (reduction) in tax reserve(5)


22





(20
)

(13
)Other


8





7


(3
)Income tax expense (recovery)

$
7

$
(63
)
$
(62
)
$
52Current income tax expense (recovery)

$
20

$
(69
)
$
57

$
109Future income tax (recovery) expense


(13
)

6


(119
)

(57
)Income tax expense (recovery)

$
7

$
(63
)
$
(62
)
$
52


(1)Restated
for adoption of CICA 3064, see Note 2.(2)In
2009, Ontario (2007Federal Canadian Government) enacted a tax rate reduction, which reduced income tax accruals for future tax liabilities
by $22 million (2007$65 million). These benefits have been recorded as a reduction of income tax expense.(3)The
tax benefit of certain costs have not been recorded due to the uncertainty that tax benefits will be realized prior to the expiration of the loss
carryforwards in the U.S.(4)As
a result of the change in functional currency on Oct. 1, 2008 (see Note 22), NOVA Chemicals recorded $111 million of income
primarily related to foreign exchange. This amount is not taxable, therefore, income taxes are $25 million lower than would be expected. In addition to this, foreign exchange losses will be
recorded for tax purposes that are not recorded for book purposes, resulting in a tax benefit of $31 million.(5)NOVA
Chemicals has a tax reserve, which is available to settle periodic tax disputes and ongoing tax adjustments. NOVA Chemicals assesses this reserve from
time to time for adequancy.


F-54

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

17.   INCOME TAXES (Continued)



(millions of dollars)

2009

2008Investment tax credits

$
57

$
Reserves not currently deductible


2


66Other


3


2Future income tax asset

$
62

$
68




(millions of dollars)

2009

2008(1)Basis difference in plant and equipment

$
(866
)
$
(504
)Unrealized foreign exchange gains (losses)


6


(9
)Reserves not currently deductible


40


64Losses available to be carried forward


113


306Other


(16
)

65Valuation allowance


(94
)

(299
)Future income tax liability

$
(817
)
$
(377
)


(1)Restated
for adoption of CICA 3064, see Note 2.




F-55

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

17.   INCOME TAXES (Continued)



Year ended Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
2009(millions of dollars)

2008(1)

2007(1)Successor

PredecessorIncome (loss) before income taxesCanadian

$
57

$
(233
)
$
18

$
482Foreign


(52
)

(69
)

(120
)

(82
)$
5

$
(302
)
$
(102
)
$
400Current income tax expense (recovery)Canadian

$
19

$
(71
)
$
55

$
105Foreign


1


2


2


4$
20

$
(69
)
$
57

$
109Future income tax (recovery) expenseCanadian

$
(1
)
$
5

$
(127
)
$
(27
)Foreign


(12
)

1


8


(30
)$
(13
)
$
6

$
(119
)
$
(57
)Total income tax expense (recovery)

$
7

$
(63
)
$
(62
)
$
52


(1)Restated
for adoption of CICA 3064, see Note 2.


18.   EMPLOYEE FUTURE BENEFITS



F-56

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

18.   EMPLOYEE FUTURE BENEFITS (Continued)



F-57

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

18.   EMPLOYEE FUTURE BENEFITS (Continued)



Pension Plans

Post Retirement PlansYear ended Dec. 31





Year ended Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
2009

July 6Dec. 31,
2009

Jan. 1July 5,
2009(millions of dollars)

2008

2007

2008

2007Successor

Predecessor

Successor

PredecessorCurrent service cost

$
10

$
6

$
21

$
25

$
1

$


$
1

$
2Interest cost on accrued benefit obligations


24


21


48


46


3


3


5


5Actual loss (return) on plan assets


(37
)

(17
)

123


2











Actuarial (gain) loss on accrued benefit obligations


(10
)

65


(127
)

5











Costs arising in the period


(13
)

75


65


78


4


3


6


7Differences between costs arising in the period and costs recognized in the period in respect of the long-term nature of employee future benefit
costs:(Return) loss on plan assets


15


(2
)

(161
)

(58
)










Transitional (asset) obligations





(3
)

(6
)

(6
)







1


1Actuarial loss (gain)


11


(58
)

122


4








1


1Past service and actual plan amendments




















(1
)

(1
)Net defined benefit costs recognized


13


12


20


18


4


3


7


8Curtailment/
special termination (credit) charge











(4
)










Settlement charge





16


1














Total benefit cost recognized

$
13

$
28

$
21

$
14

$
4

$
3

$
7

$
8


F-58

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

18.   EMPLOYEE FUTURE BENEFITS (Continued)



Pension Plans

Post Retirement Plans(millions of dollar, except as noted)

July 6Dec. 31,
2009

Jan. 1July 5,
2009

Year
ended
2008

July 6Dec. 31,
2009

Jan. 1July 5,
2009

Year
ended
2008Successor

Predecessor

Successor

PredecessorChange in benefit obligationsBenefit obligation at beginning of period

$
786

$
708

$
950

$
84

$
85

$
90Current service cost


13


7


21


1





1Interest cost


24


21


48


3


2


5Experience (gain) loss


(5
)

78


(115
)

14


(2
)

(6
)Plan amendments


1








4





Settlement gain


(7
)

(41
)

(9
)







Employee contributions








3


1


1


2Acquisition/divestiture

















Benefits paid


(26
)

(18
)

(45
)

(3
)

(3
)

(6
)Transfer from settlement of past claim

















7NOVA Chemicals' share of obligations transferred to INEOS NOVA JV


(8
)




(9
)







1Foreign currency exchange rate (gain) loss


67


31


(136
)

4


1


(9
)Benefit obligation at end of period

$
845

$
786

$
708

$
108

$
84

$
85Change in plan assetsFair value of plan


555


527


784








Actual return (loss) on plan assets at beginning of period


51


10


(123
)







Employer and employee contributions


21


54


43


3


3


6Settlement loss


(8
)

(41
)

(9
)







Acquisition/divestiture

















Benefits paid


(26
)

(19
)

(45
)

(3
)

(3
)

(6
)NOVA Chemicals' share of assets transferred to INEOS NOVA JV


(6
)




(9
)







Foreign currency exchange rate (loss) gain


50


24


(114
)







Fair value of plan assets at end of period

$
637

$
555

$
527

$


$


$
Funded statusPlan assets in deficiency of benefit obligation

$
(208
)
$
(231
)
$
(181
)
$
(108
)
$
(84
)
$
(85
)Unrecognized net transitional (asset) obligation





(24
)

(26
)




7


6Unrecognized prior service cost


1





(5
)

3


(14
)

(15
)Unrecognized net actuarial (gain) loss


(28
)

290


235


15


18


20Net amounts recognized in consolidated balance sheets

$
(235
)
$
35

$
23

$
(90
)
$
(73
)
$
(74
)


F-59

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

18.   EMPLOYEE FUTURE BENEFITS (Continued)



Pension Plans

Post Retirement PlansWeighted-average assumptions used to determine end of year obligations

2009

2008

2009

2008Discount rate


5.8%


6.4%


6.1%


6.6%Assumed long-term rate of return on plan assets(1)


7.5%


7.5%





Rate of increase in future compensation


3.9%


3.9%





Long-term health care inflation(2)








5.0%


5.0%


(1)NOVA
Chemicals establishes an appropriate long-term rate of return for each plan's assets which reflects asset allocations within each plan as well as
independent views of long-term rate of return expectations for each asset class.(2)Ultimate
trend rate, expected to be achieved by 2024 for Canadian plans and 2017 and 2019 for U.S. plans. The initial assumed health care cost trend rate at
Dec. 31, 2009 was 8% on average.




(millions of dollars)

Accrued Benefit
Obligation

Fair Value of
AssetsDecember 31, 2009

$
826

$
625December 31, 2008

$
683

$
500




(millions of dollars)

Pension Plans

Post-
Retirement
Plans2010

$
47

$
72011

$
36

$
82012

$
39

$
82013

$
42

$
82014

$
44

$
8Five Years Thereafter

$
267

$
46




F-60

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

18.   EMPLOYEE FUTURE BENEFITS (Continued)



Target Allocation

Percentage of Plan AssetsAsset Category

2010

2009

2008Year ended December 31Equities


60%


59%


52%Fixed Income


40%


41%


48%Total


100%


100%


100%




F-61

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

18.   EMPLOYEE FUTURE BENEFITS (Continued)



19.   ASSET RETIREMENT OBLIGATIONS



Year ended December 31
(millions of dollars)

2009

2008Beginning of year

$
20

$
23Increase in obligation due to push-down accounting (see Note 3)


12


Increase (decrease) in obligation as a result of changes in Canadian dollar


4


(5
)Increase in present value of the obligations (accretion expense)


3


2End of year

$
39

$
20


20.   CONTINGENCIES AND COMMITMENTS



F-62

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

21.   SEGMENTED INFORMATION



F-63

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

21.   SEGMENTED INFORMATION (Continued)



Year ended Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
2009(millions of dollars)

2008

2007Successor

PredecessorJoffre Olefins


290

$
240

$
1,104

$
970Corunna Olefins


344


290


1,680


1,334Polyethylene


802


697


2,373


2,016Performance Styrenics


143


104


401


402INEOS NOVA Joint Venture


606


544


1,872


2,080Eliminations


(6
)

(4
)

(64
)

(70
)Total revenue from external customers

$
2,179

$
1,871

$
7,366

$
6,732


(1)Third-party.




Year ended Dec. 31July 6Dec. 31, 2009

Jan. 1July 5, 2009(millions of dollars)

2008

2007Successor

PredecessorJoffre Olefins

$
274

$
263

$
1,055

$
833Corunna Olefins


182


147


857


741Polyethylene


1


1


10


6Performance Styrenics


13


1


32


10INEOS NOVA Joint Venture


29


8


70


12Eliminations


(499
)

(420
)

(2,024
)

(1,602
)Total intercompany and affiliate revenue

$


$


$


$



F-64

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

21.   SEGMENTED INFORMATION (Continued)



Year ended Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
2009(millions of dollars)

2008

2007Successor

PredecessorJoffre Olefins

$
564

$
503

$
2,159

$
1,803Corunna Olefins


526


437


2,537


2,075Polyethylene


803


698


2,383


2,022Performance Styrenics


156


105


433


412INEOS NOVA Joint Venture


635


552


1,942


2,092Eliminations


(505
)

(424
)

(2,088
)

(1,672
)Total revenue

$
2,179

$
1,871

$
7,366

$
6,732


(1)Before
intersegment eliminations.




Year ended Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
20092008(1)

2007(1)Successor

PredecessorJoffre Olefins

$
105

$
87

$
621

$
531Corunna Olefins


(27
)

(78
)

(243
)

152Polyethylene


149


42


(43
)

127Performance Styrenics


(2
)

(27
)

(69
)

(30
)INEOS NOVA Joint Venture


(2
)

6


(103
)

(5
)Corporate


(130
)

(236
)

(143
)

(202
)Eliminations


(4
)

(8
)

36


(18
)Total operating income (loss)

$
89

$
(214
)
$
56

$
555Interest expense (net)


(85
)

(94
)

(156
)

(175
)Other gains (losses)


1


6


(2
)

20Income tax (expense) recovery


(7
)

63


62


(52
)Net (loss) income

$
(2
)
$
(239
)
$
(40
)
$
348


(1)Restated
for adoption of CICA 3064, see Note 2.


F-65

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

21.   SEGMENTED INFORMATION (Continued)



Year ended Dec. 31July 6Dec. 31, 2009

Jan. 1July 5, 20092008(1)

2007(1)Successor

PredecessorJoffre Olefins

$
77

$
33

$
65

$
57Corunna Olefins


12


32


64


57Polyethylene


34


37


76


69Performance Styrenics


4


12


24


25INEOS NOVA Joint Venture





13


25


21Corporate


4


3


7


8Total depreciation and amortization

$
131

$
130

$
261

$
237


(1)Restated
for adoption of CICA 3064, see Note 2.




Year ended Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
20092008

2007Successor

PredecessorJoffre Olefins

$
3

$
3

$
15

$
21Corunna Olefins


12


8


41


62Polyethylene


35


24


77


33Performance Styrenics


7


3


13


10INEOS NOVA Joint Venture


3


3


20


30Total capital expenditures

$
60

$
41

$
166

$
156




2009

2008(1)Joffre Olefins

$
2,587

$
786Corunna Olefins


539


1,008Polyethylene


1,570


944Performance Styrenics


132


303INEOS NOVA Joint Venture


229


458Corporate


478


507Eliminations


(2
)

1Total assets

$
5,533

$
4,007


(1)Restated
for adoption of CICA 3064, see Note 2.


F-66

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

21.   SEGMENTED INFORMATION (Continued)



Year ended
Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
20092008

2007Successor

PredecessorCanada

$
593

$
571

$
2,617

$
2,333United States


1,120


897


3,349


2,896Europe and Other


466


403


1,400


1,503$
2,179

$
1,871

$
7,366

$
6,732


(1)Based
on location of customer.




2009

2008(2)Canada

$
4,892

$
2,900United States


388


766Europe and Other


253


341$
5,533

$
4,007


(1)Based
on location of operating facility.(2)Restated
for adoption of CICA 3064, see Note 2.


F-67

---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

22.   FINANCIAL INSTRUMENTS



Carrying
amounts

From interest
income
(expense), net

Impairment
charges(1)

Realized/Unrealized
gain (loss)

Net gain
(loss)(millions of dollars)

Dec. 31,
2009

July 6
Dec. 31,
2009

Jan. 1
July 5,
2009

Jan. 1
Dec. 31,
2009

July 6
Dec. 31,
2009

Jan. 1
July 5,
2009

July 6
Dec. 31,
2009

Jan. 1
July 5,
2009Successor

Predecessor

2009

Successor

Predecessor

Successor

PredecessorHeld-for-trading financial assets (Notes 4 and 7)(2)

$
285

$


$


$


$
48

$
5

$
48

$
5Held-for-trading financial liabilities (Notes 9 and 11)

$






(4
)







(9
)




(13
)Loans and receivables (Notes 4 and 7)

$
345


1


1











1


1Available-for-sale securities(3)

$
24


1














1


Other financial liabilities (Notes 9, 10 and 11)

$
2,529


(83
)

(88
)










(83
)

(88
)$
(81
)
$
(91
)
$


$
48

$
(4
)
$
(33
)
$
(95
)


(1)There
were no impairment charges in the 2009 Predecessor or Successor periods.(2)Includes
cash and cash equivalents.(3)$12 million
included in Prepaid expenses and other assets recorded at fair value and $12 million included in Other non-current
assets with no published market price and recorded at cost (Note 7).


Dec. 31, 2008 (millions of dollars)

Carrying
amounts
2008

From interest
income
(expense), net

Impairment
charges

Realized/
Unrealized
gain (loss)

Net gain
(loss)Held-for-trading financial assets (Notes 3 and 5)

$
74

$
1

$


$


$
1Held-for-trading financial liabilities (Notes 9 and 11)

$
178


(9
)




(209
)

(218
)Loans and receivables (Notes 4 and 7)

$
324


4








4Available-for-sale securities (Note 7)

$
11





(5
)

1


(4
)Other financial liabilities (Notes 9, 10 and 11)

$
2,306


(141
)







(141
)$
(145
)
$
(5
)
$
(208
)
$
(358
)


F-68

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

22.   FINANCIAL INSTRUMENTS (Continued)



(millions of dollars)

Carrying
amounts
2009

Level 1

Level 2

Level 3Held-for-trading financial assets

$
285

$
267

$
18

$
Available-for-sale securities


12


12





$
297

$
279

$
18

$





F-69

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

22.   FINANCIAL INSTRUMENTS (Continued)



Carrying Amount(1)

Estimated Fair Value(2)December 31 (millions of dollars)

2009

2008

2009

2008Long-term debt

$
1,824

$
1,650

$
1,925

$
1,032


(1)Includes
debt installments due within one year.(2)The
fair value of long-term debt is based on quoted market prices (Level 1 on the fair value hierarchy), where available. For all other
long-term debt, the balance in the consolidated balance sheets approximates market.




Increase in depreciation and amortization

$
(6
)Increase in foreign exchange income


117Decrease in tax expense


31$
142




F-70

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

22.   FINANCIAL INSTRUMENTS (Continued)





F-71

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

22.   FINANCIAL INSTRUMENTS (Continued)



F-72

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

22.   FINANCIAL INSTRUMENTS (Continued)



Dec. 31, 2009

Dec. 31, 2008(millions of U.S. dollars, except as noted)

Crude oil

Propane

Butane

Crude oil

Propane

ButaneNotional volumemm bbls


2.9


2.7


1.9


5.9


7.2


2.0Weighted-average price per bbl

$
88.61

$
45.75

$
72.25

$
90.65

$
50.28

$
78.37Fair value(1)

$
16

$
17

$
(15
)
$
162

$
(145
)
$
(82
)Term to maturitymonths


1 - 36


1 - 36


4 - 36


1 - 48


1 - 48


4 - 48


(1)Fair
value at Dec. 31, 2008 does not include an adjustment for credit risk. EIC-173, was adopted on Jan. 1, 2009 and did not
require restatement of prior periods


Year ended Dec. 31July 6Dec. 31,
2009

Jan. 1July 5,
2009(millions of U.S. dollars)

2008

2007Successor

PredecessorUnrealized gain (loss)

$
51

$
6

$
(87
)
$
(21
)Realized (loss) gain

$
(3
)
$
(1
)
$
(22
)
$
38




F-73

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

22.   FINANCIAL INSTRUMENTS (Continued)



(millions of dollars, except as noted)

Change

Increase/Decrease
in After-Tax
Income

Increase/Decrease
in Comprehensive
IncomeCrude oil


10%

$
30

$
30Natural gas


10%

$
28

$
28Propane


10%

$
10

$
10Butane


10%

$
25

$
25




F-74

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

22.   FINANCIAL INSTRUMENTS (Continued)



Dec. 31, 2009(millions of dollars)

Due within
1 year

Due between
1 year and
5 years

Due after
5 yearsBank loans

$
1

$


$
Current other liabilities (Note 9)


646





Long-term debt (Note 10)Unsecured debentures and notes


239


800


800Preferred shares


75





Other unsecured debt


3


20


17Interest payments


156


471


238Other long-term liabilities (Note 11)





39


381$
1,120

$
1,330

$
1,436




F-75

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

22.   FINANCIAL INSTRUMENTS (Continued)



F-76

---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

23.   UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES



Year ended Dec. 31July 6Dec. 31,
2009

Jan.1July 5,
2009(millions of dollars)

2008(1)(2)

2007(1)(2)Successor

PredecessorNet (loss) income in accordance with Canadian GAAP

$
(2
)
$
(239
)
$
(40
)
$
348Add (deduct) adjustments for:Derivative instruments and hedging activities(2)








12


(1
)Inventory costing(3)











7Stock-based compensation(4)





(1
)

4


3Accounting for uncertainty in income taxes(5)











6Net (loss) income in accordance with U.S. GAAP

$
(2
)
$
(240
)
$
(24
)
$
363Comprehensive (loss) income in accordance with Canadian GAAP

$
3

$
(235
)
$
(186
)
$
578Add (deduct) adjustments to Canadian GAAP net income (loss) for:Derivative instruments and hedging activities(2)








12


(1
)Inventory costing(3)











7Stock-based compensation(4)





(1
)

4


3Accounting for uncertainty in income taxes(5)











6Pension liability adjustments (less tax of $(3), $26, $(11) and $21, respectively)(6)


7


(45
)

(34
)

(45
)Comprehensive income (loss) in accordance with U.S. GAAP

$
10

$
(281
)
$
(204
)
$
548




2009

2008

2007Accumulated other comprehensive incomeUnrealized loss on available-for-sale securities

$


$


$
(1
)Unrealized gain on translation of self-sustaining foreign operations


5


462


609Pension liability adjustments(6)


7


(161
)

(127
)Accumulated other comprehensive income in accordance with U.S. GAAP

$
12

$
301

$
481


F-77

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

23.   UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)



December 31 (millions of dollars)

2009

2008(8)Balance sheet items in accordance with U.S. GAAP(2)(7)Current assets(3)

$
1,310

$
1,044Intangibles and other assets(1)(6)


653


154Property, plant, and equipment (net)(1)


3,570


2,808Current liabilities(2)(5)


(997
)

(1,163
)Long-term debt(2)


(1,512
)

(1,270
)Deferred income taxes(1)(2)(3)(4)(5)(6)


(770
)

(312
)Deferred credits and long-term liabilities(2)(4)(5)(6)


(454
)

(515
)Common shareholders' equity(5)(6)

$
1,800

$
746




F-78

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

23.   UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)



F-79

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.



24.   NEW ACCOUNTING PRONOUNCEMENTS



25.   SUBSEQUENT EVENTS



F-80

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All amounts in U.S. dollars, unless otherwise noted.

25.   SUBSEQUENT EVENTS (Continued)



F-81

---





Table of Contents

EXHIBIT INDEX

Exhibit No.

Description1.1

Certificate and Articles of Continuance of NOVA Chemicals Corporation dated July 6, 2009 (1)1.1

General By-Law No. 3 of NOVA Chemicals Corporation dated July 6, 2009 (1)2.1

Indenture, dated as of October 16, 2009, between NOVA Chemicals Corporation, as Issuer and U.S. Bank National Association, as Trustee in respect of the 8.375% Senior Notes due 2016 and 8.625% Senior Notes
due 2019 (2)2.2

Indenture, dated as of September 21, 1995, between NOVA Chemicals Corporation, as successor to NOVACOR Chemicals Ltd., and JP Morgan Trust Company, N.A., as successor trustee to The First National Bank of
Chicago (3)2.3

Indenture, dated as of August 28, 2000, between NOVA Chemicals Corporation, as Issuer and CIBC Mellon Trust Company, as Trustee (4)2.4

Indenture, dated as of January 13, 2004, between NOVA Chemicals Corporation, as Issuer and U.S. Bank National Association, as Trustee (5)2.5

Indenture, dated as of October 31, 2005, between NOVA Chemicals Corporation, as Issuer and U.S. Bank National Association, as Trustee (6)2.6

Registration Rights Agreement, dated as of October 16, 2009, by and among NOVA Chemicals Corporation, and Barclays Capital Inc., HSBC Securities (USA) Inc., RBC Capital Markets Corporation, and
TD Securities (USA) LLC, as Representative of the Initial Purchasers in respect of the 8.375% Senior Notes due 2016 and 8.625% Senior Notes due 2019 (7)4.1

Restated Credit Agreement, dated as of November 17, 2009, among the Company, as Borrower, The Toronto-Dominion Bank, as Administrative Agent and the lenders from time to time party thereto (8)4.2

Arrangement Agreement, dated as of February 23, 2009, by and between NOVA Chemicals Corporation and International Petroleum Investment Company (9)4.3

Form of Indemnity Agreement by and among NOVA Chemicals Corporation and former directors (10)4.4

Form of Indemnity Agreement by and among NOVA Chemicals Corporation and Directors (11)7.1
*
Computation of Earnings to Fixed Charges8.1
*
List of Subsidiaries12.1
*
Certification of Randy Woelfel, Chief Executive Officer of NOVA Chemicals Corporation, pursuant to 15 U.S.C. Section 78(m)(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
200212.2
*
Certification of Todd Karran, Senior Vice President, Chief Financial Officer and Treasurer of NOVA Chemicals Corporation, pursuant to 15 U.S.C. Section 78(m)(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 200213.1
*
Certification of Randy Woelfel, Chief Executive Officer of NOVA Chemicals Corporation, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


---



Table of Contents

Exhibit No.

Description13.2
*
Certification of Todd Karran, Senior Vice President, Chief Financial Officer and Treasurer of NOVA Chemicals Corporation, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002


(1)Incorporated
by reference from the Report on Form 6-K of NOVA Chemicals Corporation filed on August 6, 2009.(2)Incorporated
by reference from Exhibit 4.1 to the Registration Statement on Form F-4 of NOVA Chemicals Corporation,
File No. 333-163915.(3)Incorporated
by reference from Exhibit 7.1 to the Registration Statement on Form F-9 of NOVA Chemicals Corporation,
File No. 333-6108.(4)Incorporated
by reference from Exhibit 4.3 to the Registration Statement on Form F-4 of NOVA Chemicals Corporation,
File No. 333-163915.(5)Incorporated
by reference from Exhibit 7.1 to the Registration Statement on Form F-10 of NOVA Chemicals Corporation,
File No. 333-113038.(6)Incorporated
by reference from the Report on Form 6-K of NOVA Chemicals Corporation filed on November 1, 2005.(7)Incorporated
by reference from Exhibit 4.6 to the Registration Statement on Form F-4 of NOVA Chemicals Corporation,
File No. 333-163915.(8)Incorporated
by reference from Exhibit 10.1 to the Registration Statement on Form F-4 of NOVA Chemicals Corporation,
File No. 333-163915.(9)Incorporated
by reference from Schedule B to Material Change Report filed as Exhibit 99.1 to the Report on
Form 6-K of NOVA Chemicals Corporation filed on February 25, 2009.(10)Incorporated
by reference from Exhibit 10.3 to the Registration Statement on Form F-4 of NOVA Chemicals Corporation,
File No. 333-163915.(11)Incorporated
by reference from Exhibit 10.4 to the Registration Statement on Form F-4 of NOVA Chemicals Corporation,
File No. 333-163915.*Filed
herewith.


---