Document:

Exhibit 10.5

 

CHEVRON PHILLIPS
CHEMICAL COMPANY LP

 

SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN

 

(As Amended and
Restated

Effective January 1, 2005)

 

 

CHEVRON
PHILLIPS CHEMICAL COMPANY LP

SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN

(As
Amended and Restated Effective January 1, 2005)

 

TABLE OF
CONTENTS

 

 

	
  Section

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Purpose

  	
   

  	
  1

  
	
  II

  	
   

  	
  Interpretation and
  Definitions

  	
   

  	
  1

  
	
  III

  	
   

  	
  Administration of Plan

  	
   

  	
  5

  
	
  IV

  	
   

  	
  Supplemental Retirement
  Benefits & Supplemental Death Benefits

  	
   

  	
  6

  
	
  V

  	
   

  	
  Time and Form of
  Payment

  	
   

  	
  7

  
	
  VI

  	
   

  	
  Source of Payment

  	
   

  	
  8

  
	
  VII

  	
   

  	
  Withholding

  	
   

  	
  9

  
	
  VIII

  	
   

  	
  Right to Amend, Modify,
  Suspend or Terminate

  	
   

  	
  9

  
	
  IX

  	
   

  	
  Claim Review Procedure

  	
   

  	
  9

  
	
  X

  	
   

  	
  Miscellaneous

  	
   

  	
  11

  
	
   

  	
   

  	
  Appendix A

  	
   

  	
  13

  

 

i

 

CHEVRON
PHILLIPS CHEMICAL COMPANY LP

SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN

(As
Amended and Restated Effective January 1, 2005)

 

SECTION I

Purpose

 

The purpose of this
amended and restated Supplemental Executive Retirement Plan (the “Plan”)  is to provide retirement benefits to certain
eligible employees (“SERP Members”) of Chevron Phillips Chemical Company LP and
certain Affiliated Employers that adopt this Plan (collectively, the “Participating
Employers”). These benefits are in addition to the retirement benefits that may
be payable under the Chevron Phillips Chemical Company LP Retirement Plan (the “Retirement
Plan”). To accomplish this, the Participating Employers intend to make
supplemental pension and, if appropriate, survivor benefit payments, under the
terms and conditions described below, to those SERP Members and any
beneficiaries of SERP Members whose pension or survivor benefits payable under
the Retirement Plan are reduced by reason of (a) the limitations imposed under
sections 401(a)(17) and/or 415 of the Code, or (b) their deferral of
compensation under the Deferred Compensation Plan (as defined below). In
addition, the benefit payable to a SERP Member may be increased due to the use
of the definitions of “SERP Compensation” and “SERP Highest Average Earnings”
set forth below.

 

The Plan is intended to
be an “excess benefit plan” that is an unfunded deferred compensation plan
within the meaning of Section 3(36) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), and, to the extent it is not an excess benefit
plan, it is an unfunded deferred compensation program maintained “for a select
group of management or highly compensated employees” within the meaning of
Title I of ERISA, and shall be implemented and administered in a manner
consistent with this intention. It is also intended that the Plan comply with
the requirements of Section 409A of the Internal Revenue Code, as added by the
American Jobs Creation Act of 2004 (“Section 409A”), except with respect to
SERP Members (or SERP Beneficiaries) covered by Appendix A.

 

The Plan was originally
established effective January 1, 2001.

 

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

 

SECTION
II

Interpretation
and Definitions

 

A.                                    Interpretation

 

(1)                                 General.
Unless a clear contrary intention appears, for purposes of construction of
this Plan:

 

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

 

(ii)                                  reference
to any person includes such person’s successors and assigns but, if applicable,
only if such successors and assigns are permitted by the Plan, and

 

1

 

reference
to a person in a particular capacity excludes such person in any other capacity
or individually;

 

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

 

(iv)                              reference
to the Plan means the Plan as amended or modified and in effect from time to
time in accordance with the terms thereof;

 

(v)                                 reference
to any law means such law as amended, modified, codified, replaced or reenacted,
in whole or in part, and in effect from time to time, including rules and
regulations promulgated thereunder, and reference to any section or other
provision of any law means that provision of such law from time to time in
effect and constituting the substantive amendment, modification, codification,
replacement or reenactment of such section or other provision;

 

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

 

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

 

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

 

(ix)                                “or”
is not exclusive;

 

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

 

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

 

(2)                                  Accounting Terms. Unless expressly otherwise provided,
accounting terms shall be construed and interpreted, and accounting
determinations and computations shall be made, in accordance with generally
accepted accounting principles.

 

B.                                    Definitions

 

(1)                                  “Affiliated Employer” shall have the
meaning set forth in the Retirement Plan.

 

(2)                                  “Basic Death Benefit” means the benefit
payable under the Retirement Plan to the Beneficiary of a SERP Member on
account of the death of the SERP Member.

 

(3)                                  “Basic Retirement
Benefit” means the benefit payable under the Retirement Plan to a SERP
Member.

 

2

 

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

 

(5)                                  “Code” means the
Internal Revenue Code of 1986, as amended.

 

(6)                                  “Company” means Chevron Phillips Chemical
Company LP.

 

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

 

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

 

(9)                                  “Member” shall
have the meaning set forth in the Retirement Plan.

 

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

 

(11)                            “Participating Employer” means the Company
or any other Affiliated Employer participating in the Plan as provided in
Section III.E.

 

(12)                            “Plan” means the Chevron Phillips Chemical
Company LP Supplemental Executive Retirement Plan.

 

(13)                            “Retirement Plan” means the Chevron
Phillips Chemical Company LP Retirement Plan.

 

(14)                            “Separation
from Service” (or “Separated from Service”) means a “separation from
service” within the meaning of Section 409A and applicable guidance thereunder.
Generally, a separation from service occurs when a SERP Member ceases to
provide services for a Participating Employer and all Affiliated Employers.

 

(15)                            “SERP Beneficiary”
means any person, persons, or entity
designated by a SERP Member to receive any benefits payable in the event of the
SERP Member’s death. If no SERP Beneficiary designation is in effect at the
SERP Member’s death or if no person, persons, or entity so designated survives
the SERP Member, the SERP Member’s surviving spouse, if any, shall be deemed to
be the SERP Beneficiary; otherwise, the SERP Beneficiary shall be the personal
representative of the estate of the SERP Member. In determining whether any
person named as a SERP Beneficiary is living at the time of a SERP Member’s
death, if such person and the SERP Member died in a common disaster and there
is insufficient evidence to determine which person died first, then it shall be
deemed that the SERP Beneficiary died first. Beneficiary designations in
accordance with this Section must be in writing and filed with the SERP
Committee.

 

(16)                            “SERP Committee” means two or more
individuals designated by the Company to oversee the administration of the
Plan.

 

3

 

(17)                            “SERP Compensation” means “Compensation” as
defined in the Retirement Plan (without regard to Code section 401(a)(17)
limits), but including management incentive bonuses paid pursuant to the
Company’s Annual Incentive Program, which shall be treated as “Compensation”
for purposes of this Plan on the date the bonus is paid.

 

(18)                            “SERP Highest Average Earnings” means, with
respect to any SERP Member who is a Phillips Member, the SERP Member’s Average
Final Compensation determined in the same manner such amount was calculated
under the Phillips Plan as such plan was in effect on December 31, 2000. Thus,
such an individual’s SERP Highest Average Earnings will be calculated by “decoupling”
the Phillips Member’s compensation payable as a bonus, and the amount payable
as base pay. The bonus amount shall consist of the sum of the 3 highest annual
bonus payments during any 11 calendar year period, while the base pay portion
shall consist of the Phillips Member’s base compensation based upon any 36
consecutive month period preceding the termination of that Phillips Member’s
employment, which produces the highest average. For this purpose, “Phillips
Member”, “Average Final Compensation”, and “Phillips Plan” shall have the
meaning set forth in the Retirement Plan. With regard to all other SERP
Members, the term “SERP Highest Average Earnings” shall have the same meaning
as “Highest Average Earnings” in the Retirement Plan.

 

(19)                            “SERP Interest Rate”
means the rate of return (measured at the end of the preceding calendar year)
for the Treasury constant maturity 10-year note plus 1% as published by the
Federal Reserve Statistical Release – H.15 Selected Interest Rates. Should the
Federal Reserve discontinue publishing this document, then the SERP Interest
Rate shall be based on a successor publication as determined by the Company.

 

(20)                            “SERP Member” means an employee of a
Participating Employer who has satisfied the eligibility requirements under the
Retirement Plan, and who satisfies each of the following criteria:  (a) is determined by the Company to be a
member of a select group of management or highly compensated employees within
the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA; and
(b) is designated by the Company as an employee who may participate in the
Plan.

 

(21)                            “Supplemental Death Benefit” means the benefit
calculated under Section IV of the Plan and payable to the SERP Beneficiary.

 

(22)                            “Supplemental Retirement Benefit” means the
benefit calculated under Section IV of the Plan payable to a SERP Member.

 

(23)                            “Unrestricted Death Benefit” means the benefit
that would be payable under the Retirement Plan to the SERP Beneficiary of a
SERP Member on account of death of such SERP Member, calculated:  (a) without regard to the limitations of
sections 401(a)(17) and 415 of the Code; (b) as if amounts deferred by the SERP
Member under the Deferred Compensation Plan had been paid to the SERP Member in
the year so deferred; (c) utilizing “SERP Compensation” instead of “Compensation”
as

 

4

 

that term is defined in
the Retirement Plan; and (d) utilizing “SERP Highest Average Earnings” instead
of “Highest Average Earnings” as that term is defined in the Retirement Plan.

 

(24)                            “Unrestricted Retirement Benefit” means the
benefit that would be payable under the Retirement Plan to a SERP Member,
calculated:  (a) without regard to the
limitations of sections 401(a)(17) and 415 of the Code; (b) as if amounts
deferred by the SERP Member under the Deferred Compensation Plan had been paid
to the SERP Member in the calendar year so deferred; (c) utilizing “SERP
Compensation” instead of “Compensation” as that term is defined in the
Retirement Plan; and (d) utilizing “SERP Highest Average Earnings” instead of “Highest
Average Earnings” as that term is defined in the Retirement Plan.

 

SECTION
III

Administration
of the Plan

 

A.                                   The
Plan shall be administered by the SERP Committee. The SERP Committee will serve
as such without additional compensation.

 

B.                                     Notwithstanding
any other provision of the Plan, the Plan shall be interpreted, operated and
administered in accordance with Section 409A, except with respect to SERP
Members (or SERP Beneficiaries) covered by Appendix A.

 

C.                                     The
SERP Committee shall have all discretion and powers necessary to supervise the
administration of the Plan and to control its operation in accordance with its
terms, including, but not by way of limitation, the following powers:

 

(1)                                  To
interpret the provisions of the Plan and to determine, in its sole discretion,
any question arising under, or in connection with the administration or
operation of the Plan;

 

(2)                                  To
establish and revise accounting methods for formulae for the Plan;

 

(3)                                  To
determine the status and rights of SERP Members and SERP Beneficiaries;

 

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

 

(5)                                  To
establish rules for the performance of its powers and duties and for the
administration of the Plan;

 

5

 

(6)                                  To
keep all records and prepare all reports and disclosures necessary to comply
with the reporting and disclosure requirements of ERISA and the Code and to
establish from time to time and at any time, subject to the limitations of the
Plan as set forth herein, such rules and regulations and amendments supplements
thereto, as it deems necessary to comply with applicable law and for the proper
administration of the Plan; and

 

(7)                                  To
administer the claims procedures specified in Section IX.

 

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

 

E.                                      This
Plan may be adopted by Affiliated Employers as the SERP Committee may approve,
whereupon such entities shall become Participating Employers.

 

SECTION
IV

Supplemental
Retirement Benefits & Supplemental Death Benefits

 

A.                                   Provided
a SERP Member is vested in the Retirement Plan, the Supplemental Retirement
Benefit for a SERP Member shall be an amount equal to the difference between
his Basic Retirement Benefit and his Unrestricted Retirement Benefit. For a
SERP Member who has a Separation from Service on or after January 1, 2005, the
Supplemental Retirement Benefit actually payable to the SERP Member shall be
calculated with reference to the SERP Member’s actual Basic Retirement Benefit,
determined at the time of the SERP Member’s Separation from Service from the
Participating Employer, regardless of whether the SERP Member elects to
commence the receipt of benefits from the Retirement Plan.

 

B.                                     Each
SERP Beneficiary of a SERP Member shall be entitled to a Supplemental Death
Benefit as provided in this Section IV.B. if the SERP Beneficiary is entitled
to the payment of a death benefit under the terms of the Retirement Plan. The
Supplemental Death Benefit payable to a SERP Beneficiary of a SERP Member shall
be an amount equal to the difference between the SERP Beneficiary’s
Unrestricted Death benefit and his Basic Death Benefit.

 

C.                                     For
purposes of this Plan, the determination of any amount payable in accordance
with the Plan shall, except as specifically set forth in this Plan, be made in
the same manner as such determination is made under the Retirement Plan
(including, without limitation, the determination of the “Equivalent Actuarial
Value” (as defined by the Retirement Plan) of any form of benefit payable under
this Plan).

 

6

 

SECTION V

Time
and Form of Payment

 

A.

 

(1)                                  Except
as otherwise provided herein, payments to a SERP Member under the Plan shall be
made in 5 annual installments commencing on January 1 of the calendar year
following the calendar year of the SERP Member’s Separation from Service.

 

(2)                                  Notwithstanding
the foregoing, for purposes of this Section V only, a transfer of employment to
a Parent Company shall not be deemed to constitute a “Separation of
Service” until such subsequent Separation from Service from the Parent Company.
In such case, payments to the SERP Member under this Plan shall be made in 5
annual installments commencing on January 1 of the calendar year following the
calendar year of the SERP Member’s Separation from Service from the Parent
Company if permitted by Section 409A and the applicable guidance
thereunder,  otherwise payments shall be
made in 5 annual installments commencing on January 1 immediately following the
2 year anniversary of his Separation from Service from the Participating
Employer.

 

B.                                     Notwithstanding
the foregoing, a SERP Member may subsequently elect to receive a lump sum
payment of his Supplemental Retirement Benefit under the Plan in accordance
with such procedures as may be established by the SERP Committee. In addition
to such requirements as the SERP Committee may establish, effective January 1,
2006:

 

(1)                                  The
election may not take effect until at least 12 months after the date on which
the election is made;

 

(2)                                  A distribution may not be made earlier than
at least 5 years from the date the first Supplemental Retirement Benefit amount
was scheduled to be paid; and

 

(3)           The election must be made at least 12
months before the date of the first scheduled distribution.

 

C.                                     Notwithstanding
the foregoing, payment to a SERP Member shall be made in a lump sum
distribution the first business day of the month following his Separation from
Service (or first business day of the second month following his Separation
from Service if the separation occurs after the fifteenth day of the month) if
the present value of the SERP Member’s Supplemental Retirement Benefit is less
than $10,000; provided, however, that if a SERP Member is described in
Paragraph A(2) above, payment to the SERP Member shall be made in a lump sum
distribution the first business day of the month following his Separation from
Service from the Parent Company (or first business day of the second month
following his Separation from Service if the separation occurs after the
fifteenth day of the month) if permitted by Section 409A and the applicable
guidance thereunder, otherwise on January 1 immediately following his 2 year
anniversary of Separation from Service from the Participating Employer. In
determining whether the SERP Member’s Supplemental Retirement Benefit is less
than $10,000, the same provisions set forth in the Retirement Plan with respect
to the determination of such values shall be utilized.

 

7

 

D                                       Payments
to a SERP Beneficiary under this Plan shall be made in the same manner, for the
same time period and on the same basis as payments would have been made to a
SERP Member under Section V.A. of the Plan (or Section V.B. of the Plan if the
SERP Member subsequently changes his SERP election) under the assumption that
SERP Member would have Separated from Service on the last day of the month
following the SERP Member’s death. Notwithstanding the foregoing, payment to a
SERP Beneficiary shall be made in a lump sum distribution following a SERP
Member’s death if the present value of such Supplemental Death Benefit is less
than $10,000, payable at the same time and determined in the same manner as
described in Section V.C.

 

E.                                      If
a portion of the SERP Member’s benefit under the Plan is includible in income
under Section 409A, such portion shall be distributed immediately to the SERP
Member.

 

F.                                      Notwithstanding
the foregoing, any payment to a SERP Member or a SERP Beneficiary under the
Plan may be delayed upon the SERP Committee’s determination that one or more of
the following events may occur:

 

(1)                                  The
Participating Employer’s deduction with respect to such payment otherwise would
be limited or eliminated by application of Code section 162(m);

 

(2)                                  The
making of the payment would violate a term of a loan agreement to which the
Company or one of its Affiliated Employers is a party, or other similar
contract to which the Company or one of its Affiliated Employers is a party,
and such violation would cause material harm to the Company or one of its
Affiliated Employers; or

 

(3)                                  The
making of the payment would violate Federal securities laws or other applicable
law;

 

provided, that any
payment subject to this Section V.F. shall ultimately be paid in accordance
with Section 409A.

 

G.                                     For
a SERP Member who has a Separation from Service on or after January 1, 2005,
during such time (from such Separation of Service) there remains an outstanding
balance of the SERP Member’s benefit (or a SERP Beneficiary’s benefit, in the
event the SERP Member’s Separation from Service is due to death) under the
Plan, such balance shall earn the SERP Interest Rate.

 

SECTION
VI

Source
of Payment

 

The benefits payable
under this Plan to a SERP Member or their SERP Beneficiary shall be paid from
the general assets of the Participating Employer that employed the SERP Member.
The SERP Member or their SERP Beneficiary shall be an unsecured general
creditor of such Participating Employer with no special or prior right to any
assets of the Participating Employer for payment of any obligations hereunder. Nothing
contained in the Plan shall be deemed to create a trust of any kind for the
benefit of the SERP Member or any SERP Beneficiary, or create any fiduciary
relationship between the Participating Employer or the Company and the SERP
Member or any SERP Beneficiary with respect to any assets of the Participating
Employer or the Company.

 

8

 

SECTION
VII

Withholding

 

Notwithstanding any
contrary provision of the Plan, all benefits payable under this Plan to a SERP
Member or SERP Beneficiary shall be subject to applicable withholding for
federal, state and/or local income tax, FICA, and any other taxes.

 

SECTION
VIII

Right
to Amend, Modify, Suspend or Terminate

 

A.                                   The
Company may amend, modify, suspend or terminate this Plan in whole or in part,
in such manner as it may determine.

 

B.                                     Notwithstanding
the foregoing, this Plan may not be amended, modified, suspended, or terminated
as to a SERP Member who is entitled to receive or has commenced to receive
benefits pursuant to this Plan in a manner which would reduce the benefits
payable to such individual, without the express written consent of such SERP
Member or if deceased, such SERP Member’s SERP Beneficiary.

 

C.                                     No
amendment, alteration, modification, or termination shall reduce the accrued
Supplemental Retirement Benefit or Supplemental Death Benefit of any SERP
Member or SERP Beneficiary; provided, however, that this Section VIII.C. shall
not prevent reductions on account of the SERP Member’s Basic Retirement Benefit
ceasing to be affected (or becoming affected to a lesser degree) by the
limitations of sections 401(a)(17), and/or 415 of the Code, and/or the SERP
Member’s deferrals under the Deferred Compensation Plan.

 

D.                                    Notwithstanding
the foregoing, no amendment of the Plan shall apply to amounts paid under
Appendix A, unless the amendment specifically provides that it applies to such
amounts. The purpose of this restriction is to prevent a Plan amendment from
resulting in an inadvertent “material modification” to amounts that are exempt
from the requirements of Section 409A.

 

SECTION
IX

Claim
Review Procedure

 

A.                                   Filing a Claim. A SERP Member or his
authorized representative may file a claim for benefits under the Plan. Any
claim must be in writing and submitted to the SERP Committee at such address as
may be specified from time to time. Claimants will be notified in writing of
approved claims, which will be processed as claimed. A claim is considered
approved only if its approval is communicated in writing to a claimant.

 

B.                                     Denial of Claim. In the case of the denial
of a claim respecting benefits paid or payable with respect to a SERP Member, a
written notice will be furnished to the claimant within 90 days of the date on
which the SERP Committee receives the claim. If special circumstances (such as
for a hearing) require a longer period, the claimant will be notified in
writing, prior to the expiration of the 90-day period, of the reasons for an
extension of time; provided,

 

9

 

however, that no extensions will be permitted beyond
90 days after the expiration of the initial 90-day period.

 

C.                                     Reasons for Denial. A denial or partial
denial of a claim will be dated and signed by the SERP Committee and will
clearly set forth:

 

(1)                                  the
specific reason or reasons for the denial;

 

(2)                                  specific
reference to pertinent Plan provisions on which the denial is based;

 

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

 

(4)                                  an
explanation of the procedure for review of the denied or partially denied claim
set forth below, including the claimant’s right to bring a civil action under
ERISA section 502(a) following an adverse benefit determination on review.

 

D.                                    Review of Denial. Upon denial of a claim,
in whole or in part, a claimant or his duly authorized representative will have
the right to submit a written request to the SERP Committee for a full and fair
review of the denied claim by filing a written notice of appeal with the SERP
Committee within 60 days of the receipt by the claimant of written notice of
the denial of the claim. A claimant or the claimant’s authorized representative
will have, upon request and free of charge, reasonable access to, and copies
of, all documents, records, and other information relevant to the claimant’s
claim for benefits and may submit issues and comments in writing. The review
will take into account all comments, documents, records, and other information
submitted by the claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination.

 

If the claimant fails to file a request for review
within 60 days of the denial notification, the claim will be deemed abandoned
and the claimant precluded from reasserting it. If the claimant does file a
request for review, his request must include a description of the issues and
evidence he deems relevant. Failure to raise issues or present evidence on
review will preclude those issues or evidence from being presented in any
subsequent proceeding or judicial review of the claim.

 

E.                                      Decision Upon Review. The SERP Committee
will provide a prompt written decision on review. If the claim is denied on
review, the decision shall set forth:

 

(1)                                  the
specific reason or reasons for the adverse determination;

 

(2)                                  specific
reference to pertinent Plan provisions on which the adverse determination is
based;

 

(3)                                  a
statement that the claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records, and other
information relevant to the claimant’s claim for benefits; and

 

10

 

(4)                                  a
statement describing any voluntary appeal procedures offered by the Plan and
the claimant’s right to obtain the information about such procedures, as well
as a statement of the claimant’s right to bring an action under ERISA section
502(a).

 

A decision will be rendered no more than 60
days after the SERP Committee’s receipt of the request for review, except that
such period may be extended for an additional 60 days if the SERP Committee
determines that special circumstances (such as for a hearing) require such
extension. If an extension of time is required, written notice of the extension
will be furnished to the claimant before the end of the initial 60-day period.

 

F.                                      Finality of Determinations; Exhaustion of Remedies.
To the extent permitted by law, decisions reached under the claims procedures
set forth in this Section shall be final and binding on all parties. No legal
action for benefits under the Plan shall be brought unless and until the
claimant has exhausted his remedies under this Section. In any such legal
action, the claimant may only present evidence and theories, which the claimant
presented during the claims procedure. Any claims, which the claimant does not
in good faith pursue through the review stage of the procedure, shall be
treated as having been irrevocably waived. Judicial review of a claimant’s
denied claim shall be limited to a determination of whether the denial was an
abuse of discretion based on the evidence and theories the claimant presented
during the claims procedure.

 

G.                                     Limitations Period. Any suit or legal
action initiated by a claimant under the Plan must be brought by the claimant
no later than one year following a final decision on the claim for benefits by
the SERP Committee. The one-year limitation on suits for benefits will apply in
any forum where a claimant initiates such suit or legal action.

 

SECTION X

Miscellaneous

 

A.                                   No Assignment of Benefits.

 

(1)                                  The
benefits provided under this Plan may not be alienated, assigned, transferred,
pledged or hypothecated by any person, at any time, to any person whatsoever. Except
as provided below, the benefits shall be exempt from the claims of creditors or
other claimants and from all orders, decrees, levies, garnishment or executions
to the fullest extent allowed by law.

 

(2)                                  Notwithstanding
the preceding, benefits payable under the Plan shall be paid to the SERP
Member, the SERP Member’s spouse or the SERP Beneficiary in accordance with the
provisions of this Plan except to the extent that such benefits are required to
be paid to an alternate payee under the provisions of a qualified domestic
relations order (a “QDRO”) which satisfies the requirements of section 414(p)
of the Code. The provisions set forth in the Retirement Plan applicable to
QDROs shall apply to the determination of whether any such order satisfies the
requirements of section 414(p) of the Code. Further, such QDROs shall be
administrated in accordance with the rules set forth in the Retirement Plan,
the provisions of which are hereby

 

11

 

incorporated by
reference; provided, however, a benefit shall be payable to an alternate payee
under this Plan only at the time payment of the SERP Member’s benefit commences
under this Plan pursuant to Section V. Neither this Plan, the SERP Committee,
the Participating Employers nor the Company shall be liable in any manner to
any person, including the SERP Member, SERP Member’s spouse, or SERP
Beneficiary, for complying with any such court order or judgment.

 

B.                                     No Enlargement of Employment Rights. Neither
the establishment or maintenance of this Plan, the payment of any amount by the
Participating Employers nor any action of the Participating Employers or the
SERP Committee shall be held or construed to confer upon any individual any
right to be continued as an employee nor, upon dismissal, any right or interest
in the Plan other than as provided in the Plan. The Participating Employers
expressly reserve the right to discharge any employee at any time.

 

C.                                     Applicable Law; Severability. This Plan
hereby created shall be construed, administered and governed in all respects in
accordance with the laws of the State of Texas, and, to the extent applicable,
ERISA and the Code. If any provision of this instrument shall be held invalid
or unenforceable by a court of competent jurisdiction, the remaining provisions
hereof shall continue to be fully effective.

 

 

IN WITNESS WHEREOF, Chevron Phillips Chemical
Company LP by its duly authorized officer(s), has caused the Plan to be amended
and restated on the 24 day of February, 2006.

 

 

CHEVRON
PHILLIPS CHEMICAL COMPANY LP

 

 

	
  /s/ James L. Gallogly

  	
   

  
	
   

  
	
   

  
	
  TITLE:

  	
  President and Chief
  Executive Officer

  	
   

  
			

 

12

 

APPENDIX A

GRANDFATHERED
PARTICIPANTS

 

Distribution of amounts
that were earned and vested (within the meaning of Section 409A) under the Plan
prior to January 1, 2005 (and earnings thereon) that are payable to SERP
Members (or their SERP Beneficiaries) who Separated from Service prior to
January 1, 2005 shall be made in accordance with the Plan terms as in
effect on December 31, 2004.

 

13Exhibit 10.6

 

 

 

LONG-TERM INCENTIVE PLAN

 

OF

 

CHEVRON PHILLIPS CHEMICAL COMPANY LLC

 

(As Amended and Restated Effective January 1,
2005)

 

 

 

 

LONG-TERM INCENTIVE PLAN

OF

CHEVRON PHILLIPS CHEMICAL COMPANY LLC

(As Amended and Restated Effective January 1,
2005)

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Interpretation
  and Definitions

  	
  1

  
	
  2.

  	
  Administration
  of Plan.

  	
  6

  
	
  3.

  	
  Eligibility and
  Participation.

  	
  7

  
	
  4.

  	
  Grants and
  Settlement of Awards

  	
  8

  
	
  5.

  	
  Payment of
  Awards

  	
  9

  
	
  6.

  	
  Vesting and
  Forfeiture.

  	
  10

  
	
  7.

  	
  Amendments or
  Discontinuance

  	
  10

  
	
  8.

  	
  Recapitalization,
  Merger, and Consolidation

  	
  11

  
	
  9.

  	
  General
  Provisions

  	
  11

  
	
   

  	
  Exhibit A “Peer
  Companies”

  	
  13

  

 

i

 

LONG-TERM INCENTIVE PLAN

OF

CHEVRON PHILLIPS CHEMICAL COMPANY LLC

(As Amended and Restated Effective January 1,
2005)

 

PURPOSE

 

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

 

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

 

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

 

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

 

1.                                      Interpretation
and Definitions

 

(a)                                  General.

 

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

 

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

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

(ix)                                “or”
is not exclusive;

 

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

 

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

 

(2)                                  Accounting Terms.  In
each Plan Document, unless expressly otherwise provided, accounting terms shall
be construed and interpreted, and accounting determinations and computations
shall be made, in accordance with generally accepted accounting principles.

 

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

 

(b)                                 Definitions.

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(14)                            “Eligible
Employee” means:

 

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

 

3

 

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

 

Notwithstanding anything contained in the Plan to the
contrary, any person who, pursuant to a written contract with a Participating
Employer that provides that he is an independent contractor and not an
Employee, shall be excluded from the definition of Eligible Employee and shall
not be eligible to participate in the Plan during the period such written
contract is in effect regardless of such person’s reclassification as an
Employee for such period by the Internal Revenue Service for tax withholding
purposes.  If, during any period, a
Participating Employer has not treated an individual as an Employee and, for
that reason, has not withheld employment taxes with respect to that individual,
then that individual shall not be an Eligible Employee for that period, even in
the event that the individual is determined, retroactively, to have been an Employee
during all or any portion of that period.

 

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

 

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

 

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

 

(18)                            “Geographic
Differences” means the impact of the location of various assets owned by a Peer
Company that causes differences in the financial performance, such as assets
owned in the United States vs. assets owned in Europe, the Middle East or other
areas.

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

2.                                      Administration
of the Plan

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

3.                                      Eligibility
and Participation

 

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

 

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

 

7

 

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

 

4.                                      Grants and
Settlement of Awards

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

5.                                      Payment
of Awards

 

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

 

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

 

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

 

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

 

9

 

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

 

6.                                      Vesting
and Forfeiture

 

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

 

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

 

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

 

7.                                      Amendment
or Discontinuance

 

Subject
to the limitations set forth in this Section 7, the Board may at any time
and from time to time, without the consent of the Participants, alter, amend, revise,
suspend, or discontinue the Plan in whole or in part.  Any such amendment shall, to the extent
deemed necessary or advisable by the Committee, be applicable to any
outstanding Grants theretofore awarded under the Plan, notwithstanding any
contrary provisions contained in any Grant Agreement.  In the event of any such amendment to the
Plan, the holder of any Grant outstanding under the Plan shall, upon request of
the Committee and as a condition to the exercisability thereof, execute a
conforming amendment in the form

 

10

 

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

 

8.                                      Recapitalization,
Merger, and Consolidation

 

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

 

9.                                      General
Provisions

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

12

 

EXHIBIT A

 

PEER COMPANIES

 

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

 

1.                                       The
Dow Chemical Company

 

2.                                       Borealis
(polyolefins & chemicals segment)

 

3.                                       NOVA
Chemicals Corporation

 

4.                                       Equistar
Chemicals, LP

 

5.                                       ExxonMobil
Corporation (chemicals segment)

 

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

 

7.                                       Royal
Dutch/Shell Group (chemicals segment)

 

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

 

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

 

13

 

AMENDMENT NUMBER ONE

TO THE

LONG-TERM INCENTIVE PLAN OF

CHEVRON
PHILLIPS CHEMICAL COMPANY LLC

 

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

 

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

 

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

 

NOW, THEREFORE, BE IT RESOLVED,

 

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

 

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

 

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

 

	
   

  	
   

  	
   

  	
  CHEVRON
  PHILLIPS CHEMICAL

  COMPANY LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  James L. Gallogy

  
	
   

  	
   

  	
   

  	
  Its:

  	
  President and Chief
  Executive Officer

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