Document:

EX 10.35 VALUE CREATION INCENTIVE PLAN

Exhibit 10.35
 Aspect Software, Inc.
Value Creation Incentive Plan
Adopted December 5, 2012
		
	1.
	    Purposes.  Aspect Software, Inc. (the “Company”), by means of this Value Creation Incentive Plan (the “Plan”), seeks to retain the services of certain of its and its subsidiaries' employees and independent contractors and provide incentives for such persons to exert maximum efforts for the Company and its subsidiaries, and to compensate such persons for past services to the Company and its subsidiaries.  This Plan shall be effective as of December 5, 2012.

		
	2.
	     Definitions

As used in this Plan, the following terms have the meanings indicated below.
(a)“Board” means the Board of Directors of the Company.
(b)“Cause” shall have the meaning ascribed to such term in any written employment agreement between the Company and the Participant, and in the absence of such agreement, shall mean:  (i) the commission of a felony or any other act or omission involving dishonesty, disloyalty or fraud with respect to the Company or any of its affiliates or any of their customers or suppliers, (ii) conduct tending to bring the Company or any of its affiliates into substantial public disgrace or disrepute, (iii) substantial and repeated failure to perform duties as reasonably directed by the Company's Chief Executive Officer or his designees, (iv) gross negligence or willful misconduct with respect to the Company or any of its affiliates or (v) any other material breach of this Agreement.
(c)“Committee” means the Compensation Committee of the Board.
(d)“Equity Value” means, as of a given date, the aggregate fair market value of the consideration (including, without limitation, cash or other property) actually received by all of the shareholders of Parent or the Company, as applicable, on account of their equity interest in the Parent or Company in connection with a Liquidity Event, as determined by the Committee in good faith and, with respect to any securities included in such consideration that are not immediately able to be sold by the recipient thereof on a public exchange, including discounts for lack of marketability or control.
(e) “Liquidity Event” means (i) any sale or transfer by Parent or its subsidiaries of all or substantially all of their assets on a consolidated basis (for purposes hereof, “all or substantially all” shall have the meaning given to such term under Delaware law) to an unaffiliated third party, (ii) any consolidation, merger or other reorganization of Parent with or into any other entity or entities as a result of which (A) any person or group other than investment funds managed by Golden Gate Capital and/or investment funds managed by Oak Investment Partners obtains possession of the voting power (under ordinary circumstances) to elect a majority of the surviving corporation's board of directors or (B) investment funds managed by Golden Gate Capital and/or investment funds managed by Oak Investment Partners cease to own, collectively, at least 20% (by value) of the surviving corporation's shares of capital stock or (iii) any issuance, sale or transfer to any third party of shares of the Company's or Parent's capital stock by the holders thereof as a result of which (A) any person or group other than investment funds managed by Golden Gate Capital and/or investment funds managed by Oak Investment Partners obtains possession of the voting power (under ordinary circumstances) to elect a majority of the board of directors or (B) investment funds managed by Golden Gate Capital and/or investment funds managed by Oak Investment Partners cease to own, collectively, at least 20% (by value) of the Company's or Parent's shares of capital stock.
(f)“Parent” means Aspect Software Group Holdings, Ltd.

(g)“Participant” means an employee or independent contractor of the Company or any of its subsidiaries who has been designated by the Committee (in accordance with Section 3(b) below) in writing as being entitled to a Value Creation Bonus.
(h)“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
(i)“Qualified Participant” means (i) a Participant who has been continuously employed or engaged by the Company or its subsidiaries from and after the date on which this Plan is approved by the Committee and after such Person is designated as a Participant by the Committee (in accordance with Section 3(b)) and continuing each day through the date of determination (without such Person having taken any leave of absence longer than 90 days or any cumulative leaves of absence longer than 90 days in the aggregate prior to such date) or (ii) a Participant whose employment or engagement with the Company or its subsidiaries was terminated by the Company or its subsidiaries without Cause within six (6) months prior to a Liquidity Event.  For avoidance of doubt, any Participant whose employment or engagement with the Company or its subsidiaries terminates other than as a result of a termination by the Company or its subsidiaries without Cause shall not be a Qualified Participant.
3.Value Creation Bonus Payments
(a)Determination of Participant's Value Creation Bonus.  For purposes of this Plan, the “Value Creation Bonus” for a Qualified Participant with respect to a Liquidity Event means an amount, as of the date of and in connection with the closing of a Liquidity Event, calculated pursuant to the Value Creation Bonus Calculation in such Qualified Participant's Value Creation Bonus Grant Letter, substantially in the form of Exhibit A attached hereto, as determined in accordance with this Plan, which determinations shall be made in the sole discretion of a majority of the Committee.  The amount of any Qualified Participant's Value Creation Bonus shall be reduced by the amount of any payments owed by such Participant to the Company or any of its subsidiaries as of the closing of the Liquidity Event.
(b)Additional Participants.  The Committee may, in its sole discretion, designate a Participant to this Plan and determine the Value Creation Bonus Calculation amounts applicable to such Participants.
(c)Obligation to Pay Value Creation Bonus.  Subject to the other terms of this Plan, each Qualified Participant shall be entitled to receive a bonus in an amount equal to such Qualified Participant's Value Creation Bonus provided that such Qualified Participant executes all agreements and documents, if any, reasonably requested by the Company to be executed to evidence the obligations to which receipt of such Value Creation Bonus is subject pursuant to this Plan and to evidence satisfaction of the Company's obligations to such Qualified Participant in connection with a Liquidity Event to which this Plan applies.
(d)Payment of Value Creation Bonus.  The Company shall cause all Value Creation Bonuses which are payable in connection with a Liquidity Event to be paid in lump sums to each Qualified Participant within thirty (30) days after the closing of such Liquidity Event.  If all or any portion of the Equity Value consists of non-cash consideration, then, at the Company's option, either (i) the Value Creation Bonus shall be payable to Qualified Participant in cash or (ii) all or a portion of the Value Creation Bonus shall be payable to Qualified Participant in the same form of non-cash consideration (in the same proportion as such non-cash consideration constituted of the aggregate Equity Value); provided, however, that if the Company determines to pay any portion of the Value Creation Bonus in the form of non-cash consideration pursuant to clause (ii) of the immediately preceding sentence, then the cash portion of the Value Creation Bonus shall not be less than the amount of Qualified Participant's tax cost arising out of the payment of the Value Creation Bonus (i.e., the amount that Qualified Participant would be required to include as taxable income in the taxable period that includes the date of receipt multiplied by Qualified Participant's then-current combined federal and state marginal income tax rate (taking into account the deductibility of state income tax for federal income tax purposes).
4.Termination of Participant's Relationship With the Company.  If a Participant is no longer a Qualified Participant as of the closing of a Liquidity Event, then notwithstanding any other provision of this 

Plan, such Participant shall not be entitled to receive, and the Company shall have no obligation to pay, any Value Creation Bonus or other amount pursuant to this Plan.
5.Administration; Parachute Payments
(a)Administration.  The Committee shall administer this Plan.  The Committee shall have the power, in its discretion and without limitation, to make any and all decisions concerning the implementation or interpretation of the Plan, including the power to determine in good faith whether a transaction or series of transactions results in a Liquidity Event, and to make the distributions contemplated by the Plan.  The rules, interpretations, computations and other actions of the Committee shall be binding and conclusive on all persons.  In the absence of any duly constituted Committee, the Board shall administer this Plan, and all references to the Committee hereunder shall be deemed to refer to the Board.
(b)Parachute Payments.  If any payment or benefit a Participant would receive in connection with a Liquidity Event from the Company or otherwise would constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) (such Participant is hereinafter referred to as a “280G Participant”), Parent shall submit to the equityholders of Parent for approval the amount of the payment or benefit that, taking into account all other parachute payments, exceeds 2.99 times the 280G Participant's “base amount” (within the meaning of Section 280G of the Code) (the “Excess Amount”) pursuant to the requirements of Section 280G(b)(5)(B) of the Code; provided, that if Parent does not receive such approval with respect to a 280G Participant, then such 280G Participant shall forfeit, and not be entitled to receive or be paid, payment of the Excess Amount.  
6.Severability.  Should any provision of this Plan be held invalid by an administrative tribunal, court of law or other authoritative body, then the remaining provisions shall continue in force and given their full effect in a manner consistent with the spirit and purpose of the Plan.
7.Amendment or Termination of the Plan; Integration
(a)The Committee may, at any time, and from time to time prior to the consummation of a Liquidity Event, amend this Plan in any respect; provided, however, that no amendment shall adversely affect any designated Participant or group of Participants in a manner not so adversely affecting all designated Participants without the consent of such designated Participant or group of Participants.
(b)The Plan shall automatically terminate upon the consummation of a Liquidity Event (provided that the Company's obligation to pay the Value Creation Bonus to Qualified Participants in accordance with the terms of this Plan shall survive such termination).
(c)This document contains the entire Plan, and any amendment to the Plan or any Exhibit to this Plan must be made in a writing approved by the Committee and by the Participants entitled to consent to such amendment pursuant to Section 7(a) hereof.
8.Tax Withholding.  All payments made pursuant to this Plan shall be subject to all applicable tax withholding.
9.No Guarantee of Employment or Independent Contractor Relationship.  This Plan is intended to provide a financial incentive to Participants and is not intended to confer upon any Participant any rights to continued employment or a continuing independent contractor relationship, it being understood that such employment or independent contractor relationship shall remain at-will and subject to termination by either the Company or Participant at any time, with or without cause or notice.
10.Confidentiality.  Each Participant acknowledges that the contents of this Plan, including but not limited to its financial terms, are strictly confidential.  Each Participant agrees and represents that such Participant will maintain the confidential nature of this Plan, except (i) to legal counsel, tax and financial planners, and immediate family members who agree to keep it confidential; and (ii) as otherwise required by applicable law, in which case such Participant shall notify the Company in writing in advance of disclosure.
11.No Equity Interest.  This Plan does not create or convey any equity or ownership interest in the Company or any rights commonly associated with any such interest, including, but not limited to, the right to vote on any matters put before the Company's equityholders.

12.No Assignment or Transfer by Participant.  None of the rights, benefits, obligations or duties under this Plan may be assigned or transferred by any Participant, except upon such Participant's death pursuant to a Participant's will or other similar testamentary disposition or the laws of descent and distribution.  Any purported assignment or transfer by any such Participant, other than assignments or transfers pursuant to a Participant's will or other similar testamentary disposition or the laws of descent and distribution, shall be void.
13.Assumption by Purchaser.  The Company's obligations to pay the Value Creation Bonuses to Participants hereunder shall be deemed to have been satisfied if the acquiring or surviving entity in a Liquidity Event assumes such obligations or pays or agrees to pay the Value Creation Bonuses as provided hereunder.
14.Interpretation of Plan.  Any interpretation of any provision of this Plan and the definitions contained herein shall be determined by the Committee in good faith.
15.Choice of Law.  The laws of the State of Delaware shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such state's conflicts of laws rules.

Exhibit A
Aspect Software, Inc.
300 Apollo Drive
Chelmsford, MA 01824
[DATE]
[NAME]
[ADDRESS]

Re:Value Creation Incentive Plan
Dear [NAME]:
On behalf of the Compensation Committee of the Board of Directors of Aspect Software, Inc. (the “Company”), it is our pleasure to offer you participation in the Company's Value Creation Incentive Plan, dated as of December 5, 2012 (the “VCIP”), which is attached for your review as Exhibit A to this letter. 

For purposes of the VCIP, your Value Creation Bonus Calculation shall be as follows:
	
		
	Equity Value
	Value Creation Bonus

	$0 through $295,000,000
	[_ ]% of Equity Value

	$295,000,001 through $470,000,000
	$[ __ ] plus [___]% of Equity Value in excess of $295,000,000

	$470,000,001 and above
	$[_] plus [___]% of Equity Value in excess of $470,000,000

Please sign below to acknowledge that you have read and understand, and agree to be bound by, all of the terms and conditions of the VCIP (as it may be amended or modified from time to time in accordance with its terms).  After you have signed below, please return this form to me via fax at (978) 250 7900 or email at marsha.pike@aspect.com.
Sincerely,
/s/ MARSHA PIKE
Marsha Pike
SR Director, Human Resources
Agreed to and acknowledged:

________________________
Name: __________________
Date: ___________________

Exhibit A
Value Creation Incentive Plan4.2Terms_of_Notes_Exchange_Offer

Exhibit 4.2

PHILLIPS 66

1.950% Senior Notes due 2015
2.950% Senior Notes due 2017
4.300% Senior Notes due 2022
5.875% Senior Notes due 2042

Fully and Unconditionally Guaranteed by 

PHILLIPS 66 COMPANY

Four series of Securities are hereby established pursuant to Section 2.01 of the Indenture, dated as of March 12, 2012 (the “Indenture”), among Phillips 66, as issuer (the “Company”), Phillips 66 Company, as guarantor (the “Guarantor”), and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), as follows:  
1.Each capitalized term used but not defined herein shall have the meaning assigned to such term in the Indenture.
2.The title of the 1.950% Senior Notes due 2015 shall be “1.950% Senior Notes due 2015” (the “2015 Notes”), the title of the 2.950% Senior Notes due 2017 shall be “2.950% Senior Notes due 2017” (the “2017 Notes”), the title of the 4.300% Senior Notes due 2022 shall be “4.300% Senior Notes due 2022” (the “2022 Notes”) and the title of the 5.875% Senior Notes due 2042 shall be “5.875% Senior Notes due 2042” (the “2042 Notes” and, together with the 2015 Notes, the 2017 Notes and the 2022 Notes, the “Notes”).
3.The limit upon the aggregate principal amount of the 2015 Notes, the 2017 Notes, the 2022 Notes and the 2042 Notes that may be authenticated and delivered under the Indenture (except for Notes of such series authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes of such series pursuant to Section 2.08, 2.09, 2.12, 2.17, 3.07 or 9.05 of the Indenture and except for any Notes of such series which, pursuant to Section 2.04 or 2.17 of the Indenture, are deemed never to have been authenticated and delivered thereunder) is $800,000,000, $1,500,000,000, $2,000,000,000 and $1,500,000,000, respectively; provided, however, that the authorized aggregate principal amount of the Notes of each series may be increased before or after the issuance of any Notes of such series by a Board Resolution (or action pursuant to a Board Resolution) to such effect; provided further, however, that the authorized aggregate principal amount of the Notes of each series may be increased only if the additional Notes issued will be fungible with the original Notes of such series for United States federal income tax purposes.
4.The Notes of each series shall be issued upon original issuance in whole in the form of one or more Global Securities (the “Global Notes”).  The Depository Trust Company and the Trustee are hereby designated as the Depositary and the Security Custodian, respectively, for the Global Notes under the Indenture.

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5.The Notes of each series and the Trustee’s certificate of authentication shall be substantially in the form of Annex A hereto (the “Form of Note”).
6.The date on which the principal of the 2015 Notes, the 2017 Notes, the 2022 Notes and the 2042 Notes is payable shall be March 5, 2015, May 1, 2017, April 1, 2022 and May 1, 2042, respectively.
7.The rate at which the 2015 Notes shall bear interest shall be 1.950% per annum.  The rate at which the 2017 Notes shall bear interest shall be 2.950% per annum.  The rate at which the 2022 Notes shall bear interest shall be 4.300% per annum.  The rate at which the 2042 Notes shall bear interest shall be 5.875% per annum.  Interest on the Notes of each series shall be computed on the basis of a 360-day year of twelve 30-day months.  The Interest Payment Dates on which such interest shall be payable on the 2015 Notes shall be March 5 and September 5 of each year, commencing March 5, 2013.  The Interest Payment Dates on which such interest shall be payable on the 2017 Notes and the 2042 Notes shall be May 1 and November 1 of each year, commencing May 1, 2013.  The Interest Payment Dates on which such interest shall be payable on the 2022 Notes shall be April 1 and October 1 of each year, commencing April 1, 2013.  The record dates for the interest payable on the 2015 Notes on any Interest Payment Date shall be the February 20 and August 20, as the case may be, next preceding such Interest Payment Date.  The record dates for the interest payable on the 2017 Notes and the 2042 Notes on any Interest Payment Date shall be the April 15 and October 15, as the case may be, next preceding such Interest Payment Date.  The record dates for the interest payable on the 2022 Notes on any Interest Payment Date shall be the March 15 and September 15, as the case may be, next preceding such Interest Payment Date.
8.No Additional Amounts with respect to the Notes shall be payable.  The date from which interest shall accrue for the 2015 Notes shall be September 5, 2012.  The date from which interest shall accrue for the 2017 Notes and the 2042 Notes shall be November 1, 2012.  The date from which interest shall accrue for the 2022 Notes shall be October 1, 2012.
9.The place or places where the principal of, premium (if any) on and interest on the Notes shall be payable shall be the office or agency of the Company maintained for that purpose, initially the office or agency of the Trustee in The City of New York at 101 Barclay Street, New York, New York 10286, and any other office or agency maintained by the Company for such purpose.  Payments in respect of Global Notes (including principal, premium, if any, and interest) shall be made by wire transfer of immediately available funds to the accounts specified by the Holder of such Notes.  In all other cases, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as such address shall appear in the register of the Notes maintained by the Registrar.
10.The Paying Agent and Registrar for the Notes of each series initially shall be the Trustee.
11.The Notes of each series are subject to redemption, in whole or in part, at any time and from time to time, at the option of the Company, in principal amounts of $2,000 and integral multiples of $1,000 above such amount, upon not less than 30 nor more than 60 days’ prior notice as provided in the Indenture, at a Redemption Price equal to the sum of (i) 100% of the principal amount of the Notes of such series to be redeemed and (ii) the amount, if any, by which 

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the sum of the present values of the Remaining Scheduled Payments thereon, discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus, in the case of the 2015 Notes, 20 basis points, or, in the case of the 2017 Notes, 35 basis points or, in the case of the 2022 Notes, 35 basis points or, in the case of the 2042 Notes, 45 basis points, exceeds the principal amount of the Notes to be redeemed, plus accrued and unpaid interest thereon to, but not including, the Redemption Date.
“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15 (519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue; provided that if no maturity is within three months before or after the Stated Maturity for the applicable series of Notes, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight-line basis rounding to the nearest month; or (ii) if such release (or any successor release) is not published during the week preceding such calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.  The Treasury Rate shall be calculated by the Company on the third Business Day preceding such Redemption Date.
“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker that would be used, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the applicable series of Notes. 
“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company.
“Comparable Treasury Price” means, with respect to any Redemption Date, (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations.
“Reference Treasury Dealer” means each of Citigroup Global Markets Inc. (and its successors), Credit Suisse Securities (USA) LLC (and its successors), J.P. Morgan Securities LLC (and its successors), RBS Securities Inc. (and its successors) and one other nationally recognized investment banking firm that is a primary U.S. Government securities dealer (a “Primary Treasury Dealer”), specified from time to time by the Company, provided, however, that if any of the foregoing shall cease to be a nationally recognized investment banking firm that is a Primary Treasury Dealer, the Company shall substitute therefor another nationally recognized investment banking firm that is a Primary Treasury Dealer. 

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“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer as of 3:30 p.m., New York time, on the third Business Day preceding such Redemption Date.
“Remaining Scheduled Payments” means, with respect to each Note to be redeemed, the remaining scheduled payments of the principal thereof and interest thereon that would be due after the related Redemption Date but for such redemption; provided, however, that, if such Redemption Date is not an Interest Payment Date with respect to such Note, the amount of the next succeeding scheduled interest payment thereon will be reduced by the amount of interest accrued thereon to such Redemption Date.
12.The Company shall have no obligation to redeem, purchase or repay Notes pursuant to any sinking fund or analogous provision or at the option of a Holder thereof.

        

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Annex A

[FORM OF FACE OF SECURITY]

[FOR GLOBAL SECURITIES: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.  THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK), A NEW YORK CORPORATION (“DTC”), SHALL ACT AS THE DEPOSITARY UNTIL A SUCCESSOR SHALL BE APPOINTED BY THE COMPANY AND THE REGISTRAR.  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
 
PHILLIPS 66

[1.950% SENIOR NOTE DUE 2015]
[2.950% SENIOR NOTE DUE 2017]
[4.300% SENIOR NOTE DUE 2022]
[5.875% SENIOR NOTE DUE 2042]

FULLY AND UNCONDITIONALLY GUARANTEED BY

PHILLIPS 66 COMPANY

CUSIP No. _____________ 
ISIN No. _____________

No.___________    $_____________

Phillips 66, a Delaware corporation (the “Company,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, promises to pay to ____________ or registered assigns, the principal sum of ______________________ Dollars [, or such greater or lesser amount as indicated on the Schedule of Exchanges of Securities hereto,] on [March 5, 2015] [May 1, 2017] [April 1, 2022] [May 1, 2042].

A -1
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	Interest Payment Dates:
	[March 5 and September 5]

	 
	[May 1 and November 1]

	 
	[April 1 and October 1]

	 
	[May 1 and November 1]

	 
	 

	Record Dates:
	[February 20 and August 20]

	 
	[April 15 and October 15]

	 
	[March 15 and September 15]

	 
	[April 15 and October 15]

	 
	 

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

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IN WITNESS WHEREOF, the Company has caused this Security to be signed manually or by facsimile by its duly authorized officers.
Dated: 
	
		
	PHILLIPS 66

	 
	 

	By:
	 

	 
	Name:

	 
	Title:

	 
	 

	By:
	 

	 
	Name:

	 
	Title:

	 
	 

	 
	 

	 
	 

GUARANTEE

Phillips 66 Company, a Delaware corporation, unconditionally guarantees to the holder of this Security, upon the terms and subject to the conditions set forth in the Indenture referenced on the reverse hereof, (a) the full and prompt payment of the principal of and any premium on this Security when and as the same shall become due, whether at the stated maturity thereof, by acceleration, redemption or otherwise, and (b) the full and prompt payment of interest on this Security when and as the same shall become due, subject to any applicable grace period.  

 
	
		
	PHILLIPS 66 COMPANY

	 
	 

	By:
	 

	 
	Name:

	 
	Title:

	 
	 

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Certificate of Authentication:

This is one of the Securities of the series 
designated therein referred to in the within-
mentioned Indenture.

THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.,
as Trustee

	
		
	By:
	 

	 
	Authorized Signatory

	 
	 

	Dated:
	 

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[FORM OF REVERSE OF SECURITY]

PHILLIPS 66

[1.950% SENIOR NOTE DUE 2015]
[2.950% SENIOR NOTE DUE 2017]
[4.300% SENIOR NOTE DUE 2022]
[5.875% SENIOR NOTE DUE 2042]

FULLY AND UNCONDITIONALLY GUARANTEED BY

PHILLIPS 66 COMPANY

This Security is one of a duly authorized issue of [1.950% Senior Notes due 2015] [2.950% Senior Notes due 2017] [4.300% Senior Notes due 2022] [5.875% Senior Notes due 2042] (the “Securities”) of Phillips 66, a Delaware corporation (the “Company”).

1.    Interest.  The Company promises to pay interest on the principal amount of this Security at [1.950%] [2.950%] [4.300%]  [5.875%] per annum from March 12, 2012 until maturity.  The Company will pay interest semiannually on [March 5 and September 5] [May 1 and November 1] [April 1 and October 1] [May 1 and November 1] of each year (each an “Interest Payment Date”), or if any such day is not a Business Day, on the next succeeding Business Day.  Interest on the Securities will accrue from the most recent Interest Payment Date on which interest has been paid, or, if no interest has been paid, from [September 5, 2012] [November 1, 2012] [October 1, 2012] [November 1, 2012]; provided that if there is no existing Default in the payment of interest, and if this Security is authenticated between a record date referred to on the face hereof (each, a “Record Date”) and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be [March 5, 2013] [May 1, 2013] [April 1, 2013] [May  1, 2013].  The Company shall pay interest on overdue principal and premium (if any) from time to time at a rate equal to the interest rate then in effect; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time at the same rate to the extent lawful.  Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months.
2.    Method of Payment.  The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered Holders of Securities at the close of business on the Record Date next preceding the Interest Payment Date, even if such Securities are canceled after such Record Date and on or before such Interest Payment Date.  The Holder must surrender this Security to a Paying Agent to collect principal payments.  The Company will pay the principal of, premium (if any) on and interest on the Securities in money of the United States of America that at the time of payment is legal tender for payment of public and private debts.  Such amounts shall be payable at the offices of the Trustee (as defined below), provided that at the option of the Company, the Company may pay such amounts (1) by wire transfer with respect to Global Securities or (2) by check payable in such money mailed to a Holder’s registered address with respect to any Securities.

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3.    Paying Agent and Registrar.  Initially, The Bank of New York Mellon Trust Company, N.A. (the “Trustee”), the trustee under the Indenture, will act as Paying Agent and Registrar.  The Company may change any Paying Agent, Registrar, co‐registrar or additional paying agent without notice to any Holder.  The Company, Phillips 66 Company, a Delaware corporation (the “Guarantor”), or any Subsidiary of the Company may act in any such capacity.
4.    Guarantee.  The Guarantor unconditionally guarantees to the Holders from time to time of the Securities, upon the terms and subject to the conditions set forth in the Indenture (as defined below), (a) the full and prompt payment of the principal of and any premium on the Securities when and as the same shall become due, whether at the Stated Maturity thereof, by acceleration, redemption or otherwise, and (b) the full and prompt payment of any interest on the Securities when and as the same shall become due, subject to any applicable grace period.  The Guarantee constitutes a guarantee of payment and not of collection.  In the event of a default in the payment of principal of or any premium on the Securities when and as the same shall become due, whether at the Stated Maturity thereof, by acceleration, call for redemption or otherwise, or in the event of a default in the payment of any interest on the Securities when and as the same shall become due, subject to any applicable grace period, each of the Trustee and the Holders of the Securities shall have the right to proceed first and directly against the Guarantor under the Indenture without first proceeding against the Company or exhausting any other remedies which the Trustee or such Holder may have and without resorting to any other security held by it.
5.    Indenture.  The Company issued the Securities under an Indenture, dated as of March 12, 2012 (the “Indenture”), among the Company, the Guarantor and the Trustee.  The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “TIA”), as in effect on the date of execution of the Indenture.  The Securities are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms and for the definitions of capitalized terms used but not defined herein.  The Securities are unsecured general obligations of the Company limited to [$800,000,000] [$1,500,000,000] [$2,000,000,000] [$1,500,000,000] in aggregate principal amount; provided, however, that the authorized aggregate principal amount of the Securities may be increased before or after the issuance of any Securities by a Board Resolution (or action pursuant to a Board Resolution) to such effect; provided further, however, that the authorized aggregate principal amount of the Securities may be increased only if the additional Securities issued will be fungible with the original Securities for United States federal income tax purposes.  The Indenture provides for the issuance of other series of debt securities (including the Securities, the “Debt Securities”) thereunder.
6.    Denominations, Transfer, Exchange.  The Securities are in registered form without coupons in minimum denominations of $2,000 and any integral multiples of $1,000 above such amount.  The transfer of Securities may be registered and Securities may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.  Neither the Company, the Trustee nor the Registrar shall be required to register the transfer or exchange of (a) any Security selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part, or (b) any Security 

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during the period beginning 15 Business Days before the mailing of notice of redemption of Securities to be redeemed and ending at the close of business on the day of mailing.  
7.    Persons Deemed Owners.  The registered Holder of a Security shall be treated as its owner for all purposes.
8.    Redemption.  The Securities are subject to redemption, in whole or in part, at any time and from time to time, at the option of the Company, in principal amounts of $2,000 and integral multiples of $1,000 above such amount, upon not less than 30 nor more than 60 days’ prior notice as provided in the Indenture, at a Redemption Price equal to the sum of (i) 100% of the principal amount of the Securities to be redeemed and (ii) the amount, if any, by which the sum of the present values of the Remaining Scheduled Payments thereon, discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus [20] [35] [35] [45] basis points, exceeds the principal amount of the Securities to be redeemed, plus accrued and unpaid interest thereon to, but not including, the Redemption Date.
“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15 (519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue; provided that if no maturity is within three months before or after the Stated Maturity for the Securities, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight-line basis rounding to the nearest month; or (ii) if such release (or any successor release) is not published during the week preceding such calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.  The Treasury Rate shall be calculated by the Company on the third Business Day preceding such Redemption Date.
“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker that would be used, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities. 
“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company.
“Comparable Treasury Price” means, with respect to any Redemption Date, (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations.

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“Reference Treasury Dealer” means each of Citigroup Global Markets Inc. (and its successors), Credit Suisse Securities (USA) LLC (and its successors), J.P. Morgan Securities LLC (and its successors), RBS Securities Inc. (and its successors) and one other nationally recognized investment banking firm that is a primary U.S. Government securities dealer (a “Primary Treasury Dealer”), specified from time to time by the Company, provided, however, that if any of the foregoing shall cease to be a nationally recognized investment banking firm that is a Primary Treasury Dealer, the Company shall substitute therefor another nationally recognized investment banking firm that is a Primary Treasury Dealer. 
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer as of 3:30 p.m., New York time, on the third Business Day preceding such Redemption Date.
“Remaining Scheduled Payments” means, with respect to each Security to be redeemed, the remaining scheduled payments of the principal thereof and interest thereon that would be due after the related Redemption Date but for such redemption; provided, however, that, if such Redemption Date is not an Interest Payment Date with respect to such Security, the amount of the next succeeding scheduled interest payment thereon will be reduced by the amount of interest accrued thereon to such Redemption Date. 
9.    Amendments and Waivers.  Subject to certain exceptions and limitations, the Indenture or the Securities may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Securities of all series affected by such amendment or supplement (acting as one class), and any existing or past Default or Event of Default under, or compliance with any provision of, the Indenture may be waived (other than any continuing Default or Event of Default in the payment of the principal of, premium (if any) on or interest on the Securities) by the Holders of at least a majority in principal amount of the then outstanding Securities of any series or of all series (acting as one class) in accordance with the terms of the Indenture.  Without the consent of any Holder, the Company, the Guarantor and the Trustee may amend or supplement the Indenture or the Securities or waive any provision of either: (i) to cure any ambiguity, omission, defect or inconsistency; (ii) if required, to provide for the assumption of the obligations of the Company or the Guarantor under the Indenture in the case of the merger, consolidation or sale, lease, conveyance, transfer or other disposition of all or substantially all of the assets of the Company or the Guarantor; (iii) to provide for uncertificated Securities in addition to or in place of certificated Securities or to provide for the issuance of bearer Securities (with or without coupons); (iv) to provide any security for, or to add any guarantees of or additional obligors on, the Securities or the related Guarantees; (v) to comply with any requirement in order to effect or maintain the qualification of the Indenture under the TIA; (vi) to add to the covenants of the Company or the Guarantor for the benefit of the Holders of the Securities, or to surrender any right or power conferred by the Indenture upon the Company or the Guarantor; (vii) to add any additional Events of Default with respect to all or any series of the Debt Securities; (viii) to change or eliminate any of the provisions of the Indenture, provided that no outstanding Security is adversely affected in any material respect; (ix) to supplement any of the provisions of the Indenture to such extent as shall be necessary to permit or facilitate the defeasance and discharge of the Securities pursuant to 

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the Indenture; or (x) to evidence and provide for the acceptance of appointment under the Indenture by a successor Trustee with respect to the Securities and to add to or change any of the provisions of the Indenture as shall be necessary to provide for or facilitate the administration of the trusts thereunder by more than one Trustee, pursuant to the requirements of the Indenture.
The right of any Holder to participate in any consent required or sought pursuant to any provision of the Indenture (and the obligation of the Company or the Guarantor to obtain any such consent otherwise required from such Holder) may be subject to the requirement that such Holder shall have been the Holder of record of any Securities with respect to which such consent is required or sought as of a date identified by the Company or the Guarantor in a notice furnished to Holders in accordance with the terms of the Indenture.
Without the consent of each Holder affected, the Company may not (i) reduce the amount of Debt Securities whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the rate of or change the time for payment of interest, including default interest, on any Security; (iii) reduce the principal of or premium on, or change the Stated Maturity of, any Security; (iv) reduce the premium, if any, payable upon the redemption of any Security or change the time at which any Security may or shall be redeemed; (v) change the coin or currency in which any Security or any premium or interest with respect thereto is payable; (vi) impair the right to institute suit for the enforcement of any payment of principal of or premium (if any) or interest on any Security, except as provided in the Indenture; (vii) make any change in the percentage of principal amount of Debt Securities necessary to waive compliance with certain provisions of the Indenture or make any change in the provision for modification; or (viii) waive a continuing Default or Event of Default in the payment of principal of or premium (if any) or interest on the Securities.
A supplemental indenture that changes or eliminates any covenant or other provision of the Indenture which has expressly been included solely for the benefit of one or more particular series of Debt Securities under the Indenture, or which modifies the rights of the Holders of Debt Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under the Indenture of the Holders of Debt Securities of any other series.
10.    Defaults and Remedies.  Events of Default are defined in the Indenture and generally include: (i) default for 30 days in payment of any interest on the Securities; (ii) default in any payment of principal of or premium, if any, on the Securities when due and payable; (iii) default by the Company or the Guarantor in compliance with any of its other covenants or agreements in, or provisions of, the Securities or in the Indenture which shall not have been remedied within 90 days after written notice by the Trustee or by the holders of at least 25% in principal amount of the Securities then outstanding; or (iv) certain events involving bankruptcy, insolvency or reorganization of the Company or the Guarantor.  If an Event of Default occurs and is continuing, the Trustee by notice to the Company and the Guarantor, or the Holders of at least 25% in principal amount of the then outstanding Securities of the series affected by such Event of Default by notice to the Company, the Guarantor and the Trustee, may declare the principal of and interest on all the Securities to be immediately due and payable, except that in the case of an Event of Default arising from certain events of bankruptcy, insolvency or reorganization of the Company or the Guarantor, all outstanding Debt Securities under the Indenture become due and payable immediately without further action or notice.  The amount due and payable upon the acceleration of any Security is equal 

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to 100% of the principal amount thereof plus accrued interest to the date of payment.  Holders may not enforce the Indenture or the Securities except as provided in the Indenture.  The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities.  Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Securities may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal, premium or interest) if it determines that withholding notice is in their interests.  The Company and the Guarantor must furnish annual compliance certificates to the Trustee.
11.    Discharge Prior to Maturity.  The Indenture with respect to the Securities shall be discharged and canceled upon the payment of all of the Securities and shall be discharged except for certain obligations upon the irrevocable deposit with the Trustee of any combination of funds and U.S. Government Obligations sufficient for such payment.
12.    Trustee Dealings with Company and Guarantor.  The Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and may make loans to, accept deposits from, and perform services for the Company, the Guarantor or any of their respective Affiliates, and may otherwise deal with the Company, the Guarantor or any such Affiliates, as if it were not Trustee.
13.    No Recourse Against Others. A director, officer, employee, stockholder, partner or other owner of the Company, the Guarantor or the Trustee, as such, shall not have any liability for any obligations of the Company under the Securities, for any obligations of the Guarantor under the Guarantee or for any obligations of the Company, the Guarantor or the Trustee under the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  Each Holder by accepting a Security waives and releases all such liability.  The waiver and release shall be part of the consideration for the issue of Securities.
14.    Authentication.  This Security shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.
15.    CUSIP Numbers.  Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Securities as a convenience to the Holders of the Securities.  No representation is made as to the accuracy of such numbers as printed on the Securities and reliance may be placed only on the other identification numbers printed thereon.
16.    Abbreviations.  Customary abbreviations may be used in the name of a Holder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

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The Company will furnish to any Holder upon written request and without charge a copy of the Indenture.  Request may be made to:
Phillips 66
3010 Briarpark Drive
Houston, Texas 77042
Telephone:  (281) 293-6600
Attention:  Treasurer

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SCHEDULE OF EXCHANGES OF SECURITIES*

The following exchanges of a part of this Global Security for other Securities have been made:

	
					
	

   Date of Exchange
	

Amount of
Decrease in
Principal Amount
of this Global Security
	

Amount of
Increase in
Principal Amount
of this Global Security
	Principal Amount
of this Global
Security Following
Such Decrease
or Increase
	

Signature of
Authorized Officer
of Trustee or
Security Custodian

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	
					
	 
	 
	 
	 
	 

* To be included only if the Security is a Global Security

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ASSIGNMENT FORM

To assign this Security, fill in the form below: (I) or (we) assign and transfer this Security to 
	
					
	 
	 
	 
	 
	 

	(Insert assignee’s social security or tax I.D. number)

	
					
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	(Print or type assignee’s name, address and zip code)

	
					
	and irrevocably appoint
	 
	 
	 

	as agent to transfer this Security on the books of the Company.  The agent may substitute another to act for him.

	Date:
	 
	Your Signature:    
	 

	 
	 
	 
	(Sign exactly as your name appears on
the face of this Security)

	Signature Guarantee:    
	 
	 
	 

	 
	 
	(Participant in a Recognized Signature
      Guaranty Medallion Program)

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