Exhibit 10.1

INSTRUMENT AMENDING

LYONDELL CHEMICAL COMPANY

EXECUTIVE SEVERANCE PAY PLAN

LYONDELL CHEMICAL COMPANY hereby amends and restates the Lyondell Chemical
Company Executive Severance Pay Plan, to read in its entirety as the document
entitled “Lyondell Chemical Company Executive Severance Pay Plan”, attached
hereto.

IN WITNESS WHEREOF, LYONDELL CHEMICAL COMPANY, acting by and through its duly
authorized officer, has caused this Instrument to be executed on this 23rd day
of February , 2006.

 

ATTEST:     LYONDELL CHEMICAL COMPANY BY:  

/s/ Janna Sewell

    BY:  

/s/ Dan F. Smith

  Assistant Secretary       Dan F. Smith         President and Chief Executive
Officer

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LYONDELL CHEMICAL COMPANY

EXECUTIVE SEVERANCE PAY PLAN

As Amended and Restated Effective February 23, 2006

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LYONDELL CHEMICAL COMPANY

EXECUTIVE SEVERANCE PAY PLAN

(As Amended and Restated Effective February 23, 2006)

1. Purpose. This Lyondell Chemical Company Executive Severance Pay Plan (the
“Plan”) is intended to assure Lyondell Chemical Company (the “Company”) that it
will have the continued dedication of specified executives and eliminate the
distractions of personal uncertainties associated with potential transactions
that the Company may undertake in the future by providing for certain severance
benefit payments to those executives on employment termination within a
specified period following a Change in Control, as defined below.

2. Definitions. The terms set forth below have the following meanings:

“Act” means Code Section 409A, as enacted by the American Jobs Creation Act of
2004, as it may be amended, and all applicable regulations and guidelines issued
or promulgated by the appropriate government agency or regulatory body.

“Applicable Annual Earnings” means the sum of a Participant’s annual base salary
in effect on the last day of employment with the Employer (or if greater, annual
base salary in effect on the date of the Change in Control) and the
Participant’s Target Award (whether or not paid) for personal services on the
Employer’s behalf. The “Target Award” shall be the actual bonus compensation
target for the calendar year when the Change in Control occurs, or if none has
been established, the bonus compensation target for the immediately preceding
calendar year. Applicable Annual Earnings shall include the Participant’s
current annual base salary and Target Award whether paid or deferred, including
without limit, amounts contributed by or on behalf of the Participant under any
Employer-sponsored plan, such as (i) a plan described in Code Sections 125 or
401(k), or (ii) the Company’s Executive Deferral Plan. This definition of
Applicable Annual Earnings excludes any income attributable to stock options,
stock appreciation rights, performance awards other than awards under an
executive bonus plan described above, dividend credits, and restricted stock
granted under, and dividends on shares acquired pursuant to, any stock option
plan, restricted stock plan or performance unit plan.

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

“Change in Control” shall be deemed to have occurred as of the date that one or
more of the following occurs:

(i) Individuals who constitute the entire Board on the date of this amendment
(“Incumbent Directors”) then cease to constitute at least a Board majority for
any reason; provided, however, that any individual after the date of this
amendment also shall be considered an Incumbent Director if the individual’s
election or nomination for election by the Company’s shareholders was approved
by a vote of at least a majority of the then Incumbent Directors, but an
individual shall not be considered an Incumbent Director if the individual’s
initial assumption of office occurs as a result of either an actual or
threatened election contest, as those terms are used in Rule 14a-11 under the
Securities Exchange Act of 1934, as amended, or as a result of other actual or
threatened solicitation of proxies or consents by or on behalf of any Person (as
defined below) other than the Board;

 

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(ii) The consummation of any merger, consolidation, amalgamation,
reorganization, share exchange or recapitalization of the Company (or, if the
Company’s capital stock is affected, any Company subsidiary), or any sale,
lease, exchange or other transfer (in one transaction of a series of
transactions contemplated or arranged by any party as a single plan) of all or
substantially all of the Company’s assets (each of the foregoing being an
“Acquisition Transaction”) where:

(1) the Company’s shareholders immediately before that Acquisition Transaction
do not beneficially own, directly or indirectly, immediately after that
Acquisition Transaction shares or other ownership interests representing in the
aggregate fifty percent (50%) or more of (a) the then outstanding common stock
or other equity interests of the corporation or other entity surviving or
resulting from the merger, consolidation, amalgamation, reorganization, share
exchange or recapitalization or acquiring such assets of the Company, as the
case may be, or of its ultimate parent corporation or other entity, if any (the
“Surviving Entity”), and (b) the Combined Voting Power of the Surviving Entity’s
then outstanding Voting Securities, or

(2) the Incumbent Directors who initially approved the Acquisition Transaction
do not constitute a majority of the Board of Directors, or similar managing
group, of the Surviving Entity immediately after that Acquisition Transaction,
or

(3) any Person directly or indirectly becomes the Beneficial Owner of the
Surviving Entity’s securities representing, in the aggregate, more than twenty
percent (20%) of either (A) the Surviving Entity’s then outstanding shares of
common stock (“Common Shares”) or (B) the Combined Voting Power of all the
Surviving Entity’s then outstanding Voting Securities, and that Person’s direct
or indirect Beneficial Ownership of the Combined Voting Power of the outstanding
Voting Securities of the Surviving Entity immediately after the Acquisition
Transaction is more than five percentage points greater than that Person’s
Beneficial Ownership in the Combined Voting Power of the outstanding Voting
Securities of the Company immediately before the Acquisition Transaction was
initially approved;

(iii) The Company’s stockholders approve any plan or proposal to liquidate or
dissolve the Company; or

(iv) Any Person becomes, directly or indirectly, the Beneficial Owner, of
Company securities representing, in the aggregate, more than twenty percent
(20%) of either (A) the then outstanding Common Shares or (B) the Combined
Voting Power of all of the Company’s then outstanding Voting Securities;
provided, however, that notwithstanding the foregoing, no Change in Control
shall be deemed to occur under this Subsection (iv):

(1) Solely as a result of the Company acquiring securities in an transaction
that reduces the outstanding number of Common Shares or other Voting Securities
and thereby increases (a) the proportion of Common Shares beneficially owned by
any Person to more than twenty percent (20%) of the then outstanding Common
Shares, or (b) the proportionate voting power represented by the Voting
Securities beneficially owned by any Person to more than twenty percent (20%) of
the Combined Voting Power of all then outstanding Voting Securities;

 

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(2) Solely as a result of a Person acquiring securities directly from the
Company, excluding any conversion of a security not acquired directly from the
Company;

provided, further, that a Change in Control shall be deemed to occur if any
Person referred to in paragraph (1) or (2) of this Subsection (iv) thereafter
becomes the Beneficial Owner of additional shares or other ownership interests
representing one percent (1%) or more of the Company’s outstanding Common Shares
or one percent (1%) or more of the Combined Voting Power (other than as a result
of (x) a stock split, stock dividend or similar transaction or (y) an event
described in paragraph (1) or (2) of this Subsection (iv)).

(v) For purposes of this Change in Control definition, the following capitalized
terms have the following meanings:

(1) “Affiliate” means, as to a specified person, another person that directly or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the specified person, within the meaning of terms
used in Rule 405 under the Securities Act of 1933, as amended, or any successor
rule.

(2) “Beneficial Owner” has the meaning set forth in Rules 13d-3 and 13d-5 under
the Securities Exchange Act of 1934, as amended.

(3) “Combined Voting Power” means the aggregate votes entitled to be cast
generally by holders of then outstanding Voting Securities of a corporation or
other entity to elect the Board of Directors, or similar managing group, of that
corporation or entity.

(4) “Person” means any individual, entity (including, without limit, any
corporation, partnership, trust, joint venture, association or governmental
body) or group (as defined in Sections 14(d)(3) or 15(d)(2) of the Exchange Act
and the rules and regulations thereunder); provided, however, that Person
excludes the Company, any of its subsidiaries or affiliates or LYONDELL-CITGO
Refining LP (“LCR”), any employee benefit plan of the Company or LCR or any of
their subsidiaries or any entity organized, appointed or established for or
under the terms of any employee benefit plan by the Company, LCR, or their
subsidiaries.

(5) “Voting Securities” means all securities of a corporation or other entity
with the right, under ordinary circumstances, to vote to elect the Board of
Directors or similar managing group of that corporation or other entity.

“Cause” means: (i) the Participant’s continued and willful refusal to
substantially perform his duties (other than a willful refusal to perform a duty
which constitutes Constructive Termination for Good Reason or refusal resulting
from the Participant’s incapacity due to physical or mental illness), after the
Governing Body delivers a demand for substantial performance that specifically
identifies the Governing Body’s determination of the manner in which the
Participant has not substantially performed his duties, where the Participant’s
performance is not cured to the Governing Body’s reasonable satisfaction within
thirty (30) days from that demand; (ii) the Participant’s engagement in willful
misconduct or dishonesty that is materially injurious, monetarily or otherwise
to the Employer; or (iii) a Participant’s final

 

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conviction of a felony. Notwithstanding the foregoing, a Participant shall not
be deemed terminated for Cause by an Employer without (i) the Employer’s
reasonable written notice to a Participant setting forth the reasons the
Employer intends to terminate the Participant for Cause and (ii) the
Participant’s opportunity, together with his counsel, to be heard before the
Governing Body. It is specifically agreed that Cause shall exclude any act or
omission by a Participant in the good faith exercise of the Participant’s
business judgment as an officer of the Employer.

“Chief Executive Officer” means the Chief Executive Officer of the Company.

“Code” means the United States Internal Revenue Code of 1986, as amended from
time to time.

“Committee” means the Compensation and Human Resources Committee of the Board or
any person or persons appointed by the Board to administer the Plan.

“Common Stock” means the Company’s common stock, par value $1.00 per share.

“Company” means Lyondell Chemical Company.

“Constructive Termination for Good Reason” means:

(i) the Participant is assigned to any duties or responsibilities that are not
comparable to the Participant’s position, offices, duties, responsibilities or
status with the Employer at the time of the Change in Control, or the
Participant’s reporting responsibilities or titles are changed and the change
results in a reduction of the Participant’s responsibilities or position with
the Employer;

(ii) the Participant’s level of benefits (qualified and executive) or
compensation (individual base compensation and short and long-term incentive
opportunity) is reduced below the comparable level payable to similarly situated
executives at the Employer; or

(iii) the Participant is actually transferred, or offered a proposed transfer,
as evidenced in the Employer’s written communication to the Participant, to a
location other than the location where he was primarily employed immediately
preceding the Change in Control, unless that new location is a major operating
unit or facility of the Employer that is located within 50 miles of the
Participant’s primary location on the date immediately preceding a transfer;
provided, however, (1) the Participant shall provide the Committee or the Board
with written notice, within thirty (30) days from the date that he is given the
Employer’s written notice of an actual or proposed transfer, that the transfer
shall constitute a Constructive Termination for Good Reason, (2) the Employer
fails to provide the Participant with written notice rescinding the actual or
proposed transfer within twenty (20) days of the date the Employer receives the
Participant’s notice and (3) if the Employer does not rescind the transfer, the
Participant must terminate his employment due to Constructive Termination for
Good Reason within forty (40) days after that twenty (20)-day rescission period
so, in any event, the Participant shall have terminated his employment with the
Employer within ninety (90) days after the Participant first receives the
Employer’s written notice of the actual or proposed transfer.

 

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“Disability” means a permanent and total disability as defined in the
Employer-sponsored long-term disability plan applicable to the affected
Participant.

“Effective Date” means February 23, 2006.

“Employee” means an individual employed by the Company or a Subsidiary.

“Employer” means the Company or any Subsidiary that employs a Participant.

“Governing Body” means (i) the Board, if the Employer is the Company, or
(ii) the applicable governing body of any other Employer.

“Key Employee” means a Participant who at any time during the prior Plan Year
was identified as (i) an officer or the Company with annual compensation greater
than $130,000, as adjusted, (ii) a five percent (5%) owner of the Company, or
(iii) a one percent (1%) owner of the Company with annual compensation from the
Company of more that $150,000, as adjusted, as determined according to the
requirements of Code Sections 409A and 416(i). For Plan distribution purposes,
an Employee identified as a Key Employee during a year ending on the
identification date shall be considered a Key Employee for a twelve month period
beginning on the following April 1. December 31 of the prior Plan Year shall be
used as the identification date to identify Key Employees under the Act.

“Level One” means the Company’s Chief Executive Officer and those elected
officers of the Company recommended by the Chief Executive Officer and approved
by the Committee.

“Level One Participant” means a Participant who is employed in a Level One
capacity by the Company during the relevant eligibility period under Section 3;

“Level Two” means an elected officer of the Company who does not serve in a
Level One capacity, an officer of a Subsidiary or an Employee in a senior
management position of the Company or any Subsidiary who the Chief Executive
Officer designates as eligible to participate.

“Level Two Participant” means a Participant employed in a Level Two position
during the relevant eligibility period under Section 3.

“Level Three” means an Employee in a senior management position of the Company
or any Subsidiary who the Chief Executive Officer designates as eligible to
participate.

“Level Three Participant” means a Participant employed in a Level Three position
during the relevant eligibility period under Section 3.

“Participant” means an Employee eligible for a Plan benefit under Section 3 as a
Level One Participant, Level Two Participant, or Level Three Participant.

“Plan” means the Lyondell Chemical Company Executive Severance Pay Plan, as
amended from time to time.

 

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“Subsidiary” means (i) any corporation, limited liability company or similar
entity of which the Company directly or indirectly owns shares representing more
than 50% of the voting power of all classes or capital stock of such corporation
which have the right to vote generally on matters submitted to a vote of the
shareholders of that entity, (ii) LYONDELL-CITGO Refining, LP so long as the
Company maintains an equity ownership interest equal to at least 25% in that
entity, or (iii) any other entity in which the Company has an equity ownership
interest of at least 25%, so long as the Committee designates that entity as a
Subsidiary for Plan purposes.

3. Administration and Eligibility.

(a) Administration. The Plan shall be administered by the Committee, which shall
have full and exclusive power to interpret this Plan and to adopt rules,
regulations and guidelines to carry out this Plan as it deems necessary or
appropriate. The Committee, in its discretion, may retain the services of an
outside administrator to perform any of its Plan functions. Any Committee
decision in interpreting and administering this Plan shall lie within its sole
and absolute discretion and shall be final, conclusive and binding on all
parties concerned. Notwithstanding the foregoing, on or before a Change in
Control, the Board shall designate a successor plan administrator which, in all
events, shall be independent of the Company and any Company affiliate. The
successor plan administrator shall have all the powers given under the Plan to
the Committee to (i) determine all questions relating to Plan benefits;
(ii) adopt rules and procedures to administer the Plan; and (iii) interpret Plan
provisions.

(b) Eligibility to Participate. Employees, who, at any time in the two (2) year
period before a Change in Control, occupied a position classified as Level One
or Level Two, shall be eligible to receive Plan benefits and those individuals
shall be Level One Participants and Level Two Participants, respectively. In
addition, the Chief Executive Officer may designate Employees in Level Two or
Level Three, individually or by employee classification, as Level Two or Level
Three Participants under the Plan. The Chief Executive Officer must notify an
Employee of designation as a Level Two or Level Three Participant in writing,
with notice delivered to the Participant and a copy sent to Committee members.
Notwithstanding the foregoing, an Employee will not be eligible to become a
Participant so long as that Employee is currently eligible for a severance
benefit upon termination of employment with the Company pursuant to a plan or
agreement established by Millennium Chemicals, Inc. or any of its former
subsidiaries or affiliates.

(c) Eligibility for Severance Benefits. If a Participant’s employment is
terminated within two years following a Change in Control, (i) by the
Participant within ninety (90) days after any event occurs which constitutes a
Constructive Termination for Good Reason, or (ii) by the Employer for reasons
other than (A) Cause, or (B) the Participants’ death or Disability, then the
Company will provide or cause to be provided to the Participant the rights and
benefits in Section 4. No event which occurs on or after the date an Employer
ceases to be a Subsidiary shall entitle a Participant employed by that former
Subsidiary to receive any severance benefits pursuant to Section 4.

 

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4. Severance Benefits. If a Participant is eligible for Severance Benefit under
Section 3(c), then the Company shall provide or cause to be provided to the
Participant benefits as follows:

(a) Salary and Other Payment at Termination. The Company shall pay to the
Participant a cash lump-sum payment in the amount of:

(i) for Level One Participants, three (3) times the Participant’s Applicable
Annual Earnings;

(ii) for Level Two Participants, two (2) times the Participant’s Applicable
Annual Earnings; and

(iii) for Level Three Participants, one (1) times the Participant’s Applicable
Annual Earnings.

(b) Stock Options. All non-vested stock options which have been granted to the
Participant under any of the Company’s incentive plans (a “Stock Option Plan”)
shall become 100% vested and fully exercisable as of the date of the Change in
Control, notwithstanding any provision of the Stock Option Plans or the
Participant’s associated stock option agreements, if any, to the contrary.

If the Company is the surviving entity following a Change in Control, to the
extent compliant with the Act, all stock options owned by a Participant shall be
freely exercisable for the remainder of their existing terms without regard to
any earlier date in any Stock Option Plan or associated stock option agreement,
including, without limit, an earlier expiration date on a Participant’s
employment termination.

(c) Minimum Retirement Benefits. If a Participant is not fully vested when he
becomes eligible for Severance Benefits, the Company shall cause the Participant
to be treated as if fully vested in the Employer’s qualified defined benefit
retirement plan, and to be fully vested in the Company’s Supplementary Executive
Retirement Plan (or its successor), and any Subsidiary plan comparable to the
Company’s Supplementary Executive Retirement Plan. If the Participant has not
satisfied the minimum age and service requirements for early retirement
eligibility under these plans, the Company shall also cause the Participant to
be treated as having satisfied or to have satisfied the minimum age and service
requirements for early retirement eligibility to determine the Participant’s
eligibility to commence benefit payments under these plans. To determine the
amount of benefits payable under the Employer’s qualified defined benefit plan
and Supplementary Executive Retirement Plan (or its successor) or comparable
Subsidiary plan, benefits shall be calculated for a Participant who has attained
age 55 when benefit payments commence as if the Participant met the plans’ early
retirement eligibility requirements. Benefits for a Participant who has not
attained age 55 when benefit payments commence shall be calculated as if the
Participant had met early retirement eligibility requirements, and then shall be
actuarially adjusted to reflect early commencement of the benefit. Payments
attributable to these calculations which exceed any amount actually payable
under the Employer’s qualified defined benefit retirement plan under this
Section 4(c) shall be paid in a lump sum cash payment on employment termination.
If the Participant is covered under a Subsidiary’s qualified defined benefit
plan or a Subsidiary plan comparable to the Company’s Supplementary Executive
Retirement Plan, the Company will cause the Subsidiary to provide a lump-sum
cash payment on employment termination equal to the excess (if any) of the
amount payable under this Section 4(c) and the present value of the amount
payable under the Subsidiary’s plans. No payment under this Section shall be
deemed to be any part of the Participant’s benefit vested on or before
December 31, 2004 under any Employer Supplementary Executive Retirement Plan.

 

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The Participant shall be eligible for coverage under the retiree medical plan of
the Company (or its successor) on employment termination, regardless of attained
age and service. Excluding eligibility requirements, coverage shall be provided
for the Participant and the Participant’s dependents on the same terms and
conditions, as that provided to other retired executives or senior managers of
the Company (or its successor) in the same class or category of position as the
Participant held before the Change in Control; provided, however, that the
medical coverage in Section 4(d) shall govern for the first twenty-four
(24) months following termination if that coverage is more favorable to the
Participant.

(d) Insurance and Other Benefits. For a period of twenty-four (24) months
following termination, the Participant (and his or her dependents, as
applicable) shall be covered at the Company’s expense by the Company’s life
insurance, medical, dental, accident and disability plans or any successor to a
plan or program in effect at employment termination for active employees in the
same class or category as the Participant, or who would be in the same class or
category if employed by the Company (hereafter individually and collectively
referred to as “Welfare Plan”), subject to the terms of the Welfare Plan and to
the Participant’s continued contributions, if required, which contributions
shall not exceed those charged to active employees in the same class or category
in which the Participant was employed by the Company. If the Participant is
ineligible to continue to be covered under the terms of any Welfare Plan, or if
the Participant is eligible but the benefits applicable to the Participant (and
his dependents, as applicable) are not substantially equivalent to those
benefits immediately before employment termination, then, the Company, at its
expense, shall provide to the Participant (and his or dependents, as applicable)
benefits substantially equivalent to those in effect immediately before
employment termination through other sources for a period of twenty-four
(24) months following employment termination,. Any continuation coverage
required under the Consolidated Omnibus Budget Reconciliation Act of 1985 as
amended (“COBRA”) under any Company group health plan shall be in addition to
the coverage provided under this Section and shall not begin until the
twenty-four (24) month period ends.

If the Company is unable to make monthly payments for these benefits under the
Act, the Company shall calculate the cost of the benefits, at the rate in effect
at employment termination, for the twenty-four (24) month period and shall pay
that amount to the Participant at the same time other Severance Benefits are
paid. The Participant then shall be responsible for any payment required to
provide these benefits.

(e) Outplacement. The Company, at its expense, shall provide reasonable
outplacement assistance to the Participant for a period not to exceed one
(1) year from a professional outplacement assistance firm which is reasonably
suitable to the Participant and commensurate with his position and
responsibilities. In no event will the amount expended for outplacement
assistance for the Participant exceed $40,000 USD.

(f) Certain Tax Payments. If the Participant becomes entitled to one or more
payments (with a “payment” including, without limit, an increase in pension
benefits and the vesting of an option or other non-cash benefit or property)
under the terms of any plan, arrangement or agreement with the Employer (the
“Change in Control Payments”), which are or

 

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become subject to the tax imposed by Code Section 4999 of the Code (or any
similar tax that may be imposed) (the “Excise Tax”), the Company shall pay to
the Participant an additional cash amount (the “Additional Gross-up Payment”)
such that the net amount retained by the Participant after reduction for (i) any
Excise Tax on the Change in Control Payments and (ii) any federal, state and
local income or employment tax and Excise Tax payable with respect to the
Additional Gross-up Payment, shall equal the Change in Control Payments. To
determine the amount of the Additional Gross-up Payment, the Participant shall
be deemed (i) to pay federal income taxes at the highest stated rate of federal
income taxation (including surtaxes, if any) for the calendar year in which the
Additional Gross-up Payment is to be made; and (ii) to pay any applicable state
and local income taxes at the highest stated rate of taxation (including
surtaxes, if any) for the calendar year in which the Additional Gross-up Payment
is to be made. Any Additional Gross-up Payment required hereunder shall be made
to the Participant at the same time any Change in Control Payment subject to the
Excise Tax is paid or deemed received by the Participant. The Additional
Gross-up Payment shall not be paid under this Plan if an Additional Gross-up
Payment which is identical to or greater than the amount calculated in this
Section 4(f) is paid under any plan, arrangement or agreement with the Employer.

If, in connection with the examination of a Participant’s tax return, the
Internal Revenue Service asserts that any amount payable or benefit provided
hereunder is a “parachute payment” as defined in the Code and that amount or
benefit was not treated as a parachute payment in determining an Additional
Gross-up Payment, the Company, at its cost, shall assume the defense of any
controversy involving this issue and shall indemnify and hold the Participant
harmless for all liabilities, costs, taxes, interest and penalties attributable
to this issue and, to the extent necessary (without duplication), shall increase
the Additional Gross-up Payment to give effect to any additional amount or
benefit determined to be a parachute payment. The Participant shall cooperate
with the Company so the Company will be able to challenge any adverse
determination by the Internal Revenue Service through administrative proceedings
and, if the Company decides, through litigation.

(g) No Duty to Mitigate; Offsets. A Participant’s Severance Benefit entitlement
shall not be governed by any duty to mitigate the Participant’s damages by
seeking further employment nor offset by any compensation which the Participant
may receive from future employment. However, a Participant’s payment under
Section 4(a) shall be reduced by any payment required by law, regulation,
custom, contract, agreement or other Company or Employer severance plan related
to the Participant’s employment termination, including but not limited to, any
salary continuation during any notice period required by law, other than the
notice period applicable to a Constructive Termination for Good Reason.

(h) Time of Payments. Any cash payment under this Section shall be paid to a
Participant within thirty (30) days of the Participant’s employment termination,
unless the Participant is a Key Employee. Cash payments and benefits to a
Participant who is a Key Employee shall be made six (6) months after that
Participant’s severance from service, to the extent required by the Act.

5. Company Benefit Plans. The specific arrangements referred to in this Plan are
not intended (i) to exclude or limit a Participant’s participation in other
benefit plans or programs in which the Participant currently participates or may
participate including, without limit, retiree benefits, or benefits which are
available to executive personnel generally in the same class or

 

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category as the Participant or (ii) to preclude or limit other compensation or
benefits as may be authorized by the Committee or the Governing Body from time
to time. If not otherwise paid or provided, the Company shall timely pay or
provide to the Participants and/or the Participant’s dependents any other
amounts or benefits required to be paid or provided or which the Participant or
the Participant’s dependents are eligible to receive under this Plan and under
any plan program, policy or practice or contract or agreement of the Company as
in effect and applicable generally to executive personnel in the same class or
category of a Participant.

6. Payment Obligations Absolute. The Company’s obligation to pay or provide, or
to cause to be paid or provided, to Participants the amounts and benefits and to
make the arrangements provided in this Plan shall be absolute and unconditional
and shall not be affected by any circumstances (including, without limit, any
claim, counterclaim, recoupment, defense or other right, which the Employer may
have against a Participant or anyone else, other than an offset provided under
Section 4(g)). All amounts payable by or on behalf of the Company shall be paid
without notice or demand. Each and every payment made by or on behalf of the
Company shall be final and the Company and its subsidiaries or affiliates, for
any reason whatsoever, shall not seek to recover all or any part of that payment
from a Participant or from whomever shall be entitled to it. In no event shall
an asserted violation of any Plan provision constitute a basis to defer or
withhold any amount payable to, or on behalf of, a Plan Participant.

7. Confidentiality and Cooperation.

(a) Cooperation. Following termination, Participants will furnish information
and render assistance and cooperation as reasonably requested in connection with
any litigation or legal proceedings concerning the Company, any of its
Subsidiaries (other than any legal proceedings arising out of or concerning
Participant’s employment or Participant’s termination). The Company will pay or
reimburse Participants for reasonable expenses in connection with this
cooperation.

(b) Release of Liability. Each Participant, as a further eligibility condition
for Plan benefits under Section 4, must execute and deliver to the Company, in a
form acceptable to the Company, a separate release and waiver, which, without
limiting the generality of the foregoing, shall include a release and discharge
of the Company, its Subsidiaries, and its and their directors, board of
directors, officers, employees, owners, agents, successors and assigns from any
and all suits, causes of action, demands, claims, charges, complaints,
liabilities, costs, losses, damages, injuries, bonds, judgments, attorneys’ fees
and expenses, in any form whatsoever, in law or in equity, whether known or
unknown, whether suspect or unsuspected, arising out of the Participant’s
employment with Company or any Subsidiary through his termination.

8. Plan Term. If a Change in Control occurs, this Plan shall continue in full
force and effect and shall not terminate or expire until all Participants who
become entitled to any Plan payments shall have received those payments in full.
The Committee may amend, substitute, revoke or terminate the Plan at any time
before a Change in Control; provided, however, that no amendment, substitution,
revocation or termination shall occur without consent of the affected
Participants if a third party has submitted a proposal to the Board that is
reasonably calculated, in the Committee’s judgment to effect a Change in
Control. After a Change in Control, the Plan shall not be amended, substituted,
revoked or terminated in any respect which adversely affects a Participant’s
rights of a Participant without the Participant’s consent.

 

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Notwithstanding the above, if any Plan provision would result in an additional
tax under the Act, that provision will be reformed to avoid the additional tax
and no action taken to comply with the Act shall be deemed to adversely affect a
Participant’s rights. Without limiting this general provision, the Plan may be
amended to modify (i) the definition of “Constructive Termination for Good
Reason,” (ii) the conditions for eligibility under Section 3(c), (iii) the time
to pay or provide benefits under Section 4, and (iv) eligibility for insurance
coverage under Section 4, including retiree medical coverage, to the extent
necessary to avoid imposition of an additional tax under the Act.

9. Notices. All notices, requests, demands and other communications required or
permitted to be given under this Plan (“notices”) shall be in writing and shall
be deemed to have been given if delivered by-hand, given by facsimile or
telegram, or mailed via certified or registered U.S. mail, to the party to
receive the notice at the party’s address set forth below; provided that either
party may change its address for notice by giving the other party written notice
of that change.

If to the Company:

Lyondell Chemical Company

1221 McKinney, Suite 700,

Houston, TX 77010

Attn: Chairman of the Board of Directors

If to a Participant:

Last address on the books of the Employer.

Any notice given under this Plan shall be deemed received (i) when delivered if
delivered by-hand or mailed and; (ii) 24 hours after sending, if sent by
facsimile or telegram.

10. Claims Procedure. If a Participant or his authorized representative
(“claimant”) makes a written request alleging a right to receive Plan benefits
or alleging a right to receive an adjustment in Plan benefits being paid, the
Committee shall treat it as a benefit claim. All benefit claims under the Plan
shall be sent to the Committee and must be received within thirty (30) days
after employment termination. The decision will be made within ninety (90) days
after the Committee receives the claim unless the Committee determines
additional time due to special circumstances is needed. If the Committee
determines that an extension to process a claim is required, the final decision
may be deferred up to one hundred eight (180) days after the claim is received,
if the claimant is notified in writing of the need for the extension and the
anticipated date of a final decision before the end of the initial ninety
(90) day period.

If the Committee decides that any individual who has claimed a right to receive
benefits, or different benefits, under the Plan is not entitled to receive all
or any part of the benefits claimed, it will inform the claimant in writing, in
terms calculated to be understood by the claimant, of the specific reasons for
the denial, the Plan provisions on which the denial is based, a description of
additional material of information necessary to perfect the claim and an
explanation of why the material or information is needed, and an explanation of
the Plan’s claim

 

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review procedures. If no action is taken on the claim within the time periods
shown above, the claim shall be deemed denied on the last day of the applicable
time period. The claimant is entitled to a full and fair review of the denied
claim after actual or constructive notice of a denial.

The claimant must file a written request for review with the Committee, setting
forth the grounds for the request and any supporting facts, comments or
arguments he wishes to make, within sixty (60) days after actual or constructive
notice. If a written request for review is not received within this sixty
(60) day period, the denial will be final. The claimant shall have reasonable
access to all relevant documents pertaining to the claim.

The Committee or the persons responsible to conduct the review on the
Committee’s behalf shall conduct a full and review the claim. Unless special
circumstances require an extension of the review period, the Committee will
render its decision no later than the date of its next regularly scheduled
meeting, unless the request is filed less than thirty (30) days before that
meeting. If the request is filed less than thirty (30) days before a regularly
scheduled meeting, the Committee will render its decision no later than the date
of the second regularly scheduled meeting after it receives the request.
However, if special circumstances require an extension of the review period, a
final decision shall be rendered no later than the third regularly scheduled
meeting after it receives the request for review, if the claimant is notified in
writing of the special circumstances and the date of the expected decision,
before the time is extended due to special circumstances. If the decision on
review is not furnished to the claimant within the applicable time period(s),
the claim shall be denied on the last day of the applicable period. Committee
decisions shall be in writing and provided no later than five (5) days after the
decision is made. The decision shall include specific reasons for the action
taken, including the specific Plan provisions on which the decision is based.
The claimant shall be notified of the right to reasonable access, on request, to
relevant documents or other information without charge.

11. Arbitration of Disagreements. Any dispute, controversy or claim arising out
of or relating to Plan obligations (after exhaustion of the claims procedure
remedies under Section 10), shall be settled by final and binding arbitration
according to the American Arbitration Association Employment Dispute Resolution
Rules. The arbitrator shall be selected by mutual agreement of the parties, if
possible. If the parties fail to reach agreement upon appointment of an
arbitrator within thirty (30) days after one party receives the other party’s
notice of desire to arbitrate, the arbitrator shall be selected from a panel or
panels submitted by the American Arbitration Association (the “AAA”). The
selection process to be used is set forth in the AAA Employment Dispute
Resolution Rules, but if the parties fail to select an arbitrator from one or
more panels, AAA shall not have the power to appoint and arbitrator, but shall
continue to submit additional panels until an arbitrator has been selected. All
fees and expenses of the arbitration, including a transcript if requested, will
be borne by the parties equally.

12. Miscellaneous.

(a) Assignment. No right, benefit or interest hereunder shall be subject to
assignment, anticipation, alienation, sale, encumbrance, charge, pledge,
hypothecation or set-off for any claim, debt or obligation, or subject to
execution, attachment, levy or similar process; but a Participant may assign any
right, benefit or interest if the assignment is permitted under the terms of any
plan or insurance policy, or annuity contract governing that right, benefit or
interest.

 

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(b) Construction. Nothing in this Plan shall be construed to amend any provision
of any plan or policy of the Company or any Subsidiary except as otherwise
expressly noted herein. This Plan is not, and shall not, be deemed to create any
commitment by the Company or any Subsidiary to continue a Participant’s
employment. The captions of this Plan are not part of the provisions and shall
have no force or effect. Whenever the context requires, the masculine gender
includes the feminine gender, and words used in the singular or plural will
include the other.

(c) Successors. A Participant’s rights under this Plan are personal to the
Participant and shall not be assignable by a Participant other than by will or
the laws of descent and distribution without the Company’s prior written
consent. This Plan shall inure to the benefit of and be enforceable by a
Participant’s legal representatives. The Company will require any successor to
assume this Plan, and to agree to perform this Plan in the same manner and to
the same extent that the Company would be required to perform this Plan if no
succession had taken place. The Company’s failure to obtain the successor’s
assumption and agreement shall entitle a Participant to compensation from the
Company in the same amount and on the same terms as he would be entitled under
this Plan as if a Constructive Termination for Good Reason had occurred.

This Plan shall be binding upon and inure to the benefit of the Company and any
successor organization or organizations which shall succeed to substantially all
of the Company’s business and/or assets (whether directly or indirectly by
merger, consolidation, acquisition of substantially all the Company’s assets or
otherwise, including by operation of law).

(d) Taxes. Any payment or delivery required under this Plan shall be subject to
all legal requirements regarding tax withholding, filing, reporting and other
obligations.

(e) Governing Law. TO THE EXTENT THIS PLAN IS NOT GOVERNED BY FEDERAL LAW, THIS
PLAN SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAW PRINCIPLES.

 

LYONDELL CHEMICAL COMPANY

 

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