<PAGE>
                                                                   EXHIBIT 10.11

                        EXECUTIVE SEVERANCE AGREEMENT,


                          DATED AS OF ________, 1996,


                                    BETWEEN


                        LYONDELL PETROCHEMICAL COMPANY,


                  A DELAWARE CORPORATION (THE "COMPANY"), AND


                     ______________________ ("EXECUTIVE")
<PAGE>
 
                               TABLE OF CONTENTS
                               -----------------

                                                                     PAGE
                                                                     ----
<TABLE>
<CAPTION>
<S>                                                                  <C>
Section 1.     Stock Options.........................................  1

Section 2.     Termination Following Change in Control...............  3
       (a)     Termination Upon Change in Control....................  3
       (b)     Change in Control.....................................  4

Section 3.     Rights and Benefits upon Termination..................  7
       (a)     Salary and Other Payment at Termination...............  7
       (b)     Prorated Value Share Plan Award.......................  8
       (c)     Crediting of Additional Pension Benefit...............  8
       (d)     Stock Options.........................................  9
       (e)     Executive Deferral Plan...............................  9
       (f)     Insurance and Other Benefits.......................... 10
       (g)     Financial Counseling.................................. 11
       (h)     Outplacement.......................................... 11
       (i)     No Duty to Mitigate................................... 11

Section 4.     Other Benefit Plans................................... 11

Section 5.     Payment Obligations Absolute.......................... 12

Section 6.     Combined Gross-up Payment; Tax Defense................ 12
       (a)     Combined Gross-up Payment............................. 12
       (b)     Tax Defense........................................... 12

Section 7.     Conditions to the Obligations of the Company.......... 13

Section 8.     Confidentiality and Cooperation....................... 13
       (a)     Cooperation........................................... 13
       (b)     Release of Liability.................................. 14

Section 9.     Term of Agreement..................................... 15

Section 10.    Arbitration........................................... 15
       (a)     Arbitrable Matters.................................... 15
       (b)     Submission to Arbitration............................. 15
       (c)     Arbitration Procedures................................ 16
</TABLE> 

                                      (i)
<PAGE>
 
<TABLE> 
<S>            <C>                                                    <C> 
        (d)    Compliance with Decisions............................. 17
        (e)    Costs and Expenses.................................... 17

Section 11.    Notices............................................... 17

Section 12.    Miscellaneous......................................... 18
        (a)    Assignment............................................ 18
        (b)    Construction of Agreement............................. 18
        (c)    Amendment............................................. 18
        (d)    Waiver................................................ 18
        (e)    Severability.......................................... 18
        (f)    Successors............................................ 18
        (g)    Taxes................................................. 19
        (h)    Governing Law......................................... 19
        (i)    Entire Agreement...................................... 19
</TABLE>

                                     (ii)
<PAGE>
 
                         EXECUTIVE SEVERANCE AGREEMENT


     THIS EXECUTIVE SEVERANCE AGREEMENT, is made and entered into this ____ day
of __________, 1996, by and between LYONDELL PETROCHEMICAL COMPANY, a Delaware
corporation (hereinafter referred to as "Company"), and _____________________,
an individual (hereinafter referred to as "Executive").

                             W I T N E S S E T H :

     WHEREAS, the Compensation Committee of the Board of Directors of the
Company (the "Compensation Committee") has authorized the Company to enter into
a severance agreement in the form hereof with Executive;

     WHEREAS, the Board of Directors of the Company (the "Board") has determined
that, in the event the Company becomes subject to any proposed or threatened
change in control, it is imperative that the Company and the Board be able to
rely upon Executive to continue in Executive's position, and that the Company be
able to receive and rely upon Executive's advice, if requested, as to the best
interests of the Company and its stockholders without concern that Executive
might be distracted by the personal uncertainties and risks created by such a
proposal or threat;

     WHEREAS, in the event the Company receives any such proposal or threat,
Executive may, in addition to Executive's regular duties, be called upon to
assist in the assessment of such matters, advise management and the Board as to
whether such proposals or other matters would be in the best interests of the
Company and its stockholders, and to take such other actions as the Board might
determine to be appropriate;

     NOW, THEREFORE, to assure the Company that it will have the continued
dedication of Executive and the availability of Executive's advice and counsel
notwithstanding the possibility, threat or occurrence of an effort to take over
control of the Company, and to induce Executive to remain in the employ of the
Company, and for other good and valuable consideration, the Company and
Executive agree as follows:

     1.   STOCK OPTIONS.
          ------------- 

     If a Change in Control occurs while Executive is employed by the Company or
any subsidiary thereof, then with respect to any stock options granted to
Executive under the Company's Executive Long-Term Incentive Plan (the "Stock
Option Plan"), notwithstanding any provision of the Stock Option Plan or
Executive's associated stock option agreement, if any, to the contrary, all non-
vested options shall become 100% vested and fully exercisable as of the last
business day immediately preceding the Change in Control.  On Change in Control,
the Company shall also pay to Executive a cash lump sum payment for all
outstanding dividend share credits associated with stock options granted under
the Stock Option Plan. This lump sum 
<PAGE>
 
payment shall be paid within forty-five (45) calendar days from the date of the
Change in Control.

     For purposes of this Section, the value of the outstanding dividend share
credits shall be calculated by Strategic Compensation Associates, or any other
compensation consultant that is mutually agreeable to the parties (the
"Compensation Consultant").  In preparing its valuation, the Compensation
Consultant in its good faith discretion shall be responsible for designating
reasonable and customary parameters for the methodology used in its calculation.
Company shall deliver to Executive the determination of the value of his
dividend share credits with the payment therefore.

     2.   TERMINATION FOLLOWING CHANGE IN CONTROL.
          --------------------------------------- 

     (a)  Termination Upon Change in Control.  The Company will provide or cause
          ----------------------------------                                    
to be provided to Executive the rights and benefits described in Section 3 of
this Agreement in the event that Executive's employment by the Company (which
for this purpose also shall include LCR and any subsidiary of the Company or
LCR) is terminated at any time within two (2) years following a Change in
Control (as defined in Section 2(b)): (1) by the Company for reasons other than
(A) "Cause" (as defined in Section 7), (B) Executive's death or permanent
disability or (C) Executive's retirement upon reaching age 65 ("Normal
Retirement Date"), or (2) (A) by Executive within ninety (90) days following the
occurrence of a Change in Control, if the Executive is the Chairman and Chief
Executive Officer, President and Chief Operating Officer, Senior Vice President,
Chief Financial Officer and Treasurer or Senior Vice Presidnet, Secretary and
General Counsel or (B) by Executive, including Executives listed in (A) above,
within ninety (90) days following the occurrence of any of the following events
without Executive's written consent which events shall constitute "Constructive
Termination for Good Reason":

          (i)    Executive's assignment to any duties or responsibilities that
     are not comparable to Executive's position, offices, duties,
     responsibilities or status immediately preceding such Change in Control, or
     a change in Executive's reporting responsibilities or titles in effect at
     such time resulting in a reduction of Executive's responsibilities or
     position at the Company;

          (ii)   the reduction in the level of benefits or compensation provided
     to Executive below the comparable level of benefits and compensation
     payable to Executive immediately preceding the Change in Control; or

          (iii)  the actual transfer, or the proposed transfer, as evidenced in
     a written communication from Company to Executive, of Executive to another
     location other than

                                       2
<PAGE>
 
     the location at which he was primarily employed immediately preceding the
     Change in Control, unless such new location is a major operating unit or
     facility of the Company that is located within 50 miles of Executive's
     primary location as of the date immediately preceding such Change in
     Control; provided, however, (1) Executive, within thirty (30) days from the
              --------  -------                                                 
     date that he is given written notice by the Company of such actual or
     proposed transfer, shall provide the Board with written notice that such
     transfer shall constitute a Constructive Termination for Good Reason
     hereunder, (2) Company within twenty (20) days of receipt of such notice by
     the Board shall fail to provide Executive with written notice rescinding
     such actual or proposed transfer and (3) if the transfer is not rescinded
     by the Company, Executive must terminate his employment due to Constructive
     Termination for Good Reason within forty (40) days following expiration of
     the 20-day period referred to in the preceding clause so that in any event
     Executive shall have terminated his employment with the Company within 90
     days after Executive first receives written notice from the Company of such
     actual or proposed transfer.

     (b)  Change in Control.  For purposes of this Agreement, a "Change in
          -----------------                                               
Control" shall be deemed to have occurred as of the date that one or more of the
following occurs:

          (i)    Individuals who, as of the date hereof, constitute the entire
     Board of Directors of the Company ("Incumbent Directors") cease for any
     reason to constitute at least a majority of the Board; provided, however,
                                                            --------  ------- 
     that any individual becoming a director subsequent to the date hereof whose
     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
     shall be considered as though such individual was an Incumbent Director,
     but excluding, for this purpose any such individual whose initial
     assumption of office occurs as a result of either an actual or threatened
     election contest, as such terms are used in Rule 14a-11 under the Exchange
     Act or other actual or threatened solicitation of proxies or consents by or
     on behalf of any Person (as defined below) other than the Board; provided,
                                                                      -------- 
     further, that in the event ARCO at any time determines to achieve minority
     -------                                                                   
     representation on the Company's Board of Directors approximately equal to
     its then ownership percentage of the Company's common stock, its
     implementation of such determination through the election of ARCO employees
     as directors of the Company shall not be deemed to be a Change in Control
     and such ARCO employees shall constitute Incumbent Directors;

          (ii)   The stockholders of the Company shall approve (A) any merger,
     consolidation or recapitalization of the Company (or, if the capital stock
     of the Company is affected, any subsidiary of the Company), or any sale,
     lease, or other transfer (in one transaction or a series of transactions
     contemplated or arranged by any party as a single plan) of all or
     substantially all of the assets of the Company (each of the foregoing being
     an "Acquisition Transaction") where (1) the shareholders of the Company
     immediately prior to such Acquisition Transaction would not immediately
     after such Acquisition 

                                       3
<PAGE>
 
     Transaction beneficially own, directly or indirectly, shares or other
     ownership interests representing in the aggregate eighty percent (80%) or
     more of (a) the then outstanding common stock or other equity interests of
     the corporation or other entity surviving or resulting from such merger,
     consolidation or recapitalization or acquiring such assets of the Company,
     as the case may be (the "Surviving Entity") (or of its ultimate parent
     corporation or other entity, if any), and (b) the Combined Voting Power of
     the then outstanding Voting Securities of the Surviving Entity (or of its
     ultimate parent corporation or other entity, if any) or (2) the Incumbent
     Directors at the time of the initial approval of such Acquisition
     Transaction would not immediately after such Acquisition Transaction
     constitute a majority of the Board of Directors, or similar managing group,
     of the Surviving Entity (or of its ultimate parent corporation or other
     entity, if any), or (B) any plan or proposal for the liquidation or
     dissolution of the Company;

          (iii)  Any Person except for ARCO shall be or become the beneficial
     owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
     directly or indirectly, of securities of the Company representing in the
     aggregate more than twenty percent (20%) of either (A) the then outstanding
     shares of common stock of the Company ("Common Shares") or (B) the Combined
     Voting Power of all then outstanding Voting Securities of the Company;
                                                                           
     provided, however, that notwithstanding the foregoing, a "Change of
     --------  -------                                                  
     Control" shall not be deemed to have occurred for purposes of this
     Subsection (iii):

          (1)    Solely as a result of an acquisition of securities by the
                 Company which, by reducing the number of Common Shares or other
                 Voting Securities outstanding, increases (a) the proportionate
                 number of Common Shares beneficially owned by any Person to
                 more than twenty percent (20%) of the Common Shares then
                 outstanding, 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; or

          (2)    Solely as a result of an acquisition of securities directly
                 from the Company except for any conversion of a security that
                 was not acquired directly from the Company,

     provided, further, that if any Person referred to in paragraph (1) or (2)
     --------  -------                                                        
     of this Subsection (iii) shall thereafter become the beneficial owner of
     any additional Common Shares or other Voting Securities of the Company
     (other than pursuant to a stock split, stock dividend or similar
     transaction), then a "Change of Control" shall be deemed to have occurred
     for purposes of this Subsection (iii); or

          (iv)   ARCO shall become the owner, directly or indirectly, of
     securities of the Company representing in the aggregate more than fifty
     percent (50%) of either (i) the 

                                       4
<PAGE>
 
     then outstanding Common Shares or (ii) the Combined Voting Power of all
     then outstanding Voting Securities of the Company except as the result of
     an acquisition of securities by the Company which, by reducing the number
     of Common Shares or other Voting Securities outstanding, increases (x) the
     proportionate number of Common Shares beneficially owned by ARCO to more
     than fifty percent (50%) of the Common Shares then outstanding, or (y) the
     proportionate voting power represented by the Voting Securities
     beneficially owned by ARCO to more than fifty percent (50%) of the Combined
     Voting Power of all then outstanding Voting Securities; provided, however,
                                                             --------  ------- 
     that if thereafter ARCO becomes the beneficial owner of any additional
     Common Shares or other Voting Securities of the Company (other than
     pursuant to a stock split, stock dividend or similar transaction) the
     exception provided above shall no longer apply; provided, further, that for
                                                     --------  -------          
     purposes of this Subsection (iv), neither record ownership of common stock
     of the Company by the Trustee for ARCO's 401(a) qualified plans nor
     beneficial ownership of common stock of the Company by any of ARCO's
     directors for their personal account shall be deemed to constitute
     "indirect" ownership of common stock of the Company by ARCO; provided,
                                                                  -------- 
     further, that notwithstanding any contrary provision of this Agreement, no
     -------                                                                   
     Change in Control shall be deemed to have occurred pursuant to this
     Subsection (iv) if as a result of an inadvertent act ARCO becomes the
     owner, directly or indirectly, of additional Common Shares or Voting
     Securities and such securities are sold or otherwise disposed of by ARCO
     within 30 days after ARCO discovers, or is notified by the Company as to,
     the potential Change of Control resulting from such ownership, so that, as
     a result of such subsequent sale or other disposition by ARCO, no Change in
     Control would otherwise be deemed to have occurred pursuant to the terms
     (excluding this proviso) of this Subsection (iv).

     Notwithstanding any of the foregoing, no Change in Control shall be deemed
     to have occurred as a result solely of (i) the registration by ARCO of the
     Exchangeable Notes pursuant to the Registration Statement, (ii) the
     issuance and sale by ARCO of the Exchangeable Notes to the underwriters in
     accordance with the Registration Statement, or (iii) prior to the maturity
     of the Exchangeable Notes, purchases and sales of the Exchangeable Notes.

     (c)  For purposes of this Agreement:

          (i)    "Affiliate" shall mean, 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 such terms as used in Rule 405
     under the Securities Act of 1933, as amended, or any successor rule.

          (ii)   "ARCO" shall mean Atlantic Richfield Company and any of its
     Affiliates, excluding the Company.

                                       5
<PAGE>
 
          (iii)  "Combined Voting Power" shall mean the aggregate votes entitled
     to be cast generally in the election of the Board of Directors, or similar
     managing group, of a corporation or other entity by holders of then
     outstanding Voting Securities of such corporation or other entity.

          (iv)   "Exchangeable Notes" shall mean the debt securities
     exchangeable upon maturity, at ARCO's option, into shares of the Company's
     common stock or cash, as such debt securities are described in the
     Registration Statement.

          (v)    "LCR" shall mean LYONDELL-CITGO Refining Company Ltd., a
     Limited Liability Company organized under the laws of the State of Texas.

          (vi)   "Person" shall mean any individual, entity (including, without
     limitation, 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 shall not include the Company or LCR, any of their
     -------                                                                
     subsidiaries, any employee benefit plan of the Company or LCR or any of
     their majority-owned subsidiaries or any entity organized, appointed or
     established by the Company, LCR or such subsidiaries for or pursuant to the
     terms of any such plan.

          (vii)  "Registration Statement" shall mean ARCO's registration
     statement on Form S-3 (Registration No. 33-53481) with respect to the
     Exchangeable Notes.

          (viii) "Voting Securities" shall mean all securities of a corporation
     or other entity having the right under ordinary circumstances to vote in an
     election of the Board of Directors, or similar managing group, of such
     corporation or other entity.

     3.   RIGHTS AND BENEFITS UPON TERMINATION. In the event Executive is
          ------------------------------------                         
entitled pursuant to Section 2 to receive the rights and benefits described in
this Section as a result of the termination or Constructive Termination for Good
Reason of Executive's employment within two years following a Change in Control
(hereinafter collectively referred to as "Termination"), the Company agrees to
provide or cause to be provided to Executive the following rights and benefits:

     (a)  Salary and Other Payment at Termination.  Company shall pay to
          ---------------------------------------                       
Executive not later than thirty (30) days following Termination a lump-sum
payment in cash in the amount of three (3) times Executive's "Applicable Annual
Earnings" (as defined below); provided, however, if there are fewer than twenty-
                              --------  -------                                
four (24) full months remaining from the date of Termination to Executive's
Normal Retirement Date, the payment Executive shall be entitled to receive
pursuant to this Section 3(a) will equal such amount multiplied by a fraction,
the numerator of which is the number of months (including any fraction of a
month) so remaining to Executive's Normal Retirement Date and the denominator of
which is 24.

                                       6
<PAGE>
 
     For purposes of this Agreement, "Applicable Annual Earnings" shall mean the
sum of Executive's current annual base salary (determined using the highest rate
in effect up to and including the effective date of Termination, whether or not
paid) and Executive's Average Value Share Plan Award, (whether or not paid) for
personal services on behalf of the Company, LCR or their subsidiaries for a
calendar year in which the Termination occurs.  The Average Value Share Plan
Award shall be the average, determined over the three year period immediately
prior to Termination, of the cash amount of an Executive's Value Share Plan
award (but not deferred cash associated with any grant of restricted stock).  If
Executive is subject to a Constructive Termination for Good Reason because his
salary is reduced or the Value Share Plan award is reduced as a result of an
adverse change in plan terms, then the current annual base salary and Average
Value Share Plan Award used to determine Applicable Annual earnings shall be the
annual base salary in effect immediately prior to such Constructive Termination
for Good Reason or the Average Value Share Plan Award determined over the three
year period immediately prior to the Constructive Termination for Good Reason.
Applicable Annual Earnings shall include Executive's current annual base salary
and Average Value Share Plan Award whether or not paid on a deferred basis,
including without limitation, amounts contributed by or on behalf of Executive
under a Company-sponsored plan, such as (i) a plan described in Section 125 or
401(k) of the Internal Revenue Code of 1986, as amended, or (ii) the Company's
Executive Deferral Plan or an "excess benefit plan" as defined in the Employee
Retirement Income Security Act of 1974, as amended.  Notwithstanding the
preceding provisions of this paragraph, Applicable Annual Earnings does not
include any income attributable to stock options, stock appreciation rights,
performance awards, 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.

     (b)  Prorated Value Share Plan Award.  Company shall pay to Executive, not
          -------------------------------                                      
later than one hundred and twenty (120) days following the end of the year in
which Termination occurs, a cash lump-sum payment equal to his Value Share Plan
award for the Performance Cycle ending in the year of Termination (except that
if Executive is subject to Constructive Termination for Good Reason because his
Value Share Plan award was reduced, then the Value Share Plan award for this
purpose shall be the Value Share Plan award immediately prior to such
Constructive Termination for Good Reason) multiplied by a fraction, the
numerator of which is the number of elapsed days in the year of Termination up
to and including the date of Termination and the denominator of which is 365.
No payment shall be made under this paragraph if Executive is entitled to a
prorated award payable under the Value Share Plan.

     (c)  Crediting of Additional Pension Benefit.  In accordance with the
          ---------------------------------------                         
special supplemental retirement benefit authorized by the Compensation Committee
on September 13, 1991, Company shall credit Executive with an additional five
(5) years of (i) age (not to exceed age 65) and (ii) service with the Company,
under the Company's Supplementary Executive Retirement Plan (or its successor)
for purposes of determining his accrued benefits thereunder.

                                       7
<PAGE>
 
     (d)  Stock Options.  All stock options owned by Executive shall be freely
          -------------                                                       
exercisable following Termination for the remainder of their existing terms
without regard to any earlier date that may be specified therein including,
without limitation, an earlier expiration date specified with respect to
Executive's termination of employment.

     (e)  Executive Deferral Plan.  The provisions of this Section 3(e) shall
          -----------------------                                            
apply notwithstanding any provisions of the Company's Executive Deferral Plan
(the "Deferral Plan") or the initial paragraph of Section 3 hereof to the
contrary.

     In the event that (i) there is a "Termination or Adverse Amendment" (as
defined below) of the Deferral Plan within two years following a Change in
Control and (ii) a Termination within the meaning of this Agreement has not
occurred with respect to Executive, then, notwithstanding any other provision of
this Agreement, the full amount of contributions and earnings accrued or
credited to Executive's account balance under the Deferral Plan (as of the date
immediately preceding the Termination or Adverse Amendment) shall be immediately
distributed to Executive in a cash lump-sum payment.  If applicable, the Company
also shall pay Executive in a cash lump-sum payment an additional amount equal
to the "Income Tax Gross-up" (as defined below).

     In the event that Executive as of his Termination date is not eligible to
receive an "Immediate Retirement Benefit" (as defined below), then the full
amount of contributions and earnings accrued or credited to Executive's account
balance under the Deferral Plan (as of the date immediately preceding his
Termination) shall be immediately distributed to Executive in a cash lump-sum
payment.  If applicable, the Company also shall pay Executive in a cash lump-sum
payment an additional amount equal to the Income Tax Gross-up, without regard to
whether or not there has been a Termination or Adverse Amendment.

     In the event that (i) there is a Termination or Adverse Amendment of the
Deferral Plan following a Change in Control and (ii) Executive as of his
Termination date is either eligible to receive an Immediate Retirement Benefit
or elects (or has elected) to commence an Immediate Retirement Benefit, then the
full amount of contributions and earnings accrued or credited to Executive's
account balance under the Deferral Plan (as of the date immediately preceding
the Termination or Adverse Amendment) shall be immediately distributed to
Executive in a cash lump-sum payment.  If applicable, the Company also shall pay
Executive in a cash lump-sum payment an additional amount equal to the Income
Tax Gross-up.

     For purposes of this Agreement, "Termination or Adverse Amendment" means
that the Deferral Plan is either (i) terminated for whatever reason by the
Company or (ii) amended by the Company in any way that adversely affects
Executive's rights, privileges or benefits thereunder including, without
limitation, an amendment that results in a change to the methodology used to
determine the interest rate for earnings credited to Executive's account
balance, without the 

                                       8
<PAGE>
 
Executive's written consent to such amendment, other than an amendment which is
required by law.

     For purposes of this Agreement, "Immediate Retirement Benefit" means
Executive is eligible (after giving effect to Section 3(c)) to receive an
immediate allowance or distribution (whether reduced or unreduced) from a
retirement plan maintained by the Company which is intended to be a qualified
plan under Section 401(a) of the Internal Revenue Code of 1986, as amended.

     For purposes of this Agreement, "Income Tax Gross-up" shall be based on the
full amount of contributions and earnings accrued or credited to Executive's
account balance under the Deferral Plan as of September 1, 1996.  The Income Tax
Gross-up shall be the following percentage of the amount necessary so after
payment of any federal, state and local income or employment tax by Executive on
the distribution of that amount under the Deferral Plan and the Income Tax
Gross-up, the net amount retained by Executive shall be the full amount accrued
and credited to his account balance under the Deferral Plan as of September 1,
1996:

<TABLE>
<CAPTION>
================================================================================
                                               PERCENTAGE OF INCOME TAX
                   PERIOD                              GROSS-UP
================================================================================
<S>                                            <C>
First twelve month period following date of             100%
 Agreement                                          
                                                    
Second twelve month period following date                66%
 of Agreement                                       
                                                    
Third twelve month period following date                 33%
 of Agreement
================================================================================
</TABLE>

     No Income Tax Gross-up shall be payable after the end of the third twelve
month period following the date of this Agreement.

     For purposes of determining the amount of the Income Tax Gross-up,
Executive 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 Income Tax Gross-up is to be made (for 1996, the highest
stated rate is 39.6%); 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 Income Tax Gross-up is to be made.  Any Income
Tax Gross-up required hereunder shall be paid by Company to Executive at the
same time that any payment made under the Deferral Plan which is subject to
income tax is paid or deemed received by Executive.

                                       9
<PAGE>
 
     (f)  Insurance and Other Benefits. To the extent that Executive is eligible
          ----------------------------
thereunder, then for a period of twenty-four (24) months following Termination,
Executive (and his dependents, as applicable) shall continue to be covered at
Company's expense by the life insurance, medical and dental plans, and accident
and disability plans of the Company and its subsidiaries, or any successor to a
plan or program in effect at Termination for employees in the same class or
category as Executive (hereafter individually and collectively referred to as
"Company Welfare Plan"), subject to the terms of the Company Welfare Plan and to
Executive's making any required contributions thereto which contributions shall
not exceed those charged to employees in the same class or category in which
Executive was employed by the Company. In the event that Executive is ineligible
to continue to be so covered under the terms of any Company Welfare Plan, or in
the event that Executive is eligible but the benefits applicable to Executive
(and his dependents, as applicable) are not substantially equivalent to such
benefits immediately prior to Termination, then, for a period of twenty-four
(24) months following Termination, the Company shall at its expense provide to
Executive (and his dependents, as applicable) through other sources such
benefits as may be necessary to make the benefits applicable to Executive (and
his dependents, as applicable) substantially equivalent to those in effect
immediately prior to Termination. Continuation coverage provided hereunder
pursuant to any group health plan maintained by the Company or a subsidiary
shall be in lieu of, and not in addition to, any continuation coverage required
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"). Any retiree coverage provided to Executive by Company shall be on the
same terms and conditions, including bridging of coverage, as that provided to
executives in the same class or category in which Executive was employed by
Company.

     (g)  Financial Counseling.  For a period of one year following Termination,
          --------------------                                                  
Executive shall continue to be covered at Company's expense under the financial
counseling program of Company, or any successor program, in effect at
Termination for employees in the same class or category as Executive, subject to
the terms of such program.  In the event the benefits available to Executive
under such financial counseling program are not substantially equivalent to the
benefits available to Executive at Termination, Company at its expense shall
provide to Executive through other sources such benefits as may be necessary to
make the benefits available to Executive substantially equivalent to those in
effect at Termination.

     (h)  Outplacement. Company shall provide to Executive, at Company's expense
          ------------
but not to exceed $40,000.00, outplacement assistance for Executive from a
professional outplacement assistance firm which is reasonably suitable to
Executive.

     (i)  No Duty to Mitigate.  Executive's entitlement to benefits hereunder
          -------------------                                                
shall not be governed by any duty to mitigate Executive's damages by seeking
further employment nor offset by any compensation which Executive may receive
from future employment.

     4.   OTHER BENEFIT PLANS. The specific arrangements referred to in this
          -------------------
Agreement

                                       10
<PAGE>
 
are not intended (i) to exclude or limit Executive's participation in other
benefit plans or programs in which Executive currently participates or may
participate including, without limitation, retiree benefits, or benefits which
are available to executive personnel generally in the same class or category as
Executive (excluding only the Company's Special Termination Plan and the special
supplemental retirement benefit authorized by the Compensation Committee on
September 13, 1991) or (ii) to preclude or limit other compensation or benefits
as may be authorized by the Compensation Committee or the Board from time to
time. To the extent not otherwise paid or provided, the Company shall timely pay
or provide to the Executive and/or the Executive's dependents any other amounts
or benefits required to be paid or provided or which the Executive or the
Executive's dependents are eligible to receive pursuant to this Agreement and
under any plan, program, policy or practice or contract or agreement of the
Company and its Affiliates as in effect and applicable generally to executive
personnel in the same class or category of Executive.

     5.   PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation to pay or
          ----------------------------
provide or cause to be paid or provided to Executive the amounts and benefits,
and to make the arrangements, provided in this Agreement shall be absolute and
unconditional and shall not be affected by any circumstances (including, without
limitation, any setoff, claim, counterclaim, recoupment, defense or other right,
which the Company may have against Executive or anyone else). All amounts
payable by or on behalf of the Company hereunder shall be paid without notice or
demand. Each and every payment made hereunder by or on behalf of the Company
shall be final and the Company and its subsidiaries shall not, for any reason
whatsoever, seek to recover all or any part of such payment from Executive or
from whomever shall be entitled thereto. In no event shall an asserted violation
of any provision of this Agreement constitute a basis for deferring or
withholding any amount payable to, or on behalf of, Executive under this
Agreement.

     6.   COMBINED GROSS-UP PAYMENT; TAX DEFENSE.
          -------------------------------------- 

     (a)  Combined Gross-up Payment. If the Executive becomes entitled to one or
          -------------------------
more payments (with a "payment" including, without limitation, an increase in
pension benefits and the vesting of an option or other non-cash benefit or
property) pursuant to the terms of any plan, arrangement or agreement with the
Company (the "Total Payments"), which are or become subject to the tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code")
(or any similar tax that may hereafter be imposed) (the "Excise Tax"), the
Company shall pay to Executive an additional cash amount (the "Combined Gross-up
Payment") such that the net amount retained by Executive after reduction for (i)
any Excise Tax on the Total Payments and (ii) any federal, state and local
income or employment tax and Excise Tax payable with respect to the Combined
Gross-up Payment, shall equal the Total Payments. For purposes of determining
the amount of the Combined Gross-up Payment, Executive 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 Combined Gross-
up Payment is to be made (for 1996, 

                                       11
<PAGE>
 
the highest stated rate is 39.6%); 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 Combined Gross-up Payment is to be
made. Any Combined Gross-up Payment required hereunder shall be made to
Executive at the same time any Total Payment subject to the Excise Tax is paid
or deemed received by Executive.

     (b)  Tax Defense.  If in connection with the examination of Executive'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 such
amount or benefit was not treated as a parachute payment in determining the
Combined Gross-up Payment (as defined in Section 6(a) above), Company at its
cost shall assume the defense of any controversy involving such issue and shall
indemnify and hold Executive harmless for all liabilities, costs, taxes,
interest and penalties attributable to such issue and shall to the extent
necessary (without duplication) increase the Combined Gross-up Payment to give
effect to any additional amount or benefit determined to be a parachute payment.
Executive shall cooperate with Company so that Company will be able to challenge
any adverse determination by the Internal Revenue Service through administrative
proceedings and, if determined by Company, through litigation.

     7.   CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The Company shall have
          --------------------------------------------
no obligation to provide or cause to be provided to Executive the rights and
benefits described in this Agreement if the Company shall terminate Executive's
employment for "Cause", which for purposes of this Agreement shall be defined
and limited to: (i) the continued and willful refusal by Executive to
substantially perform his duties (other than a willful refusal to perform a duty
which constitutes Constructive Termination for Good Reason or a refusal
resulting from Executive's incapacity due to physical or mental illness), after
demand for substantial performance is delivered by the Board, which demand
specifically identifies the manner in which the Board has determined that
Executive has not substantially performed his duties, and Executive's
performance is not cured to the Board's reasonable satisfaction within thirty
(30) days from such demand; (ii) the engagement by Executive in willful
misconduct or dishonesty that is materially injurious to the Company, monetarily
or otherwise; or (iii) Executive's final conviction of a felony. Notwithstanding
the foregoing, the Company shall not be deemed to have terminated Executive for
Cause without (1) reasonable written notice to Executive setting forth the
reasons for the Company's intention to terminate Executive for Cause and (2) an
opportunity for Executive, together with his counsel, to be heard before the
Board. Notwithstanding any contrary provision of this Agreement, it is
specifically agreed that Cause shall not include any act or omission by
Executive in the good faith exercise of Executive's business judgment as an
officer of the Company or as a member of the Board.

     If Executive is terminated for Cause, Company, in accordance with and
subject to the provisions of the immediately preceding paragraph, shall not be
required to provide Executive with at least sixty (60) 

                                       12
<PAGE>
 
days advance written notice of such termination for Cause. If Executive is
terminated for a reason other than for Cause, Company shall be required to
provide sixty (60) days advance written notice to Executive unless Executive
agrees to a shorter notice period. Regardless of the reason for termination,
Executive shall receive, in addition to any other payments provided to Executive
hereunder or otherwise, payment for his accrued base salary and a vacation
allowance based on years of service through his termination date.

     8.   CONFIDENTIALITY AND COOPERATION.
          ------------------------------- 

     (a)  Cooperation.  Executive agrees that, at all times following
          -----------                                                
Termination, Executive will furnish such information and render such assistance
and cooperation as may reasonably be requested in connection with any litigation
or legal proceedings concerning the Company or any of its subsidiaries (other
than any legal proceedings arising out of or concerning Executive's employment
or its termination).  In connection with such cooperation, the Company will pay
or reimburse Executive for reasonable expenses.

     (b   Release of Liability.  Executive hereby represents and covenants that
          --------------------                                                 
prior to the time he is eligible to receive any payments provided for in Section
3 of this Agreement, he will execute and deliver to the Company, on a form
reasonably satisfactory to the Company and the Executive, a separate release and
waiver, which, without limiting the generality of the foregoing, shall include a
release and discharge of the Company and its subsidiaries and affiliates, and
its and their 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 suspected or unsuspected, arising out of
Executive's employment with Company through his Termination, including, without
limitation, claims arising under any federal, state or local law for breach of
an implied covenant of good faith and fair dealing, breach of contract,
defamation, slander, negligent misrepresentation, fraud, intentional or
negligent interference with business relations, and employment discrimination,
including, but not limited to, claims under the Age Discrimination in Employment
Act, the Americans with Disabilities Act and the Texas Commission on Human
Rights Act.

     9.   TERM OF AGREEMENT. This Agreement shall remain in effect unless
          -----------------
otherwise terminated by resolution of the Compensation Committee of the
Company's Board of Directors. Notwithstanding the foregoing, in no event shall
this Agreement terminate, within two (2) years after a Change in Control without
the written consent of Executive. It is the Company's intention to provide to
Executive the benefits set forth herein if the Company is subject to any Change
in Control and the other applicable conditions are satisfied. The Company shall
notify Executive in writing of the effective date of Termination if the
Compensation Committee determines to terminate this Agreement.

                                       13
<PAGE>
 
     10.  ARBITRATION.
          ----------- 

     (a)  Arbitrable Matters.  Any dispute under this Agreement arising between
          ------------------                                                   
the parties shall be settled by binding arbitration.  In the event of any
dispute between Executive and Company hereunder, either party shall be entitled
to submit the dispute to arbitration.  The arbitration proceeding shall be held
in Houston, Texas (unless otherwise mutually agreed by the parties), and shall
be conducted in accordance with the Center for Public Resources ("CPR") Rules
for Non-Administered Arbitration of Business Disputes.  The arbitration shall be
conducted by a sole arbitrator appointed in accordance with rules established by
CPR (the "Arbitrator").

     Any arbitration between Executive and Company pursuant to this Agreement
shall be governed by the United States Arbitration Act, 9 U.S.C. (S)(S) 1-16 (or
its successor).  If the United States Arbitration Act is determined by the
Arbitrator not to apply to this type of employer/employee agreement based on
precedential legal authority, the parties agree to arbitrate any dispute under
the Texas General Arbitration Act, V.A.T.S. Art. 238-6 et. seq. (or its
successor).

     (b)  Submission to Arbitration. The party submitting any matter arising out
          -------------------------
of this Agreement to arbitration (the "demanding party") shall do so by
delivering written notice thereof (the "arbitration notice") to the other party
(the "noticed party"). In addition to indicating the demanding party's intention
to commence arbitration proceedings, the arbitration notice shall state the
nature, with reasonable detail, of the dispute and the demanding party's claim
or claims, the question or questions to be submitted for decision or award by
arbitration and the relief or remedy sought. A copy of the arbitration notice
shall be concurrently provided to CPR, along with a copy of this Agreement and a
request to appoint an Arbitrator. Either party may bring an action in any court
of competent jurisdiction to compel arbitration under this Agreement.

     (c)  Arbitration Procedures. The Arbitrator shall apply the substantive law
          ----------------------
(and the law of remedies, if applicable) of the State of Texas as applicable to
the claim asserted. The Federal Rules of Evidence shall apply. The Arbitrator
shall have no authority to change this Agreement unless otherwise agreed by both
parties. The Arbitrator, and not any federal, state, or local court or agency,
shall have exclusive authority to resolve any dispute relating to the
interpretation, applicability, enforceability or formation of this Agreement,
including but not limited to any claim that all or any part of this Agreement is
void or voidable. Any party may be represented by an attorney or other
representative selected by the party.

     The Arbitrator shall have jurisdiction to hear and rule on pre-hearing
disputes and is authorized to hold pre-hearing conferences by telephone or in
person as the Arbitrator deems necessary.  The Arbitrator shall have the
authority to entertain a motion to dismiss and/or a motion for summary judgment
by any party and shall apply the standards governing such motions under the
Federal Rules of Civil Procedure.

                                       14
<PAGE>
 
     At any time after the date of receipt of the arbitration notice, each party
can make discovery requests of the other in any form permitted under the Federal
Rules of Civil Procedure.  The recipient of a discovery request shall have 20
days after the receipt of such request to object to any or all portions of such
request, and shall respond to any portions of such request not so objected to
within 30 days of the receipt of such request.  All objections shall be in
writing and shall indicate the reasons for such objections.  The objecting party
shall insure that all objections and responses are received by other parties
within the above time periods. Any party seeking to compel discovery following
receipt of an objection shall file with the other party and the Arbitrator a
motion to compel, including a copy of the initial request and the objection. The
Arbitrator shall allow 10 days for responses to the motion to compel before
ruling. Claims of privilege and other objections shall be determined as they
would in federal court in a case applying Texas law.

     At least 30 days before the arbitration, the parties must exchange lists of
witnesses, including any expert witnesses, and copies of all exhibits intended
to be used at the arbitration.  Each party shall have the right to subpoena
witnesses and documents for the arbitration.  Either party may arrange for a
court reporter to provide a stenographic record of proceedings.  The cost of the
court reporter will be paid by the Company.

     (d)  Compliance with Decisions.  To the extent permissible under applicable
          -------------------------                                             
law, the parties agree that the award of the Arbitrator shall be final and
binding and shall be subject only to the judicial review permitted by the United
States Arbitration Act or other applicable arbitration law pursuant to Section
10(a) hereof.  Judgment on the arbitration award may be entered and enforced in
any court having jurisdiction over the parties or their assets.  It is the
intent of the parties that the arbitration provisions hereof be enforced to the
fullest extent permitted by applicable law.

     (e)  Costs and Expenses.  The Company shall promptly pay or reimburse
          ------------------                                              
Executive for all costs and expenses, including, without limitation, attorneys'
fees and witnesses' fees, incurred by Executive as result of any arbitration
(regardless of the outcome thereof) arising out of this Agreement.  All expenses
of such arbitration, including the reasonable fees and expenses of legal counsel
for Executive and the costs and expenses incurred by the Arbitrator, shall be
borne by the Company.

     11.  NOTICES. All notices, requests, demands and other communications
          -------
required or permitted to be given hereunder (hereinafter referred to as
"notices") shall be in writing and shall be deemed to have been duly given if
delivered by-hand, given by prepaid telecopy, telex or telegram, or mailed via
certified or registered U.S. mail, to the party to receive such notice at such
party's address set forth below; provided that either party may change its
address for notice by giving to the other party written notice of such change.

                                       15
<PAGE>
 
     If to Company:

          Lyondell Petrochemical Company
          1221 McKinney, Suite 1600
          Houston, TX  77002
          Attn:  Chairman of the Board of Directors

     If to Executive:

          ______________________________________________
          ______________________________________________
          ______________________________________________

Any notice given pursuant to this Agreement shall be deemed received (i) if
delivered by-hand, when delivered; (ii) if sent by telecopy, telex or telegram,
24 hours after sending; and (iii) if mailed, when delivered.

     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 in respect of any claim, debt or obligation, or to
execution; attachment, levy or similar process; provided, however, that
                                                --------  -------      
Executive may assign any right, benefit or interest hereunder if such assignment
is permitted under the terms of any plan or policy of insurance, or annuity
contract governing such right, benefit or interest.

     (b)  Construction of Agreement.  Nothing in this Agreement shall be
          -------------------------                                     
construed to amend any provision of any plan or policy of the Company except as
otherwise expressly noted herein.  This Agreement is not, and nothing herein
shall be deemed to create, a commitment of continued employment of Executive by
the Company or any of its subsidiaries.  The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect.  Whenever the
context of this Agreement so requires, the masculine gender includes the
feminine gender, and words used in the singular or plural will include the
other.  The words "herein", "hereunder," and other similar compounds of the word
"here" refer to the entire Agreement and not to any particular, section or
provision.

     (c)  Amendment.  This Agreement may not be amended, modified or canceled
          ---------                                                          
except by written agreement of the parties or their respective successors and
legal representatives.

     (d)  Waiver.  No provision of this Agreement may be waived except by a
          ------                                                           
writing signed by the party to be bound thereby.

                                       16
<PAGE>
 
     (e)  Severability.  In the event that any provision or portion of this
          ------------                                                     
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall remain in full force and effect to
the fullest extent permitted by law.

     (f)  Successors.  This Agreement is personal to Executive and without the
          ----------                                                          
prior written consent of the Company shall not be assignable by Executive
otherwise than by will or the laws of descent and distribution.  This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives. The Company will require any successor (whether direct or
indirect) by purchase, merger, consolidation or otherwise of all or
substantially all of the business and/or assets of the Company or of any
division or subsidiary thereof, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform this Agreement if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement, prior to the
effective date for any such succession, shall constitute a breach of this
Agreement and shall entitle Executive to compensation from the Company in the
same amount and on the same terms as he would be entitled hereunder with respect
to Constructive Termination for Good Reason.

     This Agreement 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 business and/or assets of the Company (whether direct
or indirect by means of merger, consolidation, acquisition of substantially all
the assets of the Company, or otherwise, including by operation of law).

     (g)  Taxes.  Any payment or delivery required under this Agreement shall be
          -----                                                                 
subject to all requirements of the law with regard to withholding of taxes,
filing, making of reports and the like.

     (h)  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
          -------------                                                    
ACCORDANCE WITH THE LAWS OF THE STATE  OF TEXAS, WITHOUT GIVING EFFECT TO ITS
CONFLICTS OF LAW PRINCIPLES.

     (i)  Entire Agreement. Except as otherwise provided in Section 4 or Section
12(b) hereof, this Agreement sets forth the entire agreement and understanding
of the parties hereto with respect to the matters covered hereby.



     IN WITNESS WHEREOF, the parties have executed this Agreement as of the
_____ day of _________, 1996.

                                       17
<PAGE>
 
                              LYONDELL PETROCHEMICAL COMPANY


                              By:
                              Name:____________________________________________
                              Title:___________________________________________
 

                              EXECUTIVE


 
                                                [NAME AND TITLE]

                                       18