Form of Award Agreement


 Exhibit 10.16(a) 
  
 LYONDELL CHEMICAL COMPANY 
 AMENDED AND RESTATED 1999 INCENTIVE PLAN 
  
 AWARD AGREEMENT 
  
 Lyondell Chemical Company (“Company)” has granted the Participant a right to receive an Award (“Grant”) under the Lyondell Chemical Company Amended and Restated 1999 Incentive Plan (the “Plan”), effective on
the date specified in the Grant letter (“Grant Date”). 
  
 I. GENERAL
TERMS 
  

	 	1.	Relationship to Plan. 

  
 This Award is subject to all Plan terms, conditions, provisions and any administrative interpretations which the Committee has adopted and which are in
effect, including adjustment as provided in Section 11 of the Plan. Except as defined in this Award Agreement, capitalized terms have the same meanings ascribed to them in the Plan. 
  

	 	2.	Vesting on Death, Disability or Retirement. 

  
 If the Participant has been in continuous Employment since the Grant Date, this Award shall become fully vested or exercisable, irrespective of the limits
on exercise or vesting, on Employment termination due to death, Disability or Retirement. 
  

	 	3.	Change in Control. 

  
 If the Participant has been in continuous Employment since the Grant Date and a Change in Control occurs prior to the vesting or exercise of an Award
under Section II, any non-vested or non-exercisable Awards under this Award Agreement shall become fully vested or exercisable on the Change in Control. If the Participant’s employment is terminated by the Company within a two year period
following a Change in Control, Awards shall remain exercisable for the balance of the exercise period. Performance-Based Awards shall become payable to the Participant as if the Change in Control date occurred at the end of the applicable
Performance Cycle and as if the Target Performance level was reached on that date. Any Cash Award under this Section shall be paid within 60 days after the Change in Control date. 
  

	 	4.	Certain Limits. 

  
 Unless the Company provides otherwise by a separate written agreement or plan covering the Participant, if a Participant would be subject to the excise
tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) on the amounts payable under this Award Agreement and other amounts or benefits the Participant receives from a. the Company, b. any person whose
actions result in a change of ownership covered by Code Section 280G(b)(2) or c. any person affiliated with the Company or person, required to be included to 

  

 Page 1 







 
calculate parachute payments under Code Sections 280G and 4999, the amounts vested under this Award Agreement shall be reduced automatically to an amount one
dollar less than that which, when combined with other amounts, would subject the Participant to the excise tax. 
  

	 	5.	Legal Compliance. 

  
 The Participant will not be entitled to exercise this Award and the Company will not be obligated to issue any shares of Common Stock or cash under this
Award Agreement, if at the exercise, the share issuance or cash payment would constitute the Participant’s or the Company’s violation of any provision of any law or regulation of any governmental authority or any stock exchange or
transaction quotation system. Whether or not the options and shares covered by the Plan have been registered pursuant to the Securities Act of 1933 (the “Act”) and prior to issuing any certificates for shares of Common Stock, the Company
may require that the Participant represent in writing and in form and substance satisfactory to the Company, that he is acquiring shares for his own account for investment and not with a view to, or for sale in connection with, the distribution of
all or any part of the shares, in violation of the Act or any other securities laws. 
  

	 	6.	Notice. 

  
 Notice of an Award exercise must be made in the following manner, using forms the Company may provide from time to time: 
  
 a. by registered or certified United States mail, postage
prepaid, to Lyondell Chemical Company, Attn: Manager of Executive Services, 1221 McKinney Street, Suite 700, Houston, Texas 77010, and the exercise date shall be the mailing date; or 
  
 b. by hand delivery or otherwise to Lyondell Chemical Company, Attn: Manager of Executive Services, 1221
McKinney Street, Suite 700, Houston, Texas 77010, and the exercise date shall be the date when the Company acknowledges receipt of the notice. 
  
 Notwithstanding the foregoing, (1) if the Company’s address is changed before the exercise date of this Award, notice of exercise shall be made
instead under the previous provisions at the Company’s current address, or (2) if the Committee delegates the administration of Award exercises to a third party administrator, notice of exercise shall be made instead according to the
instructions that the third party administrator gives to the Participant for the exercise. 
  
 Any other notices provided for in this Award Agreement or in the Plan shall be given in writing and shall be deemed effectively delivered or given on receipt or, in the case of notices delivered by the Company to the
Participant, five days after deposit in the United States mail, postage prepaid, addressed to the Participant at the address specified in the Company’s records or at another address the Participant designates by written notice to the Company.

  

 Page 2 








	 	7.	Stock Certificates. 

  
 Certificates representing shares of Common Stock attributable to vested or exercised Awards will bear all legends required by law and necessary or
advisable to effectuate the Plan provisions and this Award Agreement. 
  

	 	8.	Tax Withholding 

  
 The Company has the right to deduct applicable taxes from any Cash Award payment, to withhold an appropriate amount of cash to pay taxes required by law
at delivery or when cash vesting occurs under this Plan or to take any other action that, in the Company’s opinion, may be necessary to satisfy all tax withholding obligations. 
  
 No certificates representing shares of Common Stock shall be delivered to or for a Participant unless the amount of all
federal, state and other governmental withholding tax requirements imposed on the Company for those shares of Common Stock has been remitted to the Company or unless provisions to pay withholding requirements have been made to the Committee’s
satisfaction. A Participant may pay all or any portion of the taxes required to be withheld by the Company or paid by the Participant related to an Award of shares of Common Stock by delivering cash, by electing to have the Company withhold shares
of Common Stock, or by delivering previously owned shares of Common Stock, with a Fair Market Value determined according to the Plan equal to the amount required to be withheld or paid. The Participant must elect the withholding or payment method on
or before the date that the amount of withholding taxes are determined. 
  

	 	9.	Successors and Assigns. 

  
 This Award Agreement shall bind and inure to the benefit of and be enforceable by the Participant, the Company and their respective permitted successors
and assigns (including personal representatives, heirs and legatees), but the Participant may not assign any rights or obligations under this Award Agreement except to the extent and in the manner expressly permitted by the Plan or this Award
Agreement. 
  

	 	10.	Definitions. 

  
 The following definitions apply to this Award Agreement: 
  
 a. “Award Opportunity” means the percentage of the Target Performance Award payable to the Participant based on achieved
performance 
  
 b. “Beneficiary” means
(i) the Participant’s designated beneficiary or beneficiaries, under this Plan, (ii), if there is no Plan designation, the Participant’s designated beneficiary under the Company’s group life insurance plan in which the
Participant is eligible to participate, (iii) if there is no group life insurance designation, the Participant’s surviving spouse, or (iv) if there is no surviving spouse, the personal representative of the Participant’s estate.

  

 Page 3 







 c. “Change in Control” shall be deemed to have occurred on the date that one or
more of the following occurs: 
  
 i. Individuals
who, on March 26, 2004, constitute the entire Board (“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 Securities Exchange Act of 1934,
as amended or other actual or threatened solicitation of proxies or consents by or on behalf of any Person (as defined below) other than the Board; 
  
 ii. The stockholders of the Company shall approve 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 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, or of its ultimate parent corporation or other entity, if any (in either case, the “Surviving
Entity”), and (b) the Combined Voting Power of the then outstanding Voting Securities of the Surviving Entity 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;; 
  
 iii. The stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company; or 

 
 iv. Any Person shall be or become the beneficial owner
(as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company representing in the aggregate more than twenty percent (20%) of either (1) the then
outstanding shares of common stock of the Company (“Common Shares”) or (2) the Combined Voting Power of all then outstanding Voting Securities of the Company; provided, however, that notwithstanding the foregoing,
a Change in Control shall not be deemed to have occurred for purposes of this Subsection iv: 
  

 Page 4 







 (a) 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 (i) the proportionate number of Common Shares beneficially owned by any Person to more than twenty percent (20%) of the Common Shares then outstanding, or
(ii) 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; 
  
 (b) 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; 
  
 v. For purposes of this definition of Change in Control, the following capitalized terms have the following meanings: 
  
 (1) “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. 
  
 (2) “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. 
  
 (3) “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, 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 by the Company, LCR or their subsidiaries for or pursuant to the terms of any plan. 
  
 (4) “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. 
  

 Page 5 







 d. “Disability” means a permanent and total disability defined in the
Company’s applicable long-term disability plan or policy. 
  
 e. “Employment” means employment as an Employee with the Company or any Subsidiary. Neither the Participant’s transfer from Company employment to employment by any Subsidiary, the Participant’s
transfer from employment by any Subsidiary to Company employment, nor the Participant’s transfer between Subsidiaries shall be deemed to be a Participant’s employment termination. Moreover, a Participant’s employment shall not be
deemed to terminate because the Participant is absent from active employment due to temporary illness, during authorized vacation, during temporary leaves of absence granted by the Company or a Subsidiary for professional advancement, education,
health or government service, during military leave for any period if the Participant returns to active employment within 90 days after military leave terminates, or during any period required to be treated as a leave of absence by any valid law or
agreement. 
  
 f. “Maximum Performance”
means a Ranking considered to be outstanding performance. 
  
 g. “Payment Date” means the date when an Award is paid or delivered to the Participant. 
  
 h. “Peer Group” means the companies that were members of the S&P 500 Chemicals Index and the S&P Mid-Cap 400 Chemicals
Index at the beginning of the applicable Performance Cycle and that are still publicly traded as of the last day of the applicable Performance Cycle, or other group of companies the Committee selects in its discretion. 
  
 i. “Performance Cycle” means the period beginning
on January 1 of the year in which the Grant Date occurs and ending on December 31 in the third calendar year (including the year of the Grant) after the Grant Date. 
  
 j. “Ranking” means the relative performance of the Company compared to its Peer Group, based on
Total Shareholder Return, and expressed as a percentile ranking. 
  
 k. “Retirement” means an Employment termination voluntarily initiated by the Participant on or after the earliest of i. age 65, ii. age 55 with 10 years of participation service credited under the
Company’s qualified defined benefit pension plan in which the Participant is eligible to participate or iii. outside the United States, whenever retirement is permitted under applicable law (as the Committee determines in its sole judgment), if
the Participant is eligible to receive a retirement benefit. 
  
 l. “Target Performance” means the expected Ranking for the applicable Performance Cycle. 
  

 Page 6 







 m. “Target Performance Award” means the number of units, options, shares or
SARs granted to the Participant on the Grant Date which the Participant may earn during the applicable Performance Cycle if the Company achieves Target Performance. 
  
 n. “Threshold Performance” means a Ranking considered to be the minimum acceptable performance to
pay a Performance-Based Award. 
  
 o. “Total
Shareholder Return” means the change in the market price of the Company’s Common Stock plus dividend yield, measured over the course of the applicable Performance Cycle. 
  

	 	11.	Governing Law. 

  
 This Award Agreement shall be governed by, construed and enforced according to the laws of the State of Texas. 
  
 II. CONDITIONS APPLICABLE TO SPECIFIC AWARDS. 
  

	 	1.	Restricted Stock Awards. 

  
 a. The restricted period (“Restricted Period”) for a Restricted Stock Award shall lapse and the Award shall vest in three
cumulative installments, with one-third of the Award vesting on the first anniversary of the Grant Date, an additional one-third of the Award vesting on the second anniversary of the Grant Date, and the final one-third of the Award vesting on the
third anniversary of the Grant Date. The Participant must be in continuous Employment from the Grant Date through each anniversary date to vest the applicable portion of the Award. 
  
 b. Each Award shall be subject to the restrictions in this Section 1 and a substantial risk of
forfeiture during the Restricted Period. A Participant shall not be entitled to any Award payment until the Restricted Period for the applicable portion of the Award lapses and the Award vests. Non-vested Awards or non-vested portions of Awards and
any unpaid associated Cash Award shall be forfeited on the date the Participant’s Employment terminates for any reason other than death, Disability, Retirement. 
  
 c. No rights related to an Award may be sold, transferred, assigned, pledged or otherwise encumbered or
disposed of during the Restricted Period. However, subject to the restrictions in this Award Agreement and the Plan, a Participant awarded Restricted Stock is entitled to all ownership rights, including voting rights and the right to receive any
cash dividends that may be paid on non-vested shares of Restricted Stock. 
  
 d. When a portion of the Award vests under Section 1.a., a Participant will receive a stock certificate covering a number of shares of Common Stock of the 

  

 Page 7 







 
Company equal to the number of shares of Restricted Stock which vest. A Participant shall also become entitled to receive, as promptly as possible, a Cash
Award equal to the Fair Market Value of a share of Common Stock of the Company on the vesting date, multiplied by the number of shares of Restricted Stock which vest. 
  

	 	2.	Non-Qualified Stock Option Awards. 

  
 a. A Stock Option Award is intended to be a nonqualified stock option within the meaning of Code Section 83. 
  
 b. Except as provided in Part I, Section 3, a Stock
Option Award (“Options”) shall become exercisable in three cumulative installments, with one-third of the Award becoming exercisable on the first anniversary of the Grant Date, an additional one-third of the Award becoming exercisable on
the second anniversary of the Grant Date, and the final one-third of the Award becoming exercisable on the third anniversary of the Grant Date. The Participant must be in continuous Employment from the Grant Date through each anniversary date of the
applicable portion of the Award to become exercisable. 
  
 c. Except as provided in Part I, Section 3, this Award shall terminate and be of no force and effect for any Option not previously exercised by the Participant on the first to occur of: 
  
 i. the close of business on the tenth anniversary of the Grant Date;

  
 ii. (1) for the portion of the Award exercisable on
Employment termination (or which becomes exercisable on Employment termination due to death, Disability or Retirement), the expiration of (a) 90 days following the Participant’s Employment termination by the Company or a Subsidiary for
reasons other than for cause (as determined by the Committee), death, Disability or Retirement, or (b) five (5) years following the Participant’s Employment termination by death, Disability or Retirement; and 
  
 (2) for the portion of the Award not exercisable on
Employment termination, the date the Participant’s Employment terminates; 
  
 iii. the date the Participant’s Employment terminates for any reason other than those described in ii.(1). 
  
 d. The Participant shall have no shareholder rights for shares of Common Stock subject to an Option unless and until the Option has been
exercised and shares of Common Stock have been transferred to the Participant. 
  
 e. Subject to the limits of this Award Agreement and the Plan, this Award may be exercised by notice provided to the Company under Part I,
Section 6. Notice shall (i) state the number of shares under the Option which are being exercised and (ii) be accompanied by a check, cash or money order payable to Lyondell Chemical Company in 

  

 Page 8 







 
the full amount of the purchase price for any shares of Common Stock being acquired or, at the Participant’s option, accompanied by Common Stock owned
by the Participant for at least six months equal in value to the full amount of the purchase price (or any combination of cash, check, money order or Common Stock). Common Stock shall be valued at its Fair Market Value on the exercise date to
determine the amount, if any, of the purchase price satisfied by payment in Common Stock. Any Common Stock delivered to satisfy all or a portion of the purchase price shall be appropriately endorsed for transfer and assignment to the Company.

  
 On Notice of Award Exercise under Part I,
Section 6, the Company shall provide the Participant with Shares of Common Stock equal to the number of Options exercised. Notwithstanding anything to the contrary, the Company, acting through the Committee, reserves the right to deliver a Cash
Award in lieu of shares on an Option exercise equal to the number of Options exercised multiplied by the excess of the Fair Market Value of a share of Common Stock on the exercise date over the price per share at the Grant. 
  
 If any law or regulation requires the Company to take any
action regarding the shares specified in the notice, or cash paid on exercise, the delivery time shall be postponed for the period of time necessary to take action. 
  

	 	3.	Stock Appreciation Right Awards. 

  
 a. A Stock Appreciation Right Award (“SAR”) is the right to receive a Cash Award based on the number of SARs granted, with the
value of the SAR equal to the appreciation in value of a share of Common Stock, over the price per share set forth in the Grant. 
  
 b. A SAR shall become exercisable in three cumulative installments, with one-third of the Award becoming exercisable on the first
anniversary of the Grant Date, an additional one-third of the Award becoming exercisable on the second anniversary of the Grant Date, and the final one-third of the Award becoming exercisable on the third anniversary of the Grant Date. The
Participant must be in continuous Employment from the Grant Date through each anniversary date for the applicable portion of the Award to become exercisable. If the Participant has been in continuous Employment since the Grant Date, this Award shall
become fully exercisable, irrespective of the limits above if, at any time prior to the third anniversary of the Grant Date the Fair Market Value per share of Common Stock is greater than or equal to two times the price per share set forth in the
Grant for at least 5 consecutive trading days. 
  
 c. This Award shall terminate and be of no force and effect for any SAR not previously exercised by the Participant on the first to occur of: 
  
 i. the close of business on the tenth anniversary of the Grant Date; 
  
 ii. (1) for the portion of the Award exercisable on Employment termination (or which becomes exercisable on Employment
termination 

  

 Page 9 







 
due to death, Disability or Retirement), the expiration of (a) 90 days following the Participant’s Employment termination by the Company or a
Subsidiary for reasons other than for cause (as determined by the Committee), death, Disability or Retirement, or (b) one year following the Participant’s Employment termination by death, Disability or Retirement; and 
  
 (2) for the portion of the Award not exercisable on
Employment termination, the date the Participant’s Employment terminates; 
  
 iii. the date the Participant’s Employment terminates for any reason other than those described in ii.(1)(b). 
  
 d. The Participant shall have no rights as a shareholder in the Company or any right to receive Common Stock or any other form of equity
interest in the Company as a result of this Award. 
  
 e. Subject to the limits of this Award Agreement and the Plan, this Award may be exercised by notice provided to the Company under Part I, Section 6. Notice shall state the number of SARs which are being exercised. 
  
 On Notice of Award exercise under Part I, Section 6,
the Company shall pay the Participant a Cash Award equal to the number of SARs exercised multiplied by the excess of the Fair Market Value of a share of Common Stock on the exercise date over the initial value of the SAR at the Grant, unless the
Committee determines that the Award will be satisfied by shares of Common Stock equal to this amount. 
  
 If any law or regulation requires the Company to take any action regarding the shares specified in the notice, or cash paid on exercise,
the delivery time shall be postponed for the period of time necessary to take action. 
  

 Page 10 








	 	4.	Performance Units. 

  
 a. A Participant shall be entitled to an Award only if and when the Committee determines that previously established goals for the Award
have been met. 
  
 b. The Award shall be
forfeited if the Participant is not employed or has terminated Employment before the Payment Date for any reason other than death, Disability or Retirement. 
  
 i. If the Participant’s Employment ends due to death, Disability or Retirement before the Performance Cycle ends, the Participant, or
the Participant’s Beneficiary, the Participant’s Award will be pro-rated based on the number of days the Participant was an employee during the Performance Cycle. 
  
 ii. If the Participant’s Employment ends due to death, Disability or Retirement after the end of the
Performance Cycle but before the Payment Date, the Participant or his Beneficiary will be eligible for the full amount of the Award for that Performance Cycle. 
  

Payment shall be made at the time and in the same form that Awards under this Section normally are paid or delivered to other Plan
Participants. 
  
 c. The achievement of the
following levels of performance shall be used to calculate the Award payable for a Performance Cycle: 
  
 i. Maximum Performance means a Ranking of at least 80th percentile. 
  
 ii. Target Performance means a Ranking of 50th percentile. 
  
 iii. Threshold Performance means a Ranking of 30th percentile. 
  

 Page 11 







 The following chart shows the Award Opportunity for the level of performance achieved in
the Performance Cycle: 
  

				
	 Performance Level

	  	% of Award Earned

	 
	Maximum Performance	  	200	%
	Target Performance	  	100	%
	Threshold Performance	  	20	%
	Below Threshold Performance	  	0	%

  
 The
Award Opportunity for a Ranking between Threshold Performance and Target Performance, or between Target Performance and Maximum Performance, shall be interpolated between the values listed in the chart above. However, the amount potentially payable
to the Participant shall never exceed the percentage of a Participant’s Target Performance Award earned for Maximum Performance. 
  
 d. An Award will equal the product of (i) the number of Performance Units earned according to the performance level attained under
Section 4.c. and (ii) the average Fair Market Value of a share of Common Stock on the last ten (10) trading days of the applicable Performance Cycle. Subject to the provisions of this Section 4, the Award will be paid as a Cash
Award, unless the Committee specifically determines to pay the Award in shares of Common Stock, or in any combination of a Cash Award and shares of Common Stock, as determined by the Committee. Payment will be made as soon as practicable after the
close of the applicable Performance Cycle, following the Committee’s written determination of the attained performance level . 
  

 Page 12