Document:

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                                                                   EXHIBIT 10.12

Lyondell Chemical Company

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RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS

As Amended And Restated Effective January 1, 2002
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                                TABLE OF CONTENTS

ARTICLE I    DEFINITIONS...................................................   1

ARTICLE II   ELIGIBILITY AND VESTING.......................................   3

ARTICLE III  RETIREMENT BENEFIT............................................   3

ARTICLE IV   DEATH BENEFITS................................................   4

ARTICLE V    CHANGE IN CONTROL.............................................   5

ARTICLE VI   SOURCE OF BENEFITS AND FUNDING................................   9

ARTICLE VII  MISCELLANEOUS.................................................   9
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                                    ARTICLE I

                                   DEFINITIONS

1.1 Actuarial Equivalent means, in comparing benefits payable in different forms
or at different times or in different circumstances, a value under one such set
of circumstances which is the same as the value under a different set of
circumstances. Such value shall be computed and determined with reference to
mortality assumptions, interest rates and other actuarial factors and
assumptions then in effect under the Lyondell Chemical Company Retirement Plan
for Non-Represented Employees for the purpose of calculating actuarial
equivalents under that Plan.

1.2 Administrative Committee means the Directors Benefit Committee.

1.3 Beneficiary means a person or persons designated by the Non-Employee
Director or Retiree to receive the Death Benefit under Article IV.

1.4 Board means the Board of Directors of Lyondell Chemical Company.

1.5 Company means Lyondell Chemical Company.

1.6 Death Benefits means the benefit described under and determined in
accordance with Article IV of the Plan.

1.7 Director means a Director of the Board.

1.8 Effective Date means January 1, 2002.

1.9 Financial Hardship means a condition of financial difficulty, relating to a
Non-Employee Director, Retiree or Beneficiary, as the case may be, determined by
the Administrative Committee, upon advice of counsel, to be sufficient to
justify a change of election in the form of benefit under either Article III or
IV, as applicable, without causing the receipt of taxable income by any other
participant in the Plan in advance of the payment to him of Plan benefits.

1.10 Lump Sum Payment means a single cash payment which shall be the Actuarial
Equivalent of the sum of the monthly payments otherwise payable (or the
remainder payable in the case of an election under Section 3.3(b) or 4.3(b))
during the Payment Period in the case of a Non-Employee Director with less than
180 months of completed Service on the Board and which shall be the Actuarial
Equivalent of a life annuity with a term certain of 180 months otherwise payable
(or the remainder payable in the case of an election under Section 3.3(b) or
4.3(b)) during the Payment Period in the case of a Non-Employee Director with
180 or more months of completed Service on the Board.

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1.11 Non-Employee Director means (i) a Director of the Company that is not a
current employee of the Company, LYONDELL-CITGO Refining LP, Equistar Chemicals,
LP, or a subsidiary or affiliate of any of these entities and who has not been
an employee of any of these entities within three years prior to the date the
person became a Director or (ii) a Director who for at least three (3) years has
not been an employee of any of the entities described in clause (i) above.

1.12 Pay for purposes of the Plan means an amount equal to one-twelfth of the
annual retainer paid to a Non-Employee Director immediately preceding the
earlier of termination of Service on the Board or death. In the event of a
Change in Control, as determined under Section 5.3, Pay means an amount equal to
one-twelfth of the annual retainer paid to a Non-Employee Director immediately
preceding the Change in Control, but if the annual retainer has been reduced in
anticipation of the Change in Control, the amount shall equal one-twelfth the
annual retainer paid to a Non-Employee Director immediately prior to its
reduction. Pay does not include fees paid for committee chairmanships, Board and
committee meeting fees or any other special director compensation.

1.13 Payment Period means the period the Retiree and/or Beneficiary receives
benefits in the form of a monthly allowance from this Plan. The Payment Period
will be that number of months equal to the Non-Employee Director's Service on
the Board expressed in months; provided, however, that if a Retiree completed
180 months or more of Service on the Board as a Non-Employee Director, the
Payment Period shall be the greater of 180 months or for the remaining life of
the Retiree.

1.14 Plan is the Retirement Plan for Non-Employee Directors of Lyondell Chemical
Company.

1.15 Retiree means a former Non-Employee Director with a vested benefit payable
under the Plan.

1.16 Retirement Benefit means the benefits described under and determined in
accordance with Section 3.1.

1.17 Service on the Board means (i) for a Non-Employee Director described in
Section 1.11(i) all service on the Board as a Non-Employee Director and (ii) for
a Non-Employee Director described in Section 1.11(ii), service on the Board from
the later of the date the Non-Employee Director became a Director or the
Non-Employee Director's termination of employment with the Company,
LYONDELL-CITGO Refining LP, Equistar Chemicals, LP, or a subsidiary or affiliate
of any of these entities, as applicable. Service on the Board shall also include
service as a director of a company merged into the Company provided the
Non-Employee Director was a director of the acquired company immediately prior
to the merger. With respect to a Non-Employee Director who elects, prior to
January 31, 1999, to retain a benefit under this Plan determined solely with

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respect to service on the Board through December 31, 1998, Service shall not
include service on the Board after December 31, 1998.

1.18 Trust Agreement means the Trust Agreement between Lyondell Chemical Company
and Wilmington Trust Company and any amendments or successor agreements thereto.

                                   ARTICLE II

                             ELIGIBILITY AND VESTING

2.1 A participant in this Plan shall be any Non-Employee Director who was a
Non-Employee Director prior to October 16, 1998 and who elected prior to January
31, 1999, to (i) continue to accrue benefits under this Plan or (ii) retain a
benefit under this Plan with a Payment Period determined solely with respect to
Service performed through December 31, 1998.

2.2 Any Non-Employee Director who has completed three (3) years of Service on
the Board will be vested in the benefits provided under Article III of the Plan.

2.3 Any Non-Employee Director who was a participant in this Plan on October 16,
1998, and who elected to receive the present value as of December 31, 1998 of
the monthly retirement allowance at retirement age 72 under this Plan in the
form of a transferred benefit to the Elective Deferral Plan for Non-Employee
Directors or a grant of restricted Common Stock shall have no further right to
any form of benefit under this Plan.

                                   ARTICLE III

                               RETIREMENT BENEFIT

3.1 A Retiree shall be paid a monthly retirement allowance equal to Pay unless
an optional form of benefit was elected pursuant to Section 3.3. The allowance
will be paid to the Retiree until the earlier of (i) the end of the applicable
Payment Period or (ii) the death of the Retiree.

3.2 The Retirement Benefit will commence in the month following retirement from
the Board provided the Retiree is at least age 65 at the time of retirement from
the Board. The Retirement Benefit for a Retiree who left the Board prior to age
65 will commence in the month following attainment of age 65.

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3.3 In lieu of a monthly retirement allowance, a Retiree may receive payment of
his Retirement Benefit in the form of a Lump Sum Payment upon termination of
Service on the Board and satisfaction of the following conditions:

          (a) A Non-Employee Director must elect that the Retirement Benefit be
paid in the form of a Lump Sum Payment prior to the attainment of age 70 or at
least one year prior to termination of Service on the Board, if earlier. A
Non-Employee Director who is age 70 or older when he becomes eligible to
participate in the Plan must elect to have the Retirement Benefit paid in the
form of a Lump Sum Payment within 30 days of becoming eligible to participate in
the Plan.

          (b) A Non-Employee Director who fails to timely elect a Lump Sum
Payment under subparagraph (a) or a Retiree currently receiving a monthly
retirement allowance who wishes to receive his remaining monthly benefits in the
form of a Lump Sum Payment may request the Administrative Committee to change
the form of payment previously elected. The Administrative Committee, in its
sole discretion, may allow such request provided that (i) the Administrative
Committee determines that the Non-Employee Director or Retiree has experienced a
Financial Hardship justifying the request for a change of election, or (ii) the
Non-Employee Director or Retiree, as applicable, agrees to accept a reduction in
amount of his Retirement Benefit, as determined to be necessary to preclude
constructive receipt of taxable income by any Non-Employee Director
participating in the Plan in advance of the payment to him of the Retirement
Benefit. The amount by which the Retirement Benefit is reduced under the
preceding sentence will be forfeited to the Company.

          (c) The Lump Sum Payment option described in this Section may be
discontinued by the Company in its sole discretion at any time. Any elections
made pursuant to this Section prior to the time when the Company discontinues
the Lump Sum Payment option shall be disregarded and Retirement Benefits shall
be paid in accordance with Section 3.1.

                                   ARTICLE IV

                                 DEATH BENEFITS

4.1 The Beneficiary of a Non-Employee Director who dies while a member of the
Board or a Retiree who dies prior to the attainment of age 65 will receive as a
Death Benefit an allowance equal to 50% of Pay unless an optional form of
benefit was elected pursuant to Section 4.3. This allowance shall be payable
monthly commencing in the month following the Non-Employee Director's or
Retiree's death and shall continue until the end of the Payment Period or until
the death of the Beneficiary, whichever occurs first. If the Non-Employee
Director or Retiree dies without designating a Beneficiary, then this allowance
shall be payable in the form of a Lump Sum Payment to the Director's estate.

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4.2 The monthly retirement allowance paid a Retiree will be continued and paid
as a Death Benefit to the Beneficiary of a Retiree who dies on or after
attainment of age 65 unless the Retiree elected an optional form of benefit
pursuant to Section 4.3. This allowance shall be payable monthly commencing in
the month following the Retiree's death and shall continue until the end of the
Payment Period or until the death of the Beneficiary, whichever occurs first. If
the Beneficiary dies prior to the end of such Payment Period, the remaining
payments will be paid in the form of a Lump Sum Payment to the Beneficiary's
estate. If the Retiree dies without designating a Beneficiary, then such
allowance shall be payable in a Lump Sum Payment to the Retiree's estate.

4.3  (a) In lieu of payment of the Death Benefit as a monthly allowance, a
Non-Employee Director may elect prior to commencement of his Retirement Benefit
to have the Death Benefit, if any, paid in the form of a Lump Sum Payment to his
Beneficiary.

     (b) A Beneficiary of a deceased Non-Employee Director or Retiree may
request the Administrative Committee to change the Non-Employee Director's prior
election. The Administrative Committee, in its sole discretion, may allow such
request provided that (i) the Administrative Committee determines that the
Beneficiary has experienced a Financial Hardship, justifying the request for a
change of election, or (ii) the Beneficiary agrees to accept a reduction in the
amount of the Death Benefit, as determined to be necessary, upon advice of
counsel, to preclude constructive receipt of taxable income by any Non-Employee
Director in advance of the payment to him of the Retirement Benefit. The amount
by which the Death Benefit is reduced under the preceding sentence will be
forfeited to the Company.

     (c) The Lump Sum Payment option described in this Section may be
discontinued by the Company in its sole discretion at any time. Any elections
made pursuant to this Section prior to the time when the Company discontinues
the Lump Sum Payment option shall be disregarded and the Death Benefit shall be
paid in accordance with Section 4.1 or 4.2, as applicable.

4.4 No Death Benefit will be paid to any Beneficiary if the Retiree elected and
received a Lump Sum Payment of the Retirement Benefit described in Section 3.1.

                                    ARTICLE V

                                CHANGE IN CONTROL

     5.1 Upon a Change in Control as defined in Section 5.3, the amount of
benefits for all then remaining Non-Employee Directors shall be determined based
on the Non-Employee Director's Pay, as defined under Section 1.12 and Service on
the Board as of the date of Change in Control. Service on the Board and Pay
following a Change in

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Control shall be disregarded for purposes of determining the amount of benefits
payable under this Plan.

     5.2 Notwithstanding any other provision of the Plan, on a Change in
Control, a Non-Employee Director, a Retiree or a Beneficiary of a deceased
Non-Employee Director or Retiree will receive a Lump Sum Payment of vested
benefits under the Plan, in lieu of payments in accordance with any form
previously selected by the Non-Employee Director or Retiree. This Lump Sum
Payment shall be made immediately to a Retiree and Beneficiary. It shall also be
paid immediately to a Non-Employee Director, unless the Non-Employee Director
previously elected an alternate payment commencement date, as established under
Administrative Committee procedures.

     5.3 For purposes of this Plan, a Change in Control will be deemed to have
occurred as of the date that one or more of the following occurs:

     (a) Individuals who, as of February 1, 1999, 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
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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;

     (b) 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; provided, however, that, notwithstanding the
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foregoing, a Change of Control shall not be deemed to have occurred for purposes
of this Subsection (b) if each of the following conditions are met: (i) the

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Acquisition Transaction is between the Company and/or its Affiliates, on the one
hand, and Millennium Chemicals Inc. ("Millennium") and/or its Affiliates, on the
other hand, (ii) the Company or an entity that was a wholly owned subsidiary of
the Company prior to the Acquisition Transaction has a class of equity
securities registered under Section 12 of the Securities Exchange Act of 1934,
as amended, immediately after completion of the Acquisition Transaction, (iii)
Millennium or an entity that was a wholly owned subsidiary of Millennium prior
to the Acquisition Transaction has a class of equity securities registered under
Section 12 of the Securities Exchange Act of 1934, as amended, immediately after
completion of the Acquisition Transaction, and (iv) as a result of the
Acquisition Transaction, the Company or its Affiliates own a greater percentage
equity interest in Equistar Chemicals, LP ("Equistar") than was owned, directly
or indirectly, by the Company immediately prior to such Acquisition Transaction;

     (c) The stockholders of the Company shall approve any plan or proposal for
the liquidation or dissolution of the Company; or

     (d) 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 (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
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notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred for purposes of this Subsection (d):

     (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;

     (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; or

     (3) Solely as a result of a direct or indirect acquisition by Occidental
     Petroleum Corporation ("Occidental") or Millennium, or any Affiliate of
     either of them, of beneficial ownership of securities representing, (x) in
     the case of Occidental (with its Affiliates), no more than forty percent
     (40%), (y) in the case of Millennium (with its Affiliates), no more than
     forty percent (40%), and (z) in the case of Occidental (with its
     Affiliates) and Millennium (with its Affiliates) in the aggregate, no more
     than forty-nine percent (49%), of either (A) the then outstanding Common
     Shares or (B) the Combined Voting Power of all then outstanding Voting
     Securities of the Company, pursuant to or as contemplated

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     under any agreement between the Company and Occidental and/or Millennium or
     Affiliates of either of them (including any subsequent related transaction
     or series of related transactions or acquisitions of Voting Securities of
     the Company by Occidental and/or Millennium or their Affiliates or
     assignees approved by the Incumbent Directors prior to the consummation of
     such transaction or series of related transactions) where, as a result of
     such transaction or series of related transactions, the Company or a
     Surviving Entity owns, directly or indirectly, a greater percentage equity
     interest in Equistar than was owned, directly or indirectly, by the Company
     immediately prior to such transaction or series of related transactions;

     provided, further, that if any Person referred to in paragraph (1) or (2)
     of this Subsection (d) shall thereafter become the beneficial owner of
     additional shares or other ownership interests representing one percent
     (1%) or more of the outstanding Common Shares or one percent (1%) or more
     of the Combined Voting Power of the Company (other than (x) pursuant to a
     stock split, stock dividend or similar transaction or (y) as a result of an
     event described in paragraph (1), (2) or (3) of this Subsection (d)), then
     a Change in Control shall be deemed to have occurred for purposes of this
     Subsection (d).

     (e) 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, LYONDELL-CITGO Refining
     -------
     LP ("LCR") or Equistar, any of their subsidiaries, any employee benefit
     plan of the Company, LCR or Equistar or any of their majority-owned
     subsidiaries or any entity organized, appointed or established by the
     Company, LCR, Equistar or such subsidiaries for or pursuant to the terms of
     any such 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

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     the Board of Directors, or similar managing group, of such corporation or
     other entity.

                                   ARTICLE VI

                         SOURCE OF BENEFITS AND FUNDING

6.1 Non-Employee Directors, Retirees and their Beneficiaries shall have no legal
or equitable rights, claims or interests in any specific assets or property of
the Company, nor shall they be the beneficiaries of, or have any rights, claims
or interests in any life insurance policies, annuity contracts, or the proceeds
therefrom owned, or which may be acquired, by the Company ("Policies"). Any such
Policies or other assets of the Company shall be, and remain, the general,
unpledged, unrestricted assets of the Company. The Company's obligation under
the Plan shall be merely that of an unfunded and unsecured promise of the
Company to pay money in the future.

6.2 Although the Company is responsible for the payment of all benefits under
the Plan, the Company may, in its discretion, contribute funds to a grantor
trust for the purpose, as it deems appropriate, of paying benefits under this
Plan. Such trust, including the Trust Agreement, may be irrevocable, but assets
of trust shall be subject to the claims of creditors of Company. To the extent
any benefits provided under the Plan are actually paid from the trust, the
Company shall have no further obligation with respect thereto but to the extent
not so paid, such benefits shall remain the obligation of, and shall be paid, by
the Company. The Directors shall have the status of unsecured creditors insofar
as their legal claim for benefits under the Plan and the Non-Employee Directors
or Retirees shall have no security interest in the grantor trust.

                                   ARTICLE VII

                                  MISCELLANEOUS

7.1 The Company may, in its sole discretion, terminate, suspend or amend the
Plan at any time or from time to time, in whole or in part. However, no
amendment, suspension, or termination of the Plan may reduce the benefit of a
Non-Employee Director, Retiree or Beneficiary accrued through the date of such
amendment, suspension or termination or adversely affect the right or ability of
a Non-Employee Director, Retiree or Beneficiary to elect to receive such benefit
in accordance with the terms of the Plan as in effect on the date before such
amendment, suspension or termination.

7.2 Nothing contained herein will confer upon any Non-Employee Director the
right to be retained in the Service of the Company as a Director.

7.3 To the maximum extent permitted by law, no benefit under the Plan or assets
of the trust shall be assignable or subject in any manner to alienation, sale,
transfer, claims

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or creditors, pledge, attachment or encumbrances of any kind except as provided
in the applicable trust document.

7.4 The Administrative Committee may adopt rules and regulations to assist it in
the administration of the Plan. The Administrative Committee shall in its sole
discretion have the right to appoint such agents as it may deem necessary to
carry out is duties pursuant to the provisions of the Plan.

7.5 (a) The Administrative Committee shall be charged with the administration of
the Plan and shall decide all questions arising in the administration,
interpretation and application of the Plan, including all questions of benefit
payments. The decision of the Administrative Committee shall be conclusive and
binding on all parties, provided that the Administrative Committee has acted in
good faith and in accordance with the provisions of the Plan.

     (b) Except as hereinbefore provided, any determination by a majority of the
Administrative Committee at a meeting thereof, whether in person or by
telephone, or without a meeting by a resolution or memorandum signed by all the
members, shall be final and conclusive on the Company, on all Directors,
Retirees and Beneficiaries claiming any right hereunder, and on all third
parties dealing with the Company.

     (c) Any member of the Administrative Committee may resign at any time by
giving written notice to the other members and to the Company, effective as
therein stated, or otherwise upon receipt.

7.6 Each Non-Employee Director shall receive a copy of the Plan and the
Administrative Committee will make available for inspection by any Non-Employee
Director a copy of the rules and regulations used by the Administrative
Committee in administering the Plan.

7.7 Each Non-Employee Director shall cooperate with the Company by furnishing
any and all information requested by the Company in order to facilitate the
payment of benefits hereunder, taking such physical examinations as the Company
may deem necessary and taking such other relevant action as may be requested by
the Company. If a Non-Employee Director refuses to cooperate, the Company shall
have no further obligation to the Non-Employee Director under the Plan. If a
Non-Employee Director makes any material misstatement of information or
nondisclosure of medical history, then no benefits will be payable hereunder to
such Non-Employee Director or his Beneficiary, provided, that in the Company's
sole discretion, benefits may be payable in an amount reduced to compensate the
Company for any loss, cost, damage or expense suffered or incurred by the
Company as a result in any way of any action, misstatement or nondisclosure.

7.8 The Plan is established under and will be construed according to the laws of
the State of Texas.

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                                                                   EXHIBIT 10.13

Lyondell Chemical Company

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RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS

As Amended and Restated Effective October 16, 1998
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                            LYONDELL CHEMICAL COMPANY
                RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS

1.   Purpose.
     --------

     The Restricted Stock Plan for Non-Employee Directors of Lyondell Chemical
     Company (the "Plan") is intended to provide non-employee directors of
     Lyondell Chemical Company (the "Company") with an increased proprietary
     interest in the Company's success and progress by granting them shares of
     the Company's Common Stock ("Common Stock") that are restricted in
     accordance with the terms and conditions set forth below ("Restricted
     Shares"). The Plan is intended to increase the alignment of non-employee
     directors with the Company's shareholders in terms of both risk and reward.

2.   Administration.
     --------------

     The Plan is to be administered by the Directors Benefit Committee (the
     "Committee") of the Company or any successor committee with responsibility
     for the administration of compensation and benefit plans for directors. The
     Committee shall have all necessary authority and discretion to interpret
     any provision of this Plan or to determine any question regarding grants of
     Restricted Shares under this Plan. Any determination or interpretations of
     the Committee shall be final, conclusive and binding on all persons.

3.   Eligibility.
     -----------

     All current or subsequently elected members of the Company's Board of
     Directors who at the time such service began were not, and for the
     preceding ten years had not been, Executive Officers or employees of the
     Company or any of its subsidiaries ("Eligible Directors") shall be eligible
     to participate in the Plan.

4.   Grants.
     ------

     Each year 25 percent of the annual retainer paid to non-employee directors
     shall be made in the form of grants of Restricted Shares to Eligible
     Directors. Also, any Eligible Director who is not receiving credit for
     service performed as a director after December 31, 1998 under the
     Retirement Plan for Non-Employee Directors shall receive a $25,000 annual
     payment in lieu of any retirement benefit, payable in the form of
     Restricted Shares. Grants of Restricted Shares to participants shall be on
     the terms and conditions and with the restrictions determined from time to
     time by the Committee under Section 5 of this Plan. Annual awards of
     Restricted Shares shall be granted as soon as practicable after the first
     business day of each calendar year, with the number of Restricted Shares
     granted determined by dividing the dollar amount of the respective payments
     by the closing price of a share of Common Stock on the first business day
     of the calendar year. A person who becomes an Eligible Director after the
     first business day of the calendar year shall receive

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     the annual awards of Restricted Shares on a prorated basis, based upon the
     number of months in the calendar year remaining following the first day of
     the month in which the person becomes an Eligible Director, and the number
     of Restricted Shares awarded shall be determined by dividing the prorated
     amount allocable to the partial year by the closing price of a share of
     Common Stock on the first business day of the month in which the person
     becomes an Eligible Director.

     Any member of the Company's Board of Directors who elects prior to January
     31, 1999, to receive the present value as of December 31, 1998 of the
     accrued monthly retirement allowance under the Company's Retirement Plan
     for Non-Employee Directors ("Accrued Benefit") in the form of a grant of
     Restricted Shares shall receive a number of Restricted Shares determined by
     dividing the Accrued Benefit by the closing price of a share of Common
     Stock on December 31, 1998.

5.   Terms and Conditions of Restricted Shares.
     -----------------------------------------

     (a) General. Each grant of Restricted Shares shall be subject to the
         --------
     restrictions under subsection (c) for the Restricted Period of the grant.

     (b) Restricted Period. The Restricted Period shall begin on the date of the
         ------------------
     grant. The Restricted Period for a grant shall be at least one year, and
     shall be set by the Committee and described in the individual granting
     agreement to be executed by the Company and each non-employee director.
     Notwithstanding the foregoing, any Restricted Shares awarded in lieu of the
     Accrued Benefit shall have a Restricted Period ending on December 31, 2003
     or, if earlier, the first date after the Director's attainment of age 70 on
     which his or her term as a director would otherwise expire.

     (c) Restrictions. One or more of these restrictions shall be a restriction
         -------------
     which constitutes a substantial risk of forfeiture. An Eligible Director
     shall have all ownership rights and privileges of a shareholder as to such
     Restricted Shares, including the right to receive dividends and the right
     to vote such Restricted Shares, except that the following restrictions
     shall apply: (i) an Eligible Director shall not be entitled to delivery of
     the certificate until the expiration of the Restricted Period, (ii) none of
     the Restricted Shares may be sold, transferred, assigned, pledged, or
     otherwise encumbered or disposed of during the Restricted Period, and (iii)
     except as provided in subsection 4(d), all grants of the Restricted Shares
     shall be forfeited and all rights of an Eligible Director to such
     Restricted Shares shall terminate without further obligation on the part of
     the Company if the Eligible Director fails to satisfy the terms of the
     grant of Restricted Shares.

          During the Restricted Period, the Restricted Shares may be held on an
     uncertificated basis or a stock certificate representing the number of
     Restricted Shares granted may be registered in each Eligible Director name
     but held in custody by the Plan for the Eligible Director account and not
     released to the Eligible Director until the Restricted Period lapses.

                                      -3-
<PAGE>

     (d) Termination of Directorship. If an Eligible Director ceases to be a
         ----------------------------
     director of the Company by reason to Disability, Death, Retirement or
     Change of Control, the Restricted Shares granted to such Eligible Director
     shall immediately vest. If an Eligible Director ceases to be a director of
     the Company for any other reason, the Eligible Director shall immediately
     forfeit all Restricted Shares, except to the extent that a majority of the
     Board other than the Eligible Director approves the vesting of such
     Restricted Shares. Upon vesting, except as provided in Section 6, all
     restrictions applicable to such Restricted Shares shall lapse and a
     certificate for such shares shall be delivered to the Eligible Director, or
     the Eligible Director's beneficiary or estate, in accordance with Section
     5(e).

          For purposes of this section, the following definitions apply:

          (i) "Disability" shall mean a permanent and total disability as
          defined in Section 22(e)(3) of the Internal Revenue Code.

          (ii) "Retirement" shall mean ceasing to be a director of the Company
          (i) on or after age 72 or (ii) at any time prior to age 72 with the
          consent of a majority of the members of the Board other than the
          Eligible Director.

          (iii) "Change of Control" shall mean a change of control as defined in
          the Company's Elective Deferral Plan for Non-Employee Directors.

     (e) Delivery of Restricted Shares. At the end of the Restricted Period a
         ------------------------------
     stock certificate for the number of Restricted Shares which have vested
     shall be delivered free of all such restrictions to the Eligible Director
     or the Eligible Director's beneficiary or estate, as the case may be.

6.   Regulatory Compliance.
     ---------------------

     An Eligible Director or an Eligible Director's beneficiary or estate shall
     not receive or sell any Common Stock granted pursuant to this Plan until
     all appropriate listing, registration and qualification requirements and
     consents and approvals have been satisfied or obtained, free of any
     condition unacceptable to the Board of Directors.

     The Committee shall have the authority to remove any or all of the
     restrictions on the Restricted Shares, including restrictions under the
     Restricted Period, whenever it determines that such action is appropriate
     as a result of changes in applicable laws or other circumstances after the
     date of the grant.

7.   Shares Reserved Under the Plan
     ------------------------------
     The shares of Common Stock covered by grants under this Plan as Restricted
     Shares will not exceed 100,000 shares in the aggregate, subject to
     adjustment as provided below, and in accordance with and subject to Rule
     16b-3 of the Securities and Exchange Act of 1934,

                                      -4-
<PAGE>

     ("Exchange Act") as amended. Restricted Shares may be originally issued or
     treasury shares or a combination of both.

     Any shares of Common Stock granted as Restricted Shares that are
     terminated, forfeited or surrendered or which expire for any reason will
     not be available again for issuance under this Plan, if any Eligible
     Director received any of the benefits of ownership of those shares prior to
     termination, forfeiture or surrender.

     In the event of a recapitalization, stock split, stock dividend,
     combination or exchange of shares, merger, consolidation, rights offering,
     separation, reorganization or liquidation, or any other change in the
     Company's corporate structure or shares, the Committee may make such
     equitable adjustments in the number and class of shares authorized to be
     granted as Restricted Shares, as it deems appropriate to prevent dilution
     or enlargement of rights. Shares issued as a consequence of any such change
     shall be issued subject to the same restrictions and provisions applicable
     to the original grant of Restricted Shares.

8.   Termination or Amendment of the Plan.
      ------------------------------------

     The Committee may at any time terminate the Plan and may from time to time
     alter or amend the Plan or any part hereof (including any amendment deemed
     necessary to ensure that the Company may comply with any regulatory
     requirement referred to in Section 6) without shareholder approval, unless
     otherwise required by law or by the rules of the Securities and Exchange
     Commission or New York Stock Exchange. No termination or amendment of the
     Plan may, without the consent of an Eligible Director, impair the rights of
     such director with respect to shares of Common Stock granted under the
     Plan.

9.   Miscellaneous.
     -------------

     (a)  Nothing in the Plan shall be deemed to create any obligation on the
          part of the Board to nominate any director for reelection by the
          Company's shareholders.

     (b)  The Company shall have the right to require, prior to the issuance or
          delivery of any Restricted Shares, payment by an Eligible Director of
          any taxes required by law with respect to the issuance or delivery of
          such shares, or the lapse of restrictions thereon.

10.  Governing Law.
     -------------

     The Plan shall be construed according to the law of the State of Texas to
     the extent federal law does not supersede and preempt state law.

11.  Effective Date.
     --------------

     The Plan was originally effective as of June 1, 1996. The Plan as amended
     and restated herein is effective October 16, 1998.

                                      -5-
<PAGE>

IN WITNESS WHEREOF, LYONDELL CHEMICAL COMPANY, acting by and through its duly
authorized officer, has caused this Instrument to be executed on            ,
                                                                 -----------
199   .
    --

ATTEST:                                     LYONDELL CHEMICAL COMPANY

By: ________________________                By: ______________________________
     Assistant Secretary                         Robert J. Millstone
                                                 Secretary

                                      -6-

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