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                                                                   EXHIBIT 10.16

                            LYONDELL CHEMICAL COMPANY
                          1999 LONG-TERM INCENTIVE PLAN

               (As Amended and Restated Effective January 1, 2001)

          1. Objectives. This Lyondell Chemical Company 1999 Incentive Plan (the
"Plan") is intended to:

     .    Focus Participants on key measures of value creation for the Company's
          shareholders
     .    Provide significant upside and downside award potential commensurate
          with shareholder value creation
     .    Encourage a long-term management perspective and reward for sustained
          long-term performance
     .    Enhance the ability of Lyondell to attract and retain highly talented
          and competent individuals
     .    Reinforce a team orientation among top management
     .    Encourage ownership of the Company's stock among top management

          2.   Definitions. As used herein, the terms set forth below shall have
the following respective meanings:

               "Award" means any Option, Performance Shares, Restricted Stock,
Phantom Stock, Cash Award or Stock Appreciation Right, whether granted singly,
in combination or in tandem, granted to a Participant pursuant to any applicable
terms, conditions and limitations as the Committee may establish in order to
fulfill the objectives of the Plan.

               "Award Agreement" means an agreement in the form prescribed by
the Committee that sets forth the terms, conditions and limitations applicable
to an Award.

               "Board" means the Board of Directors of the Company.

               "Cash Award" means an award payable in cash.

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

               "Common Stock" means the common stock, par value $1.00 per share,
of the Company.

               "Committee" means the Compensation Committee of the Board or any
person or persons appointed by the Board to administer the Plan.

               "Company" means Lyondell Chemical Company.

               "Effective Date" means January 1, 2001, the effective date of the
restatement of the Plan.

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

               "Exercise Price" means the price at which the Option Shares may
be purchased under the terms of the Award Agreement.

               "Fair Market Value" of a share of Common Stock means, as of a
particular date, (i) if shares of Common Stock are listed on a national
securities exchange, the closing price per share of Common Stock reported on the
consolidated transaction reporting system for the principal national securities
exchange on which shares of Common Stock are listed on that date, or, if there
shall have been no such sale so reported on that date, on the last preceding
date on which such a sale was so reported, (ii) if shares of Common Stock are
not so listed but are quoted on the Nasdaq National Market, the closing price
per share of Common Stock reported by the Nasdaq National Market on that date,
or, if there shall have been no such sale so reported on that date, on the last
preceding date on which such a sale was so reported, (iii) if the Common Stock
is not so listed or quoted, the mean between the closing bid and asked price on
that date, or, if there are no quotations available for such date, on the last
preceding date on which such quotations are available, as reported by the Nasdaq
Stock Market, or, if not reported by the Nasdaq Stock Market, by the National
Quotation Bureau Incorporated or (iv) if shares of Common Stock are not publicly
traded, the most recent value determined by an independent appraiser appointed
by the Company for such purpose.

               "Grant Date" means the date on which an Award is granted by the
Committee.

               "Option" means a right to purchase a particular number of shares
of Common Stock at a particular Exercise Price, subject to certain terms and
conditions as provided in the Plan and Award Agreement.

               "Option Shares" means the shares of Common Stock covered by a
particular Option.

               "Participant" means an Employee to whom an Award has been granted
under this Plan.

               "Performance-Based Award" means an Award that is paid, vested or
otherwise deliverable solely based on the achievement of one or more Performance
Goals as provided in Section 6(a).

               "Performance Goal" means a standard established by the Committee
to determine in whole or in part whether Performance-Based Awards shall be
earned.

               "Performance Shares" means the contingent right to receive an
amount in cash or Common Stock, as determined by the Committee in its sole
discretion, that is subject to the attainment of one or more Performance Goals.

               "Phantom Stock" means a right to receive the value of a specified
number of shares of Common Stock.

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               "Plan" means the Lyondell Chemical Company 1999 Long-Term
Incentive Plan, as amended from time to time.

               "Restricted Stock" means shares of Common Stock that are
restricted or subject to forfeiture provisions.

               "Stock Appreciation Rights" or "SARs" means the right to receive
an amount in cash or Common Stock equal to the appreciation in value of a
specified number of shares of Common Stock over a particular period of time.

               "Subsidiary" means (i) any corporation, limited liability company
or similar entity of which the Company directly or indirectly owns equity
interests representing more than 50% of the voting power of all classes equity
interests of such entity which have the right to vote generally on matters
submitted to a vote of the equity holders of such entity, (ii) Equistar
Chemicals, LP or LYONDELL-CITGO Refining, LP so long as the Company maintains an
equity ownership interest equal to at least 25% in such entities, or (iii) any
other entity in which the Company has an equity ownership interest of at least
25%, so long as such entity is designated by the Committee as a Subsidiary for
purposes of this Plan; provided, however, that with respect to Options intended
to qualify as incentive stock options within the meaning of Section 422 of the
Code, "Subsidiary" shall have the meaning set forth in Section 424(f) of the
Code or any successor provision.

          3.   Plan Administration and Designation of Participants.

               (a) Eligibility. All Employees of the Company and its
Subsidiaries who, in the judgment of the Committee, are in a position to
contribute significantly to its long-term profit and growth objectives are
eligible for Awards under this Plan. The Committee shall select the Participants
from time to time by the grant of Awards under the Plan and, subject to the
terms and conditions of the Plan, shall determine all terms and conditions of
the Award.

               (b) Administration. The Plan shall be administered by the
Committee, which shall have full and exclusive power to interpret this Plan and
to adopt such rules, regulations and guidelines for carrying out this Plan as it
may deem necessary or appropriate. The Committee may delegate its duties
hereunder to the Chief Executive Officer or other senior officers of the Company
subject to such rules and regulations as the Committee establishes. The
Committee may, in its discretion, retain the services of an outside
administrator for the purpose of performing any of its functions hereunder. The
Committee may, in its discretion, provide for the extension of the
exercisability of an Award, accelerate the vesting or exercisability of an
Award, eliminate or make less restrictive any restrictions contained in an Award
Agreement, waive any restriction or other provision of this Plan or an Award
Agreement or otherwise amend or modify an Award in any manner that is either (i)
not adverse to the Participant holding the Award or (ii) consented to by such
Participant. The Committee may grant an Award to an individual whom it expects
to become an Employee of the Company or any of its Subsidiaries within the
following six months, with such Award being subject to the individual's actually
becoming an Employee within such time period, and subject to such other terms
and conditions as may be established by the Committee. The Committee may correct
any defect or supply any omission or reconcile any inconsistency in this Plan or
in any Award Agreement in the manner and to the

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extent the Committee deems necessary or desirable to further the Plan purposes.
Any decision of the Committee in the interpretation and administration of this
Plan shall lie within its sole and absolute discretion and shall be final,
conclusive and binding on all parties concerned.

               No member of the Committee and no officer of the Company to whom
the Committee has delegated authority in accordance with this Plan shall be
liable for anything done or omitted to be done by him or her in connection with
the performance of any duties under this Plan, except for his or her own willful
misconduct or as expressly provided by statute.

          4.   Award Agreement. Each Award granted hereunder, other than a Cash
Award, shall be described in an Award Agreement, which shall be subject to the
terms and conditions of the Plan. The Committee shall authorize written
guidelines for the issuance of a Cash Award.

          5.   Shares of Common Stock Available for Awards. Subject to the
provisions of Section 11 hereof, no Award shall be granted if it shall result in
the aggregate number of shares of Common Stock issued under the Plan plus the
number of shares of Common Stock covered by or subject to Awards then
outstanding (after giving effect to the grant of the Award in question) to
exceed the lesser of 10 million or 10% of the number of shares of Common Stock
outstanding at the time of granting such Award. No Participant may be granted,
during the term of the Plan, Options covering or relating to more than 2,000,000
shares of Common Stock. No Participant may be granted, during the term of the
Plan, Awards in the form of Performance Shares, Restricted Stock, Stock
Appreciation Rights or Phantom Stock covering or relating to more than 1,000,000
shares of Common Stock. No more than 2,500,000 shares of Common Stock shall be
available for Awards in the form of Performance Shares, Restricted Stock, Stock
Appreciation Rights or Phantom Stock. No Participant may be granted Cash Awards
in respect of any calendar year having a value in excess of $2,000,000. No more
than 1,000,000 shares of Common Stock shall be available for Incentive Stock
Options. The number of shares of Common Stock that are the subject of Awards
under this Plan that are forfeited or terminated, expire unexercised, are
settled in cash in lieu of Common Stock or in a manner such that all or some of
the shares covered by an Award are not issued to a Participant or are exchanged
for Awards that do not involve Common Stock, shall again immediately become
available for Awards hereunder. The Committee may from time to time adopt and
observe such procedures concerning the counting of shares against the Plan
maximum as it may deem appropriate. The Board and the appropriate officers of
the Company shall from time to time take whatever actions are necessary to file
any required documents with governmental authorities, stock exchanges and
transaction reporting systems to ensure that shares of Common Stock are
available for issuance pursuant to Awards.

          6.   Types of Awards.

               (a) Performance-Based Awards. Without limiting the type or number
of Awards that may be made under the other provisions of this Plan, an Award may
be in the form of a Performance-Based Award. Performance-Based Awards are Awards
that shall be paid, vested or otherwise deliverable solely on account of the
attainment of one or more pre-established, objective Performance Goals
established by the Committee prior to the earlier to occur of (x) 90 days after
the commencement of the period of service to which the Performance Goal relates
and (y) the lapse of 25% of the period of service (as scheduled in good faith at
the

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time the goal is established), and in any event while the outcome is
substantially uncertain. A Performance Goal is objective if a third party having
knowledge of the relevant facts could determine whether the goal is met. Such a
Performance Goal may be based on one or more business criteria that apply to the
Employee, one or more business units of the Company, or the Company as a whole,
and may include one or more of the following: economic value, economic value
added, increased revenue, net income, stock price, market share, earnings per
share, return on equity, return on assets, decrease in costs, shareholder value,
net cash flow, total shareholder return, return on capital, return on investors'
capital, operating income, funds from operations, cash flow, cash from
operations, after-tax operating income, and total market value. Prior to the
payment of any compensation based on the achievement of Performance Goals, the
Committee must certify in writing that applicable Performance Goals and any of
the material terms thereof were, in fact, satisfied. In interpreting Plan
provisions applicable to Performance Goals and Performance-Based Awards, it is
the intent of the Plan to conform with the standards of Section 162(m) of the
Code and Treasury Regulation Section 1.162-27(e)(2)(i), and the Committee in
establishing such goals and interpreting the Plan shall be guided by such
provisions. A Performance-Based Award may include Performance Shares, Options,
Restricted Stock, Stock Appreciation Rights, Cash Awards or Phantom Stock.

               (b) Options. Options granted to Employees hereunder may be either
incentive stock options within the meaning of Section 422 of the Code or
nonqualified options within the meaning of Section 83 of the Code. The Exercise
Price of an Option shall not be less than the Fair Market Value of a share of
Common Stock on the Grant Date of the Option and shall not be less than the Fair
Market Value of a share of Common Stock on the Grant Date of any outstanding
Option that is relinquished in connection with a grant of a new Option. The
terms, conditions and limitations applicable to Options awarded to Employees
shall be determined by the Committee.

               (c) Performance Shares. An Award may be in the form of
Performance Shares. Performance Shares shall be payable, in the sole discretion
of the Committee in cash, shares of Common Stock, or any combination thereof.
The terms, conditions and limitations applicable to an Award of Performance
Shares shall be determined by the Committee.

               (d) Restricted Stock. An Award may be in the form of shares of
Common Stock or Restricted Stock. The terms, conditions, and limitations
applicable to any Award of shares of Common Stock or Restricted Stock pursuant
to this Plan shall be determined by the Committee.

               (e) Phantom Stock. An Award may be in the form of Phantom Stock,
or other bookkeeping account tied to the value of shares of Common Stock. The
terms, conditions, and limitations applicable to any Awards of Phantom Stock
shall be determined by the Committee.

               (f) Stock Appreciation Rights. An Award may be in the form of
SARs. The exercise price of an SAR shall not be less than the Fair Market Value
of a share of Common Stock on the Grant Date. The terms, conditions, and
limitations applicable to any Awards of SARs shall be determined by the
Committee.

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               (g) Cash Awards. An Award may be in the form of a Cash Award. The
terms, conditions and limitations applicable to any Cash Awards shall be
determined by the Committee.

          7.   Payment of Awards.

               (a) General. Payment of Awards may be made in the form of cash or
Common Stock or combinations thereof and may include such restrictions as the
Committee shall determine including, in the case of Common Stock, restrictions
on transfer and forfeiture provisions.

               (b) Deferral. The Committee may, in its discretion, (i) permit
selected Participants to elect to defer payments of some or all types of Awards
in accordance with procedures established by the Committee or (ii) provide for
the deferral of an Award in an Award Agreement or otherwise. Any such deferral
may be in the form of installment payments or a future lump sum payment. Any
deferred payment, whether elected by the Participant or specified by the Award
Agreement or by the Committee, may be forfeited if and to the extent that the
Award Agreement so provides.

               (c) Dividends and Interest. Dividends or dividend equivalent
rights may be extended to and made part of any Award denominated in Common Stock
or units of Common Stock, subject to such terms, conditions and restrictions as
the Committee may establish. The Committee may also establish rules and
procedures for the crediting of interest on deferred cash payments and dividend
equivalents for deferred payment denominated in Common Stock or units of Common
Stock.

               (d) Substitution of Awards. At the discretion of the Committee, a
Participant may be offered an election to substitute an Award for another Award
or Awards of the same or different type.

          8.   Stock Option Exercise. The price at which shares of Common Stock
may be purchased under an Option shall be paid in full at the time of exercise
in cash or, if permitted by the Committee, by means of tendering Common Stock or
surrendering all or part of that or any other Award, including Restricted Stock,
valued at Fair Market Value on the date of exercise, or any combination thereof.
The Committee shall determine acceptable methods for tendering Common Stock or
Awards to exercise an Option as it deems appropriate. The Committee may provide
for procedures to permit the exercise or purchase of Awards by use of the
proceeds to be received from the sale of Common Stock issuable pursuant to an
Award. Unless otherwise provided in the applicable Award Agreement, in the event
shares of Restricted Stock are tendered as consideration for the exercise of an
Option, a number of the shares issued upon the exercise of the Option, equal to
the number of shares of Restricted Stock used as consideration therefor, shall
be subject to the same restrictions as the Restricted Stock so submitted as well
as any additional restrictions that may be imposed by the Committee.

          9.   Termination of Employment. Upon the termination of employment by
a Participant, any unexercised, deferred or unpaid Awards shall be treated as
provided in the specific Award Agreement evidencing the Award. Unless otherwise
specifically provided in the

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Award Agreement, each Award granted pursuant to this Plan which is an Option
shall immediately terminate to the extent the Option is not vested (or does not
become vested as a result of such termination of employment) on the date the
Participant terminates employment with the Company or its Subsidiaries.

          10.  Assignability. Except as otherwise provided herein, no Award
granted under this Plan shall be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated by a Participant other than by marital
property settlement or similar domestic relations agreement, decree or order, or
by will or the laws of descent and distribution, and during the lifetime of a
Participant, any Award shall be exercisable only by him, or, in the case of a
Participant who is mentally incapacitated, the Award shall be exercisable by his
guardian or legal representative. The Committee may prescribe and include in
applicable Award Agreements other restrictions on transfer. Any attempted
assignment or transfer in violation of this Section shall be null and void. Upon
the Participant's death, the personal representative or other person entitled to
succeed to the rights of the Participant (the "Successor Participant") may
exercise such rights. A Successor Participant must furnish proof satisfactory to
the Company of his or her right to exercise the Award under the Participant's
will or under the applicable laws of descent and distribution.

               Subject to approval by the Committee in its sole discretion, all
or a portion of the Awards granted to a Participant under the Plan may be
transferable by the Participant, to the extent and only to the extent specified
in such approval, to (i) the children or grandchildren of the Participant
("Immediate Family Members"), (ii) a trust or trusts for the exclusive benefit
of such Immediate Family Members ("Immediate Family Member Trusts"), or (iii) a
partnership or partnerships in which such Immediate Family Members have at least
ninety-nine percent (99%) of the equity, profit and loss interests ("Immediate
Family Member Partnerships"); provided that the Award Agreement pursuant to
which such Awards are granted (or an amendment thereto) must expressly provide
for transferability in a manner consistent with this Section. Subsequent
transfers of transferred Awards shall be prohibited except by will or the laws
of descent and distribution, unless such transfers are made to the original
Participant or a person to whom the original Participant could have made a
transfer in the manner described herein. No transfer shall be effective unless
and until written notice of such transfer is provided to the Committee, in the
form and manner prescribed by the Committee. Following transfer, any such Awards
shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, and, except as otherwise provided herein, the
term "Participant" shall be deemed to refer to the transferee. The consequences
of termination of employment shall continue to be applied with respect to the
original Participant, following which the Awards shall be exercisable by the
transferee only to the extent and for the periods specified in this Plan and the
Award Agreement.

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          11.  Adjustments.

               (a) The existence of outstanding Awards shall not affect in any
manner the right or power of the Company or its partners to make or authorize
any or all adjustments, recapitalization, reorganizations or other changes in
the ownership of the Company or its business or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock (whether or not such issue is prior to, on a parity with or junior to the
Common Stock) or other obligations, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other Company act or proceeding of any kind, whether or not of a
character similar to that of the acts or proceedings enumerated above.

               (b) In the event of any Common Stock distribution or split,
recapitalization, extraordinary distribution, merger, consolidation, combination
or exchange of shares of Common Stock or similar change or upon the occurrence
of any other event that the Committee, in its sole discretion, deems
appropriate, the (i) the number of shares of Common Stock reserved under this
Plan and covered by outstanding Awards and related Incentive Stock Option award
limitation; (ii) the Exercise Price in respect of such Awards; and (iii) the
appropriate Fair Market Value and other price determinations for such Awards
shall be adjusted as appropriate.

               (c) In the event of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation
(such event hereinafter referred to as a "Transaction"), the Board shall be
authorized (i) to issue or assume Awards by means of substitution of new Awards,
as appropriate, for previously issued Awards or to assume previously issued
Awards as part of such adjustment, (ii) to make provision, prior to the
transaction, for the acceleration of the vesting and exercisability of, or lapse
of restrictions with respect to, Awards or (iii) in the event of a Transaction
of which the Company is not the surviving corporation, to (A) cancel Awards that
are Options or SARs and give the Participants who are the holders of such Awards
notice and opportunity to exercise for 30 days prior to such cancellation or (B)
settle an Award that is an Option or SAR by a cash payment equal to the
difference between the Fair Market Value per share of Common Stock on the date
of the Transaction and the Exercise Price of the Award, multiplied by the number
of shares subject to the Award.

          12.  Purchase for Investment. Unless the Awards and shares of Common
Stock covered by this Plan have been registered under the Securities Act of
1933, as amended, each person receiving shares of Common Stock pursuant to an
Award under this Plan may be required by the Company to give a representation in
writing in form and substance satisfactory to the Company to the effect that he
is acquiring such shares for his own account for investment and not with a view
to, or for sale in connection with, the distribution of such shares or any part
thereof.

          13.  Tax Withholding. The Company shall have the right to deduct
applicable taxes from any Award payment and withhold, at the time of delivery or
vesting of cash or shares of Common Stock under this Plan, an appropriate amount
of cash or number of shares of Common Stock or a combination thereof for payment
of taxes required by law or to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for withholding of

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such taxes. The Committee may also permit withholding to be satisfied by the
transfer to the Company of shares of Common Stock theretofore owned by the
holder of the Award with respect to which withholding is required. If shares of
Common Stock are used to satisfy tax withholding, such shares shall be valued
based on the Fair Market Value when the tax withholding is required to be made.

          14.  Amendments or Termination. The Committee may amend, alter or
discontinue this Plan, except that no amendment or alteration that would impair
the rights of any Participant under any Award that he has been granted shall be
made without his consent, and no amendment or alteration shall be effective
prior to approval by the Company's shareholders to the extent such approval is
determined by the Committee to be required by applicable laws, regulations or
exchange requirements. No Awards shall be granted more than ten years after the
Effective Date.

          15.  Restrictions. No shares of Common Stock or other form of payment
shall be issued with respect to any Award unless the Company shall be satisfied
based on the advice of its counsel that such issuance will be in compliance with
applicable federal and state securities laws. The Award Agreement may include
provisions for the repurchase by the Company of Common Stock acquired pursuant
to an Award and repurchase of the Participant's Option rights.

          16.  Unfunded Plan. Insofar as it provides for Awards of cash, Common
Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants who are entitled to
cash, Common Stock or rights thereto under this Plan, any such accounts shall be
used merely as a bookkeeping convenience. The Company shall not be required to
segregate any assets that may at any time be represented by cash, Common Stock
or rights thereto, nor shall this Plan be construed as providing for such
segregation, nor shall the Company, the Board or the Committee be deemed to be a
trustee of any cash, Common Stock or rights thereto to be granted under this
Plan. Any liability or obligation of the Company to any Participant with respect
to a grant of cash, Common Stock or rights thereto under this Plan shall be
based solely upon any contractual obligations that may be created by this Plan
and any Award Agreement, and no such liability or obligation of the Company
shall be deemed to be secured by any pledge or other encumbrance on any property
of the Company. None of the Company, the Board, the Committee or a Subsidiary
shall be required to give any security or bond for the performance of any
obligation that may be created by this Plan.

          17.  Miscellaneous. The granting of any Award shall not impose upon
the Company any obligation to maintain any Participant as an Employee and shall
not diminish the power of the Company to discharge any Participant at any time.

          18.  Governing Law. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Texas.

          19.  Effective Date of Plan. This Plan was originally effective
January 1, 1999 and was approved by the shareholders of the Company in May 1999.
This Plan was amended and restated as of the Effective Date.

                                                       LYONDELL CHEMICAL COMPANY

                                                                          Page 9<PAGE>

                                                                   EXHIBIT 10.17

LYONDELL CHEMICAL COMPANY

-------------------------

EXECUTIVE SEVERANCE PAY PLAN

As Amended and Restated Effective January 1, 2002
<PAGE>

                            LYONDELL CHEMICAL COMPANY
                          EXECUTIVE SEVERANCE PAY PLAN
               (As Amended and Restated Effective January 1, 2002)

     1. Purpose. This Lyondell Chemical Company Executive Severance Pay Plan
(the "Plan") is intended to assure Lyondell Chemical Company (the "Company")
that it will have the continued dedication of specified executives by
eliminating the distractions of personal uncertainties associated with potential
transactions that the Company may undertake in the future by providing for the
payment to such executives of certain severance benefits upon a termination
within a specified period following a Change in Control, as defined below.

     2. Definitions. As used herein, the terms set forth below shall have the
following respective meanings:

          "Applicable Annual Earnings" means the sum of a Participant's annual
base salary in effect on the last day of employment with the Employer (or if
greater, annual base salary in effect on the date of the Change in Control) and
the Participant's Target Award (whether or not paid) for personal services on
behalf of the Employer. The "Target Award" shall be the actual bonus
compensation target for the calendar year during which the Change of Control
occurs, or if none has been established, the bonus compensation target for the
immediately preceding calendar year. Applicable Annual Earnings shall include
the Participant's current annual base salary and Target Award whether or not
paid on a deferred basis, including without limitation, amounts contributed by
or on behalf of the Participant under any Employer-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. Notwithstanding the
preceding provisions of this paragraph, for purposes of this Plan, the
definition of Applicable Annual Earnings does not include any income
attributable to stock options, stock appreciation rights, performance awards
other than awards under an executive bonus plan described above, dividend
credits, and restricted stock granted under, and dividends on shares acquired
pursuant to, any stock option plan, restricted stock plan or performance unit
plan.

          "Board" means the Board of Directors of the Company.

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

          (i) Individuals who, 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 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;

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

          (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 (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 in Control shall not be
deemed to have occurred for purposes of this Subsection (iv):

          (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;

                                                                             -3-
<PAGE>

          (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 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 (iv) 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 (iv)), then
     a Change in Control shall be deemed to have occurred for purposes of this
     Subsection (iv).

          (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.

                                                                             -4-
<PAGE>

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

          "Cause" means: (i) the continued and willful refusal by a Participant
to substantially perform his duties (other than a willful refusal to perform a
duty which constitutes Constructive Termination for Good Reason or refusal
resulting from the Participant's incapacity due to physical or mental illness),
after demand for substantial performance is delivered by the Governing Body
which demand specifically identifies the manner in which the Governing Body has
determined that the Participant has not substantially performed his duties, and
the Participant's performance is not cured to the Governing Body's reasonable
satisfaction within thirty (30) days from such demand; (ii) the engagement by a
Participant in willful misconduct or dishonesty that is materially injurious to
the Employer, monetarily or otherwise; or (iii) a Participant's final conviction
of a felony. Notwithstanding the foregoing, an Employer shall not be deemed to
have terminated a Participant for Cause without (i) reasonable written notice to
a Participant setting forth the reasons for the Employer's intention to
terminate the Participant for Cause and (ii) an opportunity for the Participant,
together with his counsel, to be heard before the Governing Body.
Notwithstanding any contrary provision of this Plan, it is specifically agreed
that Cause shall not include any act or omission by a Participant in the good
faith exercise of the Participant's business judgment as an officer of the
Employer.

          "Chief Executive Officer" means the Chief Executive Officer of the
Company.

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

          "Common Stock" means the common stock, par value $1.00 per share, of
the Company.

          "Committee" means the Compensation Committee of the Board or any
person or persons appointed by the Board to administer the Plan.

          "Company" means Lyondell Chemical Company.

          "Constructive Termination for Good Reason" means:

          (i) the Participant is assigned to any duties or responsibilities that
are not comparable to the Participant's position, offices, duties,
responsibilities or status with the Employer at the time of the Change in
Control, or the Participant's reporting responsibilities or

                                                                             -5-
<PAGE>

titles are changed and the change results in a reduction of the Participant's
responsibilities or position with the Employer;

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

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

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

          "Effective Date" means March 15, 1999.

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

          "Employer" means the Company or any Subsidiary that is the employer of
a Participant.

          "Governing Body" shall mean (i) the Board if the Employer is the
Company, or (ii) the applicable governing body of any other Employer.

          "Level One" means the Chief Executive Officer and any Executive Vice
President of the Company.

          "Level One Participant" means a Participant who is employed in a Level
One position of the Company during the period relevant for determination of
eligibility pursuant to Section 3.

          "Level Two" means an elected executive officer of the Company who does
not serve in a capacity defined under Level One, or an elected executive officer
of a Subsidiary who is designated by the Chief Executive Officer as eligible for
participation.

                                                                             -6-
<PAGE>

          "Level Two Participant" means a Participant who is employed in a Level
Two position during the period relevant for determination of eligibility
pursuant to Section 3.

          "Level Three" means a senior management position of the Company or any
Subsidiary which is designated by the Chief Executive Officer as eligible for
participation.

          "Level Three Participant" means a Participant who is employed in a
Level Three position during the period relevant for determination of eligibility
pursuant to Section 3.

          "Participant" means an Employee who is eligible for a benefit under
the Plan pursuant to Section 3 as a Level One Participant, Level Two
Participant, or Level Three Participant.

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

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

     3.   Administration and Eligibility.

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

          (b) Eligibility to Participate. Individuals eligible to receive
              --------------------------
benefits under the plan are Employees who, at any time in the two (2) year
period prior to a Change in Control, occupied a position classified as Level One
or Level Two, and such individuals shall be Level One Participants and Level Two
Participants, respectively. In addition, the Chief Executive Officer may
designate Employees in Level Two or Level Three, individually or by employee
classification, as Level Two or Level Three Participants under the Plan. Any
designation of an Employee as a Level 2 or Level Three Participant must be made
by written notice signed by the Chief Executive Officer and delivered to the
Participant with a copy sent to members of the

                                                                             -7-
<PAGE>

Committee. Notwithstanding the foregoing, an Employee will not be eligible to
become a Participant so long as such Employee is (i) currently eligible for a
severance benefit upon termination of employment with the Company pursuant to a
plan or agreement established by ARCO Chemical Company, or (ii) eligible for
severance benefits from the Company or a Subsidiary under any other plan or
agreement if such benefits are substantially equal to or greater than the
benefits set forth in this Plan.

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

     4.   Severance Benefits. If a Participant is eligible for a severance
benefit due to a termination under circumstances described in Section 3(c), then
the Company shall provide or cause to be provided to the Participant benefits as
follows:

          (a) Salary and Other Payment at Termination. The Company shall pay to
              ---------------------------------------
the Participant not later than thirty (30) days following termination a lump-sum
payment in cash in the amount of:

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

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

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

          (b) Stock Options. With respect to any stock options granted to the
              -------------
Participant under any of the Company's incentive plans (a "Stock Option Plan"),
notwithstanding any provision of the Stock Option Plans or the Participant's
associated stock option agreements, if any, to the contrary, all non-vested
options shall become 100% vested and fully exercisable as of the date of the
Change in Control.

          In the event the Company is the surviving entity following a
Change in Control, all stock options owned by a Participant shall be freely
exercisable 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 a Participant's termination of
employment.

          (c) Minimum Retirement Benefits. The Company shall cause the
              ---------------------------
Participant to be fully vested in the Employer's qualified defined benefit
retirement plan, the Company's Supplementary Executive Retirement Plan (or its
successor), and any plan of a Subsidiary

                                                                             -8-
<PAGE>

comparable to the Company's Supplementary Executive Retirement Plan, and to have
satisfied the minimum age and service requirements for early retirement
eligibility for purposes of determining the Participant's eligibility to
commence receipt of benefits under such plans. For purposes of determining the
amount of benefits payable under the Employer's qualified defined benefit plan
and Supplementary Executive Retirement Plan (or its successor) or comparable
Subsidiary plan, a Participant who has attained age 55 at the time benefit
payments commence shall be deemed to have satisfied the early retirement
eligibility requirements for benefit payment purposes, and a Participant who has
not attained age 55 at the time benefit payments commence shall receive a
benefit amount that is actuarially adjusted to reflect the early commencement of
the benefit that would otherwise have been paid at attainment of early
retirement age. Payments attributable to any early retirement benefit that would
become payable under the Employer's qualified defined benefit retirement plan
pursuant to this Section 4(c) shall be payable in a lump sum cash payment. In
the event the Participant is covered under a Subsidiary's qualified defined
benefit plan or a plan of a Subsidiary comparable to the Company's Supplementary
Executive Retirement Plan, the Company will provide a lump-sum cash payment
equal to the excess (if any) of the amount payable pursuant to this Section 4(c)
and the present value of the amount payable under such plans of the Subsidiary.
The Participant shall be eligible for coverage under the retiree medical plan of
the Company (or its successor) upon termination of employment, regardless of
attained age and service, with such coverage to be provided for the Participant
and the Participant's dependents on the same terms and conditions, excluding
eligibility requirements, as provided to other retired executives or senior
managers of the Company (or its successor) in the same class or category of
position as was held by the Participant prior to the Change in Control;
provided, however, that the medical coverage set forth in Section 4(e) shall
govern for the first twenty-four (24) months following termination to the extent
more favorable to the Participant.

          (d) Executive Deferral Plan. Notwithstanding any provisions of the
              -----------------------
Company's Executive Deferral Plan (the "Deferral Plan") to the contrary, the
full amount of contributions and earnings accrued or credited to a Participant's
account balance under the Deferral Plan (as of the date immediately preceding
the Termination) shall be immediately distributed to the Participant in a cash
lump-sum payment.

          (e) Insurance and Other Benefits. For a period of twenty-four (24)
              ----------------------------
months following termination, the Participant (and his or her dependents, as
applicable) shall be covered at the Company's expense by the Company's life
insurance, medical, dental, accident and disability plans or any successor to a
plan or program in effect at termination for active employees in the same class
or category as the Participant, or who would be in the same class or category if
employed by the Company (hereafter individually and collectively referred to as
"Welfare Plan"), subject to the terms of the Welfare Plan and to the
Participant's making any required contributions thereto which contributions
shall not exceed those charged to active employees in the same class or category
in which the Participant was employed by the Company. In the event that the
Participant is ineligible to continue to be so covered under the terms of any
Welfare Plan, or in the event that Participant is eligible but the benefits
applicable to the Participant (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, at its expense, shall provide to the Participant (and his or
dependents, as applicable) through other sources such benefits as may be
necessary to make the benefits applicable to the Participant (and his or her
dependents, as applicable) substantially equivalent to

                                                                             -9-
<PAGE>

those in effect immediately prior to termination. Continuation coverage provided
pursuant to any group health plan maintained by the Company shall be in addition
to any continuation coverage required under the Consolidated Omnibus Budget
Reconciliation Act of 1985 as amended ("COBRA").

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

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

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

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

                                                                            -10-
<PAGE>

     5.   Company Benefit Plans

          (a) Funding of Supplemental Executive Benefit Plans Trust. Immediately
              -----------------------------------------------------
upon a Change in Control, the Company shall deposit with the trustee under the
Company's Supplemental Executive Benefit Plans Trust Agreement (the "Trust") an
amount which, together with the value of the assets then held under the Trust,
will be sufficient to fund, and to enable the trustee to timely pay, the
benefits due under the Supplementary Executive Retirement Plan, the Executive
Deferral Plan and any other plans funded by the Trust, taking into consideration
such factors as the person serving as the Chief Executive Officer of the Company
immediately prior to the Change in Control or his designee deems relevant.

          (b) Other Benefit Plans. The specific arrangements referred to in this
              -------------------
Plan are not intended (i) to exclude or limit a Participant's participation in
other benefit plans or programs in which the Participant currently participates
or may participate including, without limitation, retiree benefits, or benefits
which are available to executive personnel generally in the same class or
category as the Participant or, (ii) to preclude or limit other compensation or
benefits as may be authorized by the Committee or the Governing Body from time
to time. To the extent not otherwise paid or provided, the Company shall timely
pay or provide to the Participants and/or the Participant's dependents any other
amounts or benefits required to be paid or provided or which the Participant or
the Participant's dependents are eligible to receive pursuant to this Plan and
under any plan program, policy or practice or contract or agreement of the
Company as in effect and applicable generally to executive personnel in the same
class or category of a Participant.

     6.   Payment Obligations Absolute. The Company's obligation to pay or
provide, or to cause to be paid or provided to Participants the amounts and
benefits and to make the arrangements provided in this Plan shall be absolute
and unconditional and shall not be affected by any circumstances (including,
without limitation, any setoff, claim, counterclaim, recoupment, defense or
other right, which the Employer may have against a Participant 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 or
affiliates, for any reason whatsoever, shall not seek to recover all or any part
of such payment from a Participant or from whomever shall be entitled thereto.
In no event shall an asserted violation of any provision of this Plan constitute
a basis for deferring or withholding any amount payable to, or on behalf of, a
Participant under this Plan.

     7.   Confidentiality and Cooperation.

          (a) Cooperation. Following termination, Participants 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, any of its Subsidiaries (other than any legal proceedings arising out
of or concerning Participant's employment or Participant's termination). In
connection with such cooperation, the Company will pay or reimburse Participants
for reasonable expenses.

                                                                            -11-
<PAGE>

          (b) Release of Liability. Each Participant must, prior to the time
              --------------------
that he or she is eligible to receive any payments provided for in Section 4 of
this Plan, execute and deliver to the Company, on a form reasonably satisfactory
to the Company and the Participant, a separate release and waiver, which,
without limiting the generality of the foregoing, shall include a release and
discharge of the Company, its Subsidiaries, and its and their directors, board
of directors, officers, employees, owners, agents, successors and assigns from
any and all suits, causes of action, demands, claims, charges, complaints,
liabilities, costs, losses, damages, injuries, bonds, judgments, attorneys' fees
and expenses, in any form whatsoever, in law or in equity, whether known or
unknown, whether suspect or unsuspected, arising out of the Participant's
employment with Company or any Subsidiary through his termination, 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, except to the extent that the
Participant's rights are vested under the terms of employee benefit plans
sponsored by the Employer and except with respect to such rights or claims
(other than agreements herein to perform future employment-related actions) as
may arise after termination.

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

     9.   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 facsimile 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.

          If to the Company:

          Lyondell Chemical Company
          1221 McKinney, Suite 700, Houston, TX 77010
          Attn:    Chairman of the Board of Directors

          If to a Participant:

          Last address on the books of the Employer.

                                                                            -12-
<PAGE>

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

     10.  Claims Procedure. If a Participant makes a written request alleging a
right to receive benefits under this Plan or alleging a right to receive an
adjustment in benefits being paid under the Plan, the Committee shall treat it
as a claim for benefits. All claims for benefits under the Plan shall be sent to
the Committee and must be received within 30 days after termination of
employment. If the Committee determines that any individual who has claimed a
right to receive benefits, or different benefits, under the Plan is not entitled
to receive all or any part of the benefits claimed, he will inform the claimant
in writing of its determination and the reasons therefor in terms calculated to
be understood by the claimant. The notice will be sent within 90 days of the
claim unless the Committee determines additional time, not exceeding 90 days, is
needed. The notice shall make specific reference to the pertinent Plan
provisions on which the denial is based, and describe any additional material or
information that is necessary. Such notice shall, in addition, inform the
claimant what procedure the claimant should follow to take advantage of the
review procedures set forth below in the event the claimant desires to contest
the denial of the claim. The claimant may within 60 days thereafter submit in
writing to the Committee a notice that the claimant contests the denial of his
or her claim by the Committee and desires a further review. The Committee shall
within 60 days thereafter review the claim and authorize the claimant or his
designated representative to appear personally and review all relevant documents
and submit issues and comments relating to the claim to the persons responsible
for making the determination on behalf of the Committee. The Committee will
render its final decision with specific reasons therefor in writing and will
transmit it to the claimant within 60 days of the written request for review,
unless the Committee determines additional time, not exceeding 60 days, is
needed.

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

                                                                            -13-
<PAGE>

     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
                                                   --------  -------
Participant 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 Plan. Nothing in this Plan shall be construed to
              --------------------
amend any provision of any plan or policy of the Company or any Subsidiary
except as otherwise expressly noted herein. This Plan is not, and nothing herein
shall be deemed to create, a commitment of continued employment of a Participant
by the Company or any Subsidiary. The captions of this Plan are not part of the
provisions hereof and shall have no force or effect. Whenever the context of
this Plan 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
Plan and not to any particular section or provision.

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

          This Plan shall be binding upon and inure to the benefit of the
Company and any successor organization or organizations which shall success 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 of the Company, or otherwise, including by operation of law).

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

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

                                                       LYONDELL CHEMICAL COMPANY

                                                                            -14-

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