Supp. Executive Benefit Plans Trust Agreement

EXHIBIT 10.8


LYONDELL CHEMICAL COMPANY
SUPPLEMENTAL EXECUTIVE BENEFIT PLANS
TRUST AGREEMENT


(As Amended and Restated
Effective as of January 1, 2002)


TABLE OF CONTENTS


PAGE RECITALS......................................................................................................... 1


SECTION 1 Creation of the Trust.......................................................................... 2


SECTION 2 Limitation on Use of Funds..................................................................... 3


SECTION 3 Change in Control.............................................................................. 4


SECTION 4 Independent Plan Administrator................................................................. 8


SECTION 5 Excess Reversion............................................................................... 9


SECTION 6 Authority of Investment Officers............................................................... 9


SECTION 7 Duties and Powers of Trustee with Respect to Investments....................................... 10


SECTION 8 Additional Powers and Duties of the Trustees................................................... 13


SECTION 9 Insurance Policies and Contracts............................................................... 14


SECTION 10 Participating Plan Records..................................................................... 15


SECTION 11 Valuation...................................................................................... 15


SECTION 12 Participant Records Prior to and Following a Change in Control................................. 16


SECTION 13 Trustee Accounts............................................................................... 16


SECTION 14 Investment of Cash............................................................................. 17


SECTION 15 Payments by the Trustee........................................................................ 18


SECTION 16 Determination of Change in Control............................................................. 19


SECTION 17 Trustee Compensation and Trust Expenses........................................................ 19


SECTION 18 Payment of Taxes by Trustees................................................................... 20


SECTION 19 Custodians and Agents.......................................................................... 20


SECTION 20 Liability for Benefit Payments................................................................. 20


SECTION 21 Company Insolvency............................................................................. 21


SECTION 22 Trustee Responsibility for Plan Administration and Trust Record Keeping After Change in
Control........................................................................................ 23


SECTION 23 Trustee Standards of Performance and Indemnifications.......................................... 23


SECTION 24 Removal and Resignation of Trustee............................................................. 24


SECTION 25 Termination of Participating Plan or Plans..................................................... 25


SECTION 26 Rights of Company to Trust Assets.............................................................. 25


SECTION 27 Amendments of Trust............................................................................ 26


SECTION 28 Termination of Trust........................................................................... 26


SECTION 29 Successors..................................................................................... 27


SECTION 30 Communications................................................................................. 28


SECTION 31 Unclaimed Distributions........................................................................ 28


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SECTION 32 Prohibition of Assignments..................................................................... 28


SECTION 33 Governing Law.................................................................................. 29


SECTION 34 Execution...................................................................................... 29


APPENDIX A .................................................................................................... 30


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LYONDELL CHEMICAL COMPANY
SUPPLEMENTAL EXECUTIVE BENEFIT PLANS
TRUST AGREEMENT


THIS AGREEMENT, as amended and restated as of January 1, 2002, between LYONDELL CHEMICAL COMPANY (the "Company"), and WILMINGTON TRUST COMPANY (the "Trustee");


R E C I T A L S


A. Effective August 1, 2001, the Company and the Trustee entered into this Agreement to create a Trust (defined under Section 1 of this Trust Agreement) for purposes of the Lyondell Chemical Company Supplementary Executive Retirement Plan and the Lyondell Chemical Company Executive Deferral Plan and any benefit plans that may be established and maintained by the Company for executive employees of the Company after the effective date of this Trust, that permit funding by this Trust, and that are established and maintained to provide deferred compensation for a select group of management or highly compensated employees. The benefit plans that may be funded by this Trust are listed in Appendix A attached hereto and shall hereinafter be referred to as the "Participating Plans".


B. The amount and timing of benefit payments (the "Supplemental Benefits") to which the participants of the Participating Plans (the "Trust Beneficiaries") are or may become entitled under each of the Participating Plans are set forth in the Participating Plans.


C. The Company established this trust fund to assist it in accumulating the amounts necessary to satisfy its contractual liability to pay Supplemental Benefits under the Participating Plans.


D. The Company is obligated to pay all Supplemental Benefits from its general assets to the extent not paid by this Trust and the amendment and restatement of this Trust Agreement shall not reduce or otherwise affect the Company's continuing liability to pay Supplemental Benefits from such assets, except that the Company's liability shall be offset by actual benefit payments made from this Trust.


E. The trust continued by this amended and restated Trust Agreement is intended to be a "grantor trust" with the result that the corpus and income of the Trust shall be treated as assets and income of the Company pursuant to Sections 671 through 679 of the Internal Revenue Code of 1986, as amended (the "Code").


F. The Company intends that the Trust shall at all times be subject to the claims of the Company's creditors as herein provided and that the Participating Plans shall not be deemed funded within the meaning of the Employee Retirement Income Security Act of 1974, as amended, ("ERISA") solely by virtue of the existence of this Trust Agreement.


NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:


SECTION 1


CREATION OF THE TRUST


There is hereby established and continued with the Trustee a trust consisting of all sums paid to it for purposes of the Participating Plans, investments thereof and any earnings, appreciations or losses thereon, which, less disbursements made by Trustee, and amounts paid to the Company as provided in Section 2 of this Trust Agreement, are referred to herein as the "Trust" and shall be dealt with as provided in this Trust Agreement. The Trust shall be held for the exclusive purpose of providing payments to Trust Beneficiaries in accordance with the provisions of the Participating Plans, and defraying reasonable expenses of administration in accordance with the provisions of this Trust Agreement until all such payments required by this Trust Agreement have been made, subject to the provisions on the use of Funds under Section 2 of this Trust Agreement, and to the requirement that the Trust shall at all times be subject to the claims of the general creditors of the Company as set forth in Sections 21.1 and 21.2 of this Trust Agreement. The Trustee shall have no duty or authority to inquire into the correctness of amounts tendered to it or to enforce the collection of any contribution by the Company.


The Company shall direct the Trustee to establish a separate subtrust ("Subtrust") for each Plan to which the Trustee shall credit contributions it receives which are earmarked for that Plan and Subtrust. Each Subtrust shall reflect an undivided interest in assets of the trust fund and shall not require any segregation of particular assets. When Subtrusts are established, all contributions shall be designated by the Company for a particular


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Subtrust. However, any contribution received by the Trustee which is not designated by the Company for a particular Subtrust before a Change in Control shall be allocated among the Subtrusts in proportion to each Participating Plan's pro rata interest in the Trust, as calculated during the last Valuation.


When a Subtrust is established at a date subsequent to execution of this Agreement, the Trustee shall allocate the Trust assets among the separate Subtrusts as directed by the Company prior to a Change in Control.


The Company may direct the Trustee, or the Independent Plan Administrator may determine on its own initiative after a Change in Control, to maintain a separate sub-account within each Subtrust for a Plan for each Participant who is covered by the Subtrust. If so directed, each sub-account in a Subtrust shall reflect an individual interest in assets of the Subtrust and, as much as possible, shall operate in the same manner as if it were a separate Subtrust.


The Trustee shall allocate investment earnings and losses and expenses of the trust fund as of a valuation date among the Subtrusts in proportion to their balances. Payments to creditors as directed by a court of competent jurisdiction in the event of the Company's insolvency shall be charged against the Subtrusts in proportion to their balances, except that payment of Plan benefits to a Participant as a general creditor shall be charged against the Subtrust for that Plan.


Assets allocated to a Subtrust for one Plan may not be used to provide benefits under any other Plans until all benefits under such Plan have been paid in full, except that excess assets of a Subtrust may be transferred to other Subtrusts.


SECTION 2


LIMITATION ON USE OF FUNDS


No part of the corpus of the Trust shall be recoverable by the Company, borrowed by or against for the benefit of the Company or used for any purpose other than for the exclusive purpose of providing payments to Trust Beneficiaries in accordance with the provisions of the Participating Plans and defraying reasonable expenses of administration in accordance with the provisions of this Trust Agreement until all such payments required by this Trust Agreement have been made; provided, however, that (i) nothing in this Section 2 shall be deemed to limit or otherwise prevent the payment from the Trust of (a) amounts described in Section 5 of this Trust Agreement, (b) expenses and other charges


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as provided in Section 17 and 18 of this Trust Agreement, or (c) the application of the Trust as provided in Sections 15.5 or 28 of this Trust Agreement, and (ii) the Trust shall at all times be subject to the claims of the general creditors of the Company as set forth in Section 21.1 and 21.2 of this Trust Agreement.


SECTION 3


CHANGE IN CONTROL


Section 3.1. General. Various provisions of this Trust Agreement provide
------------ for certain rights and obligations upon and following a Change in Control of the Company.


Section 3.2. Definition of "Change in Control". For purposes of this Trust
------------ Agreement, a "Change in Control" shall be deemed to have occurred as of the date that one or more of the following occurs:


(i) Individuals who, as of 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;


(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


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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):


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(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 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


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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.


(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.


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SECTION 4


INDEPENDENT PLAN ADMINISTRATOR


Various provisions of this Trust Agreement refer to the term "Independent Plan Administrator" which shall mean, unless stated otherwise in a specific provision of this Trust Agreement, and, except as provided below, an entity which is unrelated to, and unaffiliated with, the Company, and which, prior to a Change in Control has accepted in writing the position of Independent Plan Administrator under this Trust Agreement. The Independent Plan Administrator shall not be considered to be related to or affiliated with the Company solely as a result of an agreement between the Independent Plan Administrator and the Company to provide individual financial counseling services to specified Company executives or to provide financial counseling services to survivors of deceased Company employees. The Independent Plan Administrator shall be appointed by the Company and shall have its duties specified in an agreement executed by the Company and the Independent Plan Administrator prior to a Change in Control. The Trustee shall be given advance written notification of such appointment by the Company. Following a Change in Control, if the Company had failed to designate an Independent Plan Administrator prior to a Change in Control, the Independent Plan Administrator shall be appointed by the Trustee following a Change in Control and shall have its duties specified in an agreement executed by the Trustee and the Independent Plan Administrator. In the event the Independent Plan Administrator fails to act, provides services to the Company other than in its capacity as Independent Plan Administrator other than as provided above, or resigns, the Company prior to a Change in Control, or the Trustee after a Change in Control, shall retain a successor Independent Plan Administrator. Notwithstanding any other provision of this Trust Agreement, the Trustee shall be responsible only for the prudent selection of an Independent Plan Administrator after a Change in Control (i) following notice by the Company or the Independent Plan Administrator of disqualification of the Independent Plan Administrator through the provision of services to the Company other than in its capacity as Independent Plan Administrator, (ii) upon resignation or failure to act by the Company-appointed Independent Plan Administrator, or (iii) in the event the Company failed to appoint an Independent Plan Administrator prior to a Change in Control. The Trustee shall be entitled to conclusively rely on the determinations of a qualified Independent Plan Administrator.


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SECTION 5


EXCESS REVERSION


Prior to a Change in Control, upon a determination that the assets of the Trust have a value exceeding one hundred twenty-five percent (125%) of the actuarial present value of accrued but unpaid benefits of the Participating Plans, considered on the basis of assets being allocated to each Participating Plan, all or a portion of the amount of such assets which constitute the "Excess Reversion" (as defined below) may be repaid to the Company upon direction of the Company. However, prior to any such repayment, the Company must deliver to the Trustee a certified statement by an actuary who is an Enrolled Actuary under ERISA and who is not affiliated with the Company of (i) the amount equal to one hundred (100%) percent of the actuarial present value of the accrued but unpaid benefits under the Participating Plans, calculated on an individual plan basis, as described above, (the "Certified Benefit Values"), (ii) the value of the Trust assets, allocated to each Participating Plan, as described above, and (iii) the amount, if any, by which the value of the Trust assets under (ii) exceeds the Certified Benefit Values under (i), and (iv) the amount, if any, by which the value of the Trust assets under (ii) exceeds one hundred twenty-five (125%) percent of the Certified Benefit Values (the "Excess Reversion"). The actuary shall make each determination required to prepare the certified statement based on reasonable factors, assumptions and tables (as determined solely by such actuary). The Trustee shall repay assets of the Trust to the Company as directed by the Company and in an amount up to but not greater than the Excess Reversion. Any repayment of assets of the Trust to the Company may be made only prior to a Change in Control and shall be made within thirty (30) days (or as soon as practicable) after the later of the Trustee's receipt of the certified statement by the actuary and the Company's direction to make such a payment. Any separate allocations of assets pursuant to this Section 5 shall be solely for the purpose of completing the valuation tests described in this Section and shall not reflect any legal commitment of assets to any Participating Plan or to any Trust Beneficiary.


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