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1990 Arco Chemical Long Term Incentive Plan

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Sectors: Chemicals
Effective Date: January 01, 1990
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Exhibit 10.7


1990 ARCO CHEMICAL COMPANY LONG-TERM INCENTIVE PLAN


Article I GENERAL PROVISIONS
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Section 1. PURPOSES OF THE PLAN
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The purposes of this Plan are to encourage management and other key employees to focus on the long-range growth and profitability of the Company; to reward them for success in achieving specific long-range goals; and to facilitate the attraction and retention of employees of superior capability.


Section 2. EFFECTIVE DATE AND DURATION OF PLAN
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The effective date of the Plan is January 1, 1990, subject to approval by the holders of a majority of the shares which are represented in person or by proxy and entitled to vote on the subject at a meeting of the stockholders of the Company at which a quorum is present, except that awards under the Plan may be made subject to such stockholder approval. No awards may be made under the plan after December 31, 1996.


Section 3. DEFINITIONS
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As used herein, the following terms shall have the following meanings:


(a) "Common Stock" shall mean the common stock of the Company having a par value of $1.00 per share.


(b) "Company" shall mean ARCO Chemical Company.


(c) "Dividend Share Credits" (DSC's) shall mean the number of credits, expressed as an equivalent number of shares of Common Stock, to be recorded as credited to an Eligible Employee as of the record date established by the Board of Directors of the Company for each cash dividend declared and issued on outstanding shares of Common Stock, with respect to the Stock Rights held by an Eligible Employee on such record date. The number of DSCs to be credited shall be the aggregate number derived by (i) multiplying the declared dividend rate per share of Common Stock by the number of Stock Rights held by an Eligible Employee as of the dividend record date, and (ii) dividing the resulting figure by the Fair Market Value of a share of Common Stock on such record date. The DSCs will be calculated to the nearest 0.0001 of a unit.


1990 ARCO Chemical Company Long-Term Incentive Plan Page 2


(d) "Eligible Employees" shall mean management and other key employees of the Company or of any Subsidiary or Affiliate who, in the opinion of the Subcommittee, are in a position to contribute significantly to the Company's long-term profit and growth objectives; provided, however, that no member of the Subcommittee nor any person owning stock processing more than 10 percent of the total combined voting power of all classes of stock of the Company shall be an Eligible Employee. "Eligible Employee" shall mean the singular of Eligible Employees.


(e) "Employer" shall mean, with respect to any Eligible Employee, the Company, Lyondell Petrochemical Company, and any Subsidiary or Affiliate of either, that is the employer of the Eligible Employee.


(f) "Fair Market Value" (FMV) of a share of Common Stock shall be the mean of the highest and lowest sale prices, or the closing sale price of a share of Common Stock, whichever is higher, on the date in question as reported on the composite tape for issues listed on the New York Stock Exchange. If no transactions were reported on the composite tape for the Common Stock on such date, the FMV shall be computed using the prices reported on the nearest day preceding the date in question. If the Common Stock should not then be listed or admitted to trading on such Exchange, FMV shall be the mean of the closing bid and asked prices on the date in question as furnished by any member firm of the New York Stock Exchange selected from time to time by the Subcommittee for that purpose.


(g) "Plan" shall mean this 1990 Long-Term Incentive Plan including any amendments hereof and rules and regulations hereunder.


(h) "Pyramiding" shall mean the process whereby an optionee surrenders shares received from the exercise of a portion of the optionee's total stock options to satisfy the exercise price for additional option shares. The additional shares thus obtained may in turn be surrendered at their Fair Market Value to satisfy the exercise price for yet additional option shares. The process may be repeated as often as the optionee directs to satisfy the total exercise price for the options exercised.


(i) "Sale Price" of any share of Common Stock shall mean the actual price for which such share of Common Stock shall have been sold by an Eligible Employee on the date in question as reported on a confirmation form prepared and furnished to the Company by the broker effecting the transaction on behalf of such Eligible Employee.


1990 ARCO Chemical Company Long-Term Incentive Plan Page 3


(j) "Stock Options" shall mean Non-qualified Stock Options, and shall consist of options to purchase the Common Stock of the Company under the terms and conditions set forth in Article II.


(k) "Stock Rights" shall mean, as of any date, (i) the total number of shares of Common Stock underlying all outstanding and unexercised Stock Options held by an Eligible Employee pursuant to the Plan, plus (ii) the number of DSCs credited to an Eligible Employee on such date.


(l) "Subcommittee" shall mean the Long-Term Incentive Plan Administration Subcommittee of the Board of Directors of the Company.


(m) "Subsidiary" or "Affiliate" shall mean (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 1563(a) of the Internal Revenue Code of 1986 (the "Code") [determined without regard to Section 1563(a)(4) and Section 1563(e)(3)(c) of the Code] and of which the Company is then a member, and (ii) all trades or businesses, whether or not incorporated, which, under regulations prescribed by the Secretary of the Treasury pursuant to Section 210(d) of the Employee Retirement Income Security Act of 1974, are then under common control with the Company.


Section 4. ADMINISTRATION OF THE PLAN
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The plan shall be administered by the Subcommittee, which is authorized to interpret the Plan, to adopt such rules and regulations as it may from time to time deem necessary for the effective operation of the Plan, and to act upon all matters relating to the granting of awards under the Plan. Any determination, interpretation, construction or other action made or taken pursuant to the provisions of the Plan by or on behalf of the Subcommittee shall be final, binding and conclusive for all purposes and upon all persons including, without limitation, the Company, its subsidiaries and Affiliates, their respective stockholders, Eligible Employees and their respective successors in interest.


1990 ARCO Chemical Company Long-Term Incentive Plan Page 4
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