-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LDaOzYNpbTh/cnAIOG94b87wVyxXxxZr8VTTShz1vg8aNdedS1qCZOMSHl52Tq4W pZjREasEIrBmyOINmK8xHg== 0000950109-96-007761.txt : 19961121 0000950109-96-007761.hdr.sgml : 19961121 ACCESSION NUMBER: 0000950109-96-007761 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19961119 EFFECTIVENESS DATE: 19961119 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARCO CHEMICAL CO CENTRAL INDEX KEY: 0000819544 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 510104393 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-16395 FILM NUMBER: 96669237 BUSINESS ADDRESS: STREET 1: 3801 WEST CHESTER PIKE CITY: NEWTOWN SQUARE STATE: PA ZIP: 19073 BUSINESS PHONE: 2153592000 S-8 1 FORM S-8 REGISTRATION STATEMENT Registration No. 333- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------- FORM S-8 Registration Statement Under The Securities Act of 1933 ------------------------------ ARCO Chemical Company (Exact name of Registrant as specified in its charter) Delaware 51-0104393 - --------------------------------------------------- ------------------------- (State or other jurisdiction of incorporation or (I.R.S. Employer organization) Identification No.) 3801 West Chester Pike, Newtown Square, Pennsylvania 19073-2387 - --------------------------------------------------- ------------------------- (Address of Principal Executive Offices) (Zip Code) ARCO CHEMICAL COMPANY NEW EMPLOYEE VALUE INCENTIVE PLAN (Full title of the plan) --------------------------------------------------------------------- Robert J. Millstone, Esq. Copy to: Kathy Habecker Gaddes, Esq. Vice President, General Counsel and Attorney Secretary ARCO Chemical Company ARCO Chemical Company 3801 West Chester Pike 3801 West Chester Pike Newtown Square, PA 19073-2387 Newtown Square, PA 19073-2387 (610) 359-3208 (610) 359-3255 (Name, address and telephone number of agent for service) CALCULATION OF REGISTRATION FEE ================================================================================ Title of Amount to be Proposed Proposed Amount of Securities to be Registered* Maximum Maximum Registration Registered Offering Aggregate Fee Price Per Offering VIP Unit** Price** VIP Units 60,000 units $50.125 $3,007,500 $911.36 - -------------------------------------------------------------------------------- * Each VIP Unit represents the Registrant's obligation to make a cash payment equal to the appreciation on one share of the Registrant's Common Stock, plus dividend equivalents. This Registration Statement also relates to such indeterminate number of additional VIP Units as may be offered as a result of stock splits, stock dividends or similar transactions. ** The proposed maximum offering price per VIP Unit and the proposed maximum aggregate offering price are calculated solely for the purpose of determining the registration fee pursuant to Rule 457(h) under the Securities Act of 1933, as amended. Such prices are based on a price of $50.125 per share, which is the average of the high and low sale prices per share of the Registrant's Common Stock on November 15, 1996, as reported in the consolidated reporting system. PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS ---------------------------------------------------- Item 1. Plan Information ---------------- Information required by this Item is omitted from the Registration Statement in accordance with the Introductory Note to Part I of Form S-8. Item 2. Registrant Information and Employee Plan Annual Information ----------------------------------------------------------- Information required by this Item is omitted from the Registration Statement in accordance with the Introductory Note to Part I of Form S-8. -1- PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT -------------------------------------------------- Item 3. Incorporation of Documents by Reference --------------------------------------- The following documents filed by ARCO Chemical Company (the "Company") with the Securities and Exchange Commission (the "Commission") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated herein by reference: (a) The Company's Annual Report on Form 10-K for the year ended December 31, 1995. (b) All other reports filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act after December 31, 1995. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this Registration Statement and prior to the filing of a post-effective amendment that indicates that all securities offered hereby have been sold or that deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of the filing of such documents. Item 4. Description of Securities ------------------------- The securities being offered are units of deferred compensation obligations ("VIP Units") of the Company, which are offered pursuant to the ARCO Chemical Company New Employee Value Incentive Plan (the "Plan"). The following description of the terms and conditions of the VIP Units is qualified by reference to the Plan, which is filed herewith as Exhibit 4 and incorporated herein by reference. Each VIP Unit entitles the holder to a cash payment in an amount calculated as described below. Holders of VIP Units are unsecured general creditors of the Company with respect to amounts attributable to the value of outstanding unpaid VIP Units. The Plan is unfunded. The Company is not required to set aside assets to be used for payment of the value of awards. No interest will be paid or accrued on any award. The committee administering the Plan (the "Committee") grants awards under the Plan in its sole discretion. Each award is stated as a number of VIP Units. For each award, the Committee designates the effective date of the award (the "Award Date") and assigns an Award Price to each VIP Unit, which may not be less than the market price of the Company's common stock (the "Company Stock") on the Award Date. The Committee also designates a period during which the award can be exchanged for cash. The recipient of an award may choose any date within this period on which to exchange the award (the "Exchange Date"). II-1 Each VIP Unit earns dividend share credits ("DSCs"). The DSCs accumulate in the following manner. Whenever the Company declares a cash dividend on outstanding shares of Company Stock, DSCs are credited as of the dividend record date with respect to the VIP Units and prior DSCs credited to the award. The number of DSCs credited as of each dividend record date is the number derived by (1) multiplying the per share amount of the dividend by the number of VIP Units and DSCs held by the award recipient as of the dividend record date, and (2) dividing the resulting amount by the market price of a share of Company Stock on the dividend record date. The value of DSCs is calculated to the nearest 0.0001 of a DSC. All VIP Units and related DSCs associated with a particular award must be exchanged for cash at the same time. Upon exchange of an award, the holder is entitled to receive (1) the Exchange Value (as defined below) of his or her VIP Units, plus (2) the DSC Value (as defined below) of the DSCs accumulated on the award. The Exchange Value of a VIP Unit is the amount by which the market price of a share of Company Stock on the Exchange Date exceeds the Award Price of the VIP Unit. If the market price is less than or equal to the Award Price, the Exchange Value of the VIP Unit is zero. The DSC Value of an award is generally the market price of a share of Company Stock on the Exchange Date multiplied by the number of DSCs accumulated on the award. However, if the market price on the Exchange Date is less than the Award Price of the VIP Unit being exchanged, the DSC Value as determined above is reduced (but not below zero) by an amount equal to (1) the Award Price minus the market price (2) multiplied by the number of VIP Units being exchanged. VIP Units and related DSCs can be forfeited in the circumstances set forth in the Plan. These circumstances include certain terminations of employment, the recipient's engaging in activities which are detrimental to the Company (as defined in the Plan), and cancellations of the award prior to its designated Maturity Date by the Committee in its sole discretion. All payments under the Plan are made in cash. Payment is made in the currency in which the holder of an award is receiving base salary or retirement or disability benefits at the time of exchange. If the award holder is not receiving any such payments at the time of exchange, the Committee will determine the currency of payment. In the event of the death of an award holder, payments will be made in the currency of the country of residence of his or her beneficiary or, if there is no beneficiary, in the currency of the country whose laws govern administration of the award holder's estate. The Plan contains rules for converting the value of an award into the currency of payment. Item 5. Interests of Named Experts and Counsel -------------------------------------- Not applicable. II-2 Item 6. Indemnification of Directors and Officers ----------------------------------------- A. Reference is made to Section 25 of the By-Laws of the Company and to Section 145 of the General Corporation Law of the State of Delaware as set forth below. 1. Section 25 of the By-Laws of the Company provides: (a) Right to Indemnification. Each person who was or is a party or ------------------------ is threatened to be made a party to or is involved or is threatened to be involved (as a witness or otherwise) in or otherwise requires representation by counsel in connection with any threatened, pending or completed action, suit or proceeding, or any inquiry that such person in good faith believes might lead to the institution of any such action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she is or was a director or officer of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, and the basis of such proceeding is alleged action or inaction in an official capacity or in any other capacity while serving as such a director, officer, employee or agent, shall be indemnified and held harmless by the Company to the fullest extent authorized by the General Corporation Law of Delaware, as the same exists or may hereafter be amended (but, in the case of any such amendment with reference to events occurring prior to the effective date thereof, only to the extent that such amendment permits the Company to provide broader indemnification rights than such law permitted the Company to provide prior to such amendment), against all costs, charges, expenses, liabilities and losses (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director or officer (or to serve another entity at the request of the Company) and shall inure to the benefit of such person's heirs, personal representatives and estate; provided, however, that, except as provided in --------- -------- paragraph (b) hereof, the Company shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person against the Company only if such proceeding (or part thereof) was authorized prior to its initiation by a majority of the disinterested members of the Board of Directors of the Company. The rights to indemnification conferred in this Section shall include the right to be paid by the Company any expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the ------------------ General Corporation Law of Delaware requires, payment shall be made to or on behalf of a person only upon delivery to the Company of an undertaking, by or on behalf of such person, to repay all amounts so advanced if it shall ultimately be determined that such person is not entitled to be indemnified under this Section or otherwise. The rights to indemnification conferred in this Section shall be deemed to be a contract between the Company and each person who serves in the capacities described above at any time while this Section is in effect. Any repeal or modification of this Section shall not in any way diminish any rights to indemnification of such person or the obligations of the Company arising hereunder. II-3 (b) Right of claimant to appeal and to bring suit. If a claim under --------------------------------------------- paragraph (a) of this Section is not paid in full by the Company within thirty days after a written claim has been received by the Company, the claimant may submit a written appeal to the Chairman of the Board. If the claim is not paid in full by the Company within thirty days after a written appeal has been received by the Chairman of the Board, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim. If successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting or defending such claim. In any action brought by the claimant to enforce a right to indemnification hereunder or by the Company to recover payments by the Company for expenses incurred by a claimant in a proceeding in advance of its final disposition, the burden of proving that the claimant is not entitled to be indemnified under this Section or otherwise shall be on the Company. Neither the failure of the Company (including its Board of Directors or its independent legal counsel) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because the claimant has met the applicable standard of conduct set forth in the General Corporation Law of Delaware, nor an actual determination by the Company (including its Board of Directors or its independent legal counsel) that the claimant has not met such applicable standard of conduct, shall create a presumption that the claimant has not met the applicable standard of conduct or, in the case of such an action brought by the claimant, be a defense to the action. (c) Non-exclusivity of rights. The right to indemnification and the ------------------------- payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Company's Certificate of Incorporation, any By-Law, any agreement, a vote of Company stockholders or of disinterested Company directors or otherwise, both as to action in that person's official capacity and as to action in any other capacity by holding such office, and shall continue after the person ceases to serve the Company as a director or officer or to serve another entity at the request of the Company. (d) Insurance. The Company may maintain insurance, at its expense, --------- to protect itself and any director or officer of the Company or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of Delaware. (e) Indemnity agreements. The Company may from time to time enter -------------------- into indemnity agreements with the persons who are members of its Board of Directors and with such officers or other persons as the Board may designate, such indemnity agreements to provide in substance that the Company will indemnify such persons to the fullest extent of the provisions of this Section 25. II-4 (f) Indemnification of employees and agents of the Company. The ------------------------------------------------------ Company may, under procedures authorized from time to time by the Board of Directors, grant rights to indemnification, and to be paid by the Company the expenses incurred in defending any proceeding in advance of its final disposition, to any employee or agent of the Company to the fullest extent of the provisions of this Section 25. 2. Section 145 of the General Corporation Law of the State of Delaware provides: (a) A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (b) A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. (c) To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding II-5 referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (d) Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (3) by the stockholders. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate. (f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. (g) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under this section. (h) For purposes of this section, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint II-6 venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. (i) For purposes of this section, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this section. (j) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (k) The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation's obligation to advance expenses (including attorneys' fees). B. Under the Administrative Services Agreement between Atlantic Richfield Company ("ARCO") and the Company, ARCO provides the Company with insurance coverage under ARCO's Directors' and Officers' Liability Insurance, to the extent authorized by the By-Laws of the Company and the laws of the State of Delaware. Such coverage currently has a limit of $205,000,000. Item 7. Exemption from Registration Claimed ----------------------------------- None. II-7 Item 8. Exhibits -------- Number Description Method of Filing - -------- ---------------------------------------- --------------------- 4 ARCO Chemical Company New Employee Value Filed herewith Incentive Plan 5 Opinion of Hughes Hubbard & Reed LLP, as Filed herewith to the legality of the securities being registered 23.1 Consent of Hughes Hubbard & Reed LLP Included in Exhibit 5 23.2 Consent of Coopers & Lybrand L.L.P. Filed herewith 24 Power of Attorney authorizing Filed herewith John A. Shaw to sign the Registration Statement and all amendments thereto on behalf of certain directors and officers of the Company Item 9. Undertakings ------------ (a) The Company hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act"); (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement. provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if -------- ------- the Registration Statement is on Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Company pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration II-8 statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The Company hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Company's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-9 SIGNATURES ---------- The Registrant. Pursuant to the requirements of the Securities Act of -------------- 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Newtown Square, Commonwealth of Pennsylvania, on this 19th day of November, 1996. ARCO Chemical Company By: ALAN R. HIRSIG ------------------------- Alan R. Hirsig President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons, in the capacities and on the date indicated. Signature Capacity Date --------- -------- ---- MIKE R. BOWLIN* Chairman of the Board November 19, 1996 - ------------------------ and Director Mike R. Bowlin President, ALAN R. HIRSIG Chief Executive Officer and November 19, 1996 - -------------------------- Director Alan R. Hirsig MARVIN O. SCHLANGER* Executive Vice President, November 19, 1996 - ---------------------- Chief Operating Officer and Director Marvin O. Schlanger WALTER J. TUSINSKI* Senior Vice President, November 19, 1996 - ------------------------ Chief Financial Officer and Director Walter J. Tusinski II-10 Signature Capacity Date --------- -------- ---- RONALD J. ARNAULT* Director November 19, 1996 - ------------------------------- Ronald J. Arnault WALTER F. BERAN* Director November 19, 1996 - ------------------------------- Walter F. Beran ANTHONY G. FERNANDES* Director November 19, 1996 - ------------------------------- Anthony G. Fernandes MARIE L. KNOWLES* Director November 19, 1996 - ------------------------------- Marie L. Knowles JAMES A. MIDDLETON* Director November 19, 1996 - ------------------------------- James A. Middleton FRANK SAVAGE* Director November 19, 1996 - ------------------------------- Frank Savage ROBERT H. STEWART, III* Director November 19, 1996 - ------------------------------- Robert H. Stewart, III JOHN A. SHAW Vice President and November 19, 1996 - ------------------------------- Controller John A. Shaw (principal accounting officer) * By: JOHN A. SHAW November 19, 1996 - ------------------------------- John A. Shaw (Attorney in fact) II-11 EXHIBIT INDEX -------------
Number Description Method of Filing - ------ ------------------------------------------------- --------------------- 4 ARCO Chemical Company New Employee Value Filed herewith Incentive Plan 5 Opinion of Hughes Hubbard & Reed LLP, as to the Filed herewith legality of the securities being registered 23.1 Consent of Hughes Hubbard & Reed LLP Included in Exhibit 5 23.2 Consent of Coopers & Lybrand L.L.P. Filed herewith 24 Power of Attorney authorizing John A. Shaw to Filed herewith sign the Registration Statement and all amendments thereto on behalf of certain directors and officers of the Company
EX-4 2 NEW EMPLOYEE VALUE INCENTIVE PLAN - -------------------------------------------------------------------------------- ARCO CHEMICAL COMPANY NEW EMPLOYEE VALUE INCENTIVE PLAN - -------------------------------------------------------------------------------- Document Date: November 1, 1996 EXHIBIT 4 NEW EMPLOYEE VALUE INCENTIVE PLAN
TABLE OF CONTENTS 1 Summary of Plan...................................... 1 2 Effective Date....................................... 1 3 Eligibility for Participation........................ 1 4 Administration of the Plan........................... 1 5 Awards of VIP Units.................................. 2 6 Award Letter......................................... 2 7 Terms and Conditions of Awards....................... 2 8 Method of Payment.................................... 5 9 Exchange Rates and Currency Conversion............... 5 10 No Guarantee of Employment........................... 7 11 No Rights as Stockholder............................. 7 12 Withholding Taxes.................................... 7 13 Amendment or Termination of the Plan................. 7 14 Adjustment in Terms of Award......................... 7 15 Delegation of Authority.............................. 8 16 Pensions............................................. 8 17 Funding of the Plan.................................. 8 18 Non-Assignment....................................... 8 19 Compliance with the Law.............................. 8 20 Governing Law........................................ 9 Appendix of Definitions................................... 10
Document Date: November 1, 1996 ARCO Chemical Company New Employee Value Incentive Plan Page 1 1 SUMMARY OF THE PLAN 1.1 General. This is the ARCO Chemical Company New Employee Value Incentive ------- Plan. The Plan provides for Awards of VIP Units to Employees worldwide as an incentive for individuals to whom the Company has made an offer of employment to accept such offer and commence employment with the Company and to encourage future contributions by such individuals to the success of the Company. Employees who are on the Executive Grade Payroll are not eligible for any Awards hereunder. VIP Units awarded hereunder accumulate Dividend Share Credits. A VIP Unit may be exchanged at any time from its Maturity Date until its Expiration Date. An awardee who effects an exchange of VIP Units will receive the Exchange Value of the VIP Units exchanged plus the DSC Value of the accumulated Dividend Share Credits attributable thereto. 1.2 Purposes. The purposes of the Plan are: to facilitate the attraction, -------- compensation and retention of Employees worldwide of superior capability; and to recognize the potential for such Employees to contribute to the long-term growth and profitability of the Company; and to provide a compensation program that encourages the long-term appreciation of the value of the Company. 1.3 Definitions. All capitalized terms used herein are defined in the ----------- Appendix of Definitions set forth at the end of the Plan. 2 EFFECTIVE DATE This Plan is effective as of November 1, 1996, and will continue in effect unless terminated by the Company. 3 ELIGIBILITY FOR PARTICIPATION Any and all Employees of the Company worldwide are eligible to receive Awards of VIP Units under the Plan in connection with his or her initial employment with the Company. Employee is a defined term that excludes, among others, any employees of the Company who are on the Executive Grade Payroll. The Committee may authorize the Company to extend an offer to make Awards of VIP Units under the Plan to any individual upon his or her employment with the Company; provided that such individual would, upon employment by the Company, qualify as an Employee under the Plan. No Awards under the Plan shall be made to any individual unless and until such individual becomes an Employee. No person shall be considered an awardee under the Plan or have any interest or right, contingent or otherwise, under the Plan unless and until such person shall have become an Employee and shall have received an Award ARCO Chemical Company New Employee Value Incentive Plan Page 2 of VIP Units. 4 ADMINISTRATION OF THE PLAN This Plan shall be administered by the Committee. The Committee is authorized to: interpret the Plan; make any factual determinations that may be necessary under the Plan; correct any defect, supply any omission or reconcile any inconsistency in the Plan; adopt such rules and regulations as they may from time to time deem necessary for the operation of the Plan; and act upon all matters relating to the making 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 Committee shall be final, binding and conclusive for all purposes and upon all persons including, without limitation, the Company, Employees and their respective successors in interest. 5 AWARDS OF VIP UNITS The Committee from time to time may receive recommendations from Management for proposed Awards of VIP Units to individuals to whom the Company has extended or may extend an offer of employment; provided that such individuals would, upon employment by the Company, qualify as Employees under the Plan. After receiving such recommendations, the Committee shall determine, in its sole authority and discretion: (a) the individuals to whom Awards of VIP Units shall be made under the Plan at the time and in the event that such individuals shall have become Employees; (b) the number of VIP Units to be awarded to any Employee; (c) the Award Date, Award Price, Maturity Period, Maturity Date and Expiration Date of any VIP Units awarded; and (d) any other terms and conditions that may be applicable to a particular Award of VIP Units under the Plan. 6 AWARD LETTER Each Award of VIP Units made under this Plan shall be evidenced by an Award Letter setting forth the terms and conditions thereof. 7 TERMS AND CONDITIONS OF AWARDS ARCO Chemical Company New Employee Value Incentive Plan Page 3 All VIP Units awarded under the Plan shall be subject to the following terms and conditions: (a) Specific Terms of Award. Each VIP Unit shall be assigned an Award ----------------------- Date, Award Price, Maturity Period, Maturity Date and Expiration Date by the Committee at the time of award. (b) Dividend Share Credits. Each VIP Unit shall accumulate Dividend ---------------------- Share Credits. The formula for accumulation of Dividend Share Credits is set forth in the definition of "Dividend Share Credits" in the Appendix of Definitions. (c) Exchange of VIP Units. Subject to paragraph (e) of this Section 7, --------------------- a VIP Unit may be exchanged at any time on or after its Maturity Date until its Expiration Date provided that it has not otherwise been cancelled pursuant to the terms and conditions of the Plan. (d) Exchange Value and DSC Value. Upon effecting an Exchange of a ---------------------------- VIP Unit, an awardee will receive payment of the Exchange Value of the VIP Unit plus the DSC Value of the Dividend Share Credits attributable thereto; provided, however, that an awardee shall be entitled to payment of DSC Value in respect of the Dividend Share Credits only if the DSC Value is greater than zero as computed in accordance with the Plan and provided, further, that an awardee shall not be entitled to payment of any DSC Value in respect of the Dividend Share Credits if the DSC Value is zero as computed in accordance with the Plan. (e) Detrimental Activity. Notwithstanding anything to the contrary -------------------- expressed or implied in the Plan, an awardee shall be entitled to receive payment of the Exchange Value of his VIP Units and the DSC Value of the Dividend Share Credits attributable thereto only if he has not engaged in any Detrimental Activity from the Award Date of such VIP Units through the date on which he wishes to effect the Exchange thereof. (f) No Fractional Exchange. An awardee may not effect an Exchange ---------------------- of less than one VIP Unit (i.e., a fractional Exchange). (g) No Partial Exchange of an Award. An awardee may not effect an ------------------------------- Exchange of less than all of the VIP Units associated with any particular Award of VIP Units under the Plan (i.e., a partial Exchange). The VIP Units associated with any such Award must be exchanged altogether. (h) Termination of Employment Prior to Expiration of Maturity Period. ---------------------------------------------------------------- If an ARCO Chemical Company New Employee Value Incentive Plan Page 4 awardee's employment with the Company is terminated prior to the expiration of the Maturity Period of any VIP Units awarded, such VIP Units and the accumulated Dividend Share Credits attributable thereto shall be cancelled in all circumstances except if the awardee's termination from employment prior to the expiration of the Maturity Period is due to (i) death, (ii) Disability, (iii) Retirement, (iv) Layoff or Reduction-In-Force or (v) any other termination of employment in connection with which the Committee, in its sole discretion, has determined that the awardee's VIP Units shall not be cancelled. (i) Termination of Employment After Expiration of the Maturity Period. ----------------------------------------------------------------- If an awardee's employment is terminated after expiration of the Maturity Period of any VIP Units awarded, such VIP Units and the accumulated Dividend Share Credits attributable thereto shall not be cancelled in any circumstances except if the awardee's termination of employment after expiration of the Maturity Period is due to (i) discharge for cause, (ii) resignation without approval of the Company, or (iii) resignation of the awardee at the initiation of the Company (except in the circumstances of a Retirement or Layoff or Reduction-In-Force). If the awardee's employment terminates for the reasons specified in clauses (i), (ii) or (iii) of this paragraph, the VIP Units and the accumulated Dividend Share Credits attributable thereto shall be cancelled. (j) Transfer of Rights Upon Death. In the event of the death of an ----------------------------- awardee, all rights to the awardee's VIP Units and the accumulated Dividend Share Credits attributable thereto shall pass to the designated beneficiary of the awardee, or if there is no designated beneficiary, to the estate of the awardee in accordance with applicable laws of descent and distribution. (k) Extensions of Expiration Date. In the event of the death of an ----------------------------- awardee, any VIP Units of the awardee with Expiration Dates prior to the 60th day after an executor or other fiduciary is duly qualified, appointed and legally empowered to oversee the affairs of awardee's estate shall have their Expiration Dates extended to such date automatically by operation of the Plan up to a maximum of one year beyond the original Expiration Date; provided, however, that the Committee may, in its sole discretion authorize any extensions beyond such maximum that it considers reasonable and appropriate under the circumstances. In the event that an awardee is unable to effect an Exchange of VIP Units because of mental or physical disability or incapacity, or because of any other reasons beyond the awardee's control, the Committee may, in its sole discretion, extend the Expiration Dates of any VIP Units of such awardee as it ARCO Chemical Company New Employee Value Incentive Plan Page 5 considers reasonable and appropriate under the circumstances. (l) Leave of Absence. For purposes of the Plan and any Award of VIP ---------------- Units hereunder, an awardee on an approved Leave of Absence (paid or unpaid) has not terminated employment with the Company and retains all rights under the Plan. (m) Employment with Other ARCO Companies. For purposes of the Plan ------------------------------------ and any Award of VIP Units hereunder, employment by Atlantic Richfield Company, Lyondell Petrochemical Company, Vastar Resources, Inc. or any subsidiaries and affiliates under the control of these companies, shall be considered equivalent to employment by the Company. Accordingly, termination of employment by the Company to enter into employment by one of these companies shall not result in the cancellation of VIP Units or Dividend Share Credits or the forfeiture of any rights hereunder. Similarly, termination of employment by one of these companies to enter into employment by another one of these companies, or to return to the Company, shall not result in any cancellation or forfeiture. However, termination of employment by one of these companies in any other circumstances shall be subject to the full range of consequences set forth in this Plan for termination of employment by the Company. 8 METHOD OF PAYMENT All payments under the Plan shall be made in cash, in the currency in which the awardee is receiving base salary at the time of payment. If the awardee has terminated employment with the Company, then the payments shall be made in the currency in which the awardee is receiving Disability or Retirement benefits from the Company, or, if there are no such benefits being paid, in such currency as the Committee, in its sole discretion, deems appropriate under the circumstances. If payment is to be made to the beneficiary of an awardee who has died, the payments shall be made in the currency of the country of residence of the beneficiary. If payment is to be made to the estate of an awardee who has died, the payments shall be made in the currency of the country whose laws govern the administration of the estate. (Section 9 below sets forth the rules for converting payments under the Plan into the required currency of payment.) 9 EXCHANGE RATES AND CURRENCY CONVERSION 9.1 Award Exchange Rate. If an awardee of an Award is receiving base salary in ------------------- an Award Date Currency other than U.S. dollars, the Committee shall specify, at the time of the Award, the Award Exchange Rate applicable to such Award. ARCO Chemical Company New Employee Value Incentive Plan Page 6 9.2 Rules for Converting Currencies. Section 8 above sets forth the rules for ------------------------------- determining the currency in which payments under the Plan are to be made. Set forth below are the rules for converting payments under the Plan into the required currency of payment. (a) Award Date Currency in U.S. Dollars and Exchange Date Currency Not ------------------------------------------------------------------ in U.S. Dollars. If the Award Date Currency is U.S. dollars and the --------------- corresponding Exchange Date Currency is not U.S. dollars, then the cash payment to be made to the awardee, the awardee's beneficiary or the awardee's estate, as the case may be, upon an Exchange shall be determined as follows: (i) the Exchange Value of the VIP Units being exchanged and the DSC Value of the Dividend Share Credits attributable thereto shall be calculated first in U.S. dollars and then (ii) the sum of such Exchange Value plus such DSC Value shall be converted from U.S. dollars to the Exchange Date Currency using the Payment Exchange Rate. (b) Award Date Currency Not in U.S. Dollars and Exchange Date Currency ------------------------------------------------------------------ in U.S. Dollars. If the Award Date Currency is not U.S. dollars and --------------- the corresponding Exchange Date Currency is U.S. dollars, then the cash payment to be made to the awardee, the awardee's beneficiary or the awardee's estate, as the case may be, upon an Exchange shall be determined as follows: (i) the Exchange Value of the VIP Units being exchanged and the DSC Value of the Dividend Share Credits attributable thereto shall be calculated first in U.S. dollars; then (ii) the sum of such Exchange Value plus such DSC Value shall be converted from U.S. dollars to the Award Date Currency using the Award Exchange Rate; and finally (iii) the converted sum shall be converted from the Award Date Currency back into U.S. dollars using the Payment Exchange Rate. (c) Award Date Currency Same as Exchange Date Currency. If the Award -------------------------------------------------- Date Currency is not U.S. dollars and the Award Date Currency and the corresponding Exchange Date Currency are the same non-U.S. dollar currency, then the cash payment to be made to the awardee, the awardee's beneficiary or the awardee's estate, as the case may be, upon an Exchange shall be determined as follows: (i) the Exchange Value of the VIP Units being exchanged and the DSC Value of the Dividend Share Credits attributable thereto shall be calculated first in U.S. dollars and then (ii) the sum of such Exchange Value plus such DSC Value shall be converted from U.S. dollars to the Award Date Currency using the Award Exchange Rate. (d) Award Date Currency Different from Exchange Date Currency. If the --------------------------------------------------------- ARCO Chemical Company New Employee Value Incentive Plan Page 7 Award Date Currency is not U.S. dollars and the Award Date Currency and the corresponding Exchange Date Currency are different non-U.S. dollar currencies, then the cash payment to be made to the awardee, the awardee's beneficiary or the awardee's estate, as the case may be, upon an Exchange shall be determined as follows: (i) the Exchange Value of the VIP Units being exchanged and the DSC Value of the Dividend Share Credits attributable thereto shall be calculated first in U.S. dollars; then (ii) the sum of such Exchange Value plus such DSC Value shall be converted from U.S. dollars to the Award Date Currency using the Award Exchange Rate; and finally (iii) the converted sum shall be further converted from the Award Date Currency into the Exchange Date Currency using the Payment Exchange Rate. 10 NO GUARANTEE OF EMPLOYMENT Neither the Plan nor any Award Letter nor any action taken or omitted to be taken hereunder, including, without limitation, any offer by the Company to make an Award of VIP Units to any individual at the time such individual commences employment with the Company, shall be deemed to create or confer upon any person any right to be employed by or retained in the employment of the Company or to receive subsequent Awards under the Plan. The rights of the Company to withdraw an offer of employment to any individual, or to terminate an awardee's employment at any time or as otherwise provided by any agreement between the awardee and the Company, are specifically reserved. 11 NO RIGHTS AS STOCKHOLDER No shares of Company Stock shall reserved for or issued under the Plan. No person or awardee shall have any rights as a holder of or interest in Company Stock by virtue of any offer to make an Award of VIP Units under the Plan or an Award of VIP Units made under the Plan. Dividend Share Credits shall not be considered as dividends on Company Stock. 12 WITHHOLDING TAXES The Company shall have the right to withhold from any payment under this Plan, base salary or other remuneration, or otherwise to cause the awardee (or his beneficiary or executor, as the case may be) to make payment of, any taxes required to be withheld with respect to any payments of Exchange Value or DSC Value or otherwise with respect to an Award. 13 AMENDMENT OR TERMINATION OF THE PLAN ARCO Chemical Company New Employee Value Incentive Plan Page 8 The Committee may amend the Plan as it may from time to time consider appropriate, provided, however, that no amendment may be made to modify the terms or conditions of an Award of VIP Units after the Award Date thereof (except as provided in Section 14 below). The Committee may terminate the Plan at any time in its sole discretion, provided, however, that the Plan shall continue in full force and effect for any VIP Units and Dividend Share Credits outstanding as of the date of termination until such VIP Units and Dividend Share Credits are exchanged, cancelled or expire. 14 ADJUSTMENT IN TERMS OF AWARD 14.1 Reorganization. In the event of an extraordinary reorganization, -------------- change in business operations, recapitalization, merger, consolidation or other change in the corporate or capital structure of the Company, the Committee may modify the terms of any or all Awards of VIP Units in such manner as it determines in its sole discretion to be necessary and advisable. 14.2 Discretionary Cancellation. The Committee may in its sole discretion -------------------------- and with or without cause cancel any VIP Unit awarded to an Employee at any time before the expiration of its Maturity Period. Following such a cancellation, the awardee shall have no right or claim to compensation or substitute provision of any kind in respect of such cancellation. Any such cancellation shall be effective as of the date specified by the Committee. 15 DELEGATION OF AUTHORITY The members of the Committee may delegate their authority under this Plan in whole or in part to such employees or agents of the Company as they may deem necessary, appropriate and consistent with the purposes of the Plan. Such delegation may be effected orally or in writing. 16 PENSIONS Payments made under the Plan, unless required by local laws, are not intended to be benefit bearing or to be taken into account for the purposes of any pension or retirement or termination of employment benefits, provision or plan. 17 FUNDING OF THE PLAN The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of the Exchange Value of VIP Units and DSC Value of the Dividend Share Credits attributable thereto. In no event shall interest be paid or ARCO Chemical Company New Employee Value Incentive Plan Page 9 accrued on any Award of VIP Units, including unpaid installments thereof. 18 NON-ASSIGNMENT Neither VIP Units or Dividend Share Credits, nor any rights or contingent rights may be sold, transferred, assigned, pledged, hypothecated, or otherwise encumbered or disposed of, except by will or under the laws of descent and distribution. Any attempt to violate this clause by an awardee or any other person claiming under or through him shall be null and void and without effect. 19 COMPLIANCE WITH LAW This Plan, the Awards hereunder, the Exchange of VIP Units hereunder and the obligations of the Company hereunder shall be subject to all applicable laws and to all required governmental or regulatory approvals. The Committee may revoke any Award if it is contrary to law or may modify an Award to the extent necessary to comply with any applicable law. The Committee may agree, in its sole discretion, to limit its authority under this section. 20 GOVERNING LAW The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan, and any Award hereunder shall be determined in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to principles of conflicts of laws, and applicable federal law. ARCO Chemical Company New Employee Value Incentive Plan Page 10 APPENDIX OF DEFINITIONS Award An award of VIP Units made to an Employee under the Plan. Award Date The effective date of an Award under the Plan. Award Date Currency The currency in which an awardee of an Award is receiving base salary on the Award Date of such Award. Award Exchange Rate The Company's currency exchange rate as of the Award Date for converting between U.S. dollars and the applicable Award Date Currency. If the Company has not fixed a currency exchange rate for converting between U.S. dollars and the applicable Award Date Currency as of the Award Date, the Award Exchange Rate shall be such rate as may be fixed by the Committee in its sole discretion. Award Letter The letter sent to the awardee that evidences the Award of VIP Units under the Plan. Any letter or other written communication furnished to an individual in connection with the extension of an offer of employment which includes an offer to make an Award of VIP Units under the Plan upon employment shall not be considered an Award Letter under the Plan. Award Price The price assigned to each VIP Unit at the Award Date, which shall not be less than the Market Price on the Award Date. The Award Price shall be denominated in U.S. dollars. Committee The Committee that administers the Plan. The Committee shall be comprised of the President and Chief Executive Officer and the Vice President Human Resources of the Company or such substitute members as either of them may designate in their sole discretion. Company ARCO Chemical Company, a Delaware, U.S.A. corporation, and all of the subsidiaries and affiliates thereof that are consolidated therein for financial reporting purposes under U.S. generally accepted accounting principles. References to the "Company" in this Plan refer, as the context requires, either to the consolidated group as a whole or to the members of the ARCO Chemical Company New Employee Value Incentive Plan Page 11 consolidated group severally. Company Stock The common stock of the Company having a par value of $1.00 per share. Confidential Any information about the Company, including without Information limitation, business information, financial information or technical information, that has not been disclosed publicly by the Management of the Company. Detrimental The following activities shall constitute Detrimental Activity Activity: (a) improperly disclosing or making use of any Confidential Information and (b) direct or indirect persuasion of or any attempt to persuade any employee of any Company to breach any of the terms of their employments with the Company. Disability Disability shall mean a medically determinable physical or mental impairment resulting from illness or injury that renders an Employee unable to perform one or more of the substantial duties of the Employee's normal work assignment with the Company or of any other work assignment which the Company determines is available to the Employee and for which the Employee is reasonably qualified by education, training or experience to perform. Dividend Share VIP Units held by the awardee accumulate Dividend Share Credits Credits as of the dividend record date for each cash dividend declared and issued on outstanding shares of Company Stock. Dividend Share Credits held by the awardee accumulate Dividend Share Credits in the same manner. The number of Dividend Share Credits to be credited as of each dividend record date shall be the aggregate number derived by (1) multiplying the declared dividend rate per share of Company Stock by the number of VIP Units and Dividend Share Credits held by the awardee as of the dividend record date and (2) dividing the resulting figure by the Market Price of a share of Company Stock on such record date. The Dividend Share Credits will be calculated to the nearest 0.0001 of a credit. ARCO Chemical Company New Employee Value Incentive Plan Page 12 DSC Value DSC Value shall be determined as follows: (a) If the Market Price on the date of Exchange of a VIP Unit is greater than or equal to the Award Price thereof, the DSC Value of the Dividend Share Credits attributable to such VIP Unit shall be the Market Price on the date of Exchange multiplied by the number of such Dividend Share Credits. (b) If the Market Price on the date of Exchange of a VIP Unit is less than the Award Price thereof, then the value of the Dividend Share Credits attributable to the VIP Units associated with an Award shall be (i) (the Market Price on the date of Exchange multiplied by the number of such Dividend Share Credits) minus (ii) (the Award Price minus the Market Price on the date of Exchange) multiplied by the number of VIP Units being Exchanged; provided, however, that if the amount determined under clause (ii) is equal to or greater than the amount determined under clause (i), the DSC Value shall be zero. Employee Any regular, full or part time, employees of the Company except: (a) employees on the Company's Executive Grade Payroll; and (b) employees of Joint Ventures, unless the Committee otherwise determines; and (c) seasonal, temporary, casual, project or contract employees, unless the Committee otherwise determines. Exchange The surrender of VIP Units for payment of their Exchange Value plus the DSC Value of the Dividend Share Credits attributable to such VIP Units. Exchange Date The currency in which payment is required to be made to an Currency awardee, the awardee's beneficiary or the awardee's estate, as the case may be, upon an Exchange by the awardee, the awardee's beneficiary or the awardee's estate, as the case ARCO Chemical Company New Employee Value Incentive Plan Page 13 may be, of VIP Units awarded to the awardee. Section 8 of the Plan sets forth the rules for determining the currency in which payments under the Plan are required to be made upon an Exchange. Exchange Value The Exchange Value on any date of Exchange shall equal the Market Price of one share of Company Stock on the date of Exchange less the Award Price of the VIP Unit. The Exchange Value shall be zero if the Market Price is less than or equal to the Award Price. Executive Grade The compensation grades from time to time specified by Payroll the Company as executive compensation grades. Expiration Date The date 10 years after the Award Date, or such earlier or later date as may be provided under the Plan. Joint Venture Any business partnership or joint venture entered into by the Company with one or more unrelated third parties. Layoff or Any termination of the employment of any one or more Reduction-In-Force Employees resulting from a determination by the Company that there is inadequate work to warrant the continuation of the employment of the affected Employees, from a determination by the Company to reduce its workforce or from a determination by the Company of a comparable nature. Leave of Absence A leave of absence, which may be paid or unpaid, taken by an awardee with the approval of the Company. Management The management of the Company, including principally the officers of the Company. Market Price The Market Price on a particular date shall be the higher of (i) the closing price of a share of Company Stock on such date or (ii) the arithmetic mean of the per share highest and lowest sale prices on such date, all as reported on the composite tape for issues listed on the New York Stock Exchange. If no transactions in Company Stock were reported on the composite tape on such date, the Market Price shall be computed using the prices reported on the nearest available day preceding the date in question. If the Company Stock should not then be listed or admitted to trading on the New ARCO Chemical Company New Employee Value Incentive Plan Page 14 York Exchange, the Market Price shall be a value established by the Committee in its sole discretion. The Market Price shall be denominated in U.S. dollars Maturity Date The day of expiration of the Maturity Period. Maturity Period In respect of a VIP Unit, the period beginning on the Award Date thereof and ending on the earlier of: (a) the expiration of four years from the Award Date; or (b) the expiration of such shorter period of time that may be specified by the Committee in its sole discretion. Payment Exchange The Company's currency exchange rate as of the date of Rate Exchange for converting between the applicable Award Date Currency and the applicable Exchange Date Currency. If the Company has not fixed a currency exchange rate for converting between the applicable Award Date Currency and the applicable Exchange Date Currency as of the date of Exchange, the Payment Exchange Rate shall be such rate as may be fixed by the Committee in its sole discretion. Plan The ARCO Chemical Company New Employee Value Incentive Plan, as it may be amended from time to time. Retirement Retirement from active employment with the Company after attaining the retirement age specified in an applicable Company pension or other retirement plan or any other termination of employment with a right to an immediate allowance under a Company pension or other retirement plan, or early retirement with the approval of the Company. VIP Unit The unit by which Awards under the Plan are valued. Construction Words or expressions used herein shall: (a) when denoting the masculine gender include the feminine; and ARCO Chemical Company New Employee Value Incentive Plan Page 15 (b) when denoting the singular include the plural and vice versa. EX-5 3 OPINION OF HUGHES HUBBARD & REED LLP [LETTERHEAD OF HUGHES HUBBARD & REED LLP APPEARS HERE] November 18, 1996 ARCO Chemical Company 3801 West Chester Pike Newtown Square, Pennsylvania 19073-2387 Ladies and Gentlemen: Re: ARCO Chemical Company New Employee Value Incentive Plan You have requested our opinion in connection with the Registration Statement on Form S-8 (the "Registration Statement") of ARCO Chemical Company (the "Company") to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), with respect to 60,000 units of deferred compensation obligations of the Company ("VIP Units") to be offered in accordance with the provisions of the Company's New Employee Value Incentive Plan (the "Plan"). In this connection, and as a basis for the opinion expressed below, we have examined and relied on originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments, have made such inquiries as to questions of fact of officers and representatives of the Company, and have made such examinations of law as we have deemed necessary or appropriate for the purpose of giving this opinion. In stating our opinion, we have assumed the authenticity of all documents submitted to us as originals and the conformity to authentic original documents of all documents submitted to us as certified, conformed or photostatic copies. The opinion expressed below is restricted to matters controlled by the federal laws of the United States and the General Corporation Law of the State of Delaware. We are not members of the Delaware bar. The opinion expressed below is subject to the effect of bankruptcy, insolvency, fraudulent transfer, or other similar laws affecting the rights of creditors generally, and to the effect of general principles of equity, whether applied by a court of law or equity. Based upon the foregoing, it is our opinion that when the applicable provisions of the Securities Act and of such "Blue Sky" or other state securities laws as may be applicable shall have been complied with, the VIP Units will be legally issued, valid and binding obligations of the Company, subject to the terms and conditions of the VIP Units as set forth in the Plan or the applicable award of VIP Units. In giving this opinion, we note that, under the terms of the Plan, under certain circumstances the VIP Units may be cancelled, without consideration, by the committee administering the Plan, in its sole discretion. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the Rules and Regulations of the Securities and Exchange Commission thereunder. Very truly yours, Hughes Hubbard & Reed LLP EXHIBIT 5 EXHIBIT 23.1 EX-23.2 4 CONSENT OF COOPERS & LYBRAND LLP CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated February 12, 1996 on our audits of the consolidated financial statements of ARCO Chemical Company as of December 31, 1995 and 1994 and for the years ended December 31, 1995, 1994, and 1993, which is included in the Annual Report on Form 10-K of ARCO Chemical Company for the year ended December 31, 1995. We also consent to the reference to our firm under the heading "Experts" in the prospectus documents relating to the employee benefit plan which is the subject of this Registration Statement. Coopers & Lybrand L.L.P. 2400 Eleven Penn Center Philadelphia, PA November 19, 1996 EXHIBIT 23.2 EX-24 5 POWER OF ATTORNEY ARCO CHEMICAL COMPANY POWER OF ATTORNEY Each person whose signature appears below hereby constitutes and appoints Alan R. Hirsig, Robert J. Millstone, John A. Shaw, and Walter J. Tusinski, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to effect the following acts as necessary or appropriate for the conduct of the business and affairs of ARCO Chemical Company (the "Company"): I. In connection with any outstanding security of the Company registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (1) to execute any singular or periodic report required or permitted to be filed under the Securities Exchange Act of 1934, as amended, including specifically the Company's Annual Report on Form ------------ 10-K for the fiscal year ended December 31, 1995; and (2) to file or cause to be filed such report with the Commission, any national or foreign securities exchange, any securities industry self-regulatory organization, any state or other jurisdiction of the United States, and any jurisdiction outside the United States, in each case as required or permitted by applicable law; II. In connection with the issuance, offering, or sale of any securities authorized by the Board of Directors of the Company or by the Executive Committee thereof pursuant to due authorization by such Board, or in connection with the issuance, offering or sale of any security, participation or interest in any employee or executive compensation or benefit plan authorized and approved by the Board of Directors of the Company or by the Executive or Compensation Committees thereof pursuant to due authorization by such Board (1) to execute and file, or cause to be filed, with the Securities and Exchange Commission (the "Commission"). (A) Registration Statements and any and all amendments (including post-effective amendments) thereto, and to file, or cause to be filed, all exhibits thereto and other documents in connection therewith as required or permitted by the Commission in connection with such registration under the Securities Act of 1933, as amended, and (B) any singular or periodic report or other document required or permitted to be filed by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended; (2) to execute and file, or cause to be filed, any application for registration or exemption therefrom, or any report or any other document required or permitted to be filed by the Company under the Blue Sky or securities laws of any state or other jurisdiction of the United States, and to furnish any other information required in connection therewith, including any reports or other documents required or permitted to be filed subsequent to the issuance of such securities; (3) to execute and file, or cause to be filed, any application for registration or exemption therefrom under the securities laws of any jurisdiction outside the United States, including any reports or other documents required or permitted to be filed subsequent to the issuance of such securities; and (4) to execute and file, or cause to be filed, any application for listing such securities on any national or foreign securities exchange; granting to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act required to be done as he or she might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue of this Power of Attorney. EXHIBIT 24 Each such attorney-in-fact and agent shall have the right to indemnification for any action taken or omitted pursuant to this Power of Attorney provided in the By-Laws of the Company to officers and directors for service as such, including, but not limited to, the non-exclusivity provisions of such By-Laws. Each person whose signature appears below may at any time revoke this Power of Attorney, as to himself or herself only, by an instrument in writing specifying that this Power of Attorney is revoked as to him or her as of the date of delivery of such revocation to the Secretary of the Company or at a subsequent specified date. This Power of Attorney shall be revoked automatically with respect to any person whose signature appears below effective on the date he or she ceases to be a member of the Board of Directors, or in the case of Mr. Shaw, on the date he ceases to be principal accounting officer of the Company. Any revocation shall not void or otherwise affect any acts performed by any attorney-in fact and agent named herein pursuant to this Power of Attorney prior to the effective date of such revocation. This instrument may be executed in multiple counterparts each of which shall be deemed as original and all of which together shall be deemed one instrument. Signature Title Date --------- ----- ---- /s/ MIKE R. BOWLIN Chairman of the Board November 19, 1996 - ---------------------------- and Director Mike R. Bowlin /s/ ALAN R. HIRSIG President, Chief Executive November 19, 1996 - ---------------------------- Officer and Director Alan R. Hirsig /s/ MARVIN O. SCHLANGER Executive Vice President, November 19, 1996 - ---------------------------- Chief Operating Officer Marvin O. Schlanger and Director /s/ WALTER J. TUSINSKI Senior Vice President. November 19, 1996 - ---------------------------- Chief Financial Officer Walter J. Tusinski and Director /s/ RONALD J. ARNAULT - ---------------------------- Director November 19, 1996 Ronald J. Arnault /s/ WALTER F. BERAN - ---------------------------- Director November 19, 1996 Walter F. Beran /s/ ANTHONY G. FERNANDES - ---------------------------- Director November 19, 1996 Anthony G. Fernandes /s/ MARIE L. KNOWLES - ---------------------------- Director November 19, 1996 Marie L. Knowles
Signature Title Date --------- ----- ---- /s/ JAMES A. MIDDLETON - ------------------------------ Director November 19, 1996 James A. Middleton /s/ FRANK SAVAGE - ------------------------------ Director November 19, 1996 Frank Savage /s/ ROBERT H. STEWART, III - ------------------------------ Director November 19, 1996 Robert H. Stewart, III
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