-----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, PiXKJwbRV4LvaOGMA338K9LfMjQ7Sr+WXlnriH+skGFV2EuKogQ8etUVBxDhO+w7 0p+1O9MlgVT2U4Os2qsbQw== 0001036050-97-000559.txt : 19970804 0001036050-97-000559.hdr.sgml : 19970804 ACCESSION NUMBER: 0001036050-97-000559 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19970801 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-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-27099 FILM NUMBER: 97649798 BUSINESS ADDRESS: STREET 1: 3801 WEST CHESTER PIKE CITY: NEWTOWN SQUARE STATE: PA ZIP: 19073 BUSINESS PHONE: 2153592000 S-3/A 1 AMENDMENT NO. 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 1, 1997 REGISTRATION NO. 333-27099 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- AMENDMENT NO. 1 TO FORM S-3 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 (I.R.S. EMPLOYER IDENTIFICATION INCORPORATION OR ORGANIZATION) NUMBER) 3801 WEST CHESTER PIKE, NEWTOWN SQUARE, PENNSYLVANIA 19073-2387 (610) 359-2000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ---------------- ROBERT J. MILLSTONE, ESQ. VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY 3801 WEST CHESTER PIKE, NEWTOWN SQUARE, PENNSYLVANIA 19073-2387 (610) 359-3255 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ---------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement. ---------------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_] If any of the securities being registered on the Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] ---------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED PROSPECTUS - ---------- ARCO CHEMICAL COMPANY $350,000,000 DEBT SECURITIES ------------ ARCO Chemical Company, a Delaware corporation (the "Company"), intends to issue from time to time debt securities (the "Debt Securities") from which the Company will receive up to an aggregate principal amount of $350,000,000, or the equivalent thereof in one or more foreign currencies or composite currencies, including European Currency Units ("ECU"). The Debt Securities may be sold for U.S. dollars or one or more foreign or composite currencies, and the principal of and any interest on the Debt Securities may likewise be payable in U.S. dollars or one or more foreign or composite currencies. The Debt Securities will be offered to the public on terms determined by market conditions at the time of sale. The Debt Securities may be issued in one or more series with the same or various maturities at par or a premium or with an original issue discount. The specific designation, aggregate principal amount, currency, purchase price, maturity, rate and time of payment of interest, whether such Debt Securities are to be issued in book-entry form, any other specific terms and any listing on a securities exchange of the Debt Securities in respect of which this Prospectus is being delivered (the "Offered Debt Securities") are set forth in the accompanying prospectus supplement (the "Prospectus Supplement") together with the terms of offering of the Offered Debt Securities. ------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------ The Debt Securities will be sold directly, through agents designated from time to time, through underwriting syndicates represented by managing underwriters, by underwriters without a syndicate, or by dealers. If any agents of the Company or any underwriters are involved in the sale of the Offered Debt Securities, the names of such agents or underwriters and any applicable commissions or discounts are set forth in the Prospectus Supplement. The net proceeds to the Company from such sale are also set forth in the Prospectus Supplement. This Prospectus may not be used to consummate sales of Debt Securities unless accompanied by a Prospectus Supplement. ------------ The date of this Prospectus is NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE TO WHICH THEY RELATE. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission") relating to its business, financial position, results of operations and other matters. Such reports, proxy statements and other information filed by the Company with the Commission pursuant to the informational requirements of the Exchange Act can be inspected and copied at the Public Reference Section maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 as well as the Commission's regional offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such material can be obtained from the Commission by mail at prescribed rates. Requests should be directed to the Commission's Public Reference Section located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Such material may also be accessed electronically by means of the Commission's web site on the Internet (http://www.sec.gov). Such reports, proxy statements and other information can also be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005, on which one or more of the Company's securities are listed. The Company has filed with the Commission a registration statement on Form S-3 (herein, together with all amendments and exhibits, referred to as the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Reference is made to the Registration Statement and to the exhibits relating thereto for further information with respect to the Company and the securities offered thereby. Statements contained herein concerning any document filed as an exhibit are not necessarily complete and, in each instance, reference is made to the copy of such document filed as an exhibit to the Registration Statement. Each such statement is qualified in its entirety by such reference. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company hereby incorporates by reference herein the following documents: (i) the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1997, (ii) the Company's Current Report on Form 8-K, dated July 21, 1997, (iii) the Company's Current Report on Form 8-K, dated June 27, 1997, (iv) the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1997 and (v) the Company's Annual Report on Form 10-K for the year ended December 31, 1996, all of which have been filed with the Commission under File No. 1- 9678. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the termination of the offering of the Debt Securities offered hereby shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein or in the accompanying Prospectus Supplement modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. 2 The Company will provide without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, upon written or oral request of such person, a copy of any and all of the information incorporated herein by reference (not including exhibits to such information, unless such exhibits are specifically incorporated by reference into such information). Requests should be directed to: Manager, Investor Relations, ARCO Chemical Company, 3801 West Chester Pike, Newtown Square, Pennsylvania 19073-2387 (Telephone: (610) 359-3171 or (610) 359-2000). ARCO CHEMICAL COMPANY ARCO Chemical Company, a Delaware corporation ("ARCO Chemical" or the "Company"), is a leading international manufacturer and marketer of intermediate chemicals and specialty products used in a broad range of consumer goods. The Company's principal executive offices are located at 3801 West Chester Pike, Newtown Square, Pennsylvania 19073-2387 (Telephone: (610) 359-2000). The Company is the successor to certain portions of the ARCO Chemical Division of Atlantic Richfield Company, a Delaware corporation ("ARCO"). On June 9, 1987, ARCO transferred substantially all the assets and liabilities of the oxygenates and polystyrenics business of the then ARCO Chemical Division to the Company in exchange for 80,000,001 shares of the Company's common stock, par value $1.00 (the "Common Stock"). On October 5, 1987, the Company completed an initial public offering of 19,550,000 additional shares of Common Stock. As of the date of this Prospectus, ARCO's 80,000,001 shares represent approximately 82.5 percent of the outstanding shares of Common Stock. USE OF PROCEEDS Unless otherwise indicated in the accompanying Prospectus Supplement, the net proceeds to be received from the sale of the Offered Debt Securities will be used for general corporate purposes, including capital expenditures. Additional information on the use of net proceeds from the sale of Offered Debt Securities may be set forth in the Prospectus Supplement relating to such Offered Debt Securities. RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of earnings to fixed charges of the Company for the periods indicated. The ratios of earnings to fixed charges for the years ended December 31, 1992 through December 31, 1996 have been derived from the audited financial statements of the Company for such periods and the ratio for the six months ended June 30, 1997 has been derived from the unaudited financial statements of the Company for such period.
SIX MONTHS YEAR ENDED DECEMBER 31, ENDED ------------------------ JUNE 30, 1992 1993 1994 1995 1996 1997 ---- ---- ---- ---- ---- ---------- RATIO OF EARNINGS TO FIXED CHARGES.......... 2.9 3.5 4.8 7.6 5.2 3.0
For purposes of these calculations, earnings consist of pretax income from continuing operations, adjusted for interest expense and a rental expense factor. Fixed charges consist of interest expense, capitalized interest and a rental expense factor. 3 DESCRIPTION OF DEBT SECURITIES The following description sets forth certain general terms and provisions of the Debt Securities to which any Prospectus Supplement may relate. The particular terms of the Offered Debt Securities offered by any Prospectus Supplement and the extent, if any, to which such general provisions may apply to the Offered Debt Securities will be described in the Prospectus Supplement relating to such Offered Debt Securities. The Debt Securities will be unsecured obligations issued under the Indenture, dated as of June 15, 1988 (the "Indenture"), between the Company and The Bank of New York, as trustee (the "Trustee"). The following statements are subject to the detailed provisions of the Indenture, a copy of which is incorporated by reference into the Registration Statement. Wherever particular provisions of the Indenture or terms defined therein are referred to herein or in the Prospectus Supplement, such provisions or terms are incorporated by reference as a part of the statements made, and the statements are qualified in their entirety by such reference. References in italics are to the Indenture. Capitalized terms used but not otherwise defined herein have the meaning given to them in the Indenture. GENERAL The Debt Securities will rank equally with all other unsecured and unsubordinated debt of the Company. The Indenture does not limit the amount of debt, either secured or unsecured, that may be issued by the Company under the Indenture or otherwise. Debt Securities may be issued from time to time up to an aggregate principal amount of $350,000,000 and will be offered to the public on terms determined by market conditions at the time of sale. The Debt Securities may be issued in one or more series with the same or various maturities, at par or a premium or with an original issue discount. Reference is made to the Prospectus Supplement for the following terms of the Debt Securities offered thereby: (i) the designation of and any limit upon the aggregate principal amount of such Debt Securities; (ii) the percentage of principal amount at which such Debt Securities will be issued; (iii) the date or dates on which such Debt Securities will mature; (iv) the currency of denomination of such Debt Securities, which may be in Dollars or in any Foreign Currency or composite currency, including ECUs; (v) the designation of the currency or currencies in which payment of the principal of, and premium, if any, and the interest on such Debt Securities will be made, and whether, in the event the currency of denomination is other than Dollars but the payment of principal thereof, and premium, if any, and interest thereon is payable in Dollars, payment of the principal of, and premium, if any, or the interest on such Debt Securities, at the election of a Holder thereof, may instead be payable in the currency of denomination; (vi) the rate or rates (which may be fixed or floating) per annum, if any, at which such Debt Securities will bear interest; (vii) the times at which any such interest will be payable; (viii) any index used to determine the amounts of payments of principal of, and premium, if any, and interest on such Debt Securities; and (ix) any redemption terms or other specific terms associated with such Debt Securities. One or more series of Debt Securities may be sold at a substantial discount from their stated principal amount, bearing no interest or interest at a rate which at the time of issuance is below market rates. One or more series of Debt Securities may be floating rate debt securities or floating rate debt securities which are exchangeable for fixed rate debt securities. Federal income tax consequences and special considerations applicable to any such series will be described in the Prospectus Supplement relating thereto. Any series of Debt Securities may be issued in whole or in part in book- entry form. The Prospectus Supplement relating to a series of Debt Securities which may be issued in book-entry form will specify the terms and procedures relating thereto. Debt Securities, to the extent evidenced in registered form, will be issued in denominations of $1,000 and integral multiples thereof. The Prospectus Supplement relating to a series of Debt Securities denominated in a composite currency or any Foreign Currency or Currencies will specify the 4 denominations thereof. Unless otherwise indicated in the Prospectus Supplement relating thereto, principal, and premium, if any, and interest are to be payable at the principal corporate trust office of the Trustee in New York, New York, or at any paying agency maintained at the time by the Company for such purpose. At the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as it appears on the register for Debt Securities. Debt Securities may be presented for registration of transfer or exchange at such office of the Trustee or at such other location or locations as may be established pursuant to the Indenture without any service charge but subject to the limitations provided in the Indenture. GLOBAL SECURITIES The Debt Securities of a series may be issued in whole or in part in the form of one or more Global Securities that will be deposited with, or on behalf of, a depositary (the "Depositary") identified in the Prospectus Supplement relating to such series. Global Securities may be issued only in fully registered form and in either temporary or permanent form. Unless and until it is exchanged in whole or in part for the individual Debt Securities represented thereby, a Global Security may not be transferred except as a whole by the Depositary for such Global Security to a nominee of such Depositary or by a nominee of such Depositary to a successor Depositary or any nominee of such successor. The specific terms of the depositary arrangement with respect to a series of Debt Securities will be described in the Prospectus Supplement relating to such series. The Company anticipates that the following provisions will generally apply to depositary arrangements. Upon the issuance of a Global Security, the Depositary for such Global Security or its nominee will credit, on its book entry registration and transfer system, the respective principal amounts of the individual Debt Securities represented by such Global Security to the accounts of persons that have accounts with such Depositary. Such accounts shall be designated by the dealers, underwriters or agents with respect to such Debt Securities or by the Company if such Debt Securities are offered and sold directly by the Company. Ownership of beneficial interests in a Global Security will be limited to persons that have accounts with the applicable Depositary ("participants") or persons that may hold interests through participants. Ownership of beneficial interests in such Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the applicable Depositary or its nominee (with respect to interests of participants) and the records of participants (with respect to interests of persons other than participants). The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a Global Security. So long as the Depositary for a Global Security, or its nominee, is the registered owner of such Global Security, such Depositary or such nominee, as the case may be, will be considered the sole owner or holder of the Debt Securities represented by such Global Security for all purposes under the Indenture. Except as provided herein, owners of beneficial interests in a Global Security will not be entitled to have any of the individual Debt Securities of the series represented by such Global Security registered in their names, will not receive or be entitled to receive physical delivery of any such Debt Securities of such series in definitive form and will not be considered the owners or holders thereof under the Indenture governing such Debt Securities. Payments of principal, any premium on, and any interest on, individual Debt Securities represented by a Global Security registered in the name of a Depositary or its nominee will be made to the Depositary or its nominee, as the case may be, as the registered owner of the Global Security representing such Debt Securities. Neither the Company, the Trustee for such Debt Securities, any paying agent, nor the security registrar for such Debt Securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of the Global Security for such Debt Securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Company expects that the Depositary for a series of Debt Securities or its nominee, upon receipt of any payment of principal, premium or interest in respect of a permanent Global Security representing any of such 5 Debt Securities, immediately will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Security for such Debt Securities as shown on the records of such Depositary or its nominee. The Company also expects that payments by participants to owners of beneficial interests in such Global Security held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name." Such payments will be the responsibility of such participants. If the Depositary for a series of Debt Securities is at any time unwilling, unable or ineligible to continue as depositary and a successor depositary is not appointed by the Company within 90 days, the Company will issue individual Debt Securities of such series in exchange for the Global Security representing such series of Debt Securities. In addition, the Company may at any time and in its sole discretion, subject to any limitations described in the Prospectus Supplement relating to such Debt Securities, determine not to have any Debt Securities of a series represented by one or more Global Securities and, in such event, will issue individual Debt Securities of such series in exchange for the Global Security or Securities representing such series of Debt Securities. Further, if the Company so specifies with respect to the Debt Securities of a series, an owner of a beneficial interest in a Global Security representing Debt Securities of such series may, on terms acceptable to the Company, the Trustee and the Depositary for such Global Security, receive individual Debt Securities of such series in exchange for such beneficial interests, subject to any limitations described in the Prospectus Supplement relating to such Debt Securities. In any such instance, an owner of a beneficial interest in a Global Security will be entitled to physical delivery of individual Debt Securities of the series represented by such Global Security equal in principal amount to such beneficial interest and to have such Debt Securities registered in its name. Individual Debt Securities of such series so issued will be issued in denominations, unless otherwise specified by the Company, of $1,000 and integral multiples thereof. LIMITATION ON LIENS The Company agrees that neither it nor any Restricted Subsidiary will issue, assume or guarantee any notes, bonds, debentures or other similar evidences of indebtedness for money borrowed ("Debt") secured by a mortgage, lien, pledge or other encumbrance ("Mortgages") upon any Restricted Property without effectively providing that the Debt Securities (together with, if the Company so determines, any other indebtedness or obligation then existing or thereafter created ranking equally with the Debt Securities) shall be secured equally and ratably with (or prior to) such Debt so long as such Debt shall be so secured, except that this restriction will not apply to: (a) Mortgages affecting property of a corporation existing at the time it becomes a Subsidiary or at the time it is merged into or consolidated with the Company or a Subsidiary; (b) Mortgages on property existing at the time of acquisition thereof or incurred to secure payment of the purchase price thereof or to secure Debt incurred prior to, at the time of, or within 24 months after the acquisition for the purpose of financing all or part of the purchase price; (c) Mortgages on any property to secure all or part of the cost of improvement or construction thereon or Debt incurred to provide funds for such purpose in a principal amount not exceeding the cost of such improvements or construction; (d) Mortgages which secure only indebtedness owing by a Subsidiary to the Company or a Subsidiary; (e) certain Mortgages to government entities, including pollution control or industrial revenue bond financing; (f) Mortgages required by any contract or statute in order to permit the Company or a Subsidiary to perform any contract or subcontract made by it with or at the request of the United States of America, any state or any department, agency or instrumentality or political subdivision of either; and (g) subject to certain conditions, any extension, renewal or replacement of any Mortgage referred to in the foregoing clauses (a) through (f). Notwithstanding the foregoing, the Company and any one or more Restricted Subsidiaries may, without securing the Debt Securities, issue, assume or guarantee Debt which would otherwise be subject to the foregoing restrictions in an aggregate principal amount which, together with all other such Debt of the Company and its Restricted Subsidiaries which would otherwise be subject to the foregoing restrictions (not including Debt permitted to be secured under clauses (a) to (g) inclusive above) and the aggregate Value of Sale and Lease-Back Transactions (other than those in connection with which the Company has voluntarily retired Funded Debt) does not at any one time exceed 10% of the Consolidated Net Tangible Assets of the Company and its consolidated Subsidiaries. (Sections 5.03 and 5.04) 6 The term Restricted Property means any of the Company's or a Subsidiary's manufacturing plants for the production of oxygenated chemicals or styrene- based polymers (other than such determined by the Board of Directors not to be a principal plant) located in the continental United States, and any shares of capital stock or indebtedness of a Restricted Subsidiary. The term Restricted Subsidiary means any Subsidiary which owns Restricted Property unless substantially all such Subsidiary's physical properties are located outside the continental United States. The term Subsidiary means any corporation at least a majority of the outstanding securities of which having ordinary voting power to elect a majority of the board of directors of such corporation is at the time owned or controlled directly or indirectly by the Company or one or more Subsidiaries or by the Company and one or more Subsidiaries. The term Consolidated Net Tangible Assets means the total amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (i) all current liabilities (excluding any thereof which are by their terms extendible or renewable at the option of the obligor thereon to a time more than 12 months after the time as of which the amount thereof is being computed), and (ii) all goodwill, trade names, trademarks, patents, purchased technology, unamortized debt discount and other like intangible assets, all as set forth on the most recent quarterly balance sheet of the Company and its consolidated Subsidiaries and computed in accordance with generally accepted accounting principles. (Article One) The Company agrees that, if, upon any consolidation or merger of the Company with or into any other corporation, or upon any sale or conveyance of all or substantially all of its property to any other corporation, any of the property of the Company or of any Restricted Subsidiary would thereupon become subject to any mortgage, lien or pledge, the Company will first secure the Debt Securities equally and ratably with any other obligations of the Company or any Restricted Subsidiary then entitled thereto, by a direct lien on all such property prior to all liens other than any theretofore existing thereon. (Section 12.02) LIMITATION ON DEBT The Indenture does not contain any limitation on the aggregate amount of Debt that may be assumed by the Company and does not offer any credit or event risk protection to holders of Debt Securities in the event that the Company engages in or is the subject of a highly leveraged transaction. The Indenture provisions described under "Limitation on Liens," however, may have the effect of inhibiting the Company from engaging in, or preventing the Company from being the subject of, some types of highly leveraged transactions. LIMITATION ON SALE AND LEASE-BACK The Company agrees that neither it nor any Restricted Subsidiary will enter into any Sale and Lease-Back Transaction with respect to any Restricted Property with any person (other than the Company or a Subsidiary) unless either (a) the Company or such Restricted Subsidiary would be entitled, pursuant to the above provisions, to incur Debt in a principal amount equal to or exceeding the Value of such Sale and Lease-Back Transaction secured by a Mortgage on the property to be leased without equally and ratably securing the Debt Securities, or (b) the Company during or immediately after the expiration of four months after the effective date of such transaction applies to the voluntary retirement of its Funded Debt an amount equal to the greater of: (1) the net proceeds of the sale of the property leased in such transaction or (2) the fair value in the opinion of the Board of Directors of the leased property at the time such transaction was entered into (subject to credits for certain voluntary retirements of Funded Debt, including the Debt Securities). (Sections 5.04 and 5.05) MODIFICATION OF THE INDENTURE The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of not less than 50% in principal amount of the Debt Securities of each series affected by the modification or amendment at the time outstanding, to modify the Indenture or any supplemental indenture or the rights of the Holders of the Debt Securities; provided that no such modification may without the consent of the Holder of each outstanding Debt Security thereby affected (a) extend the fixed maturity of any Debt Security, or reduce the rate of interest, or extend the time of payment of interest thereon, or reduce the principal amount thereof or the time during which a premium is payable thereon, or change the currency in which the Debt Security is payable, or reduce the amount of the principal of an original issue discount security that would be due and payable upon acceleration or provable upon bankruptcy without the consent of the Holder of each Debt 7 Security so affected, (b) reduce the aforesaid percentage of Debt Securities, the consent of the Holders of which is required for any such modification, or the consent of the Holders of which is required for any waiver of certain provisions of or defaults under the Indenture or (c) modify the provisions heretofore described in this paragraph, except to increase any percentage described above or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the Holders of all outstanding Debt Securities of such series so affected. (Section 11.02) EVENTS OF DEFAULT The Indenture defines an Event of Default with respect to a particular series of Debt Securities as being any one of the following events and such other event as may be established for the Debt Securities of such series: (a) default for 30 days in any payment of interest on such series; (b) default in any payment of principal, and premium, if any, on such series when due; (c) default for 30 days in the payment of any sinking fund installment when due; (d) default for 90 days after appropriate notice in performance of any other covenant in the Indenture applicable to that series; or (e) certain events of bankruptcy, insolvency or reorganization. No Event of Default with respect to a particular series of Debt Securities issued under the Indenture necessarily constitutes an Event of Default with respect to any other series of Debt Securities issued thereunder. In case an Event of Default shall occur and be continuing with respect to a particular series of Debt Securities, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Debt Securities then outstanding of the series (or, in the case of defaults under (d) or (e), of the Debt Securities of all series) may declare the principal or, in the case of Debt Securities issued with original issue discount, the amount specified in the terms thereof, of such series (or of all outstanding Debt Securities, as the case may be) to be due and payable. Any Event of Default with respect to a particular series of Debt Securities may be waived by the Holders of a majority in aggregate principal amount of the outstanding Debt Securities of such series (or of the outstanding Debt Securities of all series, in the case of defaults under (d) or (e)), except in each case a failure to pay principal, or premium, if any, or interest on such Debt Securities. (Section 7.01) The Indenture requires the Company to file annually with the Trustee an Officers' Certificate as to the absence of certain defaults under the terms of the Indenture. (Section 5.08) The Indenture provides that the Trustee may withhold notice to the Holders of the Debt Securities of any default (except in payment of principal, or premium, if any, or interest) if it considers it in the interest of the Holders of the Debt Securities to do so. (Section 7.08) Subject to the provisions of the Indenture relating to the duties of the Trustee in case an Event of Default shall occur and be continuing, the Indenture provides that the Trustee shall be under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of the Holders of the Debt Securities unless such Holders shall have offered to the Trustee reasonable indemnity. (Section 7.04, 8.01 and 8.02) Subject to such provisions for indemnification and certain other rights of the Trustee, the Indenture provides that the Holders of a majority in principal amount of the outstanding Debt Securities of the particular series affected shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. (Sections 7.07 and 8.02) CONSOLIDATION, MERGER AND TRANSFER OF ASSETS The Company may not consolidate with or merge into any corporation, or transfer its assets substantially as an entirety to any person, unless the successor corporation or transferee assumes the Company's obligations on the Debt Securities and under the Indenture, and certain other conditions are met, except that no such assumption will be required in any case where the Company transfers all or substantially all its assets located in the United States to one or more wholly owned Subsidiaries organized under the laws of the United States or any political subdivision thereof. (Article Twelve) To the extent any such assets constitute Restricted Property, the Subsidiary to which they were transferred would be a Restricted Subsidiary. See "Limitation on Liens." DEFEASANCE If so specified in the Prospectus Supplement with respect to Debt Securities of any series, the Company, at its option, (i) will be discharged from any and all obligations in respect of the Debt Securities of such series 8 (except for certain obligations to register the transfer or exchange of Debt Securities of such series, replace stolen, lost or mutilated Debt Securities of such series, maintain paying agencies, and hold moneys for payment in trust) or (ii) will not be subject to provisions of the Indenture described above under "Limitation on Liens," "Limitation on Sale and Lease-Back" and "Consolidation, Merger and Transfer of Assets" with respect to the Debt Securities of such series, in each case if the Company deposits with the Trustee, in trust, money or U.S. Government Obligations which through the payment of interest thereon and principal thereof in accordance with their terms will provide money in an amount sufficient to pay all the principal (including any mandatory sinking fund payments) of, premium, if any, and interest on, the Debt Securities of such series on the dates such payments are due in accordance with the terms of such Debt Securities. In case any Debt Securities of a series are to be redeemed prior to their Stated Maturity, the Company must have given the Trustee such irrevocable notices and instructions as are required for redemption pursuant to the terms of the Debt Securities of such series. To exercise any such defeasance option, the Company is required to deliver to the Trustee an Opinion of Counsel to the effect that, if the Debt Securities of such series are then listed on the New York Stock Exchange, such Debt Securities would not be delisted as a result of the exercise of such option. (Sections 14.01, 14.02 and 14.03) Under Federal income tax laws as of the date of this Prospectus, such deposit and discharge may be treated as an exchange of the related Debt Securities. Each holder of such Debt Securities might be required to recognize gain or loss equal to the difference between the holder's cost or other tax basis for the Debt Securities and the value of the holder's interest in the trust. Such holders might be required to include in income a different amount than would be includable without the discharge. Prospective investors are urged to consult their own tax advisers as to the consequences of such a deposit and discharge, including the applicability and effect of tax laws other than the Federal income tax law. CONCERNING THE TRUSTEE The Bank of New York is the Trustee under the Indenture. The Bank of New York also acts as Trustee under the Indenture for the Company's 9.9% Debentures due 2000, 9.375% Debentures due 2005, 10.25% Debentures due 2010 and 9.8% Debentures due 2020. The Bank of New York also acts as trustee for ARCO with respect to three public debt issues and extends credit to ARCO in the ordinary course of business. The Trustee may extend credit to the Company and its Subsidiaries in the future. PLAN OF DISTRIBUTION The Company may sell the Debt Securities (i) through underwriters or dealers; (ii) directly to a limited number of institutional purchasers or to a single purchaser; (iii) through agents; or (iv) through a combination of any such methods of sale. The Prospectus Supplement with respect to the Offered Debt Securities sets forth the terms of the offering of the Offered Debt Securities, including the name or names of any underwriters, the purchase price of the Offered Debt Securities and the proceeds to the Company from such sale, any underwriting discounts and other items constituting underwriters' compensation, any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers and any securities exchanges on which the Offered Debt Securities may be listed. If underwriters are used in the sale, the Debt Securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The Debt Securities may be offered to the public through underwriting syndicates represented by managing underwriters. Unless otherwise set forth in the Prospectus Supplement, the obligations of the underwriters to purchase the Offered Debt Securities will be subject to certain conditions precedent and the underwriters will be obligated to purchase all the Offered Debt Securities if any are purchased. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. Offered Debt Securities may be sold directly by the Company or through agents designated by the Company from time to time. Any agent involved in the offer or sale of the Offered Debt Securities in respect of which this 9 Prospectus is delivered will be named, and any commissions payable by the Company to such agent will be set forth, in the Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment. If so indicated in the Prospectus Supplement, the Company will authorize agents, underwriters or dealers to solicit offers by certain specified institutions to purchase Offered Debt Securities from the Company at the public offering price set forth in the Prospectus Supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such contracts will be subject only to those conditions set forth in the Prospectus Supplement and the Prospectus Supplement will set forth the commission payable for solicitation of such contracts. Agents and underwriters may be entitled under agreements entered into with the Company to indemnification by the Company against certain civil liabilities, including liabilities under the Securities Act, or to contribution with respect to payments which the agents or underwriters may be required to make in respect thereof. Agents and underwriters may be customers of, engage in transactions with, or perform services for the Company in the ordinary course of business. Each series of Offered Debt Securities will be a new issue of securities with no established trading market. Any underwriters to whom Offered Debt Securities are sold by the Company for public offering and sale may make a market in such Offered Debt Securities, but such underwriters will not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given as to the liquidity of the trading market for any Offered Debt Securities. PRINCIPAL STOCKHOLDER; CONTROL OF THE COMPANY As of the date of this Prospectus, ARCO owns 80,000,001 shares of Common Stock, representing approximately 82.5% of the outstanding shares of Common Stock. Under applicable provisions of the General Corporation Law of Delaware, ARCO is able, acting alone, to elect the entire Board of Directors of the Company and to approve any action requiring stockholder approval. ARCO's percentage ownership of the outstanding voting stock will preclude any acquisition of control of the Company not favored by ARCO. ARCO, including its subsidiaries, is one of the largest integrated enterprises in the petroleum industry. ARCO conducts operations in two business segments, resources and products. ARCO owns an 82.3% equity interest in Vastar Resources, Inc., which conducts natural gas and, to a lesser extent, oil, exploration, production and marketing operations. ARCO also owns a 49.9% equity interest in Lyondell Petrochemical Company, which operates petrochemical processing and petroleum refining businesses. In 1994, ARCO issued Exchangeable Notes due September 15, 1997 ("Notes"), which, at ARCO's option, can be exchanged at maturity into Lyondell common stock or cash of equal value. In July, 1997, ARCO finalized its decision to deliver shares of Lyondell common stock at maturity to settle all of the Notes. Upon the exchange, ARCO's equity interest in Lyondell will be substantially reduced or eliminated. EXPERTS The consolidated financial statements of the Company and its subsidiaries that are included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996, incorporated by reference in this Prospectus, have been incorporated herein in reliance on the report of Coopers & Lybrand L.L.P., independent accountants, given on the authority of such firm as experts in accounting and auditing. 10 LEGAL OPINIONS Certain matters relating to the legality of the Debt Securities offered hereby will be passed upon for the Company by Robert J. Millstone, Esq., Vice President, General Counsel and Secretary of the Company. As of June 30, 1997, Mr. Millstone owned an aggregate of 2,357 shares of Common Stock, held directly and under a Company benefit plan, and options to purchase another 48,300 shares of Common Stock. Mr. Millstone disclaims beneficial ownership of 318 shares of Common Stock held for or in trust for certain family members as of June 30, 1997. Certain matters relating to the legality of the Debt Securities offered hereby will be passed upon for any underwriters, agents or purchasers by Drinker Biddle & Reath LLP. 11 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Securities and Exchange Commission Registration Fee............. $106,060.61 Fees and expenses of the Trustee................................ 15,000.00* Printing and engraving expenses................................. 75,000.00* Rating Agency fees.............................................. 125,000.00* Legal fees...................................................... 100,000.00* Accounting fees................................................. 25,000.00* Qualification under state securities laws....................... 10,000.00* Miscellaneous................................................... 14,000.00* ----------- Total......................................................... $470,060.61 ===========
- -------- * Estimated (except for registration fee) and subject to future contingencies. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. 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. 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 persons 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-1 (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. (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. Section 145 of the General Corporation Law of the State of Delaware ("DGCL") provides: (a) A corporation shall have power to 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 the person 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 the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person 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 the person's 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 II-2 presumption that the person did not act in good faith and in a manner which the person 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 the person's conduct was unlawful. (b) A corporation shall have power to 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 the person 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 the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person 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 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 the person 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 II-3 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 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). The Company's Certificate of Incorporation provides that the personal liability of a director of the Company to the Company or to its stockholders for monetary damages for breach of fiduciary duty as a director shall be limited or eliminated to the fullest extent permitted by the DGCL, as amended from time to time. Section 102(b)(7) of the DGCL permits a Delaware corporation such as the Company to include in its certificate of incorporation a provision that eliminates or limits the ability of the corporation and its stockholders to recover monetary damages from a director for breach of fiduciary duty as a director; but does not permit such a provision to eliminate or limit the liability of a director for (i) any breach of the duty of loyalty to the corporation or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) unlawful payments of dividends or unlawful stock repurchases or redemptions as provided under certain provisions of Delaware law, or (iv) any transaction from which the director derived an improper personal benefit. Under an Administrative Services Agreement between ARCO and the Company, ARCO provides the Company with insurance coverage under ARCO's Directors' and Officers' Liability Insurance, which currently has a limit of $205 million, to the extent authorized by the By-Laws of the Company and the laws of the State of Delaware. Under the Underwriting Agreement and Selling Agency Agreement to be entered into between the Company and the underwriters or selling agents, as the case may be, the underwriter or selling agents, as applicable, will agree to indemnify the Company, its directors and certain of its officers against certain civil liabilities, including civil liabilities under the Securities Act. II-4 ITEM 16. EXHIBITS 1.1 Form of proposed Underwriting Agreement.* 1.2 Form of proposed Selling Agency Agreement.* 4 Form of Indenture, dated as of June 15, 1988, between the Company and the Trustee. (Filed as Exhibit 4.2 to the Company's Registration Statement on Form S-3 No. 33-23340 and incorporated herein by reference). 5 Opinion (with consent) of Robert J. Millstone, Esq., Vice President, General Counsel and Secretary of the Company.** 10.1 NLG 300 million (Dutch Guilder) Term Loan Agreement, dated as of March 12, 1997, among ARCO Chemie Nederland, Ltd. (Rotterdam Branch), as Borrower, the Company, as Guarantor, Chase Investment Bank Limited, as Arranger, Chase Manhattan International Limited, as Agent, and the Banks listed therein. (Filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1997). 10.2 Credit Agreement A concerning U.S.$ 200 million 364-day revolving credit facility, dated as of July 23, 1997, among the Company, the Banks named therein and The First National Bank of Chicago, as Agent. (Filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1997). 10.3 Credit Agreement B concerning U.S. $300 million five-year revolving credit facility, dated as of July 23, 1997, among the Company, the Banks named therein and The First National Bank of Chicago, as Agent. (Filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1997). 12 Statement re computation of ratios.* 23.1 Consent of Robert J. Millstone, Esq., Vice President, General Counsel and Secretary of the Company (included in Exhibit 5).** 23.2 Consent of Coopers & Lybrand L.L.P.* 24 Power of Attorney.** 25 Statement on Form T-1 of eligibility of Trustee under the Indenture.* - -------- * Filed herewith. **Previously filed. ITEM 17. UNDERTAKINGS A. Undertaking Pursuant to Rule 415. The undersigned registrant 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; notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; and II-5 (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 (i) and (ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (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 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. Undertaking Regarding Documents Subsequently Filed Under the Exchange Act. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in this 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. Undertaking in Respect of Indemnification. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 15 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange 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 registrant of expenses incurred or paid by a director, officer or controlling person of the registrant 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 registrant will, unless in the opinion of the 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. D. Undertaking Pursuant to Rule 430A. The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus 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. II-6 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE COMPANY CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN NEWTOWN SQUARE, COMMONWEALTH OF PENNSYLVANIA, ON AUGUST 1, 1997. ARCO Chemical Company By: Ronald R. Remick --------------------------------- RONALD R. REMICK VICE PRESIDENT AND TREASURER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE --------- ----- ---- Anthony G. Fernandes* Chairman of the August 1, 1997 - ------------------------------------- Board and Director ANTHONY G. FERNANDES Alan R. Hirsig* President, Chief August 1, 1997 - ------------------------------------- Executive Officer ALAN R. HIRSIG and Director Marvin O. Schlanger* Executive Vice August 1, 1997 - ------------------------------------- President, Chief MARVIN O. SCHLANGER Operating Officer and Director Walter J. Tusinski* Senior Vice August 1, 1997 - ------------------------------------- President, Chief WALTER J. TUSINSKI Financial Officer and Director Walter F. Beran* Director August 1, 1997 - ------------------------------------- WALTER F. BERAN
II-7
SIGNATURE TITLE DATE --------- ----- ---- Marie L. Knowles* Director August 1, 1997 - ------------------------------------- MARIE L. KNOWLES James A. Middleton* Director August 1, 1997 - ------------------------------------- JAMES A. MIDDLETON Stephen R. Mut* Director August 1, 1997 - ------------------------------------- STEPHEN R. MUT Frank Savage* Director August 1, 1997 - ------------------------------------- FRANK SAVAGE Robert H. Stewart, III* Director August 1, 1997 - ------------------------------------- ROBERT H. STEWART, III Van Billet Vice President and August 1, 1997 - ------------------------------------- Controller VAN BILLET (principal accounting officer) *By: Robert J. Millstone August 1, 1997 --------------------------------- ROBERT J. MILLSTONE (ATTORNEY IN FACT)
II-8 INDEX TO EXHIBITS
EXHIBIT NUMBER EXHIBITS ------- -------- 1.1 Form of proposed Underwriting Agreement.* 1.2 Form of proposed Selling Agency Agreement.* 4 Form of Indenture, dated as of June 15, 1988, between the Company and the Trustee. (Filed as Exhibit 4.2 to the Company's Registration Statement on Form S-3 No. 33-23340 and incorporated herein by reference). 5 Opinion (with consent) of Robert J. Millstone, Esq., Vice President, General Counsel and Secretary of the Company.** 10.1 NLG 300 million (Dutch Guilder) Term Loan Agreement, dated as of March 12, 1997, among ARCO Chemie Nederland, Ltd. (Rotterdam Branch), as Borrower, the Company, as Guarantor, Chase Investment Bank Limited, as Arranger, Chase Manhattan International Limited, as Agent, and the Banks listed therein. (Filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1997). 10.2 Credit Agreement A concerning U.S. $200 million 364-day revolving credit facility, dated as of July 23, 1997, among the Company, the Banks named therein and The First National Bank of Chicago, as Agent. (Filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1997). 10.3 Credit Agreement B concerning U.S. $300 million five-year revolving credit facility, dated as of July 23, 1997, among the Company, the Banks named therein and The First National Bank of Chicago, as Agent. (Filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1997). 12 Statement re computation of ratios.* 23.1 Consent of Robert J. Millstone, Esq., Vice President, General Counsel and Secretary of the Company (included in Exhibit 5).** 23.2 Consent of Coopers & Lybrand L.L.P.* 24 Power of Attorney.** 25 Statement on Form T-1 of eligibility of Trustee under the Indenture.*
- -------- * Filed herewith. **Previously filed. EX-1.1 2 UNDERWRITING AGREEMENT UNDERWRITING AGREEMENT ---------------------- New York, New York Dated the date set forth in Schedule I hereto To the Representatives named in Schedule I hereto of the Underwriters named in Schedule II hereto Ladies and Gentlemen: ARCO Chemical Company, a Delaware corporation (the "Company"), proposes to sell to the underwriters named in Schedule II hereto (the "Underwriters"), for whom you are acting as representatives (the "Representatives"), the principal amount of its securities identified in Schedule I hereto (the "Securities"), to be issued under an indenture (the "Indenture") dated as of June 15, 1988, between the Company and The Bank of New York, as trustee (the "Trustee"), as amended or supplemented at the date of this Agreement. Each series of Securities may vary, as applicable, as to title, aggregate principal amount, rank, interest rate or formula and timing of payments thereof, stated maturity date, redemption and/or repayment provisions, sinking fund requirements, conversion provisions and any other variable terms established by or pursuant to the Indenture. If the firm or firms listed in Schedule II hereto include only the firm or firms listed in Schedule I hereto, then the terms "Underwriters" and "Representatives," as used herein shall each be deemed to refer to such firm or firms. 1. Representations and Warranties. The Company represents and warrants to, and agrees with, each Underwriter that: (a) The Company meets the requirements for use of Form S-3 under the Securities Act of 1933 (the "Act") and has filed with the Securities and Exchange Commission (the "Commission") a registration statement on such Form (the file number of which is set forth in Schedule I hereto), which has become effective, for the registration of the Securities under the Act and no stop order suspending the effectiveness of the registration statement has been issued under the Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with. The Company may have filed one or more amendments to the registration statement, and may have used a Preliminary Final Prospectus (as hereinafter defined), EXHIBIT 1.1 each of which has previously been furnished to you. Such registration statement, as amended at the date of this Agreement and including the information, if any, deemed to be a part thereof pursuant to Rule 430A(b) (the "Rule 430A Information") or Rule 434(d) (the "Rule 434 Information") of the rules and regulations of the Commission under the Act, meets the requirements set forth in Rule 415(a)(1)(x) under the Act and complies in all other material respects with said Rule. The Company proposes to file with the Commission pursuant to Rules 415 and 424(b)(2) or (5) under the Act a final supplement to the form of prospectus included in such registration statement relating to the Securities and the plan of distribution thereof and has previously advised you of all further information (financial and other) with respect to the Company to be set forth therein. Such registration statement, including incorporated documents, exhibits and financial statements, as amended and read together at the date of this Agreement, is hereinafter called the "Registration Statement" (in the event that more than one registration statement is referred to in Schedule I hereto, the term Registration Statement shall refer to all such registration statements); such prospectus in the form in which it appears in the Registration Statement is hereinafter called the "Basic Prospectus"; and such supplemented form of prospectus, in the form in which it shall be filed with the Commission pursuant to Rule 424(b) (including the Basic Prospectus as so supplemented) is hereinafter called the "Final Prospectus." Any preliminary form of the Final Prospectus which has heretofore been filed pursuant to Rule 424 is hereinafter called the "Preliminary Final Prospectus." Any reference herein to the Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Securities Exchange Act of 1934 (the "Exchange Act") on or before the date of this Agreement, or the issue date of the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as the case may be; and any reference herein to the terms "amend," "amendment" or "supplement" with respect to the Registration Statement or the Final Prospectus shall be deemed to refer to and include the filing of any document under the Exchange Act after the date of this Agreement or the Final Prospectus, as the case may be, and on or prior to the Closing Date (as hereinafter defined) and therefore deemed to be incorporated therein by reference. All references in this Agreement to financial statements and schedules and other information which is "contained," "included" or "stated" (or other references of like import) in the Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall be deemed to mean and include all such -2- financial statements and schedules and other information which is incorporated by reference in the Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as the case may be. (b) As of the date hereof, when the Final Prospectus is first filed pursuant to Rule 424(b) under the Act, when the Registration Statement became effective, when, prior to the Closing Date (as hereinafter defined), any amendment to the Registration Statement becomes effective (including any document incorporated by reference in such Registration Statement and the filing of the Company's most recent Annual Report on Form 10-K with the Commission), and at the Closing Date (as hereinafter defined), (i) the Registration Statement, as amended as of any such time, and the Final Prospectus, as amended or supplemented and when read together with the other information in the Final Prospectus as of any such time, and the Indenture, as amended or supplemented as of any such time, did or will comply in all material respects with the applicable requirements of the Act, the Trust Indenture Act of 1939 (the "Trust Indenture Act") and the Exchange Act and the respective rules and regulations thereunder and (ii) neither the Registration Statement, as amended as of any such time and including the Rule 430A Information or Rule 434 Information, if any, deemed to be a part thereof, nor the Final Prospectus, as amended or supplemented as of any such time, did or will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. Notwithstanding the foregoing, the Company makes no representations or warranties as to (i) that part of the Registration Statement which shall constitute the Statement of Eligibility and Qualification under the Trust Indenture Act of the Trustee (the "Form T-1") or (ii) the information contained in or omitted from the Registration Statement or the Final Prospectus or any amendment thereof or supplement thereto in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Underwriter through the Representatives specifically for use in connection with the preparation of the Registration Statement and the Final Prospectus; for this purpose, the information set forth in each of the first paragraph following the table and footnotes thereto on page S-1 and under the caption "Underwriting" on page S-__ in the Final Prospectus shall constitute the only information furnished to the Company in writing by an Underwriter through the Representatives expressly for use in the Registration Statement in connection with the offer and sale of the Securities (the "Provided Information"). -3- (c) Except as otherwise stated in the Registration Statement and Final Prospectus (as such terms are defined in Section 1(a) to include incorporated documents, exhibits, financial statements, amendments, additional registration statements and prospectus supplements), since the respective dates of the Registration Statement and Final Prospectus, (i) there has been no material adverse change in the financial condition, earnings or business affairs of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a "Material Adverse Effect") and (ii) there have been no transactions entered into by the Company or any of its subsidiaries, other than those arising in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise. (d) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware with corporate power and authority to own its properties and conduct its business as described in the Final Prospectus, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification wherein it owns or leases material properties or conducts material business or is subject to no material liability or disability by reason of failure to be so qualified in any such jurisdiction. (e) As of the date hereof, each of ARCO Chemie Nederland, Ltd., a Delaware corporation ("ACN"), ARCO Chemical Delaware Company, a Delaware corporation ("ACDC"), The Meadows Corporation, a Delaware corporation ("Meadows" and together with ACN and ACDC, the "Corporate Subsidiaries" and individually a "Corporate Subsidiary"), ARCO Chimie France SNC, a French partnership ("ACF"), POSM II Limited Partnership, L.P., a Delaware limited partnership ("POSM"), and ARCO Chemical Technology, L.P., a Delaware limited partnership ("ACT") is a "significant subsidiary" of the Company (as such term is defined in Rule 1-02 of Regulation S-X promulgated under the Act) (each, a "Subsidiary" and, collectively, the "Subsidiaries"). Each Corporate Subsidiary has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or be in good standing would not result in a Material Adverse Effect. Except as otherwise stated in the -4- Registration Statement and the Final Prospectus, all of the issued and outstanding capital stock of each Corporate Subsidiary has been duly authorized and is validly issued, fully paid and non-assessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. None of the outstanding shares of capital stock of any Corporate Subsidiary was issued in violation of preemptive or other similar rights of any securityholder of such Corporate Subsidiary. ACF owns or has valid rights to use, all items of real and personal property which are material to its business, free and clear of all liens, encumbrances and claims which may materially interfere with its financial condition, results of operations or business. POSM and ACT have been duly formed and are validly existing as limited partnerships under the Uniform Delaware Limited Partnership Act, with full partnership power and authority to own or lease their properties and conduct their business and are duly qualified or registered as foreign limited partnerships for the transaction of business under the laws of each jurisdiction in which their ownership or lease of property or the conduct of their business requires such qualifications, except where the failure to be so qualified or registered would not have a Material Adverse Effect. The Company, directly or indirectly, owns a 100% interest in ACF and ACT and a ____ % interest in POSM, in each case free and clear of any liens, encumbrances or claims which could produce a Material Adverse Effect. (f) This Agreement has been duly authorized, executed and delivered by the Company. (g) The Indenture, as amended or supplemented at the date of this Agreement, has been duly authorized, executed and delivered, has been duly qualified under the Trust Indenture Act, and constitutes a legal, valid and binding instrument enforceable against the Company in accordance with its terms (subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity); and the Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture, as amended or supplemented at the date of this Agreement, and delivered to and paid for by the Underwriters pursuant to this Agreement, in the case of the Underwriters' Securities, or by the purchasers thereof pursuant to Delayed Delivery Contracts, in the case of any Contract Securities (as defined below), will constitute legal, valid and binding obligations of the Company entitled to the benefits of the -5- Indenture, as amended or supplemented at the date of this Agreement. (h) There is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Company of a character required to be disclosed in the Registration Statement which is not adequately disclosed in the Registration Statement or the Final Prospectus, and there is no franchise, contract or other document of a character required to be described in the Registration Statement or Final Prospectus, or to be filed as an exhibit, which is not described or filed as required; and the statements included or incorporated in the Final Prospectus describing any legal proceedings or material contracts or agreements relating to the Company fairly summarize such matters. (i) Neither the issue and sale of the Securities, nor the consummation of any other of the transactions herein contemplated nor the fulfillment of the terms hereof or of any Delayed Delivery Contracts will conflict with, result in a breach of, or constitute a default under the Restated Certificate of Incorporation or By-Laws of the Company or the terms of any indenture or other material agreement or instrument to which the Company is a party or bound, or any order or regulation applicable to the Company of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company. (j) The Company is not, and upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the Final Prospectus will not be, an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"). 2. Purchase and Sale. Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company agrees to sell to each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the Company, at the purchase price set forth in Schedule I hereto, the principal amount of the Securities set forth opposite such Underwriter's name in Schedule II hereto, except that, if Schedule I hereto provides for the sale of Securities pursuant to delayed delivery arrangements, the respective principal amounts of Securities to be purchased by the Underwriters shall be as set forth in Schedule II hereto, less the respective amounts of Contract Securities determined as provided below. Securities to be purchased by the Underwriters are herein sometimes called the "Underwriters' Securities" and Securities to be purchased pursuant to Delayed Delivery Contracts as hereinafter provided are herein called "Contract Securities." -6- If so provided in Schedule I hereto, the Underwriters are authorized to solicit offers to purchase Securities from the Company pursuant to delayed delivery contracts ("Delayed Delivery Contracts"), substantially in the form of Schedule III hereto but with such changes therein as the Company may authorize or approve. The Underwriters will endeavor to make such arrangements and, as compensation therefor, the Company will pay to the Representatives, for the account of the Underwriters, on the Closing Date, the percentage set forth in Schedule I hereto of the principal amount of the Securities for which Delayed Delivery Contracts are made. Delayed Delivery Contracts are to be with institutional investors, including commercial and savings banks, insurance companies, pension funds, investment companies and educational and charitable institutions. The Company will make Delayed Delivery Contracts in all cases where sales of Contract Securities arranged by the Underwriters have been approved by the Company but, except as the Company may otherwise agree, each such Delayed Delivery Contract must be for not less than the minimum principal amount set forth in Schedule I hereto and the aggregate principal amount of Contract Securities may not exceed the maximum aggregate principal amount set forth in Schedule I hereto. The Underwriters will not have any responsibility in respect of the validity or performance of Delayed Delivery Contracts. The principal amount of Securities to be purchased by each Underwriter as set forth in Schedule II hereto shall be reduced by an amount which shall bear the same proportion to the total principal amount of Contract Securities as the principal amount of Securities set forth opposite the name of such Underwriter bears to the aggregate principal amount set forth in Schedule II hereto, except to the extent that you determine that such reduction shall be otherwise than in such proportion and so advise the Company in writing; provided, however, that the total principal amount of Securities to be purchased by all Underwriters shall be the aggregate principal amount set forth in Schedule II hereto, less the aggregate principal amount of Contract Securities. 3. Delivery and Payment. Delivery of and payment for the Underwriters' Securities shall be made at the office, on the date and at the time specified in Schedule I hereto, which date and time may be postponed by agreement between the Representatives and the Company or as provided in Section 8 hereof (such date and time of delivery and payment for the Securities being herein called the "Closing Date"). Delivery of the Underwriters' Securities shall be made to the Representatives for the respective accounts of the several Underwriters against payment by the several Underwriters through the Representatives of the purchase price thereof to or upon the order of the Company by wire transfer of immediately available funds to a bank account designated by the Company. Certificates for the Underwriters' Securities shall be registered in such names and in such -7- denominations as the Representatives may request at least one full business day in advance of the Closing Date. The Company agrees to have the Underwriters' Securities available for inspection, checking and packaging by the Representatives in New York, New York, not later than 10:00 AM on the business day prior to the Closing Date. 4. Agreements. The Company agrees with the several Underwriters that: (a) Prior to the termination of the offering of the Securities, the Company will not file any amendment to the Registration Statement or supplement (including the Final Prospectus) to the Basic Prospectus unless the Company has furnished you a copy for your review prior to filing and will not file any such proposed amendment or supplement to which you reasonably object. Subject to the foregoing sentence, the Company will cause the Final Prospectus to be filed with the Commission pursuant to Rule 424(b) within the time period prescribed and will provide evidence to you of such filing. The Company will promptly advise the Representatives (i) when the Final Prospectus shall have been filed with the Commission pursuant to Rule 424(b), (ii) when any amendment to the Registration Statement shall have been filed or become effective, (iii) of the receipt of any comments from the Commission, (iv) of any request by the Commission for any amendment of the Registration Statement or amendment of or supplement to the Final Prospectus or for any additional information, (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose, (vi) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (vii) of any change in the rating assigned by any nationally recognized statistical rating organization to the Securities of the Company, or the public announcement by any nationally recognized statistical rating organization that it has under surveillance or review, with possible negative implications, its rating of the Securities, or the withdrawal by any nationally recognized statistical rating organization of its rating of the Securities and (viii) of the happening of any event which makes untrue any statement of a material fact made in the Registration Statement (insofar as the Registration Statement relates to or covers the Underwriters' Securities) or the Final Prospectus, or which requires the making of a change in the Registration Statement or the Final Prospectus in order to make any material statement therein not misleading. The Company will use its best efforts to prevent the issuance of any stop order, as described in clause (v) of the third sentence of this paragraph (a), and, if issued, to obtain as soon as possible the withdrawal thereof. -8- (b) If, at any time when a prospectus relating to the Securities is required to be delivered under the Act, any event occurs as a result of which the Final Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it shall be necessary to amend or supplement the Final Prospectus to comply with the Act or the Exchange Act or the respective rules thereunder, the Company promptly will prepare and file with the Commission, subject to the first sentence of paragraph (a) of this Section 4, an amendment or supplement which will correct such statement or omission or effect such compliance. (c) The Company will make generally available to its securityholders and to the Representatives as soon as practicable, but not later than 45 days after the end of the 12-month period beginning at the end of the current fiscal quarter of the Company, an earnings statement (which need not be audited) of the Company and its subsidiaries, covering such 12-month period, which will satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act. (d) The Company will furnish to the Representatives and counsel for the Underwriters, without charge upon request, copies of the Registration Statement (including exhibits thereto) and each amendment thereto which shall become effective on or prior to the Closing Date and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Act or the Exchange Act, as many copies of any Preliminary Final Prospectus and the Final Prospectus and any amendments thereof and supplements thereto as the Representatives may reasonably request. (e) The Company will use reasonable efforts in cooperating with the Underwriters to arrange for the qualification of the Securities for sale under the laws of such jurisdictions as the Representatives may designate, will maintain such qualifications in effect so long as required for the distribution of the Securities and will arrange for the determination of the legality of the Securities for purchase by institutional investors. (f) The Company will pay all reasonable costs incident to the performance of its obligations hereunder, including the costs of the preparation, printing, delivering and filing of all documents relating to the offering; the preparation, issuance and delivery of the Securities, or any certificates for the Securities, to the Underwriters, including any transfer taxes and any stamp or other duties payable upon the sale, issuance or delivery of the Securities to the Underwriters; the costs of any filings, if any, with the National Association of Securities -9- Dealers, Inc. relating to the Securities; the fees paid to rating agencies in connection with the rating of the Securities; the fees and disbursements of the Company's counsel, accountants and other advisors or agents (including transfer agents and registrars); as well as the fees and disbursements of the Trustee; the fees and expenses incurred with respect to the listing of the Securities and the reasonable costs (including filing fees and fees and disbursements of counsel to the Underwriters) of qualifying the Securities as provided in paragraph (e) of this Section 4 and preparing memoranda relating thereto. Except as provided in this paragraph (f) and in Section 6 hereof, the Underwriters shall pay all costs incident to the performance of their obligations hereunder, including the fees and disbursements of their counsel, any transfer taxes on any Securities sold by them and the expenses of advertising any offering of the Securities made by them. (g) Until the business day following the Closing Date, the Company will not, without the consent of the Representatives, offer or sell, or announce the offering of, any debt securities covered by the Registration Statement or any other registration statement filed under the Act. (h) The Company will from time to time timely update through the Closing Date its representations in Section 1(e) hereof to the extent required by additions to or deletions from its universe of significant subsidiaries (as defined in Rule 1-02 of Regulation S-X), which updating shall, for purposes hereof, constitute a revision to the definitions of "Corporate Subsidiaries" and "Subsidiaries". 5. Conditions to the Obligations of the Underwriters. The obligations of the Underwriters to purchase the Underwriters' Securities shall be subject to the accuracy of the representations and warranties on the part of the Company contained herein as of the date hereof, as of the date of the effectiveness of any amendment to the Registration Statement filed prior to the Closing Date (including the filing of any document incorporated by reference therein) and as of the Closing Date, to the accuracy of the statements of the Company made in any certificates pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions: (a) No stop order suspending the effectiveness of the Registration Statement, as amended from time to time, shall have been issued and no proceedings for that purpose shall have been instituted or threatened and the Final Prospectus shall have been filed with the Commission in the manner and within the time period required by Rule 424(b). -10- (b) The Company shall have furnished to the Representatives the opinion of the General Counsel or an Associate General Counsel of the Company, dated the Closing Date, to the effect that: (i) each of the Company and its Corporate Subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with corporate power and authority to own its properties and conduct its business as described in the Final Prospectus, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification wherein it owns or leases material properties or conducts material business or is subject to no material liability or disability by reason of failure to be so qualified in any such jurisdiction. POSM and ACT have been duly formed and are validly existing as limited partnerships under the Uniform Delaware Limited Partnership Act, with full partnership power and authority to own or lease their properties and conduct their business and are duly qualified or registered as foreign limited partnerships for the transaction of business under the laws of each jurisdiction in which their ownership or lease of property or the conduct of their business requires such qualifications, except where the failure to be so qualified or registered would not have a Material Adverse Effect; (ii) all the outstanding shares of capital stock of each Corporate Subsidiary have been duly and validly authorized and issued and are fully paid and nonassessable, and, except as otherwise set forth in the Final Prospectus, all outstanding shares of capital stock of such Corporate Subsidiaries are owned by the Company either directly or through wholly owned subsidiaries free and clear of any perfected security interest and, to the knowledge of such counsel, after due inquiry, any other security interests, claims, liens or encumbrances. None of the outstanding shares of capital stock of any Corporate Subsidiary was issued in violation of preemptive or other similar rights of any securityholder of each Corporate Subsidiary. The Company, directly or indirectly, owns a 100% interest in ACF and ACT and a ____ % interest in POSM which, to the knowledge of such counsel, after due inquiry, is in each case free and clear of any liens, encumbrances or claims which could produce a Material Adverse Effect; -11- (iii) the Company's authorized equity capitalization is as set forth in the Final Prospectus; the Securities conform to the description thereof contained in the Final Prospectus; and, if the Securities are to be listed on the New York Stock Exchange, authorization therefor has been given, subject to official notice of issuance and evidence of satisfactory distribution, or the Company has filed, or has undertaken to file, a preliminary listing application and all required supporting documents with respect to the Securities with the New York Stock Exchange, and such counsel has no reason to believe that the Securities will not be authorized for listing, subject to official notice of issuance and evidence of satisfactory distribution; (iv) the Indenture, as amended or supplemented as of the Closing Date, has been duly authorized, executed and delivered, has been duly qualified under the Trust Indenture Act, and constitutes a legal, valid and binding instrument enforceable against the Company in accordance with its terms (subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity); and the Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture, as amended or supplemented as of the Closing Date, and delivered to and paid for by the Underwriters pursuant to this Agreement, in the case of the Underwriters' Securities, or by the purchasers thereof pursuant to Delayed Delivery Contracts, in the case of any Contract Securities, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture, as amended or supplemented as of the Closing Date; (v) the information in the Final Prospectus under "Description of Debt Securities" or any caption purporting to describe any such Securities and "Certain United States Federal Income Tax Considerations," in the Annual Report on Form 10-K under "Legal Proceedings," as updated in Part II, Item 1 of the succeeding Quarterly Reports on Form 10-Q, and in the Registration Statement under Item 15, to the extent that it constitutes matters of law, summaries of legal matters, the Company's Restated Certificate of Incorporation or By-laws or legal proceedings, or legal conclusions, has been reviewed by such counsel and is accurate in all material respects. -12- (vi) to the best knowledge of such counsel, there is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries, of a character required to be disclosed in the Registration Statement which is not adequately disclosed in the Final Prospectus; all descriptions in the Registration Statement of contracts and other documents, to which the Company or its subsidiaries are a party are accurate in all material respects, and there is no franchise, contract or other document of a character required to be described in the Registration Statement or Final Prospectus, or to be filed as an exhibit, which is not described or filed as required; and the statements included or incorporated in the Final Prospectus describing any legal proceedings or material contracts or agreements relating to the Company fairly summarize such matters; (vii) the Registration Statement and any amendments thereto have become effective under the Act; any required filing of the Prospectus pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b) and to the best knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement, as amended, has been issued, no proceedings for that purpose have been instituted or threatened, and the Registration Statement, the Final Prospectus and each amendment thereof or supplement thereto as of their respective effective or issue dates (other than the financial statements and other financial information contained therein as to which such counsel need express no opinion) complied as to form in all material respects with the applicable requirements of the Act and the Exchange Act and the respective rules thereunder; and such counsel has no reason to believe that the Registration Statement or any amendment thereof, as of the later of the time it became effective or the time of filing by the Company with the Commission of the latest subsequent amendment thereto or Annual Report on Form 10-K, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Final Prospectus, as amended or supplemented, includes any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; -13- (viii) this Agreement and any Delayed Delivery Contracts have been duly authorized, executed and delivered by the Company; (ix) no consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated herein or in any Delayed Delivery Contracts, except such as have been obtained under the Act and such as may be required under the blue sky laws of any jurisdiction in connection with the purchase and distribution of the Securities by the Underwriters and such other approvals (specified in such opinion) as have been obtained; (x) the Company is not an "investment company" within the meaning of the 1940 Act; and (xi) to the best knowledge of such counsel, the Company is not in violation of its Restated Certificate of Incorporation or By-laws. (xii) neither the issue and sale of Securities, nor the consummation of any other of the transactions herein contemplated, nor the fulfillment of the terms hereof or of any Delayed Delivery Contracts will conflict with, result in a breach of, or constitute a default under the Restated Certificate of Incorporation or By-Laws of the Company or the terms of any material indenture or other agreement or instrument known to such counsel and to which the Company or any of its subsidiaries is a party or bound, or any order or regulation known to such counsel to be applicable to the Company or any of its subsidiaries of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or any of its subsidiaries. In rendering such opinion, such counsel may state that he expresses no opinion as to the laws of any jurisdiction outside the United States and may rely (a) as to matters involving the application of laws of any jurisdiction other than the Federal law of the United States or the General Corporation Law of the State of Delaware, to the extent deemed proper and specified in such opinion, upon the opinion of other counsel of good standing believed to be reliable and who are satisfactory to counsel for the Underwriters or, if satisfactory to counsel for the Underwriters, upon his review of the laws of such jurisdictions; and (b) as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Company and public officials. -14- (c) The Representatives shall have received from Drinker Biddle & Reath LLP, counsel for the Underwriters, such opinion or opinions, dated the Closing Date, with respect to the issuance and sale of the Securities, the Indenture, any Delayed Delivery Contracts, the Registration Statement, the Final Prospectus and other related matters as the Representatives may reasonably require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. (d) The Company shall have furnished to the Representatives a certificate of the Company, signed by a financial Senior Vice President or Vice President, the Treasurer or the Manager of Corporate Finance, dated the Closing Date, to the effect that the signer of such certificate has carefully examined the Registration Statement, the Final Prospectus and this Agreement and that: (i) the representations and warranties of the Company in this Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date; (ii) no stop order suspending the effectiveness of the Registration Statement, as amended, has been issued and no proceedings for that purpose have been instituted or, to the Company's knowledge, threatened; and (iii) since the date of the most recent financial statements included in the Final Prospectus, there has been no Material Adverse Effect, except as set forth or contemplated in the Final Prospectus. (e) At the date of this Agreement, Coopers & Lybrand shall have furnished to the Representatives a letter, in form and substance satisfactory to the Representatives, dated the date of this Agreement (or, with respect to matters involving changes or developments since the respective dates as of which specified information is given in the Final Prospectus, as of a date not more than three business days prior to the date of such letter or letters), of the type described in the American Institute of Certified Public Accountants' Statement on Auditing Standards No. 72. In addition, at the Closing Date, Coopers & Lybrand shall have furnished to the Representatives a letter or letters, dated as of the Closing Date (or, with respect to matters involving changes or developments since the respective dates as of which specified -15- financial information is given in the Final Prospectus, as of a date not more than three business days prior to the date of such letter or letters), stating the conclusions and findings of such firm with respect to the financial information and other matters covered by the letter referred to in the first sentence of this paragraph (e) and confirming in all material respects the conclusions and findings set forth in such prior letter. (f) Subsequent to the respective dates as of which information is given in the Registration Statement and the Final Prospectus, there shall not have been (i) any change or decrease specified in the letter or letters referred to in paragraph (e) of this Section 5 or (ii) any change, or any development involving a prospective change, in or affecting the business affairs or business prospects, financial condition or properties of the Company and its subsidiaries the effect of which, in any case referred to in clause (i) or (ii) above, in the judgment of the Representatives, so materially impairs the investment quality of the Securities as to make it impracticable or inadvisable to proceed with the offering or the delivery of the Securities as contemplated by the Registration Statement and the Final Prospectus. (g) Prior to the Closing Date, the Company shall have furnished to the Representatives and counsel for the Underwriters such further information, certificates, documents, and opinions (including tax opinions) as the Representatives or such counsel may reasonably request. (h) The Company shall have accepted Delayed Delivery Contracts in any case where sales of Contract Securities arranged by the Underwriters have been approved by the Company. (i) At the Closing Date, the Securities shall have ratings accorded by Moody's Investors Service, Inc. or Standard & Poor's Corporation, and the Company shall have delivered to the Representatives a letter, dated as of such date, from each such rating organization, or other evidence reasonably satisfactory to the Representatives, confirming that the Securities have such ratings. Between the execution and delivery of this Agreement and the Closing Date, there shall not have been any decrease in the ratings of any of the Company's debt securities by Moody's Investors Service, Inc. or Standard & Poor's Corporation. (j) At the Closing Date, the Securities shall have been approved for listing, subject only to official notice of issuance, if and as specified in the Final Prospectus. If any of the conditions specified in this Section 5 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall -16- not be in all material respects reasonably satisfactory in form and substance to the Representatives and their counsel, this Agreement and all obligations of the Underwriters hereunder may be canceled at, or at any time prior to, the Closing Date by the Representatives. Notice of such cancellation shall be given to the Company in writing or by telephone or telegraph confirmed in writing. Any such termination or cancellation shall be without liability of any party to any other party except to the extent provided in Sections 4(f), 6, 7 and 10 hereof. 6. Reimbursement of Underwriters' Expenses. If the sale of the Securities provided for herein is not consummated because any condition to the obligations of the Underwriters set forth in Section 5 hereof is not satisfied or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply with any provision hereof other than by reason of a default by any of the Underwriters, the Company will reimburse the Underwriters severally upon demand for all out-of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have been incurred by them in connection with the proposed purchase and sale of the Securities. 7. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless each Underwriter and each person who controls any Underwriter within the meaning of either the Act or the Exchange Act, against any and all losses, claims, damages, liabilities and expenses, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Securities as originally filed or in any amendment thereof, including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating, preparing or defending any such loss, claim, damage, liability or action, and to the extent of the aggregate -17- amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, provided that, subject to Section 7(d) below, any such settlement is effected with the written consent of the Company and; provided, however, that (i) the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein concerning the Provided Information or Form T-1 and (ii) such indemnity with respect to the Basic Prospectus or any Preliminary Final Prospectus shall not inure to the benefit of any Underwriter (or any person controlling such Underwriter) from whom the person asserting any such loss, claim, damage, liability or expense purchased the Securities which are the subject thereof if such person did not receive a copy of the Final Prospectus (or the Final Prospectus as amended or supplemented) excluding documents incorporated therein by reference at or prior to the confirmation of the sale of such Securities to such person in any case where such delivery is required by the Act and the untrue statement or omission of a material fact contained in the Basic Prospectus or any Preliminary Final Prospectus was corrected in the Final Prospectus (or the Final Prospectus as amended or supplemented). This indemnity agreement will be in addition to any liability which the Company may otherwise have. (b) Each Underwriter severally agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who signs the Registration Statement, and each person who controls the Company within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company to each Underwriter, but only with reference to the Provided Information. This indemnity agreement will be in addition to any liability which any Underwriter may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action by an indemnified party, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof; but failure promptly to notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the indemnified party -18- promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 7 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by the Representatives in the case of paragraph (a), representing the indemnified parties under paragraph (a) who are parties to such action), (ii) the indemnifying party shall not have employee counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii). (d) No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 7 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (e) In order to provide for just and equitable contribution in circumstances in which the indemnification -19- provided for in paragraph (a) of this Section 7 is due in accordance with its terms, but is for any reason held by a court to be unavailable from the Company on grounds of policy or otherwise, the Company and the Underwriters shall contribute to the aggregate losses, claims, damages, liabilities and expenses (including legal or other expenses reasonably incurred in connection with investigation or defending same) to which the Company and one or more of the Underwriters may be subject (i) in such proportion so that the Underwriters are responsible for that portion represented by the percentage that the underwriting discount bears to the sum of such discount and the purchase price of the Securities specified in Schedule I hereto and the Company is responsible for the balance or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and of the Underwriters, on the other hand, in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other equitable considerations; provided, however, that (y) in no case shall any Underwriter (except as may be provided in any agreement among underwriters relating to the offering of the Securities) be responsible for any amount in excess of the underwriting discount applicable to the Securities purchased by such Underwriter hereunder and (z) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The relative fault of the Company, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. For purposes of this Section 7, each person who controls an Underwriter within the meaning of the Act shall have the same rights to contribution as such Underwriter, and each person who controls the Company within the meaning of either the Act or the Exchange Act, each officer of the Company who shall have signed the Registration Statement, and each director of the Company shall have the same rights to contribution as the Company, subject in each case to clauses (y) and (z) of this paragraph (e). The Underwriters' respective obligations to contribute pursuant to this Section 7 are several in proportion to the number or aggregate principal amount, as the case may be, of Securities set forth opposite their respective names in Schedule II to this Agreement, and not joint. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against -20- another party or parties under this paragraph (e), notify such party or parties from whom contribution may be sought, but failure promptly to notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve the party or parties from whom contribution may be sought from any other obligation it or they may have otherwise than under this paragraph (e). 8. Default by an Underwriter. If any one or more Underwriters shall fail to purchase and pay for any of the Securities agreed to be purchased by such Underwriter or Underwriters hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Underwriters shall be obligated severally to take up and pay for (in the respective proportions which the amount of Securities set forth opposite their names in Schedule II hereto bear to the aggregate amount of Securities set opposite the names of all the remaining Underwriters) the Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase; provided, however, that in the event the aggregate amount of Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate amount of Securities set forth in Schedule II hereto, the remaining Underwriters shall have the right to purchase all, but shall not be under any obligation to purchase any, of the Securities, and if such nondefaulting Underwriters do not purchase all the Securities, this Agreement will terminate without liability to any nondefaulting Underwriter or the Company. In the event of a default by any Underwriter as set forth in this Section 8, the Closing Date shall be postponed for such period, not exceeding seven days, as the Representatives shall determine in order that the required changes in the Registration Statement and the Final Prospectus or in any other documents or arrangements may be effected. Nothing contained in this Agreement shall relieve any defaulting Underwriter of its liability, if any, to the Company and any nondefaulting Underwriter for damages occasioned by its default hereunder. 9. Termination. This Agreement shall be subject to termination in the absolute discretion of the Representatives, by notice given to the Company prior to delivery of and payment for the Securities, if prior to such time (i) there has been, since the date hereof or since the respective dates as of which information is given in the Final Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) trading in any securities of the Company has been suspended or limited by the Commission or the New York Stock Exchange or, -21- if trading in securities generally on the New York Stock Exchange or the American Stock Exchange or in the Nasdaq National Market shall have been suspended or limited or minimum or maximum prices shall have been established, or maximum ranges for prices have been required, by either exchange or by such system by order of the Commission, the NASD or any other governmental authority, (ii) a banking moratorium shall have been declared either by Federal or New York State authorities or, if the Securities include Securities denominated or payable in, or indexed to, one or more foreign or composite currencies, by the relevant authorities in the related foreign country or countries, (iii) there shall have occurred any material adverse change in the financial markets in the United States or, if the Securities include Securities denominated or payable in, or indexed to, one or more foreign or composite currencies, in the international financial markets, or any outbreak or material escalation of hostilities or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Representatives, impracticable to market the Securities or to enforce contracts for the sale of the Securities. 10. Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other statements of the Company or its officers and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or the Company or any of the officers, directors or controlling persons referred to in Section 7 hereof, and will survive delivery of and payment for the Securities. The provisions of Sections 6 and 7 hereof shall survive the termination or cancellation of this Agreement. 11. Notices. All communications hereunder will be in writing and effective only on receipt, and if sent to the Representatives, will be mailed, delivered or telegraphed and confirmed to them, at the address specified in Schedule I hereto; or, if sent to the Company, will be mailed, delivered or telegraphed and confirmed to it at ARCO Chemical Company, 3801 West Chester Pike, Newtown Square, Pennsylvania 19073-2387, to attention of the Treasurer. 12. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 7 hereof, and no other person will have any right or obligation hereunder. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters and the Company and their respective successors and the officers -22- and directors and controlling persons referred to in Section 7 hereof and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. 13. Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws or principles thereof. Specified times of day refer to New York City time. If the foregoing is in accordance with your understanding of our agreement, please sign and return the enclosed duplicate hereof, whereupon this letter, along with all counterparts, and your acceptance shall represent a binding agreement between the Company and the Representatives. Very truly yours, ARCO CHEMICAL COMPANY By: ----------------------------- The foregoing Agreement is hereby confirmed and accepted as of the date specified in Schedule I hereto. By: ----------------------------- Title: By: ----------------------------- Title: -23- For themselves and the other several Underwriters, if any, named in Schedule II to the foregoing Agreement. SCHEDULE I Underwriting Agreement dated Registration Statement No. 333-27099 Representatives: Title, Purchase Price and Description of Securities: Title: Principal Amount: $ Purchase Price: Sinking fund provisions: Redemption provisions: Other provisions: As set forth in Prospectus Supplement dated Closing Date, Time and Location: Delayed Delivery Arrangements: SCHEDULE II
Underwriter Amount - ----------- ------ $ ------ Total .............................................................. $ ======
SCHEDULE III Delayed Delivery Contract , 1997 [Insert name and address of lead representative] Dear Sirs: The undersigned hereby agrees to purchase from ARCO Chemical Company (the "Company"), and the Company agrees to sell to the undersigned, on , 19 (the "Delivery Date"), $ principal amount of the Company's (the "Securities") offered by the Company's (the "Securities") offered by the Company's Prospectus dated , 19 , and related Prospectus Supplement dated , 19 , receipt of a copy of which is hereby acknowledged, at a purchase price of % of the principal amount thereof, plus [accrued interest] [amortization of original issue discount], if any, thereon from , 19 , to the date of payment and delivery, and on the further terms and conditions set forth in this contract. Payment for the Securities to be purchased by the undersigned shall be made on or before [____], New York City time on the Delivery Date to or upon the order of the Company by wire transfer of immediately available funds to a bank account designated by the Company, upon delivery to The Depository Trust Company ("DTC") of the Securities in definitive fully registered form registered in the name of DTC or its nominee and in such authorized denominations as the undersigned may request by written or telegraphic communication addressed to the Company not less than three full business days prior to the Delivery Date. If no request is received, the Securities will be issued in a denomination equal to the aggregate principal amount of Securities to be purchased by the undersigned on the Delivery Date. The obligation of the undersigned to take delivery of and make payment for Securities on the Delivery Date, and the obligation of the Company to sell and deliver Securities on the Delivery Date, shall be subject to the conditions (and neither party shall incur any liability by reason of the failure thereof) that (1) the purchase of Securities to be made by the undersigned, which purchase the undersigned represents is not prohibited on the date hereof, shall not on the Delivery Date be prohibited under the laws of the jurisdiction to which the undersigned is subject, and (2) the Company, on or before the Delivery Date, shall have sold to certain underwriters (the "Underwriters") such principal amount of the Securities as is to be sold to them pursuant to the Underwriting Agreement referred to in the Prospectus and Prospectus Supplement mentioned above. Promptly after completion of such sale to the Underwriters, the Company will mail or deliver to the undersigned at its address set forth below notice to such effect, accompanied by a copy of the opinion of counsel for the Company delivered to the Underwriters in connection therewith. The obligation of the undersigned to take delivery of and make payment for the Securities, and the obligation of the Company to cause the Securities to be sold and delivered, shall not be affected by the failure of any purchaser to take delivery of and make payment for the Securities pursuant to other contracts similar to this contract. This contract will inure to the benefit of and be binding upon the parties hereto and their respective successors, but will not be assignable by either party hereto without the written consent of the other. It is understood that acceptance of this contract and other similar contracts is in the Company's sole discretion and, without limiting the foregoing, need not be on a first come, first served basis. If this contract is acceptable to the Company, it is required that the Company sign the form of acceptance below and mail or deliver one of the counterparts hereof to the undersigned at its address set forth below. This will become a binding contract between the Company and the undersigned, as of the date first above written, when such counterpart is so mailed or delivered. This agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws principles thereof. Very truly yours, ----------------------------------- (Name of Purchaser) By: --------------------------------- (Signature and Title of Officer) ------------------------------------ (Address) Accepted: ARCO Chemical Company, By: ----------------------- (Authorized Signature) EX-1.2 3 SELLING AGENCY AGREEMENT SELLING AGENCY AGREEMENT ------------------------ New York, New York Dated the date set forth in Schedule I hereto To the Agents named in Schedule I hereto Ladies and Gentlemen: ARCO Chemical Company, a Delaware corporation (the "Company"), proposes to authorize each of the firms named in Schedule I hereto (each, an "Agent", and collectively, the "Agents") to act as its agent to solicit orders for all or part of its securities identified in Schedule I hereto (the "Securities"), to be issued under an indenture (the "Indenture") dated as of June 15, 1988, between the Company and The Bank of New York, as trustee (the "Trustee"), as amended or supplemented at the date of this Agreement. 1. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, the Agents as set forth in this Section 1. Certain terms used in this Section 1 are defined in paragraph (c) hereof (a) If the offering of the Securities is a Delayed Offering (as specified in Schedule I hereto), paragraph (i) below is applicable and, if the offering of the Securities is a Non-Delayed Offering (as so specified), paragraph (ii) below is applicable. (i) The Company meets the requirements for use of Form S-3 under the Securities Act of 1933 (the "Act") and has filed with the Securities and Exchange Commission (the "Commission") a registration statement on such Form (the file number of which is set forth in Schedule I hereto), including a basic prospectus, which has become effective, for the registration under the Act of the offering and sale of Securities and no stop order suspending the effectiveness of the registration statement (including any Rule 462(b) registration statement) has been issued under the Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with. Such registration statement, as amended at the date of this Agreement, meets the requirements set forth in Rule 415(a)(1)(ix) or (x) under the Act and complies in all material respects with said Rule. The Company has included in such registration statement, or has filed or will file with the Commission pursuant to the applicable paragraph of Rule 424(b) under the Act, a supplement to the form of basic prospectus included in such registration statement relating to the Securities and the plan of distribution thereof (the "Prospectus Supplement"). In connection with the sale of Securities, the Company proposes to file with the Commission pursuant to the applicable paragraph of Rule 424(b) under the Act her supplements to the Prospectus Supplement specifying the interest rates, maturity dates and, if appropriate, other terms of the Securities sold pursuant hereto or the offering thereof. (ii) The Company meets the requirements for the use of Form S-3 under the Act and has filed with the Commission a registration statement on such Form (the file number of which is set forth in Schedule I Exhibit 1.2 hereto), including a basic prospectus, which has become effective for registration under the Act of the offering and sale of the Securities and no stop order suspending the effectiveness of the registration statement (including any Rule 462(b) registration statement) has been issued under the Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with. Such registration statement, as amended at the date of this Agreement, meets the requirements set forth in Rule 415(a)(ix) or (x) under the Act and complies in all other material respects with said Rule. The Company will next file with the Commission a final Prospectus Supplement relating to the Securities in accordance with Rules 430A and 424(b)(1) or (4). The Company has included in such registration statement, as amended at its effective date, all information (other than Rule 430A Information) required by the Act and the rules thereunder to be included in the Final Prospectus with respect to the Securities and the offering thereof. As filed, such final Prospectus Supplement shall contain all Rule 430A information, together with all other such required information, with respect to the Securities and the offering thereof. In connection with the sale of the Securities of the Company proposes to file with the Commission pursuant to the applicable paragraph of Rule 424(b) under the Act further supplements to the Prospectus Supplement specifying the interest rates, maturity dates and, if appropriate, other terms of the Securities sold pursuant hereto or the offering thereof. (b) As of the date hereof, when the Final Prospectus is first filed pursuant to Rule 424(b) under the Act, at the date of delivery by the Company of any Securities sold hereunder (a "Closing Date"), when the Registration Statement became effective, when any amendment to the Registration Statement becomes effective (including any document incorporated by reference in such Registration Statement and the filing of the Company's most recent Annual Report on Form 10-K with the Commission), and at the Closing Date (i) the Registration Statement, as amended as of any such time and the Final Prospectus, as amended or supplemented and when read together with the other information in the Final Prospectus as of any such time, and Indenture did or will comply in all material respects with the applicable requirements of the Act, the Trust Indenture Act of 1939 (the "Trust Indenture Act") and the Securities Exchange Act of 1934 (the "Exchange Act") and the respective rules and regulations thereunder and (ii) neither the Registration Statement, as amended as of any such time and including the Rule 430A Information or Rule 434 Information, if any, deemed to be a part thereof, nor the Final Prospectus, as amended or supplemented as of any such time, did or will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. Notwithstanding the foregoing, the Company makes no representations or warranties as to (i) that part of the Registration Statement which shall constitute the Statement of Eligibility and Qualification under the Trust Indenture Act of the Trustee (the Form "T-1") or (ii) the information contained in or omitted from the Registration Statement or the Final Prospectus or any amendment thereof or supplement thereto in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Agent specifically for use in connection with the preparation of the Registration Statement and the Final Prospectus; for this purpose, the information set forth in each of the first paragraph following the table and footnotes thereto on page S-1 and under the caption "_______" on page S-__ in the Final Prospectus shall constitute the only information furnished to the Company in writing by the Agents expressly for use in the Registration Statement in connection with the offer and sale of the Securities (the "Provided Information"). -2- (c) The terms which follow, when used in this Agreement, shall have the meanings indicated. "Basic Prospectus" shall mean the form of basic prospectus relating to the Securities contained in the Registration Statement at the date on which it became effective. "Preliminary Final Prospectus" shall mean any preliminary Prospectus Supplement to the Basic Prospectus which describes the Securities and the offering thereof and is used prior to the filing of the Final Prospectus. "Final Prospectus" shall mean the Basic Prospectus as supplemented by the Prospectus Supplement. "Registration Statement" shall mean the registration statement referred to in paragraph (a) above, including incorporated documents, exhibits and financial statements, as amended and read together at its effective date. "Rule 415 and Rule 424" refer to such rules under the Act. "Rule 430A Information" means information with respect to the Securities and the offering thereof permitted to be omitted from the Registration Statement when it becomes effective pursuant to Rule 430A. "Rule 434 Information" means information with respect to the Securities and the offering thereof permitted to be omitted from the Registration Statement when it becomes effective pursuant to Rule 434. Any reference herein to the Registration Statement, the Basic Prospectus, the Prospectus Supplement, any Preliminary Final Prospectus or the Final Prospectus shall be deemed to refer to and include documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Exchange Act on or before the date of this Agreement or the issue date of the Basic Prospectus, and Preliminary Final Prospectus or the Final Prospectus, as the case may be; and any reference herein to the terms "amend," "amendment" or "supplement" with respect to the Registration Statement or the Final Prospectus shall be deemed to refer to and include the filing of any document under the Exchange Act after the date of this Agreement or the Final Prospectus, as the case may be, and on or prior to the Closing Date and therefore deemed to be incorporated therein by reference. A "Non-Delayed Offering", shall mean an offering of securities that is intended to commence promptly after the effective date of a registration statement, with the result that, pursuant to Rules 415 and 430A all information (other than Rule 430A Information) with respect to the securities so offered must be included in such registration statement at the effective date thereof. A "Delayed Offering" shall mean an offering of securities pursuant to Rule 415 that does not commence promptly after the effective date of a registration statement with the result that only information required pursuant to Rule 415 need be included in such registration statement at the effective date thereof with respect to the securities so offered. Whether the offering of the Securities is a Non-Delayed Offering or a Delayed Offering shall be set forth in Schedule I hereto. (d) Except as otherwise stated in the Registration Statement and Final Prospectus (as such terms are defined in Sections 1(a) and (c) to include incorporated documents, exhibits, financial statements, amendments, additional registration statements and prospectus supplements), since the respective dates of the Registration Statement and Final Prospectus, (i) there has been no material adverse change in the financial condition, earnings or business affairs of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a "Material Adverse Effect") and (ii) there have been no transactions entered into by the Company or any of its subsidiaries, other than those arising in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise. (e) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware with corporate power and authority to own its properties and conduct its business as described in the Final Prospectus, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification wherein it owns or leases material properties or conducts material business or is subject to no material -3- liability or disability by reason of failure to be so qualified in any such jurisdiction. (f) As of the date hereof, each of ARCO Chemie Nederland, Ltd., a Delaware corporation ("ACN"), ARCO Chemical Delaware Company, a Delaware corporation ("ACDC"), The Meadows Corporation, a Delaware corporation ("Meadows" and together with ACN and ACDC, the "Corporate Subsidiaries" and individually a "Corporate Subsidiary"), ARCO Chimie France SNC, a French partnership ("ACF"), POSM II Limited Partnership, L.P., a Delaware limited partnership ("POSM"), and ARCO Chemical Technology, L.P., a Delaware limited partnership ("ACT") is a "significant subsidiary" of the Company (as such term is defined in Rule 1-02 of Regulation S-X promulgated under the Act) (each, a "Subsidiary" and, collectively, the "Subsidiaries"). Each Corporate Subsidiary has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or be in good standing would not result in a Material Adverse Effect. Except as otherwise stated in the Registration Statement and the Final Prospectus, all of the issued and outstanding capital stock of each Corporate Subsidiary has been duly authorized and is validly issued, fully paid and non-assessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. None of the outstanding shares of capital stock of any Corporate Subsidiary was issued in violation of preemptive or other similar rights of any securityholder of such Corporate Subsidiary. ACF owns or has valid rights to use, all items of real and personal property which are material to its business, free and clear of all liens, encumbrances and claims which may materially interfere with its financial condition, results of operations or business. POSM and ACT have been duly formed and are validly existing as limited partnerships under the Uniform Delaware Limited Partnership Act, with full partnership power and authority to own or lease their properties and conduct their business and are duly qualified or registered as foreign limited partnerships for the transaction of business under the laws of each jurisdiction in which their ownership or lease of property or the conduct of their business requires such qualifications, except where the failure to be so qualified or registered would not have a Material Adverse Effect. The Company, directly or indirectly, owns a 100% interest in ACF and ACT and a ____ % interest in POSM, in each case free and clear of any liens, encumbrances or claims which could produce a Material Adverse Effect. (g) This Agreement has been duly authorized, executed and delivered by the Company. (h) The Indenture, as amended or supplemented at the date of this Agreement, has been duly authorized, executed and delivered, has been duly qualified under the Trust Indenture Act, and constitutes a legal, valid and binding instrument enforceable against the Company in accordance with its terms (subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity); and the Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture, as amended or supplemented at the date of this Agreement, and delivered to and paid for by the purchasers thereof, constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture, as amended or supplemented at the date of this Agreement. -4- (i) There is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Company, of a character required to be disclosed in the Registration Statement which is not adequately disclosed in the Registration Statement or the Final Prospectus, and there is no franchise, contract or other document of a character required to be described in the Registration Statement or Final Prospectus, or to be filed as an exhibit, which is not described or filed as required; and the statements included or incorporated in the Final Prospectus describing any legal proceedings or material contracts or agreements relating to the Company fairly summarize such matters. (j) Neither the issue and sale of the Securities, nor the consummation of any other of the transactions herein contemplated nor the fulfillment of the terms hereof will conflict with, result in a breach of, or constitute a default under the Restated Certificate of Incorporation or By-Laws of the Company or the terms of any indenture or other agreement or instrument to which the Company is a party or bound, or any order or regulation applicable to the Company of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company. (k) The Company is not, and upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the Final Prospectus will not be, an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"). 2. Appointment as Agent. (a) Subject to the terms and conditions stated herein and subject to the reservation by the Company of the right to sell Notes directly on its own behalf, the Company hereby agrees that Notes will be sold exclusively to or through the Agents. The Company agrees that it will not appoint any other agents to act on its behalf, or to assist it, in the placement of the Notes. (b) The Company shall not sell or approve the solicitation of offers for the purchase of Notes in excess of the amount which shall be authorized by the Company from time to time or in excess of the aggregate initial offering price of Notes registered pursuant to the Registration Statement. The Agents shall have no responsibility for maintaining records with respect to the aggregate initial offering price of Notes sold, or of otherwise monitoring the availability of Notes for sale, under the Registration Statement. (c) The Agents shall not have any obligation to purchase Notes from the Company as principal. However, absent an agreement between an Agent and the Company that such Agent shall be acting solely as an agent for the Company, such Agent shall be deemed to be acting as principal in connection with any offering of Notes by the Company through such Agent. Accordingly, the Agents, individually or in a syndicate, may agree from time to time to purchase Notes from the Company as principal for resale to investors and other purchasers determined by such Agents. Any purchase of Notes from the Company by an Agent as principal shall be made in accordance with Section 3(a) hereof. (d) If agreed upon between an Agent and the Company, such Agent, acting solely as an agent for the Company and not as principal, will solicit offers for the purchase of Notes. Such Agent will communicate to the Company, orally, each offer for the purchase of Notes solicited by it on an agency basis other than those offers rejected by such Agent. Such Agent shall have the right, in its discretion reasonably exercised, to reject any offer for the purchase of Notes, in whole or in part, and any such rejection shall not be deemed a breach of its agreement contained herein. The Company may accept or reject any offer for the purchase of Notes, in whole or in part. Such Agent shall make reasonable efforts to assist the Company in obtaining performance -5- by each purchaser whose offer for the purchase of Notes has been solicited by it on an agency basis and accepted by the Company. Such Agent shall not have any liability to the Company in the event that any such purchase is not consummated for any reason. If the Company shall default on its obligation to deliver Notes to a purchaser whose offer has been solicited by such Agent on an agency basis and accepted by the Company, the Company shall (i) hold such Agent harmless against any loss, claim or damage arising from or as a result of such default by the Company and (ii) pay to such Agent any commission to which it would otherwise be entitled absent such default. (e) The Company and the Agents agree that any Notes purchased from the Company by one or more Agents as principal shall be purchased, and any Notes the placement of which an Agent arranges as an agent of the Company shall be placed by such Agent, in reliance on the representations, warranties, covenants and agreements of the Company contained herein and on the terms and conditions and in the manner provided herein. 3. Purchases as Principal; Solicitations as Agent. (a) Notes purchased from the Company by the Agents, individually or in a syndicate, as principal shall be made in accordance with terms agreed upon between such Agent or Agents and the Company (which terms, unless otherwise agreed, shall, to the extent applicable, include those terms specified in Exhibit A hereto and shall be agreed upon orally, with written confirmation prepared by such Agent or Agents and mailed to the Company). An Agent's commitment to purchase Notes as principal shall be deemed to have been made on the basis of the representations and warranties of the Company herein contained and shall be subject to the terms and conditions herein set forth. Unless the context otherwise requires, references herein to "this Agreement" shall include the applicable agreement of one or more Agents to purchase Notes from the Company as principal. Each purchase of Notes, unless otherwise agreed, shall be at a discount from the principal amount of each such Note equivalent to the applicable commission set forth in Schedule I hereto. The Agents may engage the services of any broker or dealer in connection with the resale of the Notes purchased by them as principal and may allow all or any portion of the discount received from the Company in connection with such purchases to such brokers or dealers. At the time of each purchase of Notes from the Company by one or more Agents as principal, such Agent or Agents shall specify the requirements for the officers' certificate, opinion of counsel and comfort letter pursuant to Sections 4(g), 4(h) and 4(i) hereof. (b) On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, when agreed by the Company and an Agent, such Agent, as an agent of the Company, will use its reasonable efforts to solicit offers for the purchase of Notes upon the terms set forth in the Final Prospectus. The Agents are not authorized to appoint sub-agents with respect to Notes sold through them as agent. All Notes sold through an Agent as agent will be sold at 100% of their principal amount unless otherwise agreed upon between the Company and such Agent. The Company reserves the right, in its sole discretion, to suspend solicitation of offers for the purchase of Notes through an Agent, as an agent of the Company, commencing at any time for any period of time or permanently. As soon as practicable after receipt of instructions from the Company, such Agent will suspend solicitation of offers for the purchase of Notes from the Company until such time as the Company has advised such Agent that such solicitation may be resumed. The Company agrees to pay each Agent a commission, in the form of a discount, equal to the applicable percentage of the principal amount of each -6- Note sold by the Company as a result of a solicitation made by such Agent, as an agent of the Company, as set forth in Schedule I hereto. (c) The purchase price, interest rate or formula, maturity date and other terms of the Notes specified in Exhibit A hereto (as applicable) shall be agreed upon between the Company and the applicable Agent(s) and specified in a pricing supplement to the Prospectus (each, a "Pricing Supplement") to be prepared by the Company in connection with each sale of Notes. Except as otherwise specified in the applicable Pricing Supplement, the Notes will be issued in denominations of U.S. $1,000 or any larger amount that is an integral multiple of U.S. $1,000. Administrative procedures with respect to the issuance and sale of the Notes (the "Procedures") shall be agreed upon from time to time among the Company, the Agents and the Trustee. The Agents and the Company agree to perform, and the Company agrees to cause the Trustee to agree to perform, their respective duties and obligations specifically provided to be performed by them in the Procedures. 4. Agreements of the Company. The Company agrees with the Agents that: (a) Prior to the termination of the offering of the Securities, the Company will not file any amendment of the Registration Statement or supplement (including the Final Prospectus) to the Basic Prospectus (other than by periodic or current reports filed under the Exchange Act or by an amendment or supplement providing solely for a change in the interest rates on the Securities or a change in the range of maturities of the Securities or a change in the principal amount of Securities remaining to be sold or other changes not material to the offer or sale of the Securities) unless the Company has furnished you a copy for your review prior to filing and will not file any such proposed amendment or supplement to which you reasonably object. Subject to the foregoing sentence, the Company will cause the Final Prospectus to be filed with the Commission pursuant to the applicable paragraph of Rule 424(b) within the time period prescribed and provide evidence satisfactory to you of such filing. The Company will promptly advise the Agents (i) when the initial Final Prospectus shall have been filed with the Commission pursuant to Rule 424(b), (ii) when any amendment to the Registration Statement shall have been filed or become effective, (iii) of the receipt of any comments from the Commission, (iv) of any request by the Commission for any amendment of the Registration Statement or amendment of or supplement to the Final Prospectus or for any additional information, (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose, (vi) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (vii) of the happening of any event which makes untrue any statement of a material fact made in the Registration Statement or the Final Prospectus or which requires the making of a change in the Registration Statement or the Final Prospectus in order to make any material statement therein not misleading, (viii) of any change in the rating assigned by any nationally recognized statistical rating organization to the program or any debt securities (including the Notes) of the Company, or the public announcement by any nationally recognized statistical rating organization that it has under surveillance or review, with possible negative implications, its rating of the Program or any such debt securities, or the withdrawal by any nationally recognized statistical rating organization of its rating of the Program or any such debt securities and (ix) upon the filing of any supplement to the Final Prospectus not reviewed in advance by the Agents pursuant to the first sentence of this paragraph (a). The Company will use its -7- best efforts to prevent the issuance of any stop order, as described in clause (v) of the third sentence of this paragraph (a), and, if issued, to obtain as soon as possible the withdrawal thereof. (b) If, at any time when a prospectus relating to the Securities is required to be delivered under the Act, any event occurs as a result of which the Final Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it shall be necessary to amend or supplement the Registration Statement or the Final Prospectus to comply with the Act or the Exchange Act or the respective rules thereunder, the Company promptly will (i) notify you to suspend solicitation of offers to purchase Securities and to cease using the Final Prospectus, as then amended or supplemented, (ii) prepare and file with the Commission, subject to the first sentence of paragraph (a) of this Section 4, an amendment or supplement which will correct such statement or omission or will effect such compliance and (iii) supply any supplemented Final Prospectus to you in such quantities as you may reasonably request. If such amendment or supplement, and any documents, certificates and opinions furnished to you in connection with the preparation or filing of such amendment or supplement are satisfactory in all respects to you, you will, upon the filing of such amendment or supplement with the Commission and upon the effectiveness of an amendment to the Registration Statement, if such an amendment is required, resume your obligation to solicit offers to purchase Securities hereunder. (c) The Company will make generally available to its securityholders and to the Agents as soon as practicable, but not later than 45 days after the end of the 12-month period beginning at the end of the current fiscal quarter of the Company, an earnings statement (which need not be audited) of the Company and its subsidiaries, covering such 12-month period, which will satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act. (d) The Company will furnish to the Agents and their counsel, without charge upon request, copies of the Registration Statement (including exhibits thereto) and each amendment thereto which shall become effective on or prior to the termination of the offering of the Securities, as many copies of any Preliminary Final Prospectus and the Final Prospectus and any amendments thereof and supplements thereto as the Agents may reasonably request. The Company will pay the expenses of printing all documents relating to the offering. (e) The Company will use reasonable efforts in cooperating with the Agents to arrange for the qualification of the Securities for sale under the laws of such jurisdictions as the Agents may designate, will maintain such qualifications in effect so long as required for the distribution of the Securities and will arrange for the determination of the legality of the Securities for purchase by institutional investors. (f) Each acceptance by the Company of an offer for the purchase of Securities shall be deemed to be an affirmation that the representations and warranties of the Company contained in this Agreement are true and correct at the time of such acceptance, and an undertaking that such representations and warranties will be true and correct at the time of delivery to the purchaser or the purchaser's agent of the Securities relating to such acceptance, as though made at and as of each such time (except that such representations and warranties shall be deemed to relate to the Registration Statement as then in effect and the Final Prospectus then in use). -8- (g) Each time the Final Prospectus shall be amended or supplemented (other than by an amendment or supplement providing solely for a change in the interest rates on the Securities or a change in the range of maturities of the Securities or other changes which, in the reasonable judgment of the Agent, are not material to the offer or sale of the Securities) the Company shall furnish or cause to be furnished forthwith to the Agents a certificate in form satisfactory to the Agents in their reasonable judgment to the effect that the statements contained in the certificate referred to in Section 5(d) hereof which were last furnished to the Agents are true and correct at the time of such amendment or supplement as though made at and as of such time (except that such statements shall be deemed to relate to the Registration Statement as then in effect and the Final Prospectus then in use) or, in lieu of such certificate, a certificate of the same tenor as the certificate referred to in said Section 5(d) but modified to relate to the Registration Statement as then in effect and the Final Prospectus then in use. (h) Each time the Final Prospectus shall be amended or supplemented (other than by an amendment or supplement providing solely for a change in the interest rates on the Securities or a change in the range of maturities of the Securities or other changes which, in the reasonable judgment of the Agent, are not material to the offer or sale of the Securities), the Company shall furnish or cause to be furnished forthwith to the Agents a written opinion of the General Counsel or an Associate General Counsel of the Company, dated the date of delivery of such opinion, of the same tenor as the opinion referred to in Section 5(b) hereof but modified to relate to the Registration Statement as then in effect and the Final Prospectus then in use or, in lieu of such opinion, counsel shall furnish the Agents with a letter to the effect that the Agents may rely on such last furnished opinion to the same extent as though it were dated the date of such letter authorizing reliance (except that statements in such last opinion shall be deemed to relate to the Registration Statement as then in effect and the Final Prospectus as in use at the time of delivery of such letter authorizing reliance). (i) Each time the Final Prospectus shall be amended or supplemented to set forth amended or supplemental financial information, the Company shall cause Coopers & Lybrand forthwith to furnish the Agents a letter, dated the date of filing of such amendment or supplement with the Commission, in form satisfactory to the Agent, of the same tenor as the corresponding portions of the letter referred to in Section 5(e) hereof but modified to relate to the Final Prospectus then in use and with such changes as may be necessary to reflect changes in the financial statements and other information derived from the accounting records of the Company, to the extent such financial statements and other information are available as of a date not more than three calendar days prior to the date of such letter; provided, however, that, if the Final Prospectus is amended or supplemented solely to include or incorporate by reference financial information as of and for a fiscal quarter, Coopers & Lybrand may limit the scope of such letter, which shall be satisfactory in form to you, to the unaudited financial statements, the related "Management's Discussion and Analysis of Financial Condition and Results of Operations" and any other information of an accounting, financial or statistical nature included in such amendment or supplement, unless, in your reasonable judgment, such letter should cover other information or changes in specified financial statement line items. (j) The Company will pay all reasonable costs incident to the performance of its obligations hereunder including the costs of the -9- preparation, printing, delivering and filing of all documents relating to the offering; the preparation, issuance and delivery of the Notes, including any fees and expenses relating to the eligibility and issuance of the Notes in book-entry form and the cost of obtaining CUSIP or other identification numbers for the Notes, to the Underwriters; the fees and disbursements of the Company's accountants, counsel and other advisors or agents (including any calculation agent or exchange rate agent) of the Trustee; the reasonable fees and disbursements of counsel to the Agents incurred in connection with the establishment of the Program and incurred from time to time in connection with the transactions contemplated hereby; the fees and expenses incurred in connection with any listing of Notes on a securities exchange; the costs of any filings, if any, with the National Association of Securities Dealers, Inc. (the "NASD") relating to the Securities, the fees paid to rating agencies in connection with the rating of the Securities and the costs (including filing fees and fees and disbursements of counsel to the Agents) of qualifying the Securities as provided in paragraph (e) of this Section 4 and preparing memoranda relating thereto. The Company will reimburse the Agents for out-of-pocket expenses (including fees and disbursements of counsel) incurred by the Agents in connection with this Agreement and the sale of Securities hereunder. (k) The Company will prepare, with respect to any Notes to be sold to or through one or more Agents pursuant to this Agreement, a Pricing Supplement with respect to such Notes in a form previously approved by the Agents. The Company will deliver such Pricing Supplement no later than 11:00 a.m., New York City time, on the business day following the date of the Company's acceptance of the offer for the purchase of such Notes and will file such Pricing Supplement pursuant to Rule 424(b)(3) under the Act not later than the close of business of the Commission on the fifth business day after the date on which such Pricing Supplement is first used. (l) The Company will from time to time timely update through the Closing Date its representations in Section 1(f) hereof to the extent required by additions to or deletions from its universe of significant subsidiaries (as defined in Rule 1-02 of Regulation S-X), which updating shall, for purposes hereof, constitute a revision to the definitions of "Corporate Subsidiaries" and "Subsidiaries". 5. Conditions to the Obligations of the Agent. The obligations of each Agent hereunder shall be subject to the accuracy of the representations and warranties on the part of the Company contained herein as of the date hereof, as of the date of the effectiveness of the Registration Statement and any amendment to the Registration Statement (including the filing of any document incorporated by reference therein), when any supplement to the Final Prospectus is filed with the Commission, and, as of each date of acceptance by the Company of an offer to purchase Notes and each Closing Date, to the accuracy of the statements of the Company made in any certificates pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions: (a) No stop order suspending the effectiveness of the Registration Statement, as amended from time to time, shall have been issued and no proceedings for that purpose shall have been instituted or threatened and the Final Prospectus shall have been filed with the Commission in the manner and within the time period required by Rule 424(b). (b) The Company shall have furnished to the Agents the opinion of the General Counsel or an Associate General Counsel of the Company, dated the date of this Agreement, to the effect that: -10- (i) each of the Company and its Corporate Subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with corporate power and authority to own its properties and conduct its business as described in the Final Prospectus, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification wherein it owns or leases material properties or conducts material business or is subject to no material liability or disability by reason of failure to be so qualified in any such jurisdiction. POSM and ACT have been duly formed and are validly existing as limited partnerships under the Uniform Delaware Limited Partnership Act, with full partnership power and authority to own or lease their properties and conduct their business and are duly qualified or registered as foreign limited partnerships for the transaction of business under the laws of each jurisdiction in which their ownership or lease of property or the conduct of their business requires such qualifications, except where the failure to be so qualified or registered would not have a Material Adverse Effect; (ii) the Indenture, as amended or supplemented at the date of this Agreement has been duly authorized, executed and delivered, has been duly qualified under the Trust Indenture Act, and constitutes a legal, valid and binding instrument enforceable against the Company in accordance with its terms (subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity); and the Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture, as amended or supplemented at the date of this Agreement, and delivered to and paid for by the purchasers thereof, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture, as amended or supplemented at the date of this Agreement; (iii) the information in the Final Prospectus under "Description of Debt Securities" or any caption purporting to describe any such Securities, "Certain United States Federal Income Tax Considerations" in the Annual Report on Form 10-K under "Legal Proceedings," as updated in Part II, Item 1 of the succeeding Quarterly Reports on Form 10-Q, and in the Registration Statement under Item 15, to the extent that it constitutes matters of law, summaries of legal matters, the Company's Restated Certificate of Incorporation or By-laws or legal proceedings, or legal conclusions, has been reviewed by such counsel and is accurate in all material respects; (iv) to the best knowledge of such counsel, there is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries, of a character required to be disclosed in the Registration Statement which is not adequately disclosed in the Final Prospectus; all descriptions in the Registration Statement of contracts and other documents, to which the Company or its subsidiaries are a party are accurate in all material respects, and there is no franchise, contract or other document of a character required to be described in the Registration Statement or Final Prospectus, or to be filed as an exhibit which is not described or filed as required; and the statements included or incorporated in the Final Prospectus -11- describing any legal proceedings or material contracts or agreements relating to the Company fairly summarize such matters; (v) the Registration Statement and any amendments thereto have become effective under the Act; any required filing of the Prospectus pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b) and to the best knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement, as amended, has been issued, no proceedings for that purpose have been instituted or threatened, and the Registration Statement, the Final Prospectus and each amendment thereof or supplement thereto as of their respective effective or issue dates (other than the financial statements and other financial information contained therein as to which such counsel need express no opinion) complied as to form in all material respects with the applicable requirements of the Act and the Exchange Act and the respective rules thereunder; and such counsel has no reason to believe that the Registration Statement, or any amendment thereof, as of the later of the time it became effective or the time of filing by the Company with the Commission of the latest subsequent amendment thereto or Annual Report on Form 10-K, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Final Prospectus, as amended or supplemented, includes any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (vi) this Agreement has been duly authorized, executed and delivered by the Company; (vii) no consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated herein, except such as have been obtained under the Act and such as may be required under the blue sky laws of any jurisdiction in connection with the solicitation of orders to purchase the Securities and the distribution of the Securities by the Agents and such other approvals (specified in such opinion) as have been obtained; (viii) the Company is not an "investment company" within the meaning of the 1940 Act; (ix) to the best knowledge of such counsel, the Company is not in violation of its Restated Certificate of Incorporation or By-laws; (x) neither the issue and sale of the Securities, nor the consummation of any other of the actions herein contemplated nor the fulfillment of the terms hereof will conflict with, result in a breach of, or constitute a default under the Restated Certificate of Incorporation or By-Laws of the Company or the terms of any material indenture or other agreement or instrument known to such counsel and to which the Company or any of its subsidiaries is a party or bound, or any order or regulation known to such counsel to be applicable to the Company or any of its subsidiaries of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or any of its subsidiaries. -12- In rendering such opinion, such counsel may state that he expresses no opinion as to the laws of any jurisdiction outside the United States and may rely (A) as to matters involving the application of laws of any jurisdiction other than the Federal law of the United States or the General Corporation Law of the State of Delaware, to the extent deemed proper and specified in such opinion, upon the opinion of other counsel of good standing believed to be reliable and who are satisfactory to counsel for the Agents or, if satisfactory to counsel for the Agents, upon his review of the laws of such jurisdictions; and (B) as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Company and public officials. (c) The Agent shall have received from Drinker Biddle & Reath LLP, counsel for the Agents, such opinion or opinions, dated the date of this Agreement, with respect to the issuance and sale of the Securities, the Indenture, the Registration Statement, the Final Prospectus and other related matters as the Agent may reasonably require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. (d) The Company shall have furnished to the Agents a certificate of the Company, signed by a financial Senior Vice President or Vice President, the Treasurer or the Manager of Corporate Finance, dated the date of this Agreement, to the effect that the signer of such certificate has carefully examined the Registration Statement, the Final Prospectus and this Agreement and that: (i) in the case of the certificate described in Section 4(g) hereof, the representations and warranties of the Company in this Agreement are true and correct in all material respects on and as of the date thereof with the same effect as if made on the date thereof and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the date thereof; (ii) no stop order suspending the effectiveness of the Registration Statement, as amended, has been issued and no proceedings for that purpose have been instituted or, to the Company's knowledge, threatened; and (iii) since the date of the most recent financial statements included in the Final Prospectus, there has been no Material Adverse Effect, except as set forth or contemplated in the Final Prospectus. (e) At the date of this Agreement, Coopers & Lybrand shall have furnished to the Agents a letter, in form and substance satisfactory to the Agent, dated as of the date hereof (or, with respect to matters involving changes or developments since the respective dates as of which specified information is given in the Final Prospectus, as of a date not more than three business days prior to the date of such letter), of the type described in the American Institute of Certified Public Accountants' Statement on Auditing Standards No. 72. (f) On or prior to the date of this Agreement, the Company shall have furnished to the Agents and counsel for the Agents such further information, certificates, documents and opinions (including tax opinions) as the Agents or such counsel may reasonably request. (g) At the Closing Date, the Notes shall have been approved for listing, subject only to official notices of issuance, if and as specified in the Final Prospectus. -13- If any of the conditions specified in this Section 5 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Agents and their counsel, this Agreement and all obligations of the Agents hereunder may be canceled at any time by the Agents. Notice of such cancellation shall be given to the Company in writing or by telephone or telegraph confirmed in writing. The documents required to be delivered by this Section 5 shall be delivered at the office of Drinker Biddle & Reath LLP, counsel for the Agent, at Philadelphia National Bank Building, 1345 Chestnut Street, Philadelphia, Pennsylvania 19107-3496, on the date hereof. 6. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless the Agents and each person who controls the Agents within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages, liabilities and expenses, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement for the registration of the Securities as originally filed or in any amendment thereof, including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating, preparing or defending any such loss, claim, damage, liability or action, and to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, provided that, subject to Section 6(d) below, any such settlement is effected with the written consent of the Company and; provided, however, that (i) the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein concerning the Provided Information or Form T-1 and (ii) such indemnity with respect to the Basic Prospectus, the Final Prospectus or any Preliminary Final Prospectus shall not inure to the benefit of you (or any person controlling you) if the person asserting any such loss, claim, damage, liability or expense purchased the Securities which are the subject thereof and such person did not receive a copy of the Final Prospectus (or the Final Prospectus as supplemented), excluding documents incorporated therein by reference, at or prior to the confirmation of the sale of such Securities to such person in any case where such delivery is required by the Act and the untrue statement or omission of a material fact contained in the Basic Prospectus, the Final Prospectus or any Preliminary Final Prospectus was corrected in the Final Prospectus (or the Final Prospectus as supplemented). This indemnity agreement will be in addition to any liability which the Company may otherwise have. -14- (b) The Agents agree to indemnify and hold harmless the Company, each of its directors, each of its officers who signs the Registration Statement, and each person who controls the Company within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company to the Agent, but only with reference to the Provided Information. This indemnity agreement will be in addition to any liability which the Agents may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 6 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 6, notify the indemnifying party in writing of the commencement thereof; but failure promptly to notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 6 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, representing the indemnified parties under paragraph (a) who are parties to such action), (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii). (d) No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (e) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in paragraph (a) of -15- this Section 6 is due in accordance with its terms but is for any reason held by a court to be unavailable from the Company on grounds of policy or otherwise, the Company and the Agents shall contribute to the aggregate losses, claims, damages, liabilities and expenses (including legal or other expenses reasonably incurred in connection with investigating or defending same) to which the Company and the Agents may be subject (i) in such proportion so that the Agents are responsible for that portion represented by the percentage that the sales commission received by the Agents in connection with the Securities from which such losses, claims, damages and liabilities arise (or, in the case of Securities sold pursuant to a Purchase Agreement (as defined below), the aggregate commissions that would have been received by you if such commissions had been payable) bears to the sum of such commission and the purchase price of the Securities and the Company is responsible for the balance or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and of the Agents, on the other hand, in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other equitable considerations; provided, however, that (y) in no case shall you be responsible for any amount in excess of the commissions received by you in connection with the Securities from which such losses, claims, damages and liabilities arise (or, in the case of Securities sold pursuant to a Purchase Agreement, the aggregate commissions that would have been received by you if such commissions had been payable) and (z) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The relative fault of the Company, on the one hand, and the Agents, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Agents and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. For purposes of this Section 6, each person who controls the Agents within the meaning of the Act shall have the same rights to contribution as the Agent, and each person who controls the Company within the meaning of either the Act or the Exchange Act, each Officer of the Company who shall have signed the Registration Statement and each Director of the Company shall have the same rights to contribution as the Company, subject in each case to clauses (y) and (z) of this paragraph (e). Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this paragraph (d), notify such party or parties from whom contribution may be sought, but failure promptly to notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve the party or parties from whom contribution may be sought from any other obligation it or they may have otherwise than under this paragraph (e). 7. Termination. (a) This Agreement may be terminated at any time by the Agents or by the Company for any period of time or permanently by written notice to the other without liability of any party to any other party except as provided in Sections 4(j) (with respect to out-of-pocket expenses of the Agents incurred prior to such termination), 6 and 7 hereof and except that, if at the time of termination an offer for the purchase of Securities solicited by the Agents shall have been accepted by the Company but the time of delivery to the purchaser of the Securities relating thereto shall not yet have occurred, the Company shall be obligated to pay the Agents the sales commissions in respect -16- of such purchase. Upon receipt of such notice from the Company, the Agents will forthwith suspend solicitation of offers to purchase Securities from the Company until such time as the Company has advised the Agents that such solicitation may be resumed. (b) The applicable Agent(s) may terminate any agreement by such Agent(s) to purchase Notes from the Company as principal, immediately upon notice to the Company, at any time prior to the settlement date relating thereto, if (i) there has been, since the date of such agreement or since the respective dates as of which information is given in the Final Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) there has occurred any material adverse change in the financial markets in the United States or, if such Notes are denominated and/or payable in, or indexed to, one or more foreign or composite currencies, in the international financial markets, or any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development or event involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of such Agent(s), impracticable to market such Notes or enforce contracts for the sale of such Notes, or (iii) trading in any securities of the Company has been suspended or limited by the Commission or a national securities exchange, or if trading generally on the New York Stock Exchange or the American Stock Exchange or in the Nasdaq National Market has been suspended or limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by either of said exchanges or by such system or by order of the Commission, the NASD or any other governmental authority, or (iv) a banking moratorium has been declared by either Federal or New York authorities or by the relevant authorities in the country or countries of origin of any foreign or composite currency in which such Notes are denominated and/or payable, or (v) the rating assigned by any nationally recognized statistical rating organization to the Program or any debt securities (including the Notes) of the Company as of the date of such agreement shall have been lowered or withdrawn since that date or if any such rating organization shall have publicly announced that it has under surveillance or review its rating of the Program or any such debt securities, or (vi) there shall have come to the attention of such Agent(s) any facts that would cause such Agent(s) to believe that the Final Prospectus, at the time it was required to be delivered to a purchaser of such Notes, included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time of such delivery, not misleading. 8. Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other statements of the Company or its officers and of the Agents set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Agents or the Company or any of the officers, directors or controlling persons referred to in Section 6 hereof, and will survive delivery of and payment for the Securities. The provisions of Sections 4(j) (with respect to out-of-pocket expenses of the Agents incurred prior to the termination or cancellation of this Agreement) and 6 hereof shall survive the termination or cancellation of this Agreement. 9. Notices. All communications hereunder will be in writing and effective only on receipt, and, if sent to the Agent(s), will be mailed, delivered or telegraphed and confirmed to such Agent at the address specified in Schedule I hereto; or, if sent to the Company, will be mailed, delivered or telegraphed and confirmed to it at ARCO Chemical Company, 3801 West Chester Pike, Newtown Square, Pennsylvania 19073-2387, attention of the Treasurer. -17- 10. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 6 hereof, and no other person will have any right or obligation hereunder. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Agents and the Company and their respective successors and the officers and directors and controlling persons referred to in Section 6 hereof and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Notes shall be deemed to be a successor by reason merely of such purchase. 11. Applicable Law. This Agreement will be governed by and construed in accordance,with the laws of the State of New York without regard to the conflict of laws principles thereof. If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Company and the Agents. Very truly yours, ARCO CHEMICAL COMPANY By: --------------------------- The foregoing Agreement is hereby confirmed and accepted as of the date specified in Schedule I hereto. By: -------------------------- -18- SCHEDULE I Registration Statement No. 333-27099 Agent: Type of Offering: [Delayed Offering/Non-Delayed Offering] Commissions to Agent:
PERCENT OF MATURITY RANGES PRINCIPAL AMOUNT(1) - --------------- ---------------- From 9 months to less than 1 year . . . . . . . From 1 year to less than 18 months . . . . . . . From 18 months to less than 2 years. . . . . . . From 2 years to less than 3 years. . . . . . . . From 3 years to less than 4 years. . . . . . . . From 4 years to less than 5 years. . . . . . . . From 5 years to less than 6 years. . . . . . . . From 6 years to less than 7 years. . . . . . . . From 7 years to less than 10 years . . . . . . . From 10 years to less than 15 years. . . . . . . From 15 years to less than 20 years. . . . . . . From 20 years to 30 years. . . . . . . . . . . . Greater than 30 years. . . . . . . . . . . . . .
- ---------------------------- /1/ As agreed to by the Company and the applicable Agent at the time of sale. EXHIBIT A PRICING TERMS Principal Amount: $ _________ (or principal amount of foreign or composite currency) Interest Rate or Formula: If Fixed Rate Note, Interest Rate: Interest Payment Dates: If Floating Rate Note, Interest Rate Basis(es): If LIBOR, [_] LIBOR Reuters Page: [_] LIBOR Telerate Page: Designated LIBOR Currency: If CMT Rate, Designated CMT Telerate Page: If Telerate Page 7052: [_] Weekly Average [_] Monthly Average Designated CMT Maturity Index: Index Maturity: Spread and/or Spread Multiplier, if any: Initial Interest Rate, if any: Initial Interest Reset Date: Interest Reset Dates: Interest Payment Dates: Maximum Interest Rate, if any: Minimum Interest Rate, if any: Fixed Rate Commencement Date, if any: Fixed Interest Rate, if any: Day Count Convention: Calculation Agent: Redemption Provisions: Initial Redemption Date: Initial Redemption Percentage: Annual Redemption Percentage Reduction, if any: Repayment Provisions: Optional Repayment Date(s): Original Issue Date: Stated Maturity Date: Specified Currency: Exchange Rate Agent: Authorized Denomination: Purchase Price: ___%, plus accrued interest, if any, from ___________ Price to Public: ___%, plus accrued interest, if any, from __________ Issue Price: Settlement Date and Time: Additional/Other Terms: Also, in connection with the purchase of Notes from the Company by one or more Agents as principal, agreement as to whether the following will be required: Officers' Certificate pursuant to Section 4(g) of the Selling Agency Agreement. Legal Opinion pursuant to Section 4(h) of the Selling Agency Agreement. Comfort Letter pursuant to Section 4(i) of the Selling Agency Agreement. -20- EX-12 4 STATEMENT RE COMPUTATION OF RATIOS ARCO CHEMICAL COMPANY AND CONSOLIDATED SUBSIDIARIES Computation of the Ratio of Earnings to Fixed Charges (Million of Dollars)
Six Months Years Ended December 31, Ended June 30, 1997 ---------------------------------------- --------------------- 1992 1993 1994 1995 1996 ---- ---- ---- ---- ---- Pretax income from continuing operations $322 $311 $416 $756 $487 $ 126 Add: Interest expense ................................ 91 105 85 89 86 42 Rental expense factor ........................... 26 20 22 25 27 14 ---- ---- ---- ---- ---- ---- Earnings available for fixed charges .................... $439 $436 $523 $870 $600 $ 182 ==== ==== ==== ==== ==== ==== Interest expense ........................................ $ 91 $105 $ 85 $ 89 $ 86 $ 42 Add capitalized interest ................................ 37 - 3 1 3 4 Rental expense factor ................................... 26 20 22 25 27 14 ---- ---- ---- ---- ---- ---- Fixed charges ........................................... $154 $125 $110 $115 $116 $ 60 ==== ==== ==== ==== ==== ==== Ratio of earnings to fixed charges ...................... 2.9 3.5 4.8 7.6 5.2 3.0 ==== ==== ==== ==== ==== ====
EXHIBIT 12 EX-23.2 5 CONSENT OF COOPERS & LYBRAND L.L.P. CONSENT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of ARCO Chemical Company We consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated February 12, 1997, on our audits of the consolidated financial statements of ARCO Chemical Company and Subsidiaries as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, which report is included in ARCO Chemical Company's Annual Report on Form 10-K for the year ended December 31, 1996. We also consent to the reference to our Firm under the caption "Experts". COOPERS & LYBRAND L.L.P. Philadelphia, Pennsylvania August 1, 1997 Exhibit 23.2 EX-25 6 FORM T-1 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ---------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------------------- ARCO CHEMICAL COMPANY (Exact name of obligor as specified in its charter) Delaware 51-0104393 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 3801 West Chester Pike Newton Square, Pennsylvania 19073-2387 (Address of principal executive offices) (Zip code) ------------------------ Debt Securities (Title of the indenture securities) ================================================================================ EXHIBIT 25 1. General information. Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject.
- -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State 2 Rector Street, New York, of New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers. Yes. 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. 16. List of Exhibits. Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a- 29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33- 44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -3- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 23rd day of July, 1997. THE BANK OF NEW YORK By: /s/ Thomas E. Tabor ------------------------------ Name: Thomas E. Tabor Title: Assistant Treasurer - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 1997, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS in Thousands Cash and balances due from deposit- itory institutions: Noninterest-bearing balances and currency and coin...................... $ 8,249,820 Interest-bearing balances.............. 1,031,026 Securities: Held-to-maturity securities............ 1,118,463 Available-for-sale securities.......... 3,005,838 Federal funds sold and Securities pur- chased under agreements to resell........ 3,100,281 Loans and lease financing receivables: Loans and leases, net of unearned income .....................32,895,077 LESS: Allowance for loan and lease losses ..................633,877 LESS: Allocated transfer risk reserve...........................429 Loans and leases, net of unearned income, allowance, and reserve 32,260,771 Assets held in trading accounts.......... 1,715,214 Premises and fixed assets (including capitalized leases).................... 684,704 Other real estate owned.................. 21,738 Investments in unconsolidated subsidiaries and associated companies.............................. 195,761 Customers' liability to this bank on acceptances outstanding................ 1,152,899 Intangible assets........................ 683,503 Other assets............................. 1,526,113 ----------- Total assets............................. $54,746,131 =========== LIABILITIES Deposits: In domestic offices.................... $25,614,961 Noninterest-bearing .........10,564,652 Interest-bearing ............15,050,309 In foreign offices, Edge and Agreement subsidiaries, and IBFs....... 15,103,615 Noninterest-bearing ............560,944 Interest-bearing ...........14,542,671 Federal funds purchased and Securities sold under agreements to repurchase. 2,093,286 Demand notes issued to the U.S. Treasury............................... 239,354 Trading liabilities...................... 1,399,064 Other borrowed money: With remaining maturity of one year or less.............................. 2,075,092 With remaining maturity of more than one year............................. 20,679 Bank's liability on acceptances exe- cuted and outstanding.................. 1,160,012 Subordinated notes and debentures........ 1,014,400 Other liabilities........................ 1,840,245 ----------- Total liabilities........................ 50,560,708 ----------- EQUITY CAPITAL Common stock............................. 942,284 Surplus.................................. 731,319 Undivided profits and capital reserves............................... 2,544,303 Net unrealized holding gains (losses) on available-for-sale securities............................. ( 19,449) Cumulative foreign currency transla- tion adjustments....................... ( 13,034) ----------- Total equity capital..................... 4,185,423 ----------- Total liabilities and equity capital ............................... $54,746,131 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. ) Alan R. Griffith ) J. Carter Bacot ) Thomas A. Renyi ) Directors ) - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----