SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X]
Annual Report
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Fee Required)
For the fiscal year ended June 30, 1996
OR
[ ]Transition report pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(No Fee Required)
For the transition period from
Commission File Numbers 33-23867 and 33-17707
ARCO CHEMICAL COMPANY CAPITAL ACCUMULATION PLAN
(Title of the Plan)
ARCO CHEMICAL COMPANY
3801 West Chester Pike
Newtown Square, Pennsylvania 19073
(Name and address of principal executive
office of the issuer of the securities)
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ARCO CHEMICAL COMPANY CAPITAL ACCUMULATION PLAN
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the Plan)
have duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
ARCO CHEMICAL COMPANY CAPITAL
ACCUMULATION PLAN
/s/ CYNTHIA L. BENGTSON
By___________________________
CYNTHIA L. BENGTSON
Secretary of the Capital
Accumulation Plan
Administrative Committee
Date: December 12, 1996
AMENDMENT NO. 1
TO
ARCO CHEMICAL COMPANY CAPITAL ACCUMULATION PLAN
__________________________
Pursuant to resolutions adopted by Board of Directors on
October 24, 1988, the ARCO Chemical Company Capital Accumulation
Plan (the "Plan") is hereby amended effective as of July 1, 1994:
1. Subparagraph 1.3(b) of the Plan is amended to read as
follows:
"(b) In determining the Earnings of a Member, the rules of
Section 414(q)(6) of the Code shall apply, except in
applying such rules, the term "family" shall include only
the spouse of the Member and any lineal descendants of the
Member who have not attained age 19 before the close of
the year. If, as a result of the application of such
rules the adjusted Annual Earnings limitation is
exceeded, then the limitation shall be prorated among
the affected individuals in proportion to each such
individual's Earnings as determined under this
paragraph prior to the application of this limitation."
2. Subparagraph 1.12(b)(vii) of the Plan is amended to
read as follows:
"(vii) Compensation, for purposes of this Paragraph 1.12 means
compensation within the meaning of Section 415(c)(3) of
the Code without regard to Section 125, Section 402(e)(3)
and Section 402(h)(1)(B) of the Code."
3. A new Paragraph 4.8 is added to the Plan to read as
follows:
"4.8 Exclusive Benefit
The corpus or income of the trust may not be divested
to or used for other than the exclusive benefit of the
Members and their beneficiaries and to defray
reasonable expenses of administering the Plan."
4. The second paragraph of Paragraph 5.2 is amended to read as
follows:
"All Financed Shares acquired by the Plan shall initially be
credited to a loan suspense account, and will be allocated
to the Members' Accounts only as payments on the Acquisition
Loan are made. Release from the loan suspense account for
allocation to Members' Accounts in each Plan Year shall be
based on shares of stock or other non-monetary units, rather
than by dollar amount, and shall not be less than the number
calculated as follows:"
Executed this 1st day of April, 1996.
ATTEST ARCO CHEMICAL COMPANY
/s/ JOHN G. CHOU /s/ FRANK W. WELSH
BY:_______________________ By:___________________________
FRANK W. WELSH
Vice President
Human Resources
AMENDMENT NO. 2
TO
ARCO CHEMICAL COMPANY CAPITAL ACCUMULATION PLAN
__________________________
Pursuant to resolutions adopted by Board of Directors on May
10, 1996, the ARCO Chemical Company Capital Accumulation Plan
(the "Plan") is hereby amended effective as of August 5, 1996:
1. Subparagraph 1.21(a) of the Plan is amended to read as
follows:
"(a) All corporations which are members of a controlled
group of corporations within the meaning of Section 1563(a)
of the Code [determined without regard to Section 1563(a)(4)
and Section 1563(e)(3)(C) of said Code] and of which ARCO
Chemical Company is then a member. For purposes of Paragraph
1.13 and Subparagraphs 11.8(a), (b) and (c), Subsidiary
or Affiliate shall include Lyondell Petrochemical
Company and its Subsidiaries or Affiliates; and"
2. Paragraph 3.1 of the Plan is amended to read as follows:
"3.1 Members' Elections
Each Member who is an Employee may enter into a
Salary Reduction Agreement with the Company providing
for withholding of Elective Deferrals from each of the
Member's regular paychecks at a rate of one percent to
19 percent of the Member's Earnings, in whole
percentages. A Salary Reduction Agreement shall remain
in effect until changed by the Member.
A Member's election shall be made in the manner
prescribed by the Administrator. A Member may change
the Member's election with respect to the Member's rate
of future contributions at any time by giving notice in
such manner as is prescribed by the Administrator.
Such changes shall be effective as of the payroll
period beginning after the date of receipt of such
notice by the Administrator.
The Company may limit or reduce its Salary
Reduction Agreement with any Member at any time, on a
nondiscriminatory basis, to the extent necessary to
ensure compliance with the limitations of Paragraph 3.3
or 3.4."
3. Subparagraph 3.2(a) of the Plan is amended to read as
follows:
"(a) To the extent that a Member has directed pursuant
to Paragraph 6.2 that his or her Elective Deferrals be
invested in an option other than ARCO Chemical Company
Common Stock, such Elective Deferrals shall be paid to
the Trustee in cash."
4. Section 6 of the Plan is amended to read as follows:
"SECTION 6
INVESTMENT OF MEMBERS' ACCOUNTS
6.1 Members' Accounts
The Administrator shall establish and maintain an
Account in the name of each Member. Separate records
shall be maintained with respect to the portion of a
Member's Account attributable to Elective Deferrals
under Section 3 and earnings thereon, transferred
amounts under Section 14 and earnings thereon, and the
portion of a Member's Account attributable to Company
contributions under Section 4 and earnings thereon.
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6.2 Investment of Elective Deferrals, Transferred Amounts
and Certain Company Contributions
Upon receipt of a Member's Elective Deferrals,
transferred amounts under Section 14 attributable to
employee before-tax contributions and earnings thereon,
and Company contributions pursuant to Subparagraph
6.3(b), the Trustee shall invest such amounts among the
following investment alternatives, in the proportion
indicated by the Member in his or her investment
directions provided to the Administrator:
(a) In ARCO Chemical Company Common Stock
held under the ESOP Part of the Plan or, with
respect to Members who have attained age 55, in
the non-ESOP part of the Plan;
(b) In the Money Market Fund, consisting of
specified types of fixed income investments such
as deposits in interest-bearing bank accounts,
certificates of deposit, corporate or governmental
obligations maturing in not more than five years,
financial futures contracts, deposits under a
deposit administration or similar contract issued
by an insurance company or in a commingled or
common investment account or fund established and
maintained by an investment advisor or a bank
(which bank may be the Trustee) and the assets of
which are invested primarily in debt obligations,
or in any combination thereof as ARCO Chemical
Company or a delegate thereof may determine;
(c) In the Equity Fund, consisting of
specified equity investments such as common or
capital stock of issuers (other than the Company,
Subsidiaries or Affiliates, or Lyondell
Petrochemical Company or any of its Subsidiaries
or Affiliates), bonds, debentures or preferred
stocks convertible into common or capital stock of
such issuers, financial futures contracts,
interests in any commingled or common equity fund
established and maintained by an investment
advisor or a bank (which bank may be the Trustee),
interests in any mutual fund or other similar
types of equity investments and cash equivalent
short-term investments maturing in less than one
year, or in any combination thereof as ARCO
Chemical Company or a delegate thereof may
determine;
(d) In the Bond Fund, consisting of
specified types of fixed income investments, such
as public obligations of the United States or
foreign governments or their agencies, securitized
financing or corporate bonds of issuers (other
than the Company, Subsidiaries or Affiliates, or
Lyondell Petrochemical Company or any of its
Subsidiaries or Affiliates), debentures, financial
futures contracts, interests in any commingled or
common fixed income fund established and
maintained by an investment advisor or bank (which
bank may be the Trustee), interests in any mutual
fund or other similar types of fixed income
investments and cash equivalent short-term
investments, or in any combination thereof as ARCO
Chemical Company or a delegate thereof may
determine;
(e) In the International Equity Fund
consisting of specified investments in global
issuers such as common or capital stock (other
than common or capital stock of the Company,
Subsidiaries or Affiliates, or Lyondell
Petrochemical Company or any of its Subsidiaries
or Affiliates), preferred stocks, securities
convertible into common or capital stock of such
issuers, financial futures contracts, currency
futures or options, forward currency contracts,
interests in any commingled or common equity fund
established and maintained by an investment
advisor or a bank (which bank may be the Trustee),
interests in any mutual fund or other similar
types of equity investments and cash equivalent
investments, or similar investments or in any
combination thereof as ARCO Chemical Company or a
delegate thereof may determine; or
(f) In the Balanced Fund consisting of units
of the Equity Fund, the International Equity Fund
and the Bond Fund. The weighing of the Balanced
Fund shall be
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approximately 45 percent Equity Fund, 15 percent
International Equity Fund and 40 percent Bond Fund.
A Member's directions as to the initial investment
of his or her Elective Deferrals and/or Company
contributions shall be provided in such manner as is
prescribed by the Administrator. Such directions shall
remain in effect until new directions are provided to
the Administrator by the Member. A Member may change
the direction as to the initial investment of his or
her Elective Deferrals and/or Company contributions at
any time by providing notice in such manner as may be
prescribed by the Administrator. Any change of
investment directions shall be effective with respect
to Elective Deferrals and/or Company contributions paid
to the Trustee for pay periods beginning after the
notice is received by the Administrator.
6.3 Investment of Company Contributions
(a) Except as provided in Subparagraph
6.3(b), all contributions by the Company pursuant
to Paragraph 4.1, and any amounts of interest
attributable to the proceeds of an Acquisition
Loan allocated to Members' Accounts pursuant to
Paragraph 5.2 after the Acquisition Loan has been
repaid in full, shall at all times be invested in
ARCO Chemical Company Common Stock under the ESOP
Part of the Plan. Contributions under Paragraph
4.1 made in cash shall be applied to purchase
shares of ARCO Chemical Company Common Stock or to
make payments on an Acquisition Loan within a
reasonable time after being paid to the Trustee or
after being allocated to Members' Accounts.
(b) A Member who has attained age 55 may
invest Company contributions in any of the
investment options set forth in Paragraph 6.2.
6.4 Funds Invested in the Money Market Fund
(a) There shall be invested in the Money Market Fund:
(i) Amounts which a Member elects
to have so invested under Subparagraph
6.2(b); and
(ii) On an interim basis, amounts
being accumulated in a Member's Account for
investment under Subparagraphs 6.2(a), (c),
(d), (e) and (f).
(b) Subject to the requirement of
Subparagraph 6.6(c), a Member may direct, once
during each 15-calendar-day period, that funds
invested in the Money Market Fund under
Subparagraph 6.2(b) be invested in any of the
other permitted alternatives; provided, that (i)
only one direction whether made solely under this
subparagraph, or in combination with a direction
under Paragraph 6.6, may be made during a 15-
calendar-day period, and (ii) a direction under
this subparagraph may not be made earlier than
seven days following (A) the date of receipt by
the Administrator of a Member's application to
make a withdrawal under Section 7, (B) the date a
loan application is made under Section 13, or (C)
the date a loan repayment is made under
Subparagraph 13.8(c)(i).
(c) Interest shall be allocated on a monthly
basis to funds held for a Member in the Money
Market Fund as of the last day of a calendar
month. However, such allocation shall not be made
with respect to funds resulting from a conversion
to cash of ARCO Chemical Company Common Stock,
Equity Fund, Bond Fund, International Equity Fund
or Balanced Fund units which occurred in the
calendar month in which allocation of interest is
made.
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6.5 Funds Invested in Atlantic Richfield Company Common
Stock
(a) All of the assets transferred to the
Company account of this Plan from the Company
account of the Predecessor Plan were invested in
Atlantic Richfield Company Common Stock, and
certain of the assets transferred to this Plan
from the Elective Deferral accounts of the
Predecessor Plan were invested in Atlantic
Richfield Company Common Stock. Subject to the
exception described in Subparagraph 6.5(b) and the
conversion rights described in Subparagraphs
6.5(c) and (d), such assets will continue to be
invested in Atlantic Richfield Company Common
Stock, with dividends and distributions
attributable thereto being reinvested in such
stock.
(b) Effective December 31, 1988, assets
under the Atlantic Richfield Employee Stock
Ownership Plan (the ARCO "ESOP" or "PAYSOP")
allocable to Employees of ARCO Chemical Company
were transferred to this Plan where such assets
will continue to be invested in Atlantic Richfield
Company Common Stock with dividends and
distributions attributable thereto being paid in
cash to the Members.
(c) Subject to the requirement of
Subparagraph 6.5(e), once during each 15-calendar-
day period a Member may direct that shares of
Atlantic Richfield Company Common Stock
attributable to Elective Deferrals be converted to
cash and the proceeds thereof, less any applicable
expenses of sale, be invested in one of the
options described in Paragraph 6.2.
(d) Subject to the requirement of
Subparagraph 6.5(e), once during each 15-calendar-
day period a Member may direct that shares of
Atlantic Richfield Company Common Stock, other
than shares referred to in Subparagraph 6.5(b),
attributable to Atlantic Richfield Company
contributions be converted to cash and the
proceeds thereof, less any applicable expenses of
sale, be invested in common stock of ARCO Chemical
Company in the account held for the Member under
Paragraph 6.3.
(e) Only one direction, whether made solely
under this paragraph or in combination with a
direction under Paragraphs 6.4 and/or 6.6, may be
made during a 15-calendar-day period.
6.6 Sale and Reinvestment of Common Stock, Equity
Fund Units, Bond Fund Units, International Equity Fund
Units or Balanced Fund Units
(a) A Member may direct that shares of ARCO
Chemical Company Common Stock, other than shares
purchased with Company contributions made after
July 1, 1988 and shares referred to in
Subparagraph 6.5(b), units of the Equity Fund,
Bond Fund, International Equity Fund and/or
Balanced Fund held in the Member's Account
(including shares and units transferred to the
Plan from the Predecessor Plan) be converted to
cash and the proceeds thereof, less any applicable
expenses of sale, be invested in a different
option described in Paragraph 6.2; provided, that
(i) only one direction, whether made solely under
this subparagraph, or in combination with a
direction under Paragraph 6.4, may be made during
a 15-calendar-day period; (ii) a direction under
this subparagraph may not be made earlier than
seven calendar days following (A) the date of
receipt by the Administrator of a Member's
application to make a withdrawal under Section 7,
(B) the date a loan application is made under
Section 13, or (C) the date a loan repayment is
made under Subparagraph 13.8(c)(i); and (iii) a
Member who has attained age 55 as of the date of
the direction to convert may, subject to the
restrictions described in this paragraph, direct
that shares of Common Stock (including Common
Stock of a Subsidiary or Affiliate or Lyondell
Petrochemical Company attributable to
contributions of such companies) held in the
Member's Account which are attributable to Company
contributions be sold and the proceeds reinvested
in one or more of the other options described in
Paragraph 6.2 or in ARCO Chemical Company Common
Stock, dividends reinvested.
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(b) The conversion of shares of ARCO
Chemical Company Common Stock to shares of such
stock held in the ESOP Part of the Plan described
in Subparagraph 6.2(a), shall be accomplished by a
recharacterization of the shares, pursuant to
procedures established by the Administrator;
provided, that only one direction, whether made
solely under this subparagraph or in combination
with a direction under Paragraph 6.4, may be made
during a 15-calendar-day period.
(c) Proceeds of the conversion of shares of
ARCO Chemical Company Common Stock to cash may not
be reinvested in ARCO Chemical Company Common
Stock until 15-calendar days after the date of
such conversion. Proceeds of the conversion of
units of the Equity Fund, Bond Fund, International
Equity Fund or Balanced Fund to cash may not be
reinvested in the Equity Fund, Bond Fund,
International Equity Fund or Balanced Fund, as the
case may be, until 15 calendar days after the date
of such conversion.
6.7 Directives
All elections and directions by Members concerning
the investment of their Accounts shall be made in the
manner prescribed by the Administrator, shall be
irrevocable and shall become effective upon receipt by
the Administrator.
6.8 Purchases and Sales of ARCO Chemical Company Common
Stock
Effective December 1, 1995, purchases and sales of
Common Stock of ARCO Chemical Company shall be handled
in accordance with the following rules and such
additional procedures, consistent with such rules,
which the Administrator may establish from time to
time:
(a) Purchases and sales of Common Stock of
ARCO Chemical Company pursuant to a Member's
directive under Paragraph 6.4 or 6.6, or to
accommodate a distribution or withdrawal pursuant
to Section 7 or 8, shall be made in the open-
market as follows:
(i) Each Wednesday and Friday the
Administrator shall execute an open-market
transaction, at a time determined at the
discretion of the Administrator, covering all
participant directives received by the
Administrator by such time as determined by
the Administrator, and communicated to
Members, on the preceding Company business
day, except that if a Wednesday or Friday is
a Company holiday or a day on which trading
on the New York Stock Exchange is closed, the
transaction will occur on the next day (a
Wednesday or Friday) on which the Plan
executes a transaction in the open-market.
(ii) If an unforeseeable
administrative difficulty prevents the
execution of the open-market transaction
otherwise scheduled for a Wednesday or
Friday, such transaction will be executed on
the first business day thereafter which does
not fall within one of the two exceptions in
Subparagraph 6.8(a)(i).
(iii) The Administrator may, in
its discretion, match the purchase and sale
orders scheduled for an open-market
transaction and transact the net purchase or
sale, whichever the case may be. The
Administrator may also agree with the
Administrator of one or more other individual
account plans (as described in Section 3(34)
of ERISA, and which is maintained by the Company
or its Subsidiaries or Affiliates, and
provides for the same purchases and sales
pursuant to participant directives described
in Paragraphs 6.4 and 6.6) to combine and
match orders from all of the plans and
execute a "net" transaction, as described
above. The price per share allocated to each
purchase or sale order shall be the price
transacted for the "net" shares on the open-
market transaction date otherwise scheduled
for the orders under
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Subparagraph 6.8(a)(i). The price transacted
for a "net" transaction shall be the price
obtained on the open-market in the case of
a single transaction, and the weighted average
of the prices obtained on the open-market
in the case of multiple transactions.
(iv) Brokerage commissions,
transfer fees and other expenses actually
incurred in any such sale or purchase shall
be equitably allocated and added to the cost
or subtracted from the proceeds of all
purchases or sales, as the case may be,
effected on a pricing day, whether pursuant
to the netting process described in
Subparagraph 6.8(a)(iii), or pursuant to
actual separate transactions per Member
order.
(b) Purchases of Common Stock of ARCO
Chemical Company with Member's Elective Deferrals
or Company contributions under Sections 3 and 4:
(i) Purchases shall normally be
made either in the open-market or from ARCO
Chemical Company, at prices to the Plan not
in excess of the fair market value of such
ARCO Chemical Company Common Stock on the
date of purchase thereof, as determined by
the Trustee.
(ii) Allocations to Members' Accounts will be
made in full and fractional shares.
(iii) The Trustee may limit the
daily volume of purchases to the extent it
believes such action to be in the best
interests of the Members. When ARCO Chemical
Company Common Stock is purchased, the cost
charged to the Accounts of Members affected
by such purchase shall be determined on an
equitable basis in accordance with rules to
be adopted by the Administrator and
incorporating the following principles:
(A) The cost charged to
each affected Member's Account shall be
based on the average cost per share of
all ARCO Chemical Company Common Stock
purchased during whatever period may be
established by the Administrator.
(B) Brokerage commissions, transfer fees
and other expenses actually incurred in
any such purchase shall be added to the
cost of any such purchase.
(c) A Member may direct the Administrator to
use any available cash or funds held for the
Member under Subparagraph 6.2(b) to exercise any
options, rights or warrants issued with respect to
ARCO Chemical Company Common Stock in the Member's
Account. In the absence of such direction, or if
there are no available funds, any such option,
right or warrant having a market value shall be
sold for the Member's Account.
6.9 Voting of ARCO Chemical Company Common Stock
(a) The Trustee shall vote whole shares of
ARCO Chemical Company Common Stock credited to
each Member's Account in accordance with such
Members' written instructions. Fractional shares
of ARCO Chemical Company Common Stock shall be
aggregated into whole shares of stock and voted by
the Trustee, to the nearest whole vote, in the
same proportion as shares are to be voted by the
Trustee pursuant to Members' written instructions.
In the absence of voting instructions by one or
more Members, the Trustee shall vote uninstructed
shares, to the nearest whole vote, in the same
proportion as shares are to be voted by the
Trustee pursuant to Members' written instructions.
The Trustee shall vote unallocated shares, to the
nearest whole vote, in the same proportion as
allocated shares are to be voted by the Trustee
pursuant to Members' written instructions.
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(b) The Trustee shall exercise rights other
than voting rights attributable to whole shares of
ARCO Chemical Company Common Stock credited to
each Member's Account in accordance with such
Members' written instructions. Rights
attributable to fractional shares of ARCO Chemical
Company Common Stock (which for this purpose shall
be aggregated into whole shares of stock) shall be
exercised by the Trustee in the same proportion as
rights which are exercised by the Trustee pursuant
to Members' written instructions. In the absence
of instructions by one or more Members, the
Trustee shall exercise uninstructed rights in the
same proportion as rights which are to be
exercised by the Trustee pursuant to Members'
written instructions. The Trustee shall exercise
rights attributable to unallocated shares in the
same proportion as rights attributable to
allocated shares which are to be exercised by the
Trustee pursuant to Members' written instructions.
(c) The Trustee shall notify the Members of
each occasion for the exercise of voting rights
and rights other than voting rights within a
reasonable time before such rights are to be
exercised. This notification shall include all
the information that the Company distributes to
shareholders regarding the exercise of such
rights.
6.10 Title of Investments
All investments will be held in the name of the Trustee
or its nominees.
6.11 Allocation of Trust Earnings and Valuation of Trust
Investments
(a) Any cash dividends declared on ARCO
Chemical Company Common Stock held in a Member's
Account under the ESOP Part of the Plan as of the
record date for the dividend shall be paid in cash
to the Member (or, in the event of death, to the
Member's beneficiary) on, or as soon as possible
following, the payment date for the dividend.
(b) Any cash dividends declared on ARCO
Chemical Company Common Stock held in a loan
suspense account as of the record date for the
dividend shall be used to make payments on the
Acquisition Loan used to acquire the shares of
stock held in such account.
(c) Except as provided in Subparagraphs
6.11(a) and (b), all dividends or other
distributions attributable to shares of ARCO
Chemical Company Common Stock shall be allocated
to the Account of the Member whose Account is
credited with such shares.
(d) On the last day of each month, all
income attributable to the Money Market Fund shall
be allocated to the Member's Account in the ratio
that each Member's Money Market Fund Account
balance bears to such account balance of all such
Members. For the purpose of determining such
allocation, the Money Market Fund shall be valued
at fair market value.
6.12 Purchase and Redemption of the Equity Fund, Bond Fund,
International Equity Fund and Balanced Fund Units
Effective December 1, 1995, purchase and
redemption of the Equity Fund, Bond Fund, International
Equity Fund and Balanced Fund units shall be handled in
accordance with the following rules and such additional
procedures, consistent with such rules, as the
Administrator may establish from time to time:
(a) Units of the Equity Fund, Bond Fund,
International Equity Fund and Balanced Fund shall
be purchased or redeemed, pursuant to Member
directions under Paragraph 6.6, on each Wednesday
and Friday, covering all Member directives
received by the Administrator by such time as
determined by the Administrator, and communicated
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to Members, on the preceding Company business day,
except that if a Wednesday or Friday is a Company
holiday or a day on which trading on the New York
Stock Exchange is closed, the purchase or
redemption will be executed on the next day (a
Wednesday or Friday) on which the Plan executes a
transaction under this Subparagraph 6.12(a).
(b) If an unforeseeable administrative
difficulty prevents the execution of a transaction
under Subparagraph 6.12(a), otherwise scheduled on
a Wednesday or Friday, such transaction will be
executed on the first business day thereafter
which does not fall within one of the two
exceptions in Subparagraph 6.12(a).
(c) The Administrator may, in its
discretion, combine the purchase and redemption
orders scheduled for a Wednesday or Friday and
transact the net purchase or sale orders,
whichever the case may be. The Administrator may
also agree with the Administrator of one or more
individual account plans [as described in Section
3(34) of ERISA, and which is maintained by the Company
or its Subsidiaries or Affiliates, and provides
for the same purchase and redemption procedure
described in Subparagraph 6.12(a)], to combine
orders from all of the plans and execute a "net"
transaction.
(d) When units of the Equity Fund, Bond
Fund, International Equity Fund and Balanced Fund
are purchased or redeemed, the cost or net
proceeds charged or credited to the Accounts of
Members affected by such purchase or redemption
shall be determined on an equitable basis in
accordance with rules to be adopted by the
Administrator, which are consistent with the rules
described in this section, and incorporate the
following principles:
(i) The net proceeds of any such
redemption of fund units in a Member's
Account shall be credited to such Member's
Account.
(ii) The cost of any such purchase
of fund units for a Member's Account shall be
charged to such Member's Account.
(iii) The net proceeds and cost
of fund units shall be based on the net asset
value of such units determined on the
valuation date next following the date the
purchase or redemption order is received by
the Administrator. The valuation date shall
be determined by the Administrator and shall
occur on at least a weekly basis. The net
asset value of fund units will be calculated
by dividing the difference between the value
of the fund assets and fund liabilities by
the number of units outstanding with respect
to each fund.
(iv) Brokerage commissions,
transfer fees and other expenses actually
incurred in any such purchase or redemption
shall be added to the cost or subtracted from
the gross proceeds, of any such purchase or
redemption, respectively.
(e) Income earned by the Equity Fund, Bond
Fund and International Equity Fund shall
automatically be reinvested in the Equity Fund,
Bond Fund and International Equity Fund, as the
case may be. Income, gains and losses shall be
reflected in the net asset value of the units of
the Equity Fund, Bond Fund and International
Equity Fund.
6.13 Voting of the Money Market Fund, Equity Fund, Bond Fund
and International Equity Fund Investments
The Trustee, in accordance with the Trust
Agreement, shall exercise all voting and other rights
associated with any investments held in the Money
Market Fund, Equity Fund, Bond Fund and International
Equity Fund.
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6.14 Investment Advisory Fees
The investment advisory fees, if any, incurred for
management of the Money Market Fund, Equity Fund, Bond
Fund, International Equity Fund and Balanced Fund are
charged to each respective fund.
6.15 Member Protection
No shares of ARCO Chemical Company Common Stock
held by the ESOP Part of the Plan may be subject to a
put, call or other option, or buy/sell or similar
arrangement. The provisions of this Paragraph 6.15
shall continue to be applicable to the shares of ARCO
Chemical Company Common Stock held by the ESOP Part of
the Plan even if such part ceases to be an Employee
Stock Ownership Plan under 4945(e)(7) of the Code.
6.16 Confidentiality
The Capital Accumulation Plan Administrative
Committee shall be responsible for ensuring the
adequacy of procedures established by the Administrator
to safeguard the confidentiality of information
relating to the purchasing, holding and selling of ARCO
Chemical Company Common Stock and any voting, tender or
similar rights relating to such stock."
9. Subparagraph 13.3(f) of the Plan is amended to read as
follows:
"(f) The value of Common Stock, the Equity Fund, the
International Equity Fund, the Bond Fund and the
Balanced Fund for purposes of Subparagraph 13.3(a),
will be determined on the sale date, pursuant to
Paragraph 6.8 or 6.12, immediately preceding the date
the loan application is received by the Administrator."
10. Paragraph 13.4 of the Plan is amended to read as
follows:
"13.4 Frequency
(a) A Member may have such number of loans
outstanding at any time as shall be determined by
the Administrator.
(b) A loan application may be submitted only
once during any 15-day period and a loan
application may not be submitted earlier than
seven days following receipt by the Administrator
of a Member's application to make a purchase or
sale under Paragraph 6.6 or a hardship withdrawal
under Section 7.
(c) A loan application may not be submitted
earlier than 15 days following repayment of a
previous loan under this Plan or the ARCO Chemical
Company Savings Plans.
(d) Unless determined otherwise by the
Administrator, if the Member is also a member of
the ARCO Chemical Company Savings Plan at the time
of the application for the loan, the loan is
permitted only if the Member has, at such time, an
outstanding loan under the ARCO Chemical Company
Savings Plan, or there are insufficient assets to
fund the loan in such savings plan."
- 9 -
<PAGE>
11. Subparagraph 13.7(b) of the Plan is amended to read as
follows:
"(b) The value of Common Stock, the Equity Fund, the
International Equity Fund, the Bond Fund and the
Balanced Fund sold to provide the loan proceeds shall
be determined on the sale date, pursuant to Paragraph
6.8 or 6.12, immediately following the date the loan
application is received by the Administrator."
Executed this 24th day of July, 1996.
ATTEST ARCO CHEMICAL COMPANY
/s/ JOHN G. CHOU /s/ FRANK W. WELSH
By:_______________________ By:________________________
FRANK W. WELSH
Vice President
Human Resources
AMENDMENT NO. 3
TO
ARCO CHEMICAL COMPANY CAPITAL ACCUMULATION PLAN
__________________________
Pursuant to resolutions adopted by Board of Directors on
October 17, 1996, the ARCO Chemical Company Capital Accumulation
Plan (the "Plan") is hereby amended effective as of October 1,
1996.
A new Section 15 is added to the Plan to read as follows:
"SECTION 15
SPECIAL PROVISION APPLICABLE TO CERTAIN FORMER EMPLOYEES
OF THE PLASTIC BUSINESS OF ARCO CHEMICAL COMPANY
15.1 Pursuant to an agreement dated October 1, 1996,
(the "Agreement"), ARCO Chemical Company (the
"Company") sold its plastic business to NOVA Chemicals,
Inc. ("NOVA"). In connection with the Agreement and as
a result of this sale, certain employees of the Company
ceased to be employed by the Company and commenced
employment with NOVA. Such employees are hereinafter
referred to as "NOVA Transferees".
15.2 The rights and benefits under the Plan of NOVA
Transferees shall be governed by the Plan, except as
provided in this Section 15.
15.3 Notwithstanding the provisions of Paragraph 6.8 of
the Plan, to the extent a NOVA Transferee directs the
Plan to sell shares of ARCO Chemical Company Common
Stock ("Common Stock"), ARCO Chemical Company shall
purchase such Common Stock from the Plan, as set forth
herein (the "Buyback Program").
15.4 The Buyback Program shall terminate no later than
October 30, 1997.
15.5 The maximum number of shares to be purchased by
ARCO Chemical Company under the Buyback Program shall
be 320,000 shares.
15.6 The Buyback Program may be terminated by ARCO
Chemical Company with 30 days written notice to
affected NOVA Transferees; provided, however, that such
termination shall not occur earlier than February 1,
1997.
15.7 Upon completion of the Buyback Program pursuant to
Paragraph 15.4, 15.5 or 15.6, the sale of Common Stock
as directed by NOVA Transferees shall be made pursuant
to Paragraph 6.8.
15.8 The price received by NOVA Transferees for the
shares of Common Stock purchased by ARCO Chemical
Company shall be the price determined for other Members
in accordance with Paragraph 6.8.
15.9 The Capital Accumulation Plan Administrative
Committee shall have full authority and discretion to
adopt administrative rules and procedures to implement
the Buyback Program."
Executed this 15th day of October, 1996.
ATTEST ARCO CHEMICAL COMPANY
/s/ JOHN G. CHOU /s/ FRANK W. WELSH
By:_______________________ By:____________________________
FRANK W. WELSH
Vice President
Human Resources
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the following
registration statements of the ARCO Chemical Company Capital
Accumulation Plan, Post-Effective Amendment No. 4 to Registration
Statement on Form S-8 (No. 33-23867) and Post-Effective Amendment
No. 5 to Registration Statement on Form S-8 (No. 33-17707) of our
report dated December 9, 1996, on our audits of the statements of
net assets available for benefits of the ARCO Chemical Company
Capital Accumulation Plan as of June 30, 1996 and 1995, the
related statement of changes in net assets available for benefits
for the year ended June 30, 1996 and the supplemental schedules
as of and for the year ended June 30, 1996, which report is
included in this Annual Report on Form 11-K.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
December 12, 1996
