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