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Term Loan Agreement

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Sectors: Chemicals
Governing Law: The United Kingdom
Effective Date: March 12, 1997
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CONFORMED COPY


NLG300,000,000


TERM LOAN AGREEMENT


between


ARCO CHEMIE NEDERLAND, LTD.
(ROTTERDAM BRANCH)
as Borrower


ARCO CHEMICAL COMPANY
as Guarantor


CHASE INVESTMENT BANK LIMITED
as Arranger


CHASE MANHATTAN INTERNATIONAL LIMITED
as Agent


and


OTHERS


Clifford Chance
London


Exhibit 10.1


THE SCHEDULES


The First Schedule : The Banks The Second Schedule : Form of Transfer Certificate The Third Schedule : Condition Precedent Documents The Fourth Schedule : Notice of Drawdown The Fifth Schedule : Opinion of the Guarantor's Counsel


CONTENTS


Clause Page No.


PART 1
DEFINITIONS AND INTERPRETATION 1. Definitions and Interpretation ................................... 1


PART 2
THE FACILITY


2. The Facility ..................................................... 10 3. Availability of the Facility ..................................... 10


PART 3
INTEREST


4. Interest Periods ................................................. 12 5. Payment and Calculation of Interest .............................. 12 6. Alternative Interest Rates ....................................... 12


PART 4
REPAYMENT, CANCELLATION AND PREPAYMENT


7. Repayment ........................................................ 15 8. Cancellation and Prepayment ...................................... 15


PART 5
RISK ALLOCATION


9. Taxes ............................................................ 16 10. Tax Receipts ..................................................... 18 11. Changes in Circumstances ......................................... 18


PART 6
REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT


12. Representations .................................................. 20 13. Information ...................................................... 23 14. Financial Condition .............................................. 27 15. Covenants ........................................................ 27 16. Events of Default ................................................ 31


PART 7
GUARANTEE 17. Guarantee and Indemnity .......................................... 35


PART 8
DEFAULT INTEREST AND INDEMNITY


18. Default Interest and Indemnity ................................... 38


PART 9
PAYMENTS


19. Currency of Account and Payment .................................. 40 20. Payments ......................................................... 40 21. Set-Off .......................................................... 41 22. Sharing .......................................................... 41


PART 10
FEES, COSTS AND EXPENSES


23. Fees ............................................................. 43 24. Costs and Expenses ............................................... 43


PART 11
AGENCY PROVISIONS


25. The Agent, the Arranger and the Banks ............................ 45


PART 12
ASSIGNMENTS AND TRANSFERS


26. Assignments and Transfers ........................................ 50


PART 13
MISCELLANEOUS


27. Calculations and Evidence of Debt ................................ 52 28. Remedies and Waivers, Partial Invalidity ......................... 52 29. Notices .......................................................... 53 30. Amendments ....................................................... 53


PART 14
LAW AND JURISDICTION


31. Law and Jurisdiction ............................................. 55


THIS AGREEMENT is made on 12th March 1997


BETWEEN


(1) ARCO CHEMIE NEDERLAND, LTD. (ROTTERDAM BRANCH) (the "Borrower");


(2) ARCO CHEMICAL COMPANY (the "Guarantor");


(3) CHASE INVESTMENT BANK LIMITED (the "Arranger");


(4) CHASE MANHATTAN INTERNATIONAL LIMITED (the "Agent"); and


(5) THE BANKS (as defined below).


It is agreed as follows.


PART 1
DEFINITIONS AND INTERPRETATION


1. Definitions and Interpretation


1.1 Definitions In this Agreement the following terms have the meanings given to them in this Clause 1.1.


"Advance" means, save as otherwise provided herein, an advance (as from time to time reduced by repayment) made or to be made by the Banks hereunder.


"Affiliate" means (a) any person which controls, directly or indirectly, the Guarantor or (b) any person (other than a member of the Group) which is controlled by or is under common control with a person which controls, directly or indirectly, the Guarantor.


"Atlantic" means Atlantic Richfield Company, or its Successor.


"Available Commitment" means, in relation to a Bank at any time and save as otherwise provided herein, the amount set opposite its name in the First Schedule (The Banks) less the aggregate amount which it has advanced hereunder at such time.


"Available Facility" means, at any time, the aggregate amount of the Available Commitments at such time.


"Bank" means:


(a) any financial institution named in the First Schedule (The Banks)
(other than one which has ceased to be a party hereto in accordance
with the terms hereof); or


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(b) any financial institution which has become a party hereto in
accordance with the provisions of Clause 26.4 (Assignments by Banks)
or Clause 26.5 (Transfers by Banks).


"Basle Paper" means the paper entitled "International Convergence of Capital Measurement and Capital Standards" dated July 1988 and prepared by the Basle Committee on Banking Regulations and Supervision, as amended in November 1991.


"Benefit Arrangement" means at any time an employee pension benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group.


"Capital Adequacy Requirement" means a request or requirement relating to the maintenance of capital, including one which makes any change to, or is based on any alteration in, the interpretation of the Basle Paper or which increases the amounts of capital required thereunder, other than a request or requirement made by way of implementation of the Basle Paper in the manner in which it is being implemented at the date hereof.


"Code" means the United States Internal Revenue Code of 1986.


"Cross-Indemnification Agreement" means the cross-indemnification agreement dated 1 June 1987, as amended, made between Atlantic and the Guarantor.


"Environmental Law" means, with respect to any person, all laws, regulations, treaties and conventions concerning the pollution or protection of human health or the environment or the conditions of the workplace or the generation, transportation, storage, treatment or disposal of any Materials of Environmental Concern.


"Environmental License" means any permit, approval, ruling, exemption, consent, license or other authorization required by any Environmental Law.


"Equivalent Amount" means the amount of any currency converted from the relevant amount of dollars at the Agent's spot buying rate (based on the market rates then prevailing) for the exchange of dollars and such currency at or about 11.00 a.m. on the third business day prior to the date on which the relevant amount in such currency is to be paid or calculated under this Agreement.


"ERISA" means the United States Employee Retirement Income Security Act of 1974.


"ERISA Group" means the Guarantor and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Guarantor, are treated as a single employer under Section 414 of the Code.


"Event of Default" means any circumstances described as such in Clause 16 (Events of Default).


"Existing Facilities" means the facilities made available to the Borrower pursuant to:


(a) the NLG150,000,000 Facility Agreement dated 3 March 1990 and
made between ABN AMRO Bank, N.V. and the Borrower; and


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(b) the NLG150,000,000 Facility Agreement dated 15 November 1990
and made between ABN AMRO Bank, N.V. and the Borrower.


"Facility" means the term loan facility granted to the Borrower in this Agreement.


"Facility Office" means, in relation to the Agent or any Bank, the office identified with its signature below (or, in the case of a Transferee, at the end of the Transfer Certificate to which it is a party as Transferee) or such other office as it may from time to time select.


"Guarantee" means the guarantee granted by the Guarantor in this Agreement.


"Group" means the Guarantor and its subsidiaries from time to time.


"Indebtedness for Borrowed Money" means, in relation to any person at any date, without duplication:


(a) all obligations of such person for borrowed money;


(b) all obligations of such person evidenced by debentures,
bonds, notes or other similar instruments;


(c) all obligations of such person to pay the deferred
purchase price of property or services, except trade
accounts payable arising in the ordinary course of
business;


(d) all obligations of such person as lessee under capital
leases;


(e) all Indebtedness for Borrowed Money of others secured by
an encumbrance on any asset of such person, whether or
not such Indebtedness for Borrowed Money is assumed by
such person; and


(f) all Indebtedness for Borrowed Money of others guaranteed
by such person


Provided that in no event shall Indebtedness for Borrowed Money be deemed to include any "take-or-pay" obligations incurred by the Guarantor in the ordinary course of business.


"Information Memorandum" means the document dated February 1997 concerning the Obligors which, at their request and on their behalf, was prepared in relation to this transaction and distributed by the Arranger to selected banks.


"Instructing Group" means:


(a) before any Advances have been made hereunder, a Bank or group
of Banks whose Available Commitments amount in aggregate to
more than 66 per cent. of the Available Facility; and


(b) thereafter, a Bank or group of Banks to whom in aggregate more
than 66 per cent. of the Loan is (or, immediately prior to its
repayment, was then) owed.


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"Interest Period" means, save as otherwise provided herein, any of those periods mentioned in Clause 4.1 (Interest Periods).


"LIBOR" means, in relation to any amount owed by an Obligor hereunder on which interest for a given period is to accrue, the rate per annum determined by the Agent to be equal to the arithmetic mean (rounded upwards, if not already such a multiple, to the nearest whole multiple of one-sixteenth of one per cent.) of the rates (as notified to the Agent) at which each of the Reference Banks was offering to prime banks in the London Interbank Market deposits in Guilders for such period at or about 11.00 a.m. (London time) on the Quotation Date for such period.


"Loan" means the aggregate principal amount for the time being outstanding hereunder.


"Margin" means 0.175 per cent. per annum.


"Materials of Environmental Concern" includes, but is not limited to, any and all hydrocarbons, gases, pollutants, contaminants, toxic substances and any radioactive omissions likely to cause harm to man or any living organism or to damage the environment or public health or welfare.


"Material Subsidiary" means, at any time, a subsidiary of the Guarantor whose assets have an aggregate book value which exceeds 10 per cent. of the consolidated book value of the assets of the Group and/or whose aggregate revenues exceed 10 per cent. of the consolidated revenues of the Group determined by reference to the latest audited consolidated financial statements of the Guarantor (adjusted in such manner as the Agent may require to take account of any matters occurring after the date of preparation of the financial statements in question).


"Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any person which ceased to be a member of the ERISA Group during such five year period. "Notice of Drawdown" means a notice substantially in the form set out in the Fourth Schedule (Notice of Drawdown).


"Obligors" means the Borrower and the Guarantor.


"Original Financial Statements" means:


(a) in relation to ARCO Chemie Nederland, Ltd., its unaudited financial
statements for its financial year ended 31 December 1995; and


(b) in relation to the Guarantor, its audited consolidated financial
statements for its financial year ended 31 December 1995.


"PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.


"Permitted Encumbrance" means any encumbrance:


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(a) on any asset of a corporation existing at the time it becomes a
subsidiary of the Guarantor or at the time it is merged or
consolidated into a member of the Group and not created in
contemplation of such event;


(b) subsisting over an asset at the time it is acquired or created to
secure either (i) payment of the consideration therefor or (ii)
Indebtedness for Borrowed Money incurred prior to, at the time of or
within 24 months after the acquisition thereof for the purpose of
financing all or part of the consideration therefor;


(c) created over an asset to secure (i) all or part of the cost of
construction or improvements thereon or (ii) Indebtedness for
Borrowed Money incurred to provide funds for the construction or
improvements thereon in a principal amount not exceeding the cost of
such construction or improvement;


(d) which secures Indebtedness for Borrowed Money owing from any member
of the Group to any other member of the Group;


(e) in favour of the United States of America or any state thereof, or
any department, agency, instrumentality or political subdivision
thereof to secure (i) any payment due pursuant to any agreement, law
or regulation or (ii) Indebtedness for Borrowed Money incurred for
the purpose of financing all or part of the consideration for or cost
of constructing or improving the asset subject to such encumbrance
including, without limitation, encumbrances to secure Indebtedness
for Borrowed Money in respect of any pollution control, industrial
revenue bond or other similar type of financing;


(f) required by any agreement, law or regulation to enable the Guarantor
or any member of the Group to perform any agreement made by it with
or at the request of the United States of America or any state
thereof, or any department, agency, instrumentality or political
subdivision thereof;


(g) created in favour of a supplier or other similar trade creditor in
the ordinary course of business securing Indebtedness for Borrowed
Money which is not overdue or being contested in good faith by
appropriate proceedings and in connection with which adequate
reserves are being maintained;


(h) which secures the obligations of any member of the Group owing
pursuant to a deferred payment agreement in an aggregate amount not
exceeding $10,000,000 (or its Equivalent Amount);


(i) of a judgment or attachment in respect of any Indebtedness for
Borrowed Money so long as (1) the Guarantor in good faith by
appropriate action, promptly initiated and diligently conducted,
shall contest or cause to be contested the validity, amount, extent
or application thereof and (2) such action shall operate to prevent
the sale or foreclosure (or the posting of notices preparatory to any
sale or foreclosure) of any part of an asset to satisfy such
encumbrance prior to a final determination of such action;


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(j) which secures taxes not delinquent or being contested in good faith
by appropriate proceedings and for which reserves adequate under
generally accepted accounting principles in the State of Delaware are
being maintained; and


(k) which is an extension, renewal or replacement of an encumbrance
referred to in sub-paragraphs (a) to (h) above or of the Indebtedness
for Borrowed Money secured thereby Provided that the principal amount
of Indebtedness for Borrowed Money secured thereby does not exceed
the principal amount of Indebtedness for Borrowed Money so secured at
the time of such extension, renewal or replacement and that such
extension, renewal or replacement shall be limited to all or part of
substantially the same property which secured the encumbrance
extended renewed or replaced (including improvements on such
property).


"Plan" means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and either:


(a) is maintained or contributed to by a member of the ERISA Group for
employees of a member of the ERISA Group; or


(b) has at any time within the preceding five years been maintained or
contributed to by any person which was at such time a member of the
ERISA Group for employees of any person which was at such time a
member of the ERISA Group.


"Potential Event of Default" means any event which may become (with the passage of time, the giving of notice, the making of any determination hereunder or any combination thereof) an Event of Default.


"Quotation Date" means, in relation to any period for which an interest rate is to be determined hereunder, the day on which quotations would ordinarily be given by prime banks in the London Interbank Market for deposits in Guilders for delivery on the first day of that period Provided that, if, for any such period, quotations would ordinarily be given on more than one date, the Quotation Date for that period shall be the last of those dates.


"Reference Banks" means the principal London offices of ABN AMRO Bank N.V., ING Bank N.V. and The Chase Manhattan Bank or such other bank or banks as may from time to time be agreed between the Borrower and the Agent acting on the instructions of an Instructing Group.


"Repayment Date" means the day which is 60 months after the date hereof.


"Sale and Lease-Back Transaction" means an arrangement with any person (other than a member of the Group) providing for the leasing to any member of the Group for a period of more than three years of any property which has been sold or transferred by such member of the Group to such person, to which amounts have been advanced or are to be advanced by such person on the security of the leased property.


-6-


"Successor" in relation to a party means an assignee or successor in title of such party or any person who, under the laws of its jurisdiction of incorporation or domicile, has assumed the rights and obligations of such party hereunder or to which under such laws the same has been transferred.


"Tax-Sharing Agreement" means the amended and restated tax-sharing agreement dated 1 January 1995 made between Atlantic and the Guarantor.


"Termination Date" means the earlier of the day which is one month after the date hereof and the first business day on which the Available Commitment of each of the Banks is zero.


"Transfer Certificate" means a certificate substantially in the form set out in the Second Schedule (Form of Transfer Certificate) signed by a Bank and a Transferee whereby:


(a) such Bank seeks to procure the transfer to such Transferee of all or
a part of such Bank's rights, benefits and obligations hereunder as
contemplated in Clause 26.3 (Assignments and Transfers by Banks); and


(b) such Transferee undertakes to perform the obligations it will assume
as a result of delivery of such certificate to the Agent as is
contemplated in Clause 26.5 (Transfers by Banks).


"Transfer Date" means, in relation to any Transfer Certificate, the date for the making of the transfer as specified in the schedule to such Transfer Certificate.


"Transferee" means a bank or other financial institution to which a Bank seeks to transfer all or part of such Bank's rights, benefits and obligations hereunder.


"Unfunded Liabilities" means, with respect to any Plan at any time, the amount (if any) by which the present value of all benefits under such Plan exceeds the fair market value of all Plan assets allocable to such benefits (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other person under Title IV of ERISA.


"Value" means, with respect to a Sale and Lease-Back Transaction, as of any particular time the amount equal to the greater of (a) the net proceeds of the sale or transfer of the property leased pursuant to such Sale and Lease-Back Transaction or (b) the fair value in the opinion of the board of directors of the relevant member of the Group of such property at the time of entering into such Sale and Lease-Back Transaction, in each case divided first by the number of full years of the term of the lease and then multiplied by the number of full years of such term remaining at the time of determination, without regard to any renewal or extension options contained in the lease.


1.2 Interpretation Any reference in this Agreement to:


the "Agent" or any "Bank" shall be construed so as to include its and any subsequent Successors, Transferees and assigns in accordance with their respective interests;


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a "business day" shall be construed as a reference to a day (other than a Saturday or Sunday) on which banks generally are open for business in Amsterdam, London and New York City;


an "encumbrance" shall be construed as a reference to (a) a mortgage, charge, pledge, lien or other encumbrance securing any obligation of any person, (b) any arrangement under which money or claims to, or the benefit of, a bank or other account may be applied, set-off or made subject to a combination of accounts so as to effect payment of sums owed or payable to any person or (c) any other type of preferential arrangement (including title transfer and retention arrangements) having a similar effect;


a "holding company" of a company or corporation shall be construed as a reference to any company or corporation of which the first-mentioned company or corporation is a subsidiary;


"indebtedness" shall be construed so as to include any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;


a "month" is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next succeeding calendar month save that, where any such period would otherwise end on a day which is not a business day, it shall end on the next succeeding business day, unless that day falls in the calendar month succeeding that in which it would otherwise have ended, in which case it shall end on the immediately preceding business day Provided that, if a period starts on the last business day in a calendar month or if there is no numerically corresponding day in the month in which that period ends, that period shall end on the last business day in that later month (and references to "months" shall be construed accordingly);


a "person" shall be construed as a reference to any person, firm, company, corporation, government, state or agency of a state or any association or partnership (whether or not having separate legal personality) of two or more of the foregoing;


"repay" (or any derivative form thereof) shall, subject to any contrary indication, be construed to include "prepay" (or, as the case may be, the corresponding derivative form thereof);


a "subsidiary" of a company or corporation shall be construed as a reference to any company or corporation:


(a) which is controlled, directly or indirectly, by the first-mentione
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