AMENDMENT NO. 10
TO
ATLANTIC RICHFIELD COMPANY
1985 EXECUTIVE LONG-TERM INCENTIVE PLAN
___________________________
Pursuant to authority contained in resolutions adopted by the
Board of Directors on July 28, 1997, the following amendment is
hereby made to the Atlantic Richfield Company 1985 Executive Long-
Term Incentive Plan (the "Plan"), effective July 28, 1997.
1. Article I, Sections 2(b) and 2(e) of the Plan are amended to
read as follows:
"(b) "Change of Control" means:
(i) Consummation (F1) of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of ARCO (a "Business
Combination"), unless, in each case, following such Business
Combination:
(1) All or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the then outstanding shares of common stock
(the "Outstanding Common Stock") of ARCO and the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors (the
"Outstanding Voting Securities") of ARCO immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than 60 percent of, respectively, the then
Outstanding Common Stock and the combined voting power of
the then Outstanding Voting Securities entitled to vote
generally in the election of directors, as the case may be,
of the corporation resulting from such Business Combination
(including, without limitation, a corporation which, as a
result of such transaction, owns ARCO or all or
substantially all of ARCO's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination, of the Outstanding Common Stock and
Outstanding Voting Securities, as the case may be;
(2) No Person (excluding any corporation
resulting from such Business Combination or any employee
benefit plan (or related trust) of ARCO or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 25 percent or more of, respectively,
the then Outstanding Common Stock of such corporation
resulting from such Business Combination or the combined
voting power of the then Outstanding Voting
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(F1) In the case of the vesting of Restricted Stock and Performance-
Based Restricted Stock under Article III, Section 4(c) and the
vesting of Stock Options under Article II, Section 2(f), "approval
by the shareholders of the Company" shall be substituted for
"consummation" and the exceptions under clause (1) thru (3) shall
not apply.
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Securities of such corporation, except to the extent that such
ownership existed immediately prior to the Business Combination;
and
(3) At least a majority of the members of
the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business
Combination; or
(ii) The acquisition by any Person of beneficial
ownership (within the meaning of Rule 13d-3 or Rule 13d-5
promulgated under the Exchange Act) of 25 percent (F2) or more
of either (A) the Outstanding Common Stock of ARCO or (B)
the Outstanding Voting Securities of ARCO; provided,
however, that for purposes of this Subsection (ii), the
following shall not constitute a Change of Control: (aa)
any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by ARCO or any corporation
controlled by ARCO; (bb) any acquisition by ARCO or any
increase in beneficial ownership resulting solely from an
acquisition by ARCO; (cc) any acquisition by any corporation
pursuant to a Business Combination which complies with
clauses (1), (2) and (3) of Subsection (i); or (dd) any
acquisition directly from ARCO pursuant to a transaction
(other than a Business Combination) approved by the Board
after July 28, 1997; and provided, further, that in any
event, without regard to the manner in which the level of
ownership is attained, the ownership by any Person of 40
percent or more of the Outstanding Common Stock of ARCO or
Outstanding Voting Securities of ARCO shall constitute a
Change of Control; or
(iii) Individuals who, as of July 28, 1997,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to such date whose election, or nomination for
election by ARCO's stockholders, was approved by a vote of
at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, except that
any such individual whose initial assumption of office
occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person shall not be considered
an Incumbent Director (F3); or
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(F2) This percentage shall be 40% in the case of the Vesting of Prospective
Dividend Share Credits under Article IV, Section 4 of the Plan and the
Pro Rata Payment of Contingent Restricted Stock under Article III,
Section b(v) of the Plan.
(F3) This provision shall not apply in the case of the Vesting of Prospective
Dividend Share Credits under Article IV, Section 4 of the Plan and the
Pro Rata Payment of Contingent Restricted Stock under Article III,
Section b(v) of the Plan.
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(iv) Approval by the stockholders of ARCO of a
complete liquidation or dissolution of ARCO."
"(e) "Company" means ARCO and its Subsidiaries."
2. Sections (aa), (bb), (cc), (dd), (ee), (ff) and (gg) are added to
Article I, Section 2 of the Plan to read as follows:
(aa) "Anticipatory Change of Control" means (i) the
execution of an agreement or a written document which, if
the subject thereof were consummated, would result in a
Change of Control; (ii) a public announcement by any Person,
including ARCO, of an intent to take an action(s) which, if
consummated, would result in a Change of Control; or (iii)
the delivery of a signed, written statement to the Trustee
of the Change of Control Trust and ARCO's Independent
Auditor by the Chief Financial Officer and General
Counsel of ARCO that an Anticipatory Change of Control is in
effect, provided that, with respect to any of the above
three circumstances, the Anticipatory Change of Control
shall not be effective until approved by either the Board or
the Executive Committee of the Board.
(bb) "ARCO" means Atlantic Richfield Company, its
successors and assigns.
(cc) "Change of Control Trust" means the trust
established by ARCO to provide for the payment of any
benefits, in whatever form is required, under this Plan on
and after a Change of Control.
(dd) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(ee) "Person" means any individual, corporation, firm
partnership, governmental body, entity or group and shall
include any person within the meaning of 13(d)(3) or
14(d)(2) of the Exchange Act.
(ff) "Prospective Dividend Share Credits" means the
amount of Dividend Share Credits which would be earned with
respect to a Stock Option during the period commencing on
the date of a Change of Control and concluding on the
expiration date of the term of the Stock Option, assuming
(i) no exercise of the Option; (ii) a fixed Fair Market
Value of a share of Common Stock, and (iii) a fixed
dividend, on such Common Stock. Both Fair Market Value and
the dividend rate shall be determined as of the record date
of the quarterly dividend on such Common Stock immediately
preceding the Change of Control.
(gg) "Special Plan Administrator" means the entity
designated in the Change of Control Trust as having full
Administrative powers under Article I, Section 3 of the Plan
on and after a Change of Control, including, but not limited
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to, all interpretive and decision powers reserved to the
Committee or the Subcommittee prior to a Change of Control."
3. Article I, Section 3 of the Plan is amended to read as follows:
"Section 3. Administration of the Plan
(a) Prior to a Change of Control, the Plan shall
be administered by the Committee or, where specified herein,
by the Subcommittee. The Committee or Subcommittee, as
applicable, is authorized to interpret the Plan, to adopt
such rules and regulations as may from time to time be
deemed necessary for the effective operation of the Plan,
and to act upon all matters relating to the granting 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 or
Subcommittee, as applicable, shall be final, binding and
conclusive for all purposes and upon all persons including,
without limitation, the Company, the Company's shareholders
and Eligible Employees and their respective successors in
interest.
(b) On and After a Change of Control the Plan
shall be administered by the Special Plan Administrator
which shall have all powers of the Committee and
Subcommittee described under Subsection 3(a).
(c) No member of the Committee or Subcommittee,
or the Special Plan Administrator, as applicable, shall be
personally liable by reason of any contract or other instrument
executed by such member, or on such member's behalf, in such
member's capacity as a member of the Committee or Subcommittee
nor for any mistake of judgment made in good faith, and the
Company shall indemnify and hold harmless each member of the
Committee or Subcommittee, as applicable, and each other officer,
employee or director of the Company to whom any duty or
power relating to the administration or interpretation of
the Plan has been delegated, against any cost or expense
(including counsel fees) or liability (including any sum
paid in settlement of a claim with the approval of the
Committee or Subcommittee) arising out of any act or
omission in connection with the Plan unless arising out of
such person's own fraud or bad faith.
(d) Subject to the terms and limitations of
Subsection 1(a) of Article II and Section 1 of Article III
of the Plan, the Committee or Subcommittee or Special Plan
Administrator, as applicable, may at the time of the annual
grants, make adjustments within the Total Investment Value
applicable to all Eligible Employees provided that any
reallocation resulting from changes in individual grants
may be made only to Eligible Employees in the same Salary
Grade Level as the affected individuals, so that the Total
Investment Value by Salary Grade Level may not be exceeded."
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4. Article II, Section 2(d)(i) of the Plan is amended to read as follows:
"(i) If an optionee's Employment is terminated prior to
entitlement to exercise all or a portion of a grant of Stock
Options, the optionee will immediately be entitled to exercise
all of his or her outstanding Stock Options during the remainder
of the term of the Stock Options, if the optionee's termination
is due to (1) total and permanent disability, (2)
termination, other than for cause, with a right to an
immediate allowance under a retirement plan of the Company,
or (3) involuntary termination, other than for cause."
5. Article II, Section 2(f) of the Plan is re-lettered as Section
2(g) and a new Article II, Section 2(f) is added to read as follows:
"(f) Change of Control. Upon the occurrence of a
Change of Control, a Participant shall be entitled to
exercise any outstanding Stock Options which are not
otherwise exercisable immediately preceding such a Change of
Control."
6. Article III, Section 3(b)(iii) of the Plan is amended to
read as follows:
"(iii) If a grantee's Employment is terminated
within 24 months following the grant of Performance-Based
Restricted Stock due to (1) total and permanent disability;
(2) involuntary termination, other than for cause; (3)
termination, other than for cause, with a right to an
immediate retirement allowance under a retirement plan of
the Company; or (4) death, such stock shall be deemed vested
on the day the grantee's employment is terminated."
7. Article III, Section 3(b)(v) is added to the Plan to read as follows:
"(v) (1) If a Change of Control occurs following any
grant of Contingent Restricted Stock, any actual award of
Performance-Based Restricted Stock to which the grantee
would otherwise be entitled in respect of such Contingent
Restricted Stock, based on the Company's Performance Ranking
for the year of the Performance Period on the date of the
Change of Control under the applicable Restricted Stock
Payment Schedule, shall be satisfied by the grant of shares
of Common Stock. The number of shares shall be determined
by multiplying the Contingent Restricted Stock by a
fraction, the numerator of which is the number of completed
months (or fraction thereof) in the Performance Period as of
the date of the Change of Control and the denominator of which
is the number of months in such Performance Period.
(2) If a Change of Control under Article I,
Section 2(e)(i), other than by reason of the application of
Footnote 1, occurs, and a grantee of Contingent Restricted
Stock is terminated by the Company prior to a Person attaining
an ownership level of 40 percent or more of the Outstanding
Shares of Stock of the Company or the corporation resulting
from a Business Combination,
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as defined in Article I, Section 2(e)(i), any actual
award of Performance-Based Restricted Stock to which the
grantee would otherwise be entitled, based on the Company's
performance ranking as of the earlier of (A) the end of the
Performance Period, or (B) the occurrence of a Change of Control
by reason of the application of Footnote 1 to such subsection,
shall be multiplied by a fraction, the numerator of which is
the number of completed months (or fraction thereof) of the
Performance Period as of the grantee's date of termination
and the denominator of which is the number of months in such
Performance Period, with payment to be made in shares of
Common Stock."
8. Article III, Section 4 of the Plan is amended to read as follows:
"Section 4. Waiver and Lapse of Restrictions
(a) Restrictions upon vesting and transferability
of Restricted Stock may be permitted to lapse as originally
provided by the Subcommittee at the time of grant, as
provided in the Plan or otherwise as the Subcommittee may
determine in its sole discretion.
(b) Restrictions upon vesting and transferability
of Performance-Based Restricted Stock shall lapse as
provided in Section 3 of this Article III.
(c) All shares of Restricted Stock and
Performance-Based Restricted Stock shall be deemed vested
upon the occurrence of a Change of Control."
9. Article III, Section 5(b) of the Plan is amended to read as follows:
"(b) If, prior to the end of a Performance Period, a
grantee of Contingent Restricted Stock terminates Employment
due to (i) total and permanent disability; (ii) involuntary
termination, other than for cause; or (iii) termination,
other than for cause, with a right to an immediate
retirement allowance under a retirement plan of the Company,
the grantee shall be paid the value determined under
Subsection 5(a) of this Article III as of the date of the
grantee's termination, with payment to be made in shares of
Common Stock at the end of the Performance Period."
10. Article IV, Section 4 is added to the Plan to read as follows:
"Section 4. Prospective Dividend Share Credits
(a) Upon the occurrence of a Change of Control,
the Prospective Dividend Share Credits allocable to an
optionee, as of the date of the Change of Control, shall be
credited to the account of the optionee, as described in
Subsection (b), and no further Dividend Share Credits shall
accrue with respect to such optionee.
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(b) As of the date of a Change of Control, the
Dividend Share Credits that would be earned under each
outstanding Stock Option for the remaining term of the Stock
Option shall be calculated, assuming no further exercises of
the Stock Option and using the dividend rate and the Fair
Market Value of a Share of Common Stock as of the most
recent dividend record date relating to Common Stock. The
resulting number of Dividend Share Credits shall be added to
the Dividend Share Credits held in the Participant's account
as of the date of the Change of Control and all such
Dividend Share Credits shall be treated as credited under
Article I, Subsection 2(n) of the Plan, and the Participant
shall be entitled to payment in shares of Common Stock of
the number of Dividend Share Credits relating to an exercise
of Stock Options in accordance with Article IV of the Plan."
11. Article V, Section 2 of the Plan is amended to read as follows:
"Section 2. Adjustment in Terms of Award
In the event of a reorganization,
recapitalization, stock split, stock dividend, distribution
of assets other than pursuant to a normal cash dividend,
combination of shares, merger, consolidation, rights
offering, split-up, split-off, spin-off or any other change
in the corporate structure or shares of the Company (other
than a Change of Control), the Committee may, in its
discretion, after consultation with the Chairman of the
Board and the President of ARCO, make appropriate
adjustments to reflect such event in respect of (a) the
limitation in Section 1 of this Article V on the maximum
number of shares of Common Stock upon which Stock Options
may be granted or which may be the subject of a grant of
Restricted Stock or Performance-Based Restricted Stock, (b)
the number of shares of Common Stock covered by, and the
exercise price per share applicable to, outstanding Stock
Options, (c) the number of shares of Common Stock covered by
outstanding awards of Restricted Stock or Performance-Based
Restricted Stock, and (d) the number of outstanding Dividend
Share Credits allocated to optionees' accounts. In the
event that the Committee, after consultation with the
Chairman of the Board and the President of ARCO, determines
that, because of a change (other than a Change of Control)
in the Company's business, operations, corporate structure,
capital structure, assets or manner in which it conducts
business, which it deems to be extraordinary and material,
the terms of awards theretofore made are no longer suitable
to the objectives which the Committee sought to achieve when
it made such awards, it may modify the terms of any or all
of such awards in such manner as it may decide is advisable;
provided, however, that no award may be modified in a manner
which would be inconsistent with the intent of Subsection
1(b) or Section 9 of this Article V, or which would result
in an increase in the shares of Performance-Based Restricted
Stock."
12. Article V, Section 9 of the Plan is amended to read as follows:
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"Section 9. Amendment and Discontinuance of the Plan
The Board may amend or discontinue the Plan as it
shall from time to time consider desirable, provided that:
(a) Except as provided under Subsection (c)
hereof, no amendment shall, without further approval by the
holders of a majority of the shares which are represented in
person or by proxy and entitled to vote on the subject at a
meeting of shareholders of ARCO, change the terms of the
Plan so as to increase the maximum number of shares upon
which Stock Options may be granted or which may be issued
upon a grant of Restricted Stock or Performance-Based
Restricted Stock or the payment of Dividend Share Credits
from the amounts described in Subsections 1(a) and (b) of
this Article V, reduce the minimum Stock Option price, or
extend the maximum Stock Option period.
(b) Except as provided under Subsection (c)
hereof, no amendment, discontinuance or termination shall
deprive persons who hold shares of Contingent Restricted
Stock, Restricted Stock or Performance-Based Restricted
Stock, or who are entitled to exercise Stock Options, or to
receive a settlement of Dividend Share Credits pursuant to
the terms and provisions of the Plan, of their rights with
respect thereto.
(c) No amendment may be made during the period of
an Anticipatory Change of Control, except that the Board may
amend the Plan during such a period as it may deem
necessary, upon advice of counsel, to further the interest
of the Company, its shareholders and the Plan participants
regarding any legal requirements that may be applicable to a
Change of Control, including, without limitation,
satisfaction of any requirements relating to accomplishing
"Pooling" treatment under applicable accounting rules, and
any Securities Exchange Act rules or tax rules.
(d) The Plan may not be amended or terminated on
or after a Change of Control until all Outstanding Stock
Options have been exercised or expired and all payments of
Contingent Restricted Stock under the Plan have been made."
13. Article V, Section 11 of the Plan is amended to read as follows:
"Section 11. Term of Plan
No Stock Options or Contingent Restricted Stock,
Restricted Stock or Performance-Based Restricted Stock may
be granted after February 24, 2007."
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Executed this 27th day of March, 1998.
ATTEST ATLANTIC RICHFIELD COMPANY
/s/ ARMINEH SIMONIAN /s/ JOHN H. KELLY
BY: ______________________ BY:_________________________
John H. Kelly
Senior Vice President
Human Resources
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