EXHIBIT 1.1
Draft 11/21/94
BORDEN CHEMICALS AND PLASTICS
LIMITED PARTNERSHIP
4,000,000 COMMON UNITS
UNDERWRITING AGREEMENT
----------------------
___________ ___, 1994
CS First Boston Corporation
PaineWebber Incorporated
As Representatives of the Several Underwriters,
c/o CS First Boston Corporation,
Park Avenue Plaza
New York, New York 10055
Dear Sirs:
1. Introductory. Borden Chemicals and Plastics Limited Partnership, a
Delaware limited partnership (the "Company") proposes to issue and sell to the
Underwriters (hereinafter defined) 4,000,000 common limited partner interests in
the Company ("Common Interests") on a firm basis and up to 600,000 of such
Common Interests on an optional basis..
The Common Interests are to be deposited upon issuance with Society
National Bank, as Depositary (the "Depositary"), in exchange for depositary
units evidenced by depositary receipts ("Depositary Receipts"). Unless the
context otherwise requires, all references to "Common Units" shall be deemed to
include the Common Interests sold to the Underwriters. The Common Units so
proposed to be sold by the Company to the Underwriters on a firm basis are
hereinafter referred to as "Firm Common Units" and the Common Units so proposed
to be sold by the Company to the Underwriters on an optional basis are
hereinafter referred to as the "Optional Common Units." The Firm Common Units
and the Optional Common Units are hereinafter referred to as the "Securities."
All capitalized terms which are not defined in this Agreement shall be given the
same meaning as such terms have in the Registration Statement (hereinafter
defined). The Company, Borden Chemicals and Plastics Operating Limited
Partnership, a Delaware limited partnership (the "Operating Company"), and BCP
Management, Inc., a Delaware corporation and the general partner of the Company
and the Operating Company ("BCPM" or the "General Partner"), hereby agree with
the several Underwriters named in Schedule I hereto (the "Underwriters") as
follows:
2. Representations, Warranties and Agreements of the Company and Others.
(a) Each of the Company, the Operating Company and BCPM, jointly and severally
represents and warrants to, and agrees with, the several Underwriters that:
(i) A registration statement on Form S-3 (No. 33-55863), including a
form of prospectus relating to the Securities has been filed with the
Securities and Exchange Commission (the "Commission") and either (A) has
been declared effective under the Securities Act of 1933, as amended
("Act"), and is not proposed to be amended or (B) is proposed to be amended
by amendment or post-effective amendment. If the Company does not propose
to
amend such registration statement and if any post-effective amendment to
such registration statement has been filed with the Commission prior to the
execution and delivery of this Agreement, the most recent such amendment
has been declared effective by the Commission. For purposes of this
Agreement, "Preliminary Prospectus" means any prospectus included in such
registration statement, or amendments to such registration statement,
before such registration statement has been declared effective by the
Commission and any prospectus filed by the Company with the Commission
pursuant to Rule 424(a) under the Act. For purposes of this Agreement,
"Effective Time" means (A) if the Company has advised you that it does not
propose to amend such registration statement, the date and time as of which
such registration statement, or the most recent post-effective amendment
thereto (if any) filed prior to the execution and delivery of this
Agreement, was declared effective by the Commission, or (B) if the Company
has advised you that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as of which
such registration statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the Commission.
"Effective Date" means the date of the Effective Time. Such registration
statement, as amended at the Effective Time, including all material
incorporated by reference therein and including all information (if any)
deemed to be a part of such registration statement as of the Effective
Time pursuant to Rule 430A(b) under the Act, is hereinafter referred to as
the "Registration Statement," and the form of prospectus relating to the
Securities, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no such
filing is required) as included in the Registration Statement, including
all material incorporated by reference in such prospectus, is hereinafter
referred to as the "Prospectus."
(ii) If the Effective Time is prior to the execution and delivery of
this Agreement: (A) on the Effective Date, the Registration Statement
conformed in all material respects to the requirements of the Act and the
rules and regulations of the Commission under the Act (the "Rules and
Regulations") and did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and (B) on the date of this
Agreement, the Registration Statement conforms, and at the time of filing
of the Prospectus pursuant to Rule 424(b), the Registration Statement and
the Prospectus will conform, in all material respects to the requirements
of the Act and the Rules and Regulations, and neither of such documents
contains or will contain, an untrue statement of a material fact or omits
or will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. If the Effective
Time is subsequent to the execution and delivery of this Agreement: on the
Effective Date, the Registration Statement and the Prospectus will conform
in all material respects to the requirements of the Act and the Rules and
Regulations, and neither of such documents will contain an untrue statement
of a material fact or will omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
The two preceding sentences do not apply to statements in, or omissions
from the Registration Statement or the Prospectus based upon written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein. No order preventing or
suspending the use of any Preliminary Prospectus has been issued by the
Commission.
(iii) Other than as provided in the Partnership Agreement (as defined
below) or pursuant to [names of benefit plans], there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such
securities in the Securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act.
2
(iv) Subsequent to the respective dates as of which information is given in
the Registration Statement and Prospectus, and except as set forth or
contemplated in the Prospectus, none of the Company, the Operating Company
or BCPM has incurred any material liabilities or obligations, direct or
contingent, nor entered into any material transactions not in the ordinary
course of business, and, subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, and
except as set forth or contemplated in the Prospectus, there has not been
(A) any material adverse change in the financial condition, business,
properties, prospects or results of operations of the Company, the
Operating Company, BCPM or, to the knowledge of such persons, Borden, Inc.,
a New Jersey corporation ("Borden"), which has a reasonable probability of
materially adversely affecting (1) the financial condition, business,
properties, prospects or results of operations of the Company and the
Operating Company on a combined basis, or BCPM, or (2) to the best
knowledge of the Operating Company, the Company and BCPM, Borden's ability
(or the ability of any of Borden's subsidiaries or affiliates) to fulfill
their obligations under any of the Operative Agreements (hereinafter
defined), (B) any dividend or distribution of any kind declared, paid or
made by the Company, the Operating Company or BCPM, or (C) any decrease in
the equity or increase in the long-term debt of the Company, the Operating
Company or BCPM other than increases in long term debt that do not exceed
in the aggregate $2.0 million and other than the concurrent offering of
notes by the Operating Company and BCP Finance Corporation, a Delaware
corporation and a wholly owned subsidiary of the Operating Company.
(v) The pro forma financial information set forth in the Prospectus
and the pro forma financial information set forth in the Preliminary
Prospectus dated __________, 1994 has been prepared in all material
respects in accordance with any applicable rules and guidelines of the
Commission with respect to pro forma financial statements and, in the
opinion of the Company, the Operating Company, and BCPM, the assumptions on
which the pro forma adjustments to such pro forma financial information are
based provide a reasonable basis for presenting all of the significant
effects of the transactions contemplated by such pro forma financial
information and such pro forma adjustments give appropriate effect to such
assumptions and are properly applied in such pro forma financial
information. The audited and unaudited financial statements and schedules
included in the Registration Statement and the Prospectus (other than with
respect to pro forma matters) present fairly the financial position and
the results of operations of the Company, the Operating Company and their
consolidated subsidiaries on a consolidated basis, at the respective dates
or for the respective periods therein specified, in conformity with
generally accepted accounting principles applied on a consistent basis,
except as may be set forth in the Prospectus. The other historical
financial and statistical information and data included in the Prospectus
and in the Registration Statement are, in all material respects,
accurately presented and prepared in accordance with any applicable rules
and guidelines of the Commission and on a basis consistent with such
financial statements and the books and records of the Company and the
Operating Company.
(vi) Price Waterhouse LLP on the one hand, and Arthur Andersen LLP, on
the other hand, who have expressed their respective opinions on the audited
financial statements included in the Preliminary Prospectus dated
__________, 1994 and on the audited financial statements and related
schedules included in the Registration Statement and the Prospectus, are
independent accountants with respect to the Company and BCPM on the one
hand, and the Addis Plant on the other hand, as required by the Act and the
applicable published Rules and Regulations.
3
(vii) Each of the Company and the Operating Company has been duly
formed and is validly existing and in good standing as a limited
partnership under the Delaware Revised Uniform Limited Partnership Act (the
"Delaware Act") with full partnership power and authority to own or lease
its properties (including, without limitation, in the case of the Operating
Company, the Addis Assets), to conduct its business as described in the
Prospectus after giving effect to the transfer of the Addis Assets and to
execute, deliver and perform this Agreement and, in the case of the
Company, to authorize the offering of the Securities, and to issue, sell
and deliver the Securities; the Company's only subsidiary is the Operating
Company; the Operating Company's only subsidiaries are Monochem, Inc. and
Borden Finance Corporation; to the knowledge of the Company, the Operating
Company and BCPM, on the First Closing Date (as defined in Section 3), all
action required on the part of OxyChem to be taken by such First Closing
Date for the conveyance and transfer of the Addis Assets to the Operating
Company will have been validly and sufficiently taken; the Company, the
Operating Company and BCPM will, after giving effect to the transfer of the
Addis Assets as described in the Prospectus, be in possession of and
operating in compliance in all material respects with all material
franchises, grants, authorizations, approvals, licenses, permits,
easements, consents, certificates and orders required to own or lease
their properties (including, without limitation, in the case of the
Operating Company), to own the Addis Assets and to assume certain
obligations relating to the Addis Assets and to permit the conduct of their
business, except for those franchises, grants, authorizations, approvals,
licenses, permits, easements, consents, certificates and orders (the
"Permitted Exceptions") which (a) can be expected to be obtained or given
in the normal course of business after the Closing Date or Dates
hereinafter mentioned, (b) are of a routine nature not customarily obtained
or given prior to the consummation of a transaction of the nature of the
transfer of the Addis Assets and are expected to be obtained or given after
the Closing Date or Dates hereinafter mentioned or (c) the failure to
obtain or give would not materially and adversely affect the business or
the operations of the Company and the Operating Company on a combined
basis, or BCPM, as a result of indemnity or otherwise; and each of the
Company and the Operating Company is duly qualified or registered and in
good standing as a foreign partnership in all other jurisdictions where,
after the conveyance to the Operating Company of the Addis Assets, its
ownership or leasing of properties or the conduct of its business would
require such qualification or registration, except where failure to so
qualify will not have a material effect on its financial condition.
(viii) BCPM is the general partner of each of the Company and the
Operating Company and owns a general partner interest in the Company of 1%
and a general partner interest in the Operating Company of 1.0101%. BCPM
has made all capital contributions to the Company which it is required to
make pursuant to the Partnership Agreement, and upon the issuance of the
Firm Common Units and the Optional Common Units, if any, as the case may
be, BCPM shall make the additional capital contribution to the Company as
required by Section 4.4(a)(iv) of the Partnership Agreement. BCPM's
general partner interests in the Company and the Operating Company are
validly issued, fully paid, and owned free and clear of any liens,
encumbrances, security interests, equities and claims (except in each case
as provided by the Delaware Act, by the Partnership Agreements or as set
forth in the Prospectus).
(ix) The Company is the sole limited partner of the Operating Company
with a limited partner interest in the Operating Company of 98.9899%. The
Company's limited partner interest in the Operating Company is validly
issued and, except as provided in the Partnership Agreements, subject to
the qualifications set forth in the following sentence, is fully paid and
non-assessable and owned free and clear of any liens, encumbrances,
security interests, equities and claims. Assuming that the Company does
not participate in the control
4
of the business of the Operating Company (within the meaning of the
Delaware Act) and that it does no more than exercise its rights as a
limited partner of the Operating Company, the Company, as limited partner
of the Operating Company, will have no liability in excess of its
obligations to make contributions to the Operating Company, its obligations
to make other payments provided for in the Operating Partnership Agreement
(as defined below) (the Partnership Agreement and the Operating Partnership
Agreement are collectively referred to as the "Partnership Agreements") and
its share of the Operating Company's assets and undistributed profits
(subject to the obligation of a limited partner of a limited partnership no
greater than the obligation of such limited partner to repay (i) to the
limited partnership, to the extent provided under repealed 6 Del. C. (S)
17-608, for a period of one year after any rightful return, any part of
its contribution to the limited partnership rightfully returned to it, but
only to the extent necessary to discharge the limited partnership's
liabilities to creditors who extended credit to the limited partnership
during the period the contribution was held by the limited partnership and
(ii) any funds wrongfully returned to the extent provided under repealed 6
Del. C. (S)17-608 or wrongfully distributed to it).
(x) The Securities conform in all material respects to the description
thereof in the Prospectus and such description conforms in all material
respects to the rights set forth in the Partnership Agreement.
(xi) All of the Common Units have been duly and validly authorized by
the Company, and at the time of the delivery of the Securities to the
Underwriters against payment therefor, all of the outstanding Securities
will be duly and validly issued and, subject to the qualifications set
forth in the following sentence, will be fully paid and non-assessable and
owned free and clear of any liens, encumbrances, security interests,
equities and claims. Assuming that the holder of any such Security does
not participate in the control of the business of the Company (within the
meaning of the Delaware Act) and that he does no more than exercise his
rights as a Limited Partner (as defined in the Partnership Agreement), such
holder (other than a Departing Partner), as a Limited Partner, will have no
liability in excess of his obligation to make contributions to the Company,
his obligation to make other payments provided for in the Partnership
Agreement and the Deposit Agreement (as defined below) and his share of the
Company's assets and undistributed profits (subject to the obligation of a
limited partner of a limited partnership no greater than the obligation of
such limited partner to repay (i) to the limited partnership, to the extent
provided under repealed 6 Del. C. (S) 17-608, for a period of one year
after any rightful return, any part of his contribution to the limited
partnership rightfully returned to him, but only to the extent necessary to
discharge the limited partnership's liabilities to creditors who extended
credit to the limited partnership during the period the contribution was
held by the limited partnership, and (ii) any funds wrongfully returned to
the extent provided under repealed 6 Del. C. (S)17-608 or wrongfully
distributed to him). The sale of the Securities pursuant to this Agreement
is not subject to the preemptive rights of any person or entity.
(xii) This Agreement has been duly authorized, executed and delivered
by the Company, the Operating Company and BCPM and, assuming due
authorization, execution and delivery by the Underwriters, is a valid and
binding agreement of the Company, the Operating Company and BCPM, and is
enforceable against each of such parties in accordance with its terms; the
Amended and Restated Agreement of Limited Partnership of the Company among
Borden Delaware Holdings, Inc., a Delaware corporation ("Borden Delaware"),
BCPM (as General Partner and agent and attorney-in-fact on behalf of the
limited partners of the Company), together with the persons who became
partners thereof, as amended and restated (the "Partnership Agreement"),
has been duly authorized, executed and delivered by Borden Delaware and
BCPM, and is a valid and binding agreement of Borden Delaware and BCPM,
5
enforceable against Borden Delaware and BCPM, in accordance with its terms;
the Agreement of Limited Partnership of the Operating Company between BCPM
and the Company, as amended and restated (the "Operating Partnership
Agreement"), has been duly authorized, executed and delivered by BCPM and
the Company, and is a valid and binding agreement of BCPM and the Company,
enforceable against BCPM and the Company in accordance with its terms; the
Third Amended and Restated Deposit Agreement among the Company, Borden,
BCPM (as General Partner and as attorney-in-fact for the Limited Partners
and Assignees and the Depositary (the "Deposit Agreement") has been duly
authorized, executed and delivered by the Company, Borden and BCPM, and
assuming due authorization, execution and delivery by the Depositary, is a
valid and binding agreement of the Company, Borden and BCPM, enforceable
against the Company, Borden and BCPM, and to the best knowledge of the
Company, the Operating Company and BCPM, against the Depositary, in
accordance with its terms; the Asset Transfer Agreement between the
Operating Company and OxyChem, dated as of August 12, 1994, (the "Asset
Transfer Agreement") has been duly authorized, executed and delivered by
the Operating Company, and assuming the due authorization, execution and
delivery by OxyChem, is a valid and binding agreement of the Operating
Company, and to the best knowledge of the Company, the Operating Company
and BCPM, of OxyChem, enforceable against the Operating Company, and to the
best knowledge of the Company, the Operating Company and BCPM, against
OxyChem, in accordance with its terms; the Ammonia Purchase Agreement, the
PVC Purchase Agreement, the Urea Purchase Agreement, the Methanol Purchase
Agreement, the Formaldehyde Processing Agreement and the Urea-Formaldehyde
Concentrate Processing Agreement, all of which agreements are between the
Operating Company and Borden and are hereinafter collectively referred to
as the "Purchase and Processing Agreements," have been duly authorized,
executed and delivered by each of the Operating Company and Borden and are
valid and binding agreements of each of the Operating Company and Borden,
enforceable against each of the Operating Company and Borden in accordance
with their terms; the Intercompany Agreement among the Company, the
Operating Company, BCPM and Borden (the "Intercompany Agreement") has been
duly authorized, executed and delivered and is a valid and binding
agreement of the Company, the Operating Company, BCPM and Borden
enforceable against each of such parties in accordance with its terms; the
Borden and BCPM Covenant Agreement among the Company, BCPM and Borden (the
"Borden and BCPM Covenant Agreement") has been duly authorized, executed
and delivered by the Company, BCPM and Borden, is a valid and binding
agreement of the Company, BCPM and Borden, enforceable against each of such
parties in accordance with its terms; the Environmental Indemnity Agreement
among the Company, the Operating Company and Borden (the "Environmental
Indemnity Agreement") has been duly authorized, executed and delivered by
each of the Company, the Operating Company and Borden, and is a valid and
binding agreement of the Company, the Operating Company and Borden,
enforceable against each of such parties in accordance with its terms; the
Use of Name and Trademark License Agreement among the Company, the
Operating Company and Borden (the "Use of Name and Trademark License
Agreement") has been duly authorized, executed and delivered by the
Company, the Operating Company and Borden and is a valid and binding
agreement of the Company, the Operating Company and Borden, enforceable
against each of such parties in accordance with its terms; the Patent and
Know-How Agreement among the Company, the Operating Company and Borden (the
"Patent and Know-How Agreement") has been duly authorized, executed and
delivered by the Company, the Operating Company and Borden and is a valid
and binding agreement of the Company, the Operating Company and Borden,
enforceable against each of such parties in accordance with its terms; all
necessary filings with respect to the formation of the Company and the
Operating Company as limited partnerships under the Delaware Act have been
made; and all of the statements in the Certificate of Limited Partnership
of the Company (the "Partnership Certificate") and the Certificate of
Limited Partnership of the Operating Company (the "Operating Partnership
Certificate") are
6
true and correct in all material respects. The representations and
warranties expressed herein with respect to the enforceability of this
Agreement and the Operative Agreements (hereinafter defined) are qualified
to the extent that such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium and other similar laws
affecting the rights and remedies of creditors, and by general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law) and, without limiting the foregoing, the
Company, the Operating Company and BCPM make no representation or warranty
regarding the enforceability of Section 7 of this Agreement.
(xiii) The Securities to be sold by the Underwriters have been
approved for listing on the New York Stock Exchange, subject to official
notice of issuance.
(xiv) Except as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company, the Operating
Company, or BCPM or, to the knowledge of such persons, Borden is a party
or of which any property of the Company, the Operating Company, BCPM or, to
the knowledge of such persons, Borden is the subject, which have a
reasonable probability, individually or in the aggregate, of materially
adversely affecting, (i) to the best knowledge of the Company the Operating
Company and BCPM, the ability of Borden (or any of its subsidiaries or
affiliates) to fulfill its obligations under any of the Operative
Agreements or (ii) the financial condition, business, properties, prospects
or results of operations of the Company and the Operating Company on a
combined basis, or BCPM; and, to the best knowledge of the Company, the
Operating Company and BCPM, no such proceedings are threatened by
governmental authorities or by others.
(xv) The execution, delivery and performance of this Agreement, the
Partnership Agreement, the Operating Partnership Agreement, the Deposit
Agreement, the Asset Transfer Agreement, the Purchase and Processing
Agreements, the Intercompany Agreement, the Environmental Indemnity
Agreement, the Use of Name and Trademark License Agreement and the Patent
and Know-How Agreement (collectively, the "Operative Agreements") and the
consummation of the transactions contemplated in the Prospectus to be
consummated on or prior to the Closing Date or Dates hereinafter mentioned
(including, without limitation, the conveyance of the Addis Assets to the
Operating Company) do not and will not (i) conflict with or result in
breach or violation of any of the terms or provisions of, or constitute a
default under the Operative Agreements, the Partnership Certificate, the
Operating Partnership Certificate, the charter documents, as amended, or
by-laws, as amended, of BCPM or, to the knowledge of such persons, Borden
or any material indenture, mortgage, deed of trust, note agreement or other
material agreement or instrument to which the Company, the Operating
Company, BCPM or, to the knowledge of such persons, Borden is a party or by
which they or any of them or any of their respective properties are bound,
or (ii) except for violations caused by failure to obtain any Permitted
Exceptions, constitute a violation of any statute, rule, regulation,
judgment, order or decree of any federal, state or local government,
governmental instrumentality or court having jurisdiction over the Company,
the Operating Company, BCPM or, to the knowledge of such persons, Borden or
any of their respective properties, which conflicts, breaches, violations
or defaults in the case of (i) or (ii) have a reasonable probability of
materially adversely affecting the Company and the Operating Company on a
combined basis, or BCPM.
(xvi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the issuance, sale or delivery
of the Securities to the Underwriters or the consummation by the Company,
the Operating Company or BCPM of the transactions contemplated by this
Agreement, except such as may be required by the New York Stock Exchange
("NYSE"), the National Association of Securities Dealers, Inc. ("NASD")
7
or under the Act or the securities or Blue Sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by the
Underwriters.
(xvii) Except as disclosed in the Prospectus, none of the Company,
the Operating Company or BCPM is in default with respect to any material
contract or agreement to which it is a party which default has a
reasonable likelihood of materially adversely affecting the Company and the
Operating Company on a combined basis, or BCPM. BCPM is not in violation
of its charter documents, as amended, or by-laws, as amended, and the
Company and the Operating Company are not in violation of their
Certificates of Limited Partnership.
(xviii) Except as described in the Prospectus, the Company, the
Operating Company and BCPM possess, and are and have been operating in
compliance in all material respects with, all certificates, consents,
exemptions, orders, permits, licenses, authorizations, or other approvals
(each, an "Authorization") issued by the appropriate local, state, federal
or foreign regulatory agencies or bodies necessary or required to own,
lease, license and use their properties and assets and to conduct the
business currently, or to have conducted the business in the past (or, as
described or contemplated in the Prospectus, to be) operated by them,
except for such Authorizations which, if not obtained, would not reasonably
be expected to have, individually or in the aggregate, a material adverse
effect upon the ability of the Company, the Operating Company, or BCPM to
conduct their businesses in all material respects as currently conducted
and as contemplated by the Prospectus to be conducted; and, except as
described in the Prospectus, none of the Company, the Operating Company or
BCPM has received any notice of proceedings relating to the revocation or
modification of any such Authorization which, individually or in the
aggregate, if the subject of an unfavorable decision, rulemaking,
anticipated rulemaking, ruling or filing, would be expected to have a
material adverse effect upon the ability of the Company, the Operating
Company or BCPM to conduct their businesses in all material respects as
currently conducted and as contemplated by the Prospectus to be conducted.
(xix) Except as disclosed in the Prospectus, none of the Company, the
Operating Company or BCPM (i) has violated any environmental, health,
safety or similar law or regulation applicable to its business relating to
the protection of human health, the environment or relating to hazardous or
toxic substances or wastes, solid wastes, pollutants or contaminants
("Environmental Laws"); (ii) lacks any permits, licenses or other approvals
required of them under applicable Environmental Laws to own, lease and
operate their respective properties and to conduct their business in the
manner described in the Prospectus; or (iii) is violating any items and
conditions of any such permit, license or approval or has permitted to
occur any event that allows, or after notice or lapse of time would allow,
revocation, termination of any such permit, license or approval or results
in any other impairment of their rights thereunder, which in each case
under the immediately preceding clause (i), (ii) or (iii) could reasonably
be expected to result, singly or in the aggregate, in a material adverse
effect on the Company and the Operating Company on a combined basis, or
BCPM.
(xx) None of the Company, the Operating Company or BCPM is an
"investment company" as that term is defined in the Investment Company Act
of 1940, as amended, or is subject to regulation under such Act.
(xxi) All of the issued shares of capital stock of BCPM have been
duly authorized and validly issued and are fully paid and non-assessable;
and all of the issued shares of capital stock of BCPM are owned by Borden,
free and clear of all liens, security interests, mortgages, pledges,
encumbrances, equities or claims (each, a "Lien").
8
(xxii) None of the Company, the Operating Company or BCPM does business
with the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075 of Florida Statutes (Chapter 92-198,
Laws of Florida).
(xxiii) At each Closing Date, BCPM will have (excluding its interests
in the Company and the Operating Company and any notes receivable from or
payable to the Company or the Operating Company) a net worth of at least $
million.
(xxiv) There are no contracts, agreements or understandings between
the Company, the Operating Company or BCPM and any person (other than the
Underwriters) that would give rise to a valid claim against any of them or
any Underwriter for a brokerage commission, finder's fee or other like
payment relating to the offering of the Securities.
(xxv) Except as described in the Prospectus, the Company, the
Operating Company and BCPM own, possess or can acquire on reasonable terms,
adequate trademarks, trade names and other rights to inventions, know-how,
patents, copyrights, confidential information and other intellectual
property (collectively "intellectual property rights") necessary to conduct
the business now operated by them, or presently employed by them and to
their knowledge will own, possess or can acquire adequate intellectual
property rights necessary to conduct the business of the Addis Assets and
have not received and, to their knowledge, Oxychem has not received any
notice of infringement of or conflict with asserted rights of others with
respect to any intellectual property rights that, if determined adversely
to the Company, the Operating Company or BCPM would individually or in the
aggregate have a material adverse effect on the Company and the Operating
Company on a combined basis, or BCPM.
3. Purchase, Sale and Delivery of the Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, at a purchase price of $______ per Common Unit, the number of
Firm Common Units set forth opposite the name of such Underwriter under the
caption "Number of Firm Common Units to be Purchased" on Schedule I hereto.
The Company will deliver or cause to be delivered the Depositary Receipts
representing the Firm Common Units to you for the accounts of the Underwriters,
against payment of the purchase price by wire transfer of same day funds to such
account of the Company specified by the Company at the New York office of
Sidley & Austin, at 10:00 A.M., New York time, on ________________, 1994 or at
such other place or time not later than seven full business days thereafter as
CS First Boston Corporation ("CS First Boston") and the Company determine, such
time and date being referred to herein as the "First Closing Date". On the
First Closing Date, the Company will wire transfer to CS First Boston an amount
equal to the overnight cost of borrowing the purchase price referred to above,
such amount to be confirmed to the Company in writing. The Depositary Receipts
representing the Firm Common Units will be delivered to or upon the order of CS
First Boston and PaineWebber Incorporated (the "Representatives") in the form of
one or more permanent global securities, representing the amount of Securities
then being sold to the Underwriters (the "Global Securities"), which will be
deposited with The Depository Trust Company ("DTC"), for credit to the
respective accounts of the Underwriters, unless otherwise directed by the
Representatives, and registered in the name of Cede & Co. as nominee of DTC.
In addition, upon written notice from CS First Boston given to the Company
from time to time not more than 30 days subsequent to the date of the
Prospectus, the Underwriters may purchase all or less than all of the Optional
Common Units at the purchase price per Security to be paid for the Firm Common
Units. The Company agrees to sell to the Underwriters and the Underwriters
agree,
9
severally and not jointly, to purchase from the Company, the number of Optional
Common Units (subject to adjustment by you to eliminate fractions) which bears
the same proportion to the total number of Optional Common Units to be purchased
which the number of Securities set forth opposite the name of such Underwriter
under the caption "Number of Firm Common Units to be Purchased" in Schedule I
hereto bears to the total number of Firm Common Units. Such Optional Common
Units may be purchased by the Underwriters only for the purpose of covering
over-allotments made in connection with the sale of the Firm Common Units. No
Optional Common Units shall be sold or delivered unless the Firm Common Units
previously have been, or simultaneously are, sold and delivered. The right to
purchase the Optional Common Units or any portion thereof may be exercised from
time to time and to the extent not previously exercised may be surrendered and
terminated at any time upon notice by CS First Boston to the Company.
Each time for delivery of and payment for the Optional Common Units, being
herein referred to as an "Optional Closing Date", which may be the First Closing
Date (the First Closing Date and each Optional Closing Date, if any, being
sometimes referred to as a "Closing Date"), shall be determined by CS First
Boston but shall be not later than seven full business days after written notice
of election to purchase the Optional Common Units is given. The Company will
deliver or cause to be delivered the Depository Receipts representing the
Optional Common Units on each Optional Closing Date to you for the accounts of
the several Underwriters against payment of the purchase price therefor by wire
transfer of same day funds to such account of the Company specified by the
Company at the New York office of Sidley & Austin. On each Optional Closing
Date, the Company will wire transfer to CS First Boston an amount equal to the
overnight cost of borrowing the purchase price referred to above, such amount to
be confirmed to the Company in writing. The Depositary Receipts representing
the Optional Common Units will be delivered to or upon the order of the
Representatives in the form of one or more Global Securities, representing the
amount of Securities then being sold to the Underwriters, which will be
deposited with DTC, for credit to the respective accounts of the Underwriters,
unless otherwise directed by the Representatives, and registered in the name of
Cede & Co. as nominee of DTC.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Certain Agreements of the Company and Others. The Company, the
Operating Company and BCPM covenant and agree with the several Underwriters
that:
(a) If the Effective Time is prior to the execution and delivery of
this Agreement, the Company will file the Prospectus with the Commission
pursuant to Rule 424(b)(1), if applicable (or, if applicable and consented to
by you, pursuant to Rule 424(b)(3) or 424(b)(4)), not later than the
Commission's close of business on the earlier of (i) the second business day
following the execution and delivery of this Agreement or (ii) the fifth
business day after the Effective Date; the Company will advise you promptly of
any such filing pursuant to Rule 424(b).
(b) The Company will advise you promptly of any proposal to amend or
supplement the registration statement as filed or the related prospectus or the
Registration Statement or the Prospectus and will not effect such amendment or
supplementation to which you reasonably object; and the Company will also advise
you promptly of the effectiveness of the Registration Statement (if the
effective time is subsequent to the execution and delivery of this Agreement)
and of any amendment or supplementation of the Registration Statement or the
Prospectus, and of the institution by the Commission of any stop order
proceedings in respect of the Registration Statement, and will use its best
efforts to prevent the issuance of any such stop order and to obtain as soon as
possible its lifting, if issued.
10
(c) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact, or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to amend
the Prospectus or the Registration Statement to comply with the Act, the Company
will promptly notify you of such event and will promptly prepare and file with
the Commission, at its own expense an amendment or supplement which will correct
such statement or omission or an amendment or supplement which will effect such
compliance. Neither your consent to or failure to disapprove of, nor the
Underwriter's delivery to the Company of such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its security
holders an earnings statement, which need not be audited, covering a period of
at least twelve months beginning after the Effective Date which will satisfy the
provisions of Section 11(a) of the Act. For the purpose of the preceding
sentence only, "Availability Date" means the 45th day after the end of the
fourth fiscal quarter following the fiscal quarter that includes the Effective
Date, except that if such fourth fiscal quarter is the last quarter of the
Company's fiscal year, the 90th day after the end of such fourth fiscal quarter.
(e) The Company will furnish to you copies of the Registration
Statement (seven of which will be signed and will include all exhibits), each
related Preliminary Prospectus, the Prospectus and all amendments and
supplements to such documents, in each case as soon as available and in such
quantities as you reasonably request.
(f) The Company and BCPM will take such action as you may reasonably
request to qualify the Securities for offering and sale and determination of
their eligibility for investment under the laws of such jurisdictions as you
designate and will continue such qualification in effect so long as required for
the distribution of the Securities, provided that no such qualification shall be
required in any jurisdiction where, as a result thereof, the Company, the
Operating Company or BCPM would become subject to general service of process or
to taxation or qualification to do business as a foreign corporation or foreign
limited partnership doing business in such jurisdiction.
(g) During the period of five years hereafter, the Company will
furnish to you, and upon request, to each of the other Underwriters, as soon as
practicable after the end of each fiscal year a copy of its annual report to
security holders for such year; and the Company will furnish to you (i) as soon
as available, a copy of each report or definitive proxy statement, if any, of
the Company filed with the Commission under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or mailed to security holders, and (ii) from
time to time, such other information concerning the Company as you may
reasonably request, provided that you agree to treat any of such other
information which the Company advises you is confidential in a confidential
manner.
(h) The Company, the Operating Company or BCPM will pay or cause to be
paid the following: (i) the fees, disbursements and expense of their counsel and
accountants in connection with the registration of the Securities under the Act
and all other expenses (except as provided below) in connection with the
preparation, printing and filing of the Registration Statement and the
Prospectus and amendments and supplements thereto and the furnishing of copies
thereof and of any Preliminary Prospectus to the Underwriters and dealers; (ii)
the cost of reproducing this Agreement, any Legal Investment Surveys and the
preliminary and final forms of Blue Sky Memoranda; (iii) all expenses in
connection with the qualification of the Securities for offering and sale as
provided in Section 5(f) hereof, including any reasonable fees and disbursements
of counsel for the Underwriters
11
in connection with any qualification and in connection with the Legal Investment
Survey and the Blue Sky Memoranda in an amount not in excess of $15,000; (iv)
the fees charged by the NASD for reviewing the terms of the offering of the
Securities; (v) the cost of preparing the Securities; (vi) the fees and expenses
of Resources Consultants, Inc., the environmental consultants retained by the
Underwriters in an aggregate amount not in excess of $43,000 which includes the
amount referenced in Section 5 of the underwriting agreement relating to the
issuance and sale by the Operating Company and its subsidiary of $200,000,000
principal amount of Notes due 2001) and (vii) all other costs and expenses
incident to the performance of their obligations hereunder which are not
otherwise specifically provided for in this Section. It is understood, however,
that except as provided in this Section and in Section 9, the Underwriters will
pay all of their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they make.
(i) The Company, the Operating Company or BCPM will notify the
Underwriters promptly of any change affecting any of the representations,
warranties, covenants or agreements contained herein that occurs at any time
prior to payment being made to the Company or the Operating Company on the
Closing Date or Dates.
(j) The Company will use the net proceeds received from the issuance
of the Common Units in the manner specified in the Prospectus under "Use of
Proceeds."
(k) The Company will pay any stamp, transfer or other similar tax
imposed in connection with (i) the execution, delivery and performance of this
Agreement and (ii) the execution, authentication, issuance, delivery and sale of
the Securities or otherwise in connection with the offering or distribution of
the Securities, but in no event shall the taxes covered by this Section 5(l) be
deemed to include any federal, state or local income taxes.
(l) The Company agrees not to offer, sell, contract to sell or
otherwise dispose of, or file with the Commission a registration statement
under the Act, relating to, any additional Common Units or any security
convertible into or exchangeable for Common Units without the prior written
consent of CS First Boston for a period of 180 days after the Effective Date of
the Registration Statement, other than (i) Common Units transferred to an
affiliated (as defined in the Rules and Regulations) company of the Company,
provided that such transferee agrees in writing prior to such transfer to be
bound by this restriction on disposition with respect to such Common Units as
though an original party hereto or (ii) issuances pursuant to the names[ of
benefit plans] outstanding on the date hereof.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Common Units on the
First Closing Date and the Optional Common Units to be purchased on each
Optional Closing Date will be subject to the accuracy of the representations and
warranties contained herein and the performance of all the covenants and
agreements contained herein on the part of the Company, the Operating Company
and BCPM, to the accuracy of the statements of their officers made in any
certificate furnished pursuant to the provisions hereof, to the performance by
them of their obligations hereunder and to the following additional conditions
precedent:
(a) If the Effective Time is not prior to the execution and delivery
of this Agreement, the Effective Time shall have occurred not later than 10:00
P.M. New York time, on the date of this Agreement or such later date as shall
have been consented to by you. If the Effective Time is prior to the execution
and delivery of this Agreement, the Prospectus shall have been filed with the
Commission in accordance with the Rules and Regulations and Section 5(a) of this
Agreement. Prior to the Closing Dates, no stop order suspending the
effectiveness of the Registration Statement shall
12
have been issued and no proceedings for that purpose shall have been instituted
or, to the knowledge of the Company or you, shall be threatened by the
Commission.
(b) You shall not have advised the Company that the Registration
Statement or Prospectus, or any amendment or supplement thereto, contains an
untrue statement of fact or omits to state a fact which you have concluded,
based on written advice of your counsel, is in either case misleading and in the
case of an omission is required to be stated therein or is necessary to make the
statements therein not misleading.
(c) The closing under the Asset Transfer Agreement shall have occurred
either prior to or concurrently with the First Closing Date.
(d) On the date of this Agreement you shall have received a letter of
Price Waterhouse LLP, addressed to BCPM and you in form and substance
satisfactory to you in all respects and dated the date of delivery thereof. The
letters to be received from Price Waterhouse LLP will confirm that they are
independent accountants with respect to the Company and BCPM within the meaning
of the Act and the applicable published Rules and Regulations thereunder and
state in effect that:
(i) in their opinion the financial statements and schedules
examined by them and included or incorporated by reference in the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the Securities and
Exchange Act of 1934, as amended (the "Exchange Act") and the related
published Rules and Regulations;
(ii) they have made a review of the unaudited financial
statements included in the Registration Statement in accordance with the
standards established by the American Institute of Certified Public
Accountants;
(iii) they have (A) read the unaudited pro forma condensed
combined balance sheet as of September 23, 1994 and the unaudited pro forma
condensed combined statements of income for the year ended December 31,
1993 and the nine-month period ended September 23, 1994, included in the
Registration Statement; (B) inquired of certain officials of the Company
and of the Addis Plant who have responsibility for financial and accounting
matters about the basis for their determination of the pro forma
adjustments, and whether the unaudited pro forma condensed combined
financial statements referred to above comply as to form in all material
respects with the applicable accounting requirements of Rule 11-02 of
Regulation S-X; and (C) proved the arithmetic accuracy of the application
of the pro forma adjustments to the historical amounts in the unaudited
pro forma condensed combined financial statements.
(iv) on the basis of the review referred to in clause (ii) above,
a reading of the latest available interim financial statements of the
Company (including the consolidation of the Operating Company, if
applicable) made available by management of the Company; carrying out
certain specified procedures (but not an examination in accordance with
generally accepted auditing standards) with respect to the comments set
forth in such letter; a reading of the minutes of the meetings (or
consents in lieu thereof) of the stockholders, board of directors and
standing committees thereof, of BCPM; and inquiries of certain officials of
BCPM who have responsibility for financial and accounting matters of the
Addis Plant and BCPM, nothing came to their attention which caused them to
believe that:
13
(A) the unaudited condensed consolidated financial
statements included in the Registration Statement do not comply
as to form in all material respects with the applicable
accounting requirements of the Exchange Act as it applies to Form
10-Q and the related published Rules and Regulations or any
material modifications should be made to the unaudited condensed
consolidated financial statements for them to be in conformity
with generally accepted accounting principles;
(B) at the date of the latest available unaudited balance
sheet read by such accountants, or at a subsequent specified date
not more than five days prior to the date of this Agreement,
there was any change in the total current assets, total assets or
total historical partners' capital or any increase in total
current liabilities or any changes in total short-term
indebtedness or long-term indebtedness of the Partnership as
compared with amounts shown on the latest balance sheet included
in the Prospectus; or
(C) for the period from the closing date of the latest
unaudited income statement included in the Prospectus to the
closing date of the latest available unaudited income statement
read by such accountants, or to the subsequent specified date set
forth in the immediately preceding paragraph, there were any
decreases, as compared with the corresponding period of the
previous year in consolidated net trade sales or net affiliated
sales or in the total or per Unit amounts of net income or cash
distributions declared.
except in all cases set forth in clauses (B) and (C) above for changes,
increases or decreases which the Prospectus discloses have occurred or may occur
or which are described in such letter;
(v) nothing came to their attention as a result of the procedures
specified in paragraph 6(d)(iii) that caused them to believe that the
unaudited pro forma combined consolidated financial statements referred to
in section 6(d)(iii)(A) included in the Registration Statement do not
comply as to form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X and that the pro forma
adjustments have not been properly applied to the historical amounts in
compilation of those statements.
(vi) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained
in the Registration Statement (in each case to the extent that such dollar
amounts, percentages and other financial information are derived from the
general accounting records of the Company and its subsidiaries subject to
the internal controls of the Company's accounting system or are derived
directly from such records by analysis or computation) with the results
obtained from inquiries, a reading of such general accounting records and
other procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in agreement
with such results, except as otherwise specified in such letter.
For purposes of this subsection, if the Effective Time is subsequent to the
execution and delivery of this Agreement, "Registration Statement" shall mean
the registration statement as proposed to be amended by the amendment or post-
effective amendment to be filed shortly prior to the Effective Time, and
"Prospectus" shall mean the prospectus included in the Registration Statement
and schedules included in material incorporated by reference into the Prospectus
shall be deemed included in the Registration Statement for purposes of this
subsection.
14
(e) On the date of this Agreement you shall have received a letter of
Arthur Andersen LLP, addressed to BCPM and you in form and substance
satisfactory to you in all respects and dated the date of delivery thereof. The
letter to be received from Arthur Andersen LLP will confirm that they are
independent accountants with respect to the Addis Plant within the meaning of
the Act and the applicable published Rules and Regulations thereunder and state
in effect that:
(i) in their opinion the financial statements examined by them
and included or incorporated by reference in the Registration Statement
comply as to form in all material respects with the applicable accounting
requirements of the Act and related published Rules and Regulations
thereunder;
(ii) they have made a review of the unaudited financial
statements included in the Registration Statement in accordance with the
standards established by the American Institute of Certified Public
Accountants, as indicated in their reports attached to such letter;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements of
the Addis Plant made available by management of OxyChem; carrying out
certain specified procedures (but not an examination in accordance with
generally accepted auditing standards) with respect to the comments set
forth in such letter, a reading of the minutes of the meetings (or consents
in lieu thereof) of the stockholders, board of directors and standing
committees thereof of OxyChem; and inquiries of certain officials of
OxyChem which have responsibility or financial and accounting matters of
the Addis Plant, nothing came to their attention that caused them to
believe that:
(A) the unaudited financial statements of the Addis Plant
included in the Registration Statement do not comply as to form
in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations;
(B) at the date of the latest available balance sheet of the
Addis Plant read by such accountants, or at a subsequent
specified date not more than five days prior to the date of this
Agreement, there was any increase in total current liabilities or
total liabilities of the Addis Plant or, at the date of the
latest available balance sheet read by such accountants, or to
the subsequent specified date set forth in the immediately
preceding paragraph, there was any decrease in total assets, as
compared with amounts shown on the latest balance sheet of the
Addis Plant included in the Prospectus; or
(C) for the period from the closing date of the latest
income statement of the Addis Plant included in the Prospectus to
the closing date of the latest available income statement read
by such accountants there were any decreases, as compared with
the corresponding period of the previous year in external sales,
net total sales, or net operating income, or in the total amounts
of net income of the Addis Plant;
except in all cases set forth in clauses (B) and (C) above for changes,
increases or decreases which the Prospectus discloses have occurred or may occur
or which are described in such letter; and
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained
in the Registration Statement (in each case to the extent that such dollar
amounts, percentages and other financial information are derived from the
general accounting records of OxyChem and its subsidiaries subject to
15
the internal controls of OxyChem's accounting system or are derived
directly from such records by analysis or computation) with the results
obtained from inquiries, a reading of such general accounting records and
other procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in agreement
with such results, except as otherwise specified in such letter.
For purposes of this subsection, if the Effective Time is subsequent to the
execution and delivery of this Agreement, "Registration Statement" shall mean
the registration statement as proposed to be amended by the amendment or post-
effective amendment to be filed shortly prior to the Effective Time, and
"Prospectus" shall mean the prospectus included in the Registration Statement.
(f) You shall have received from Sidley & Austin, special counsel for
the Company, the Operating Company and BCPM, an opinion, dated such Closing Date
and for purposes of such opinion, Sidley & Austin may rely as to matters
involving Delaware law on the opinion of Richards, Layton & Finger, dated such
Closing Date, a copy of which opinion shall be delivered to you at the closing
(Richards, Layton & Finger may deliver an opinion as to such matters of Delaware
law in lieu of the opinion of Sidley & Austin regarding such matters), and for
purposes of such opinion, Sidley & Austin may rely as to matters involving
Louisiana law on the opinion of ________________, dated such Closing Date, a
copy of which opinion shall be delivered to you at the closing, to the effect
that:
(i) Each of the Company and the Operating Company has been duly formed
and is validly existing as a limited partnership under the Delaware Act,
with partnership power and authority under the Delaware Act and, insofar
as the Company is concerned, under the Partnership Agreement and the
Partnership Certificate, and insofar as the Operating Company is
concerned, under the Operating Partnership Agreement and the Operating
Partnership Certificate, to own or lease its properties (including, without
limitation, in the case of the Operating Company, the Addis Assets (as such
term is defined in the Prospectus)) and to conduct its business, as
described in the Prospectus. All filings required by the Delaware Act for
the formation of the Company and the Operating Company as limited
partnerships thereunder have been made. The Company is duly qualified or
registered as a foreign partnership in the State of Louisiana. The
Operating Company is duly qualified or registered as a foreign partnership
in the States of Illinois and Louisiana.
(ii) BCPM has been duly organized and is validly existing and in good
standing as a corporation under the laws of the State of Delaware and has
the corporate power and authority necessary to own or lease its properties
and conduct its business as described in the Prospectus. BCPM has been
duly qualified as a foreign corporation to do business and is in good
standing in the States of Illinois and Louisiana.
(iii) BCPM is the general partner of each of the Company and the
Operating Company with the interests, as general partner, in distributions
thereof as specified in the Partnership Agreement and the Operating
Partnership Agreement, respectively. The Company is the sole limited
partner of the Operating Company, with the interest, as limited partner, in
distributions thereof as specified in the Operating Partnership Agreement.
BCPM's general partner interests in the Company and the Operating Company
are authorized by the Partnership Agreement and the Operating Partnership
Agreement, respectively, are validly issued and, to their knowledge and
except as provided in the Partnership Agreements, are owned free and clear
of any perfected Liens.
(iv) The Company's limited partner interest in the Operating Company
is duly authorized by the Operating Partnership Agreement, validly issued
and, subject to the qualifications set forth in the following sentence, a
fully paid and non-assessable limited
16
partner interest in the Operating Company, and, to their knowledge, and
except as provided in the Partnership Agreements is owned free and clear of
any perfected Liens. Assuming that the Company, as limited partner in the
Operating Company, does not participate in the control of the business of
the Operating Company (within the meaning of the Delaware Act) and that it
does no more than exercise its rights as limited partner of the Operating
Company, the Company, as limited partner of the Operating Company, will
have no liability in excess of its obligations to make contributions to the
Operating Company, its obligations to make other payments provided for in
the Operating Partnership Agreement and its share of the Operating
Company's assets and undistributed profits (subject to the obligation of a
limited partner of a limited partnership no greater than the obligation of
such limited partner to repay (i) to the limited partnership, to the extent
provided under repealed 6 Del C. (S)17-608, for a period of one year after
any rightful return, any part of its contribution to the limited
partnership rightfully returned to it, but only to the extent necessary to
discharge the limited partnership's liabilities to creditors who extended
credit to the limited partnership during the period the contribution was
held by the limited partnership and (ii) any funds wrongfully returned to
the extent provided under repealed 6 Del. C. (S)17-608 or wrongfully
distributed to it).
(v) All of the 36,750,000 Common Units issued under the Partnership
Agreement are duly authorized by the Partnership Agreement, validly issued
and, subject to the qualifications set forth in the following sentence,
fully paid and non-assessable limited partner interests in the Company; the
Securities being delivered on the Closing Date, when (i) the Securities are
deposited with the Depositary in accordance with the Deposit Agreement and
(ii) Depositary Receipts representing the Securities have been executed,
countersigned and registered in accordance with the Deposit Agreement and
delivered to and paid for by the Underwriters in accordance with the terms
of this Agreement, will constitute Common Units which have been duly
authorized by the Partnership Agreement, validly issued and subject to the
qualifications set forth in the following sentence, fully paid and non-
assessable limited partner interests in the Partnership. Assuming that the
Limited Partners (as such term is defined in the Partnership Agreement), as
limited partners of the Partnership, do not participate in the control of
the business of the Company and that they do no more than exercise their
rights as Limited Partners (as such term is defined in the Partnership
Agreement), the Limited Partners (as so defined), as limited partners of
the Partnership other than any Departing Partner (as so defined), will have
no liability in excess of their obligations to make contributions to the
Company, their obligations to make other payments provided for in the
Partnership Agreement and the Deposit Agreement and their share of the
Company's assets and undistributed profits (subject to the obligation of a
limited partner of a limited partnership no greater than the obligation of
such limited partner to repay (i) to the limited partnership, to the extent
provided under repealed 6 Del. C (S)17-608, for a period of one year after
any rightful return, any part of its contribution to the limited
partnership rightfully returned to it, but only to the extent necessary to
discharge the limited partnership's liabilities to creditors who extended
credit to the limited partnership during the period the contribution was
held by the limited partnership, and (ii) any funds wrongfully returned to
the extent provided under repealed 6 Del. C. (S)17-608 or wrongfully
distributed to it). The sale of the Securities pursuant to the
Underwriting Agreement is not subject under the Delaware Act or the
Partnership Agreement to the preemptive rights of any person or entity.
(vi) The Securities conform in all material respects to the
description thereof in the Prospectus and such description conforms in all
material respects to the rights set forth in the Partnership Agreement.
(vii) This Agreement has been duly authorized, executed and delivered
by the Company, the Operating Company, and BCPM; the Partnership Agreement
is a valid and
17
binding agreement of and enforceable against, BCPM in its capacity as
general partner of the Company, in accordance with its terms; the Operating
Partnership Agreement is a valid and binding agreement of, and enforceable
against, BCPM in its capacity as general partner of the Operating Company,
in accordance with its terms; and the Deposit Agreement has been duly
authorized, executed and delivered by the Company, BCPM as general partner
of the Company and as attorney-in-fact for the Limited Partners and the
Assignees and, assuming due authorization, execution and delivery by the
Depositary and Borden, is a valid and binding agreement of, and enforceable
against, the Company and BCPM, in accordance with its terms; the opinions
with respect to the enforceability of such documents is qualified to the
extent that such enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium and other similar laws affecting
the rights and remedies of creditors, and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or law).
(viii) The execution, delivery and performance of this Agreement do
not and will not (i) conflict with or result in a breach or violation of
any of the terms or provisions of or constitute a default under, the
Partnership Agreement, the Operating Partnership Agreement, the Deposit
Agreement, the charter documents, as amended, or by-laws, as amended, of
BCPM or (ii) except for violations caused by failure to obtain any
Permitted Exceptions, constitute a violation of the Delaware Act or, to our
knowledge, any existing applicable law, rule or regulation of the United
States of America, Illinois or New York or any governmental body, or
administrative or court decree thereof, having jurisdiction over the
Company, the Operating Company or BCPM, which conflicts, breaches,
violations or defaults in the case of (i) or (ii) have a reasonable
probability of materially adversely affecting the Company and the Operating
Company on a combined basis, or BCPM.
(ix) None of the Company, the Operating Company or BCPM is an
"investment company" as that term is defined in the Investment Company Act
of 1940, as amended, or is subject to regulation under such Act.
(x) To their knowledge, there are no contracts of, or legal or
governmental proceedings involving, the Company, the Operating Company or
BCPM of a character required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement
which are not described or filed as required.
(xi) To their knowledge, no consent, approval, authorization or order
of any court or governmental agency or body of the United States of
America, Illinois or New York is required for the issuance and sale of the
Securities to the Underwriters or the consummation by the Company, the
Operating Company and BCPM of the transactions contemplated by this
Agreement except such as have been obtained or made on or prior to the date
hereof, as may be required under the Act or as may be required by the NYSE,
the NASD or under the securities or Blue Sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by the
Underwriters.
(xii) The filing of the Registration Statement with the Commission
was duly authorized by the Board of Directors of BCPM. The Registration
Statement was declared effective under the Act as of __________________
____ 1994, the Prospectus was filed with the Commission pursuant to Rule
424(b) on ____________________, 1994 and, to their knowledge, (i) no stop
order suspending the effectiveness of the Registration Statement or any
part thereof has been issued under the Act and (ii) no proceedings for that
purpose have been instituted or threatened by the Commission. At the time
the Registration Statement became effective, after giving effect to Rule
430A under the Act, the Registration Statement and the Prospectus
18
(in each case other than the financial statements and schedules and other
financial and statistical information and data included therein, as to
which they express no opinion) complied as to form in all material respects
with the requirements of the Act and the Rules and Regulations.
(xiii) There are no contracts, agreements or understandings between
the Company and any person granting such person the right to require the
Company to file a registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person or to require
the Company to include such securities in the securities registered
pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Act.
(xiv) All of the issued shares of capital stock of BCPM have been
duly authorized and validly issued and are fully paid and non-assessable;
and all of the issued shares of capital stock of BCPM are owned by Borden,
free and clear of all perfected Liens.
In addition, such counsel shall state that in the course of the preparation of
the Registration Statement and the Prospectus, such counsel has considered the
information set forth therein in light of the matters required to be set forth
therein and that they have participated in conferences with officers and other
representatives of the Company, the Operating Company and BCPM, representatives
of the independent accountants for the Company and the Addis Plant and with the
Underwriters and their counsel during the course of which the contents of the
Registration Statement, the Prospectus and related matters were discussed and,
although such counsel has not independently checked the accuracy or completeness
or otherwise verified, and accordingly are not passing upon, and do not assume
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus (except as set forth in
paragraph (vi) and (x) above), on the basis of the foregoing, relying as to
materiality to a large extent upon the judgments of officers and other
representatives of the Company, the Operating Company and BCPM, no facts have
come to their attention which cause them to believe that, the Registration
Statement or any amendment thereto, as of its effective date or as of such
Closing Date, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus or any amendment or
supplement thereto as of its issue date or as of such Closing Date included an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements, in the light of the circumstances
under which they were made, not misleading; it being understood that such
counsel need not comment with respect to the financial statements and schedules
and other financial and statistical information and data included in either the
Registration Statement or the Prospectus.
(g) You shall have received from Lawrence L. Dieker, General Counsel
of BCPM and Assistant General Counsel of Borden, an opinion, dated such Closing
Date, to the effect that:
(i) Except for Permitted Exceptions, BCPM, the Company and the
Operating Company have all requisite partnership or corporate power and
authority, and have obtained and are in compliance in all material respects
with all material franchises, grants, authorizations, approvals, licenses,
permits, easements, consents, certificates and orders required, to own or
lease their respective properties as described in the Prospectus, to permit
the conduct of their respective businesses and to perform the Operative
Agreements to which BCPM, the Company or the Operating Company, as the case
may be, is a party.
(ii) Borden has all requisite corporate power and authority to perform
the Operative Agreements to which Borden is a party.
19
(iii) The Asset Transfer Agreement has been duly authorized, executed
and delivered by the Operating Company, and each of the Asset Transfer
Agreement, the Purchase and Processing Agreements, the Intercompany
Agreement, the Borden and BCPM Covenant Agreement, the Environmental
Indemnity Agreement, the Use of Name and Trademark License Agreement and
the Patent and Know-How Agreement is a valid and binding agreement of, and
enforceable against, the parties thereto, in accordance with its terms; the
opinions with respect to the enforceability of such documents is qualified
to the extent that such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium and other similar laws
affecting the rights and remedies of creditors, and by general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or law).
(iv) The performance by BCPM, the Company, the Operating Company or
Borden of each of the Operative Agreements does not and will not (i)
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under (A) any of the agreements
referred to in paragraph (iii) above, the charter documents, as amended, or
By-laws, as amended, of BCPM or Borden or (B) any material indenture,
mortgage, deed of trust, note agreement or other material agreement or
instrument to which the Company, the Operating Company, BCPM or, to his
knowledge, Borden is a party or by which the Company, the Operating Company
or BCPM or any of them or any of their respective properties are bound or,
to his knowledge, Borden or its properties are bound or (ii) except for
violations caused by failure to obtain any Permitted Exceptions,
constitute a violation of any statute, rule, regulation, judgment, order or
decree of any federal, state or local government, governmental
instrumentality or court having jurisdiction over the Company, the
Operating Company, BCPM or to his knowledge Borden or any of their
respective properties, which conflicts, breaches, violations or defaults in
the case of (i) or (ii) have a reasonable probability of materially
adversely affecting the Company and the Operating Company on a combined
basis, or BCPM.
(v) To his knowledge, except as disclosed in the Prospectus, none of
the Company, the Operating Company, or BCPM is in default in any material
respect with respect to any material contract or agreement to which it is a
party, which default has a reasonable probability of materially adversely
affecting the financial condition, business or properties of the Company
and the Operating Company on a combined basis, or BCPM or has a reasonable
probability of materially adversely affecting the consummation of the
transactions contemplated in the Prospectus to be consummated on or prior
to the date hereof or the performance of the agreements referred to in
paragraph (iii) above.
(vi) Except as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company, the Operating
Company, BCPM or, to his knowledge, Borden is a party or of which any
property of the Company, the Operating Company, BCPM or to his knowledge
Borden is the subject, which have a reasonable probability, individually or
in the aggregate, of adversely affecting, in any material respect, the
ability of the Company, the Operating Company or Borden to fulfill their
obligations under any of the agreements referred to in paragraph (ii)
above, or resulting in a material adverse change in the financial
condition, business, properties, prospects or results of operations of the
Company and the Operating Company on a combined basis, or BCPM, and, to his
knowledge, no such proceedings are threatened by governmental authorities
or by others.
(vii) To his knowledge, there are no contracts, agreements or
understandings between the Company and any person granting such person the
right to require the Company to file a registration statement under the Act
with respect to any securities of the Company
20
owned or to be owned by such person or to require the Company to include
such securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act.
(h) At such Closing Date, BCPM will, as general partner of the Company
and the Operating Company, have substantial assets which can be reached by
creditors of the Company and the Operating Company in addition to its interests
in the Company and the Operating Company; and the interest of BCPM, as general
partner of the Company and the Operating Company, in each material item of
income, gain, loss, deduction or credit of the Company and the Operating Company
will be equal to at least 1% of each such item on such date.
(i) Upon the issuance of the Common Units BCPM shall make the
additional capital contribution required by Section 4.4(a)(v) of the Partnership
Agreement.
(j) You shall have received from Andrews & Kurth, counsel for the
Underwriters, their opinion dated such Closing Date with respect to the
organization of the Company, the validity of the Securities, the Registration
Statement and the Prospectus and such other related matters as you may
reasonably request and the Company, the Operating Company, and BCPM shall have
furnished to such counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(k) You shall have received a certificate, dated such Closing Date, of
BCPM individually, and of BCPM as the general partner of the Company, executed
by BCPM's Chief Executive Officer, President or any vice president and the chief
financial or accounting officer to the effect that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been instituted by the Commission, and, to the
knowledge of the signers, no proceedings for that purpose have been
instituted or are threatened under the Act;
(ii) The representations and warranties of the Company, the
Operating Company and BCPM in this Agreement are true and correct at and as
of such Closing Date, and each of the Company, the Operating Company and
BCPM has complied with all the covenants and agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to such
Closing Date;
(iii) Between the date of this Agreement and such Closing Date,
the business, properties, and operations conducted by the Company, the
Operating Company, BCPM or, to their knowledge, the Addis Assets have not
sustained a loss by strike, fire, flood, accident or other calamity
(whether or not insured) of such a character as to interfere materially
with the conduct of business, properties and operations of the Company, the
Operating Company, the Addis Assets or BCPM.
(l) You shall have received an opinion from Sidley & Austin that such
counsel's opinions with respect to certain matters in the Prospectus discussed
under the caption "Federal Income Tax Considerations" are affirmed as of such
Closing Date.
(m) At such Closing Date, you or your counsel shall have been
furnished by the Company, the Operating Company or BCPM with all such documents
or certificates as you or your counsel may reasonably request in order to
evidence the accuracy of any of the representations or warranties, the
performance of any covenants of the Operating Company and BCPM, or the
fulfillment of any of the covenants, agreements and conditions herein
contained; and all proceedings taken by the
21
Company, the Operating Company, and BCPM at or prior to such Closing Date in
connection with the authorization, issuance and sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to you and
to counsel for the Underwriters.
(n) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event involving a
prospective change, in the condition, financial or otherwise, business,
properties or results of operations of the Company, the Operating Company, the
Addis Assets or BCPM which, in the judgment of a majority in interest of the
Underwriters including you, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or sale of and
payment for the Securities; (ii) any suspension or limitation of trading in
securities generally on the NYSE, or any setting of minimum prices for trading
on such exchange, or any suspension of trading of any securities of the Company
on any exchange or in the over-the-counter market; (iii) any banking moratorium
declared by Federal or New York authorities; (iv) any outbreak or escalation of
major hostilities in which the United States is involved, any declaration of
war by Congress or any other substantial national or international calamity or
emergency if, in the judgment of a majority in interest of the Underwriters
including you, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Securities; or (v) any enactment,
with a present or future effective date, of legislation which causes or would
cause the Company to become taxable as a corporation for federal income tax
purposes prior to January 1, 1998.
(o) You shall have received a letter, dated such Closing Date, of each of
Price Waterhouse LLP and Arthur Andersen LLP which meets the requirements of
Section 6(d) and 6(e), respectively, except that the specified date referred to
in such subsection will be a date not more than five days prior to such Closing
Date for the purposes of this subsection.
The Company or BCPM will furnish you with such conformed copies of such
opinions, certificates, letters and documents as you reasonably request.
7. Indemnification. (a) The Company, the Operating Company and BCPM,
jointly and severally, agree to indemnify and hold harmless each Underwriter
against any losses, claims, damages, or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that (i) the Company, the
Operating Company and BCPM will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged untrue
statement in or omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company, the Operating
Company or BCPM by any Underwriter through the Representatives specifically for
use therein and (ii) such indemnity shall not inure to the benefit of any
Underwriter from whom the person asserting any such loss, claim, damage or
liability purchased the Securities which are the subject thereof if such person
did not receive a copy of the Prospectus (or the Prospectus as amended or
supplemented) excluding documents incorporated therein by reference at or prior
to the confirmation of the sale of such Securities to such person in any case
where such delivery is required by the Act and the untrue statement or omission
contained in the Prospectus or any related preliminary prospectus was corrected
22
in the Prospectus (or the Prospectus as amended or supplemented) if copies
thereof had previously been furnished to such Underwriter.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless each of the Company, the Operating Company and BCPM against any losses,
claims, damages or liabilities to which any of them may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company, the
Operating Company or BCPM by such Underwriter through the Representatives
specifically for use therein, and will reimburse any legal or other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Underwriter consists of the following information in the
Prospectus furnished on behalf of each Underwriter: the last paragraph at the
bottom of the cover page concerning the terms of the offering by the
Underwriters, the legend concerning over-allotments and stabilizing on the
inside front cover page, the concession and discount figures appearing in the
fourth paragraph under the caption "Underwriting" and the information contained
in the last sentence of the seventh paragraph and the entire eighth paragraph
under the caption "Underwriting".
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsections (a) or (b) above, notify the indemnifying party in writing of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsections (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel)
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the actual or potential defendants in, or targets of,
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, (iii)
the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or compromise of
or consent to the entry of any judgment with respect to any pending or
threatened action or claim in respect of which any indemnified party is or could
have been a party and indemnity could have been
23
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action. No indemnified party shall, without
the prior written consent of the indemnifying party, effect the settlement or
compromise of or consent to the entry of any judgment with respect to any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnifying party is
an actual or potential party to such action or claim).
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by BCPM, the Company,
and the Operating Company on the one hand and the Underwriters on the other from
the offering of the Securities or, (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company, the Operating Company and BCPM on the
one hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities as well
as any other relevant equitable considerations. The relative benefits received
by the Company, the Operating Company and BCPM on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions received by
the Underwriters. The relative fault of the Company, the Operating Company and
BCPM on the one hand and the Underwriters on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Operating Company and BCPM
or the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by the Company, the Operating Company and BCPM or any of
the Underwriters in connection with investigating or defending against any
action or claim which is the subject of this subsection (d). Notwithstanding
the provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company, the Operating Company and BCPM under
this Section shall be in addition to any liability which the Company, the
Operating Company, and BCPM may otherwise have and shall extend, upon the same
terms and conditions, to each director, officer, employee or agent of any
Underwriter or person, if any, who controls any Underwriter within the meaning
of the Act; and the obligations of the Underwriters under this Section shall be
in addition to any liability which the respective Underwriters may otherwise
have and shall extend, upon the same terms and conditions, to each director,
officer, employee or agent of the Company, the Operating Company and BCPM, to
each officer of the Company, the Operating Company, and BCPM who has signed the
Registration Statement and to each person, if any, who controls the Company, the
Operating Company and BCPM within the meaning of the Act.
24
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Securities hereunder on either the First or any
Optional Closing Date and the aggregate number of Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase does not
exceed 10% of the total number of Securities which the Underwriters are
obligated to purchase on such Closing Date, CS First Boston may make
arrangements satisfactory to the Company for the purchase of such Securities by
other persons, including any of the Underwriters, but if no such arrangements
are made by such Closing Date, the non-defaulting Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder, to
purchase the Securities which such defaulting Underwriter or Underwriters agreed
but failed to purchase on such Closing Date. If any Underwriter or Underwriters
so default and the aggregate number of Securities with respect to which such
default or defaults occur is more than 10% of such total number of Securities
that the Underwriters were obligated to purchase on such Closing Date and
arrangements satisfactory to CS First Boston and the Company for the purchase
of such Securities by other persons are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of any non-
defaulting Underwriter or the Company, the Operating Company or BCPM, except as
provided in Section 9 (provided that if such default occurs with respect to
Securities purchased after the First Closing Date, this Agreement will not
terminate as to the Firm Common Units or any Optional Common Units purchased
prior to such termination). As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties, and other statements of
the Company, the Operating Company and BCPM or their respective officers and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation, or statement
as to the results thereof, made by or on behalf of any Underwriter or the
Company, the Operating Company or BCPM or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of any payment for the Securities. If this Agreement is
terminated pursuant to Section 8 or if for any reason the purchase of the
Securities by the Underwriters is not consummated, the Company, the Operating
Company and BCPM shall remain responsible for the expenses to be paid or
reimbursed by them pursuant to Section 5 and the respective obligations of the
Company, the Operating Company and BCPM and the Underwriters pursuant to Section
7 shall remain in effect, and if any Securities have been purchased hereunder
the representations and warranties in Section 2 and all obligations under
Section 5 shall also remain in effect. If the purchase of the Securities by the
Underwriters is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 8, or the occurrence of any
event specified in clause (ii), (iii) or (iv) of Section 6(n), the Company, the
Operating Company and BCPM will reimburse the Underwriters for all out-of-pocket
expenses (including fees and disbursements of counsel and the environmental
consultants) reasonably incurred by them in connection with the offering of the
Securities.
10. Notices. All communications hereunder will be in writing, and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to you, c/o CS First Boston Corporation, Park Avenue Plaza, New York, New York
10055 attention: Investment Banking Department - Transactions Advisory Group,
with a copy to Andrews & Kurth L.L.P., 425 Lexington Avenue, New York, New York
10017, Attention: Michael Rosenwasser, Esq. or, if sent to the Company, the
Operating Company or BCPM, will be mailed, delivered or telegraphed and
confirmed to them at Highway 73, Geismar, Louisiana 70734 ; provided, however,
that any notice to an Underwriter pursuant to Section 7 will be mailed,
delivered or telegraphed and confirmed to such Underwriter at its address
specified in its Underwriters' Questionnaire or acceptance telex in lieu of such
questionnaire.
25
11. Conditions of the Obligations of the Company and Others. Except as is
set forth in Section 9, the obligations of the Company, the Operating Company
and BCPM pursuant to this Agreement shall be subject to the following
conditions precedent: (i) subsequent to the execution and delivery of this
Agreement, there shall not have occurred any enactment, with a present or future
effective date, of legislation which causes or would cause the Company to become
taxable as a corporation for federal income tax purposes prior to January 1,
1998 and (ii) the closing under the Asset Transfer Agreement shall occur prior
to or concurrently with the Closing Date.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, and controlling persons referred to in Section 7, and no
other person will have any right or obligation under or by virtue of this
Agreement. No purchaser of Securities from any Underwriter will be deemed a
successor to such Underwriter merely by reason of such purchase.
13. Representation of Underwriters. You will act for the several
Underwriters in connection with this financing, and any action under this
Agreement taken by you jointly or by CS First Boston Corporation will be binding
upon all the Underwriters.
14. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of laws.
The Company, the Operating Company and BCPM hereby submit to the non-
exclusive jurisdiction of the Federal and state Courts in the Borough of
Manhattan in The City of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.
15. Direct Participation Program. As the NASD views the Securities as
interests in a direct participation program, each Underwriter agrees that it
will offer the Securities in compliance with Section 34(b)(3)(A) of Article III
of the NASD Rules of Fair Practice (the "Rules"). In particular, each
Underwriter agrees not to execute any transaction in a discretionary account
without prior written approval of the transaction by the customer, and to comply
with the disclosure and due diligence requirements set forth in subsection (B)
of Article III, Section 34(b)(3) of the Rules.
16. Counterparts. This Agreement may be executed in counterparts, all of
which, taken together, shall constitute a single agreement.
26
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us one of the counterparts, whereupon it will become a
binding agreement between the Company, the Operating Company and BCPM and the
several Underwriters in accordance with its terms.
Very truly yours,
Borden Chemicals and Plastics Limited Partnership
By: BCP Management, Inc.
as General Partner
By:
----------------------------------------------
Authorized Officer
Borden Chemicals and Plastics Operating Limited
Partnership
By: BCP Management, Inc.
as General Partner
By:
----------------------------------------------
Authorized Officer
BCP Management, Inc.
By:
----------------------------------------------
Authorized Officer
27
The foregoing Underwriting Agreement is hereby
confirmed and accepted at New York, New York,
as of the date first above written.
CS First Boston Corporation
PaineWebber Incorporated
Acting on behalf of themselves and
as the Representatives of the several
Underwriters
By: CS First Boston Corporation
By:
-----------------------------
Title:
28
SCHEDULE I
Number of Firm
Common Units
Underwriter to be Purchased
----------- ---------------
CS First Boston Corporation
PaineWebber Incorporated
TOTAL.......................... 4,000,000
---------
=========
29