borden chemicals & plastics limited partnership /de/...

Business AddressHIGHWAY 73GEISMAR LA 707345046736121

Mailing AddressHIGHWAY 73180 EAST BROAD STREET25TH FLOORCOLUMBUS OH 43215

SECURITIES AND EXCHANGE COMMISSION

FORM 10-K405Annual report pursuant to section 13 and 15(d), Regulation S-K Item 405

Filing Date: 1996-03-27 | Period of Report: 1995-12-31SEC Accession No. 0000950130-96-000992

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FILERBORDEN CHEMICALS & PLASTICS LIMITED PARTNERSHIP/DE/CIK:821202| IRS No.: 311269627 | State of Incorp.:DE | Fiscal Year End: 1231Type: 10-K405 | Act: 34 | File No.: 001-09699 | Film No.: 96539113SIC: 2821 Plastic materials, synth resins & nonvulcan elastomers

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGEACT OF 1934

For the fiscal year ended: DECEMBER 31, 1995 Commission file number: 1-9699----------------- ------

BORDEN CHEMICALS AND PLASTICSLIMITED PARTNERSHIP

Delaware 31-1269627----------------------- -------------------(State of organization) (I.R.S. Employer

Identification No.)

Highway 73, Geismar, Louisiana 70734 (614) 225-4482-------------------------------------------- --------------(Address of principal executive offices) (Registrant's telephone

number)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class Name of each exchange on which registered------------------- -----------------------------------------

Depositary Units Representing New York Stock ExchangeCommon Units

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:NONE

__________________________________

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes X No _____.

-----

Indicate by check mark if disclosure of delinquent filers pursuant to Item405 of Regulation S-K is not contained herein. [x]

__________________________________

Aggregate market value in thousands of the Common Units held by non-affiliates of the Registrant based upon the average sale price of such Units onFebruary 9, 1996 was approximately $505 million.



Number of Common Units outstanding as of the close of business on February 9,1996: 36,750,000.

================================================================================The Exhibit Index is located herein at sequential page 36.

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PART IITEM I. BUSINESS----------------

GENERAL

Borden Chemicals and Plastics Limited Partnership (the "Company" or"Partnership") is a limited partnership formed in 1987 to acquire, own andoperate polyvinyl chloride resins ("PVC"), methanol and other chemical plantslocated in Geismar, Louisiana, and Illiopolis, Illinois, that were previouslyowned and operated by Borden, Inc. ("Borden"). The three principal productgroups manufactured at these facilities are (i) PVC Polymers Products, whichconsist of PVC resins and feedstocks (such as vinyl chloride monomer ("VCM") andacetylene), (ii) Methanol and Derivatives, which consist of methanol andformaldehyde, and (iii) Nitrogen Products, which consist of ammonia and urea.During 1995, PVC Polymers Products, Methanol and Derivatives and NitrogenProducts accounted for 61%, 25% and 14%, respectively, of the Company'srevenues.

The Company seeks to increase its productive capacity through selectiveexpansions of its existing facilities and "debottlenecking" of productionfacilities at its plants. From 1988 to 1995, the Company increased overallcapacity of the Geismar and Illiopolis plants by 22.5% through variousexpansions and "debottlenecking" projects at a cost of approximately $55million.

On May 2, 1995, the Company, through its subsidiary operating partnership (the"Operating Partnership"), completed the purchase of Occidental ChemicalCorporation's ("OxyChem") Addis, Louisiana PVC manufacturing facility andrelated assets ("Addis Facility"). The Addis Facility has an annual provenproduction capacity of 450 million pounds per year, which increased theCompany's stated annual capacity for PVC resin production by approximately 50%.The cash purchase price for the Addis Facility was $100.4 million (see"Acquisition").

The Company's production complex at Geismar, Louisiana, its plant atIlliopolis, Illinois, and the Addis Facility produce products for the followingapplications:

<TABLE><CAPTION>-----------------------------------------------------------------------------PRODUCTS LOCATION PRINCIPAL APPLICATIONS-----------------------------------------------------------------------------<S> <C> <C>

PVC POLYMERS PRODUCTSPVC Geismar Water distribution pipe, residential

Illiopolis siding, wallcoverings, vinyl flooringAddis

VCM Geismar Raw material for the Company'sPVC operations

METHANOL AND DERIVATIVESMethanol Geismar Formaldehyde, MTBE, adhesives and



fibers or raw materials for theCompany's formaldehyde operations

Formaldehyde Geismar Pressed wood products, adhesives,fibers

NITROGEN PRODUCTSAmmonia Geismar Fertilizers, fibers, plastics,

explosives

Urea Geismar Fertilizers, animal feeds, adhesivesplastics

</TABLE>

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The Company's plants generally can be operated at rates in excess of statedcapacity to take advantage of market opportunities without undue adverseeffects. References to capacity assume normal operating conditions, includingdowntime and maintenance. The Company's objective is to operate the Geismar,Illiopolis and Addis plants at or near full capacity because of the reducedoperating costs per unit of output at full operation.

The integrated design of the Company's plants provides it with a high degreeof flexibility to shift production volumes according to market conditionsefficiently utilize by-product streams. The Company's products are producedthrough the highly integrated lines set below:

PVC POLYMERS PRODUCTS

PVC Resins - PVC is the second largest volume plastic material produced in theworld. The Company produces general purpose and specialty purpose PVC resins atthree plants - one located at the Geismar complex, one at Illiopolis and anotherat Addis - with stated annual capacities of 500 million, 380 million and 450million pounds of PVC resins, respectively. The PVC resin plants operated atapproximately 98% and 107% of combined capacity in 1995 and 1994, respectively.Although there have been year-to-year fluctuations in product mix, the Companyhas over time concentrated on the higher margin grades of PVC resin and reducedits dependence on commodity pipe grade PVC resins, which have historicallyexperienced lower margins. Based on data from the Society of the PlasticsIndustry, the Company believes its production currently accounts forapproximately 10% of total industry domestic capacity of PVC resins.

The PVC resin industry experienced strong demand during 1994 and the firsthalf of 1995. Producer inventories during this time were reduced to minimallevels, while plants were operating at maximum capacities. As a result,published prices for PVC resins increased from an average of $0.32 per poundduring the fourth quarter of 1993 to an average of $0.40 per pound during thethird quarter of 1995. Beginning in the fourth quarter of 1994, the continuedbuildup of PVC inventories worldwide by converters peaked resulting in reducedPVC purchases during the second half of 1995. This has caused the publishedprices of PVC resins to drop to approximately $0.31 per pound during the fourthquarter of 1995. The Company anticipates PVC pricing will improve during thesecond half of 1996.

During 1995 and 1994, approximately 10% and 12%, respectively, of theCompany's total production of PVC resins was sold to Borden for use in itsdownstream vinyl conversion operations. The balance was purchased by manycustomers, none of which accounted for more than 8% of total PVC sales dollars.Unless there is a shortage of PVC resin capacity in the industry, demand for PVCresins generally tends to be seasonal with higher demand during spring monthsand lower demand during winter months.



Production Process. PVC resins are produced by the polymerization of VCM, araw material produced by the Company. The production by the Company of certainspecialty grades of PVC resins also involves the use of certain quantities(approximately 8.7 million pounds annually) of vinyl acetate monomer, a rawmaterial not produced by the Company. The Company purchases quantities of vinylacetate monomer from Borden (which in turn purchases such raw material in bulkfrom third parties) or from unrelated third parties. Purchases from Borden havebeen and will be at prices that do not exceed the market price of vinyl acetatemonomer.

All the VCM used by the Company's Geismar and Illiopolis PVC resin plants isobtained from the Company's two Geismar VCM plants discussed below.Substantially all of the production of such VCM plants is consumed by theCompany's PVC resins

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plants at Geismar and Illiopolis. The Geismar PVC resin plants obtain VCM fromthe Company's adjacent VCM plants in the Geismar complex and the Illiopolis PVCresin plant obtains VCM from the Company's Geismar plant via rail. The VCMrequirement at the Addis Facility is currently supplied by OxyChem which hasarranged for physical delivery to the Addis Facility by pipeline via exchange,but which may also be supplied by rail car from OxyChem's plant in Deer Park,Texas or from OxyChem's joint venture facility ("OxyMar") in Corpus Christi,Texas.

VCM is principally used in the production of PVC resins. The Company producesVCM by two processes: an ethylene process and an acetylene process. Thefinished product of both of these processes is essentially identical but theproduction costs vary depending on the cost of raw materials and energy. Theability to produce VCM by either process allows the Company the flexibility offavoring the process that results in the lower cost at any particular time.

Ethylene-Based VCM. Ethylene-based VCM ("VCM-E") is produced by the Companyat a 630 million pound stated annual capacity plant at the Geismar complex. Theplant operated at approximately 106% and 103% of capacity during 1995 and 1994,respectively. Substantially all of the production of the VCM-E plant isconsumed by the Company's PVC resin plants at the Geismar complex andIlliopolis.

Ethylene and chlorine constitute the principal feedstocks used in theproduction of VCM-E. Both feedstocks are purchased by the Geismar plant fromoutside sources.

Acetylene-Based VCM. Acetylene-based VCM ("VCM-A") is produced at a 320million pound stated annual capacity plant at the Geismar complex. During both1995 and 1994, the plant operated at approximately 88% of capacity. All of theVCM-A produced at the Geismar complex is consumed by the PVC resin plants atGeismar and Illiopolis.

The Geismar complex contains the only VCM-A plant in the United States. Theintegration of the VCM-A plant with the other plants on site provides stability,cost and efficiency benefits to the plants located at the Geismar complex.Although ethylene has generally been regarded as a lower cost feedstock for theproduction of VCM, the VCM-A plant reduces the overall processing costs of theGeismar complex because the acetylene plant produces as a by-product acetyleneoff-gas, which is used as a feedstock in the production of methanol. Inaddition, hydrochloric acid, a feedstock used in the production of VCM-A, isproduced as a by-product by the adjacent VCM-E plant. Furthermore, certainindustrial plants located near the Geismar complex have excess supplies ofhydrochloric acid that the Company is generally able to purchase at relatively



low cost.

In addition to hydrochloric acid, acetylene is a primary feedstock used in theproduction of VCM-A.

Acetylene. Acetylene is primarily used as a feedstock for VCM-A and for otherchemical intermediates. The Company has a 50% interest in a 200 million poundstated annual capacity acetylene plant at the Geismar complex, with theremaining 50% interest held by BASF Corporation ("BASF"). During 1995 and 1994,the plant operated at approximately 103% and 96%, respectively, of capacity,with all production being consumed by either the Company or BASF.

During 1995, approximately 58% of the total production of the acetylene plantwas used internally as a principal feedstock of the Geismar VCM-A plant. BASFaccounted for approximately 42% of the plant's 1995 production, less than itsfull 50% share of production. Acetylene not required by BASF is available tothe Company at cost.

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It is anticipated that excess acetylene will be available at cost to the Companythrough at least 1996.

The principal feedstocks used in the production of acetylene are natural gasand oxygen. Oxygen is obtained from certain air separation units and relatedair compression systems, which are jointly owned by the Company, BASF and AirLiquide America Corporation pursuant to joint venture arrangements. For adescription of the Company's arrangements for the purchase of natural gas, see"Raw Materials".--------------

As long as a subsidiary of Borden is the general partner of the Company, theplant will be operated and managed by employees of such general partner pursuantto an operating agreement with BASF. The agreement provides that, if a Bordensubsidiary ceases to be the general partner, BASF will have the exclusive rightto become the operator of the plant and the personnel necessary to operate theplant will be encouraged to accept employment with BASF. The Company's interestin the acetylene plant and the air separation systems is subject to certainrights of first refusal and limitations on transfer. In addition, the Companyand the third parties who hold the other interests in such assets have mutualrights under certain circumstances, to require the other party to purchase itsinterests.

The Company's principal competitors in the sale of PVC include Shintech,Formosa Plastics, OxyChem and Geon.

METHANOL AND DERIVATIVES

Methanol - Methanol is used primarily as a feedstock in the production ofother chemicals. Such chemicals include formaldehyde, which is used in themanufacture of wood building products and adhesives, and MTBE, which is used asa gasoline additive. During the fourth quarter of 1995, the Company completedan expansion of its existing methanol plant. This expansion increased theCompany's stated annual capacity by 30 million gallons to 330 million gallonsper year. During 1995 and 1994, the plant operated at approximately 108% and102%, respectively, of capacity.

From early 1994 through early 1995, market conditions for methanol improvedsignificantly due to limited growth in the supply of methanol and industryconsolidation during the past several years as well as strong demand for MTBEand formaldehyde. Methanol sales prices have declined since early 1995 andrecent industry announcements indicated sales at contract prices in the range of



$0.40 to $0.45 per gallon. The outlook for methanol continues to be uncertain,but the Company believes that its methanol sales prices during 1996 are likelyto remain at current levels. The Company believes its stated annual capacityrepresents approximately 14% of total domestic capacity. The Company's maincompetitors in the sale of methanol include Methanex, Terra Industries, HoechstCelanese and Lyondell.

In 1995, approximately 42% of methanol production was sold to third parties(other than Borden). Borden accounted for approximately 28% of such productionfor its downstream formaldehyde production. Approximately 19% of production wasused internally in the production of formaldehyde and the remainingapproximately 11% was used primarily to satisfy tolling and exchangearrangements. No customer (other than Borden) accounted for more than 12% oftotal methanol sales dollars in 1995.

The primary raw material feedstock used in the production of methanol isnatural gas. The efficiency of the Geismar methanol plant has been enhanced byusing the by-product of the Geismar acetylene plant, acetylene off-gas, as apartial substitute feedstock for purchased natural gas. Natural gas representedapproximately 65% of the Company's total cost of producing methanol during 1995.

Formaldehyde. Formaldehyde is a chemical intermediate used primarily in theproduction of plywood and other pressed wood products. The Company produces50%-

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concentration formaldehyde (which is 50% formaldehyde and 50% water) atthree units at the Geismar complex. The formaldehyde plants have annualcapacities of 270, 190 and 180 million pounds per year, respectively, for the50%-concentration formaldehyde. During 1995 and 1994, the three plants operatedat approximately 102% and 99%, respectively, of combined capacity. The smallerplant also is capable of producing urea-formaldehyde concentrate for thefertilizer industry. If operated for production of urea-formaldehyde, thesmaller plant's stated annual capacity would be 125 million pounds.

Formaldehyde demand generally is influenced by the construction industry andhousing starts. Total United States production capacity of 50%-concentrationformaldehyde is approximately 7.4 billion pounds, with the formaldehyde units atthe Geismar complex representing 640 million pounds, approximately 9%, of suchtotal. Major competitors of the Company include Georgia Pacific and Neste.

During 1995, approximately 32% of formaldehyde production was sold to Bordenand approximately 2% was utilized by the Company in the production of urea-formaldehyde concentrate for the fertilizer industry. The remaining 66% waspurchased by an unaffiliated third party pursuant to a ten-year supply contractsigned in 1989. The contract requires the Company to supply in the future up to78% of its annual capacity to the third party to the extent necessary to satisfythat party's formaldehyde requirements.

The principal feedstock used in the production of formaldehyde is methanol.The Geismar formaldehyde plants obtain all such feedstock from the adjacentmethanol plant.

Borden produces formaldehyde and urea-formaldehyde concentrate at otherfacilities located in the United States and facilities outside the UnitedStates. The Company does not have any interest in such other facilities and,accordingly, Borden may be a competitor of the Company with respect toformaldehyde and urea-formaldehyde concentrate. The Partnership Agreementprovides that the Company may not significantly expand the capacity of theGeismar formaldehyde plants without special approval. The Company is intendedto be a limited purpose partnership and the Partnership Agreement provides that



the General Partner shall have no duty to propose or approve, and in its solediscretion may decline to propose or approve, any such expansion.

NITROGEN PRODUCTS

Ammonia. Ammonia is a commodity chemical used primarily for fertilizerapplications and as an intermediate for other agricultural chemicals such aspesticides and herbicides. Approximately 85% of domestic ammonia production isconsumed directly or indirectly in fertilizer applications. The Companyproduces ammonia at a 400,000 ton stated annual capacity plant located at theGeismar complex. During 1995 and 1994, the Company operated at approximately109% and 96%, respectively, of capacity.

In the latter half of 1993 and continuing throughout 1994 and 1995, theworldwide supply of ammonia experienced a series of disruptions and reductionsdue to plant shutdowns, operating problems and interruptions in the supply ofnatural gas, the primary feedstock in the production of ammonia. At the sametime, demand for ammonia, particularly in Asia (China, India and Pakistan),increased for both industrial and fertilizer applications. These factorscombined to cause occasional shortages of ammonia in the United States, which isa net importer of nitrogen products, and increase selling prices for ammonia.

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Demand for ammonia is seasonal, with prices tending to be higher in the springand fall months than during the remainder of the year. In addition, fertilizerdemand is sharply affected by swings in crop acreage.

During 1995, approximately 64% of ammonia production was sold to third parties(other than Borden), approximately 35% of production was used by the Company'sadjacent urea plant, and approximately 1% of production was sold to Borden.During 1995, five customers accounted for approximately 60% of total ammoniasales dollars with no customer accounting for more than 22% of total ammoniasales dollars.

The Company's stated annual capacity represents just under 2% of total NorthAmerican capacity. The Company's major competitors include Arcadian, Farmlandand Terra Industries.

Urea. Urea is a commodity chemical which is used primarily in fertilizerapplications. Approximately 80% of domestic production of urea is consumed infertilizer applications. Urea's high nitrogen content (46%) makes it aneffective and popular dry nitrogen fertilizer. In addition, urea is used in theproduction of urea-formaldehyde resins used in the wood building productsindustry.

The Company produces granular urea at a 250,000 ton stated annual capacityplant at the Geismar complex. During 1995 and 1994, the plant operated atapproximately 103% and 91%, respectively, of capacity.

Because of the importance of the agricultural chemical industry as a marketfor urea, demand is affected sharply by swings in crop acreage. In addition,like ammonia, demand for urea is seasonal, with prices tending to be higher inthe spring and fall months than during the remainder of the year. Worldwideurea production has expanded rapidly over the past 20 years, particularly incountries with abundant supplies of low cost natural gas. Like ammonia, ureademand has suffered during recent years from reduced United States fertilizerdemand. It also has been affected even more severely than ammonia by importsfrom third world countries because storage and shipping of urea is easier andless costly than is the case with ammonia. Competition from imports hasmoderated recently as the declining value of the United States dollar has madeUnited States markets less attractive.



Urea prices remained stable in 1995 due to many of the same factors whichinfluenced the price of ammonia. However, unlike ammonia, the supply of ureahas increased during this time period as several new world scale plants came onstream. This factor has kept urea prices at relatively stable levels in spite ofthe increasing demand.

During 1995, approximately 61% of the Company's urea was sold to thirdparties, approximately 38% to Borden, and the remaining approximately 1% wasused internally by the Company in the production of urea-formaldehydeconcentrate.

The Company's stated annual capacity represents approximately 3% of totalNorth American capacity. The Company's major competitors include Arcadian,Unocal and CF Industries.

The principal feedstocks used in the production of urea are ammonia and carbondioxide, which the Company obtains from its adjacent ammonia plant.

RAW MATERIALS

The principal purchased raw material used in the Company's operations isnatural gas. In 1995, the Company purchased over 65 million MMBTUs of naturalgas for feedstock and as an energy source. Currently, the Company is one of thelargest industrial purchasers of natural gas in the state of Louisiana. Naturalgas is

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supplied by pipeline to the Geismar complex by six major natural gas suppliers.In 1995, natural gas represented 30%, 56% and 65% of total production costs foracetylene, ammonia and methanol, respectively, and 26% of the Company's totalproduction costs. The Company purchases the majority of its natural gas underlong-term, market sensitive supply contracts. The cost of purchasing naturalgas is, in general, greater in winter months, reflecting increased demand fornatural gas by consumers and industry during such months. Although the Companyhas diversified its suppliers and does not currently anticipate any difficultyin obtaining adequate natural gas supplies, there can be no assurance that theCompany will in the future be able to purchase adequate supplies of natural gasat acceptable price levels.

The Company purchases other raw materials for its operations, principallyethylene and chlorine. Ethylene is currently supplied by pipeline to theGeismar facility by several suppliers. Chlorine is supplied by rail car to theGeismar complex by various suppliers. The major raw material for the IlliopolisPVC plant, VCM, is supplied by rail car from the Geismar facility. In addition,in connection with the production of certain specialty grades of PVC resins, theCompany purchases certain quantities of vinyl acetate monomer. See "-PVCPolymers Products-Production Process". The Company purchases its VCMrequirements for the Addis Facility under a VCM supply agreement entered intowith OxyChem at the closing of the Acquisition. The Company does not believethat the loss of any present supplier would have a material adverse effect onthe production of any particular product because of numerous, competitivealternate suppliers.

Because raw materials have accounted for a high percentage of the Company'stotal production costs, and are expected to continue to represent a highpercentage of such costs for the Company, the Company's ability to pass onincreases in costs of these raw material feedstocks will have a significantimpact on operating results. The ability to pass on increases in feedstock andfuel costs is, to a large extent, dependent on the then existing marketconditions. Because of the large volume of purchases of natural gas, any



increase in the price of natural gas or a shortage in its availability couldmaterially adversely affect the Company's income and cash flow from operationsand its ability to service its debt obligations.

INSURANCE

The Company maintains property, business interruption and casualty insurancewhich it believes is in accordance with customary industry practices, but it isnot fully insured against all potential hazards incident to its business. TheCompany also maintains pollution legal liability insurance coverage. However,because of the complex nature of environmental insurance coverage and therapidly developing case law concerning such coverage, no assurance can be givenconcerning the extent to which its pollution legal liability insurance, or anyother insurance that the Company has, may cover environmental claims against theCompany. Insurance, however, generally does not cover penalties or the costs ofobtaining permits. See "Legal Proceedings".

The Company is included in Borden's master insurance program, which includesproperty damage and liability insurance. Under its risk retention program,Borden maintains deductibles of $2.5 million, $0.5 million and $0.5 million peroccurrence for property and related damages at the Geismar, Illiopolis and Addisfacilities, respectively, and deductibles ranging from $1.0 million to $3.0million per event for liability insurance.

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MARKETING

The Company's PVC resin sales are conducted through a professional staff ofnine trained personnel geographically located in nine territories, supported bya regional sales office located in Northbrook, Illinois. In addition to theregional sales managers, there are three product sales managers performingmarketing functions. All are employees of Borden.

The Company's other products are similarly marketing through a professionalfield sales organization of three Borden employees and two additional marketingmanagers under the management of the director of non-PVC resins sales andmarketing located at Geismar. The professionals involved in this sales functionare geographically positioned in three locations covering the United States.

The Company's sales activity is based on customer contact on a regular basisto secure and maintain long-term supply relationships. A substantial portion ofthe Company's sales is made under contracts with annual negotiations relating tospecific conditions of sales.

UTILITIES

The Geismar complex operates three high thermal efficiency co-generation unitsproviding the site with low cost electricity, steam and high temperaturereformer combustion air. Each unit is composed of a natural gas burningturbine/generator unit combined with a steam producing heat recovery system(i.e., the "co-generation" of electricity and steam).

The co-generation units are designed to provide 100% of the electricity, asignificant portion of the steam, and a portion of the reformer combustion airrequirements of the Geismar complex at full production levels. These units haveelectrical outputs of 20, 35 and 35 megawatts, respectively. The electricitysupplied by the units through a substation owned by Monochem, Inc. ("Monochem"),a corporation of which the Partnership owns 50% of the capital stock, usuallyexceeds the requirement of the Geismar complex with the excess production beingsold to Gulf States Utilities at its "avoided cost" rate. The Company'sinterest in Monochem is subject to certain rights of first refusal and



limitations on transfer.

Water requirements at the Geismar complex are obtained through Monochem fromthe Mississippi River. At Illiopolis, a municipal water company supplies thefacility with its water requirements. Because the Illiopolis facilityrepresents a significant portion of the demand for water supply from themunicipal water company, the Company manages the operations of the water companyon a cost-reimbursed basis. The Addis Facility obtains its electricity and waterrequirements from local public utilities. Natural gas is purchased by pipelinefrom various intrastate suppliers.

PURCHASE AND PROCESSING AGREEMENTS

In connection with the formation of the Company in 1987, Borden entered intocertain purchase agreements ("Purchase Agreements") and processing agreements("Processing Agreements") with the Company covering the following products: PVCresins, methanol, ammonia, urea, formaldehyde and urea-formaldehyde concentrate.The Purchase and Processing Agreements expire in November 2002, subject totermination by Borden in the event BCPM ceases to be the general partner of theCompany, other than by reason of (i) the withdrawal of BCPM as general partnerunder circumstances where such withdrawal violates the Partnership Agreement,(ii) removal of BCPM as general partner by the Unitholders under circumstanceswhere cause exists or (iii) any other event except (x) voluntary withdrawal byBCPM as general partner of the Company under circumstances where such withdrawaldoes not violate the Partnership Agreement and such withdrawal is approved by aMajority Interest or (y)

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the removal of BCPM as general partner of the Company by action of theUnitholders under circumstances where cause does not exist.

The Purchase Agreements require Borden to purchase from the Company and theCompany to supply to Borden, subject to certain monthly quantity limits, atleast 85% (and at the option of Borden up to 100%) of the quantities of PVCresins, methanol, ammonia and urea required by Borden for use in its plants inthe continental United States. Under the Purchase Agreements, the price for PVCresins, ammonia, urea and methanol generally will be an amount equal to themonthly weighted average price per unit that the Company charges its lowest-priced major customer (other than Borden). If the Company does not make anysales to any major customers other than Borden, then the price to Borden will bethe lowest prevailing price in the relevant geographic area. The PurchaseAgreements also provide that the Company is required to meet competitive third-party offers or let Borden purchase the lower-priced product from such thirdparties in lieu of purchases under the Purchase Agreements.

The Processing Agreements for formaldehyde and urea-formaldehyde concentrateessentially require Borden to utilize the processing capacity of theformaldehyde plants so that the formaldehyde plants operate at no less than 90%of capacity, after taking into account the purchases of formaldehyde by anunaffiliated third party under a long-term requirements contract. Although suchthird party's current requirements for formaldehyde exceed 200 million poundsper year, in the event that such third party's annual requirements are less thansuch amount, Borden has the option of reducing or terminating its obligation toutilize such processing capacity. Under the Processing Agreements, Borden isrequired to pay the Company a fee for each pound of formaldehyde and urea-formaldehyde concentrate processed equal to the Company's processing costs plusa per pound charge. The per-pound charge is subject to increase or decreasebased on changes in the Consumer Price Index from October 1987. The ProcessingAgreements also require the Company to meet competitive third party offerscovering formaldehyde unless meeting such offer would impose a significanteconomic penalty on the Company, in which case Borden will be permitted to



accept such offer and reduce its obligations under the Processing Agreements bya corresponding amount.

The Company believes that the pricing formulas set forth in the Purchase andProcessing Agreements have in the past provided aggregate prices and processingcharges that Borden would have been able to obtain from unaffiliated suppliers,considering the magnitude of Borden's purchases, the long-term nature of suchagreements and other factors. The Company believes that this will continue tobe the case in the future. There may be conditions prevailing in the market atvarious times, however, under which the prices and processing charges set underthe Purchase and Processing Agreements could be higher or lower than thoseobtainable from unaffiliated third parties.

The Company is free to sell or otherwise dispose of, as it deems appropriate,any quantities of PVC resins, ammonia, urea, methanol or formaldehyde whichBorden is not required to purchase. In addition, the Purchase and ProcessingAgreements do not cover acetylene, VCM or industrial gases, which are eitherconsumed internally by the Company or have not been historically purchased byBorden.

Because the foregoing Purchase and Processing Agreements are requirementscontracts, sales of products thereunder are dependent on Borden's requirementsfor such products. Such requirements could be affected by a variety of factors,including a sale or other disposition by Borden of all or certain of itsmanufacturing plants to unaffiliated purchasers (in which event such agreementsshall not apply to such purchasers unless otherwise agreed to by suchpurchasers).

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In the event that, whether as a result of the change of control of Borden orotherwise, Borden were to sell or otherwise dispose of all or certain of itsplants or otherwise reorient its businesses, Borden's requirements for productssold or processed by the Company under the Purchase and Processing Agreementscould be diminished or eliminated. The Company anticipates that if Borden wereto sell all or certain of its chemical manufacturing facilities, a purchaser maybe interested in negotiating the continuation of all or certain of the Purchaseand Processing Agreements.

COMPETITION

The business in which the Company operates is highly competitive. The Companycompetes with major chemical manufacturers and diversified companies, a numberof which have revenues and capital resources exceeding those of the Company.Because of the commodity nature of the Company's products, the Company is not ina position to protect its position by product differentiation and is not able topass on cost increases to its customers to the extent its competitors do notpass on such costs. In addition to price, other significant factors in themarketing of the products are delivery, quality and, in the case of PVC resins,technical service. The Company believes that the overall efficiency,integration and optimization of product mix of the facilities at Geismar,Illiopolis, and Addis make the Company well positioned to compete in the marketsit serves.

Borden has agreed that, so long as BCP Management, Inc. ("BCPM") is thegeneral partner of the Company, Borden will not engage in the manufacture orsale in the United States of methanol, ammonia, urea, acetylene, VCM or PVCresins. However, if BCPM (i) is removed as general partner by the Unitholdersunder circumstances where cause exists or (ii) withdraws as general partnerunder circumstances where such withdrawal violates the existing partnershipagreements ("Partnership Agreements"), Borden shall not engage in suchmanufacture or sale for a period of two years from the date of such removal or



withdrawal. If Borden were to sell any of its manufacturing facilities to anunaffiliated purchaser that is not a successor to Borden, the purchasers of suchfacilities would be free to compete with the Company.

TRADEMARKS

The Company entered into a Use of Name and Trademark License Agreement ("Useof Name and Trademark License Agreement") with Borden pursuant to which theCompany is permitted to use in its name the Borden name and logo. The Use ofName and Trademark License Agreement and the right to use the Borden name andlogo shall terminate in the event that BCPM ceases to be the General Partner.

MANAGEMENT

The General Partner, BCPM, manages and controls the activities of the Companyand the Holding Company and the General Partner's activities are limited to suchmanagement and control. Neither the Holding Company nor the Unitholdersparticipate in the management or control of the Company. The General Partnerhas fiduciary duties to Unitholders. Notwithstanding any limitation onobligations or duties, the General Partner will be liable, as general partner,for all the debts of the Company (to the extent not paid by the Company) otherthan any debt incurred by the Company that is made specifically nonrecourse tothe General Partner.

The Company does not directly employ any of the persons responsible formanaging or operating the business of the Company, but instead relies on theofficers of the General Partner and employees of Borden who provide support toor perform services for the General Partner and reimburses Borden (on its own oron the General Partner's behalf) for their services.

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ENVIRONMENTAL AND SAFETY REGULATIONS

General. The Company's operations are subject to federal, state and localenvironmental, health and safety laws and regulations, including laws relatingto air quality, hazardous and solid wastes, chemical management and waterquality. The Company has expended substantial resources, both financial andmanagerial, to comply with environmental regulations and permittingrequirements, and anticipates that it will continue to do so in the future.Although the Company believes that its operations generally are in materialcompliance with these requirements, there can be no assurance that significantcosts, civil and criminal penalties, and liabilities will not be incurred. TheCompany holds various environmental permits for operations at each of itsplants. In the event a governmental agency were to deny a permit application orpermit renewal, or revoke or substantially modify an existing permit, suchagency action could have a material adverse effect on the Company's ability tocontinue the affected plant operations. Plant expansions are subject tosecuring necessary environmental permits. Environmental laws and regulationshave changed substantially and rapidly in recent years, and the Companyanticipates continuing changes. The trend in environmental regulations is toplace more restrictions and limitations on activities that may affect theenvironment, such as emissions of pollutants and the generation and disposal ofwastes. Increasingly strict environmental regulations have resulted in increasedoperating costs for the Company, and it is possible that the costs of compliancewith environmental, health and safety laws and regulations will continue toincrease. See "Management's Discussion and Analysis of Financial Condition andResults of Operations-Liquidity and Capital Resources-EnvironmentalExpenditures."

The Company maintains an environmental and industrial safety and healthcompliance program and conducts internal regulatory audits at its Geismar,



Illiopolis and Addis plants. The Company's plants have had a history ofinvolvement in regulatory, enforcement and variance proceedings in connectionwith safety, health and environmental matters. Risks of substantial costs andliabilities are inherent in certain plant operations and certain products foundat and produced by the plants, as they are with other enterprises engaged in thechemical business, and there can be no assurance that significant costs andliabilities will not be incurred.

Air Quality. The Geismar, Illiopolis and Addis plants emit air contaminantsand are subject to the requirements of the Clean Air Act and comparable statestatutes. Many of the existing requirements under these laws are embodied inpermits issued to the plants by state environmental agencies. The Companybelieves that the Geismar, Illiopolis and Addis plants generally are in materialcompliance with these requirements.

The 1990 Amendments to the Clean Air Act (the "1990 Clean Air Act Amendments")substantially revised and expanded the air pollution control requirementsthroughout the United States. As discussed below, certain of these new orrevised requirements may impact the Geismar, Illiopolis and Addis plants.

The 1990 Clean Air Act Amendments require more stringent controls on volatileorganic compounds ("VOC") emissions in ozone non-attainment areas and alsorequire, subject to certain exceptions, the control of nitrogen oxide ("NOx")emissions in such areas. The Geismar and Addis plants are located in a"nonattainment area" for ozone under the 1990 Clean Air Act Amendments.Additional capital expenditures may be required at the Geismar and Addis plantsin order to upgrade existing pollution control equipment and/or installadditional control equipment to comply with the new, more stringent regulationsfor VOC and NOx.

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The 1990 Clean Air Act Amendments and state laws and regulations also requirecertain sources to control emissions of hazardous air pollutants, includingvinyl chloride. In particular, the EPA promulgated a rule in April 1994, whichmay require the modification of the existing emission control equipment at theGeismar facility. Capital expenditures may be necessary to comply with thesecontrol standards.

The 1990 Clean Air Act Amendments further require "enhanced monitoring" of theemissions from certain pieces of equipment. Although monitoring systems arealready in place at the Geismar, Illiopolis and Addis plants, capitalexpenditures may be necessary to upgrade the systems to comply with the"enhanced monitoring" requirement.

Based on the information currently available to the Company, the Company doesnot believe that the capital expenditures that may be required at the Geismar,Illiopolis and Addis plants to comply with the 1990 Clean Air Act Amendments andcorresponding state regulations will be material. However, because all theregulatory requirements under the 1990 Clean Air Act Amendments are not yetfinal, and the Company is continuing to evaluate the impact of such amendmentson it, there can be no assurance that the actual costs will not exceed theCompany's estimates.

The United States Department of Justice ("DOJ"), at the request of theEnvironmental Protection Agency ("EPA"), has brought an enforcement proceedingagainst the Company and BCPM for alleged violation of the Clean Air Act, andother environmental statutes, at the Geismar facility. See "Legal Proceedings".

OSHA and Community Right to Know. The Geismar, Illiopolis and Addis plantsare subject to the requirements of the federal Occupational Safety and HealthAct ("OSHA") and comparable state statutes. The Company believes that the



Geismar, Illiopolis, and Addis plants generally are in material compliance withOSHA requirements, including general industry standards, vinyl chloride exposurerequirements, recordkeeping requirements and chemical process safety standards.It is possible that changes in safety and health regulations, or a finding ofnoncompliance with current regulations, could result in additional capitalexpenditures or operating expenses for the Geismar, Illiopolis and Addis plants.

The OSHA hazard communication standard and the EPA community right-to-knowregulations under the Emergency Planning and Community Right-to-Know Act("EPCRA") require the Company to organize information about the hazardousmaterials in the plants and to communicate that information to employees andcertain governmental authorities. The Company has prepared a detailed hazardcommunication program and will continue this program as a part of its industrialsafety and health compliance program. The Company is a member of the CommunityAwareness and Emergency Response ("CAER") program of the Chemical ManufacturersAssociation, as well as the Association's Responsible Care initiative. AtGeismar, membership in such programs includes participation in the Geismar AreaMutual Aid organization, which maintains a community warning system fornotification of chemical releases through the local sheriff's department. TheCompany believes that it generally is in material compliance with EPCRA.

The Company is currently subject to a proceeding for alleged violations at theIlliopolis facility of release reporting requirements under EPCRA. Thisproceeding is discussed under "Legal Proceedings".

Solid and Hazardous Waste. The Geismar, Illiopolis and Addis plants generatehazardous and nonhazardous solid waste and are subject to the requirements ofRCRA and comparable state statutes. The Company believes that the Geismar,Illiopolis and Addis plants generally are in material compliance with RCRA.However, see "Legal Proceedings".

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A primary trigger for RCRA requirements is the designation of a substance as a"hazardous waste". It is anticipated that additional substances will in thefuture be designated as "hazardous waste", which likely would result inadditional capital expenditures or operating expenses for the Company.

The Geismar complex is operating under RCRA interim status and has filed apermanent RCRA permit application for its valorization of chlorinated residuals("VCR") unit and related tanks. However, the Company does not believe that theGeismar facility must obtain a RCRA permit and is challenging the applicabilityof the RCRA permit requirements to it. The Company's challenge to those permitrequirements, the potential permitting costs, civil penalties and correctiveaction costs that it may incur if that challenge is unsuccessful, are discussedunder "Legal Proceedings".

The DOJ, at the request of the EPA, has brought an enforcement proceedingagainst the Company and BCPM for alleged violations of RCRA, and otherenvironmental statutes, at the Geismar facility. See "Legal Proceedings".

During the early 1990s, the Company shipped partially depleted mercuricchloride catalyst to the facility of Thor Chemicals S.A. (PTY) Limited ("Thor")in Cato Ridge, South Africa for recovery of mercury. In 1993 the LouisianaDepartment of Environmental Quality ("LDEQ") determined that the partiallydepleted catalyst was not a hazardous waste, although LDEQ reversed thisposition in 1994. The Company disagrees with this reversal. See "LegalProceedings."

Superfund. CERCLA, also known as the "Superfund" law, imposes liability,without regard to fault or the legality of the original conduct, on certainclasses of persons that are considered to have contributed to the release of a



"hazardous substance" into the environment. These persons include the owner oroperator of the disposal site or sites where the release occurred and thecompanies that disposed, or arranged for the disposal of, the hazardoussubstances found at the site. Persons who are or were responsible for releasesof hazardous substances under CERCLA may be subject to joint and severalliability for the costs of cleaning up the hazardous substances and for damagesto natural resources. In the ordinary course of the Company's operations,substances are generated that fall within the CERCLA definition of "hazardoussubstance". If such wastes have been disposed of at sites which are targetedfor cleanup by federal or state regulatory authorities, the Company may be amongthose responsible under CERCLA or analogous state laws for all or part of thecosts of such cleanup. The Geismar, Illiopolis and Addis plants have in thepast and are expected to continue to generate hazardous substances and disposeof such hazardous substances at various offsite disposal sites.

The DOJ, at the request of the EPA, has brought an enforcement proceedingagainst the Company and BCPM for alleged violation of CERCLA's reportingrequirements, and other environmental requirements, at the Geismar facility.See "Legal Proceedings".

Toxic Substances Control Act. The Company is subject to the Toxic SubstancesControl Act ("TSCA"), which regulates the development, manufacture, processing,distribution, importation, use, and disposal of thousands of chemicals. Amongother requirements, TSCA provides that a chemical cannot be manufactured,processed, imported or distributed in the United States until it has beenincluded on the TSCA Chemical Inventory. Other important TSCA requirementsgovern recordkeeping and reporting. For example, TSCA requires a company tomaintain records of allegations of significant adverse reactions to health orthe environment caused by chemicals or chemical processes. The Company believesthat it generally is in material compliance with TSCA. Violations of TSCA canresult in significant penalties.

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Water Quality. The Geismar, Illiopolis and Addis plants maintain wastewaterdischarge permits for their facilities pursuant to the Federal Water PollutionControl Act of 1972 and comparable state laws. See Item 3 "Legal Proceedings"for a discussion of the Company's challenge to a wastewater permit for theGeismar facility. Where required, the Company and the Addis Facility also haveapplied for permits to discharge stormwater. The Company believes that theGeismar, Illiopolis and Addis plants generally are in material compliance withthe Federal Water Pollution Act of 1972 and comparable state laws. In caseswhere there are excursions from the permit requirements, the Geismar andIlliopolis plants are taking action to achieve compliance, are working incooperation with the appropriate agency to achieve compliance or are in goodfaith pursuing their procedural rights in the permitting process.

The EPA has issued effluent regulations specifying amounts of pollutantsallowable in direct discharges and in discharges to publicly owned treatmentworks. The Geismar, Illiopolis and Addis plants manufacture or use as rawmaterials a number of chemicals subject to additional regulation. Both federaland state authorities continue to develop legislation and regulations to controlthe discharge of certain toxic water pollutants. Passage of such legislation orregulations could necessitate additional capital expenditures to reducedischarges of these substances into the environment either during routine orepisodic events. The Company does not believe that these legislativedevelopments would have a material adverse impact on the Company's operations.

It is common for chemical plants from time to time to encounter areas ofgroundwater contamination during the ordinary course of business. Typically,some of these contamination events are historical and cannot be documented as tothe causal circumstances. While some contamination events have been identified



at the Company's plants, it is the Company's policy, where possible andappropriate, to address and resolve these contamination events. The Companybelieves that environmental indemnities available to it would cover asubstantial portion of these known or unknown contamination events. The Companydoes not believe that the known contamination events will have material adverseimpact on the Company's operations. The Company believes that the Geismar,Illiopolis and Addis plants generally are in material compliance with all lawswith respect to known groundwater contamination events. At the Geismar complex,Borden and the Company have complied with the Settlement Agreement with thestate of Louisiana for groundwater remediation. See "Legal Proceedings" forfurther discussion.

Present and Future Environmental Capital Expenditures. Although it is theCompany's policy to comply with all applicable environmental, health and safetylaws and regulations, in many instances the implementing regulations have notbeen finalized. Even where regulations or standards have been adopted, they aresubject to varying and conflicting interpretations and implementation. In manycases, compliance with environmental regulations or standards can only beachieved by capital expenditures, some of which may be significant. Capitalexpenditures for environmental control facilities were approximately $1.4million in 1995 and $1.7 million in 1994. To the extent estimates areavailable, capital expenditures for environmental control facilities areexpected to total approximately $4.2 million in 1996 (although such estimatecould vary substantially depending on the outcome of the various proceedings andmatters discussed herein, and no assurance can be given that greaterexpenditures on the part of the Company will not be required as to matters notcovered by the environmental indemnity from Borden).

BORDEN ENVIRONMENTAL INDEMNITY

Under the Environmental Indemnity Agreement, subject to certain conditions,Borden has agreed to indemnify the Company and the Holding Company in respect ofenvironmental liabilities arising from facts or circumstances that existed and

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requirements in effect prior to November 30, 1987, the date of the initial saleby Borden of the Geismar and Illiopolis plants to the Company (the "TransferDate"). The Company is responsible for environmental liabilities arising fromfacts or circumstances that existed and requirements in effect on or after theTransfer Date. With respect to certain environmental liabilities that may arisefrom facts or circumstances that existed and requirements in effect both priorto and after the Transfer Date, Borden and the Company will share liabilities onan equitable basis considering all of the facts and circumstances including, butnot limited to, the relative contribution of each to the matter and the amountof time each has operated the asset in question (to the extent relevant). Noclaims can be made under the Environmental Indemnity Agreement after November30, 2002, and no claim can, with certain exceptions be made with respect to thefirst $0.5 million of liabilities which Borden would otherwise be responsiblefor thereunder in any year, but such excluded amounts shall not exceed $3.5million in the aggregate. Excluded amounts under the Environmental IndemnityAgreement have aggregated approximately $3.0 million through December 31, 1995.

If the United States is successful in requiring the Company to performcorrective action at the Geismar facility or the LDEQ requires the Company totake further remedial measures in connection with the Settlement Agreement (see"Legal Proceedings"), the Company anticipates that a substantial portion of itscorrective action costs would be covered by the Environmental IndemnityAgreement. The extent to which any penalties or permit costs that the Companymay incur as a result of pending environmental proceedings will be subject tothe Environmental Indemnity Agreement will depend, in large part, on whethersuch penalties or costs are attributable to facts or circumstances that existed



and requirements in effect prior to the Transfer Date.

ADDIS ENVIRONMENTAL INDEMNITY

OxyChem has indemnified the Company for environmental liabilities arising fromthe manufacture, generation, treatment, storage, handling, processing, disposal,discharge, loss, leak, escape or spillage of any product, waste or substancegenerated or handled by OxyChem prior to the closing of the Acquisition, anycondition resulting therefrom relating to acts, omissions or operations ofOxyChem prior to such date, and any duty, obligation or responsibility imposedon OxyChem prior to such date under environmental laws in effect prior to suchdate to address such condition. However, except with regard to claims arisingfrom OxyChem's disposal of waste at sites other than the Addis Facility, OxyChemhas no indemnification obligation if the claim for indemnification is the resultof a change in applicable law after the closing of the Acquisition. OxyChem'sobligation to indemnify the Company for environmental liabilities is subject tocertain limitations. There can be no assurance that the indemnificationprovided by OxyChem will be sufficient to cover all environmental liabilitiesexisting or arising at the Addis Facility.

PRODUCT LIABILITY AND REGULATION

As a result of the Company's manufacture, distribution and use of differentchemicals, the Company is, and in the future may be, subject to various lawsuitsand claims, such as product liability and toxic tort claims, which arise in theordinary course of business and which seek compensation for physical injury,pain and suffering, costs of medical monitoring, property damage, and otheralleged harms. See "Legal Proceedings-General Proceedings". New or differenttypes of claims arising from the Company's various chemical operations may bemade in the future.

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The United States Food and Drug Administration ("FDA") is proposing newregulations providing for the safe use of vinyl chloride polymers in food-contact articles. According to the FDA, such regulations are required becausevinyl chloride monomer, a component of vinyl chloride polymer, has been shown tobe a carcinogen. However, the FDA concludes in its proposal that there is areasonable certainty of no harm from the exposure to the small amounts of vinylchloride monomer that may result from the use of vinyl chloride polymers in foodpackaging which complies with the FDA's proposed regulations. Thus, the FDAproposal would continue to allow substantially all presently allowable uses,including all products currently made using products produced by the Company.While the FDA has tentatively concluded that such action will not have asignificant effect on the human environment, it is considering whether todevelop a full environmental impact statement to consider the potential effecton the environment of the disposal of these food-contact articles. The EPA hasauthority with respect to the safe use of vinyl chloride polymer pipe inmunicipal water systems and has not imposed any restrictions on its use. It ispossible, however, that the FDA, the EPA, or other federal and state agenciesmay seek to impose additional restrictions on the use or disposal of vinylchloride polymer. Moreover, while Borden has agreed to indemnify the Company inrespect of liabilities arising from products (including but not limited to vinylchloride polymer) shipped prior to the Transfer Date, the Company will beresponsible for any subsequent product liabilities.

EMPLOYEES

The Partnership does not directly employ any of the persons responsible formanaging and operating the Partnership, but instead reimburses BCPM for theirservices. On December 31, 1995 BCPM employed approximately 850 individuals.



CASH DISTRIBUTIONS

The Partnership distributes 100% of its Available Cash as of the end of eachquarter on or about 45 days after the end of such quarter to Unitholders ofrecord as of the applicable record date and to the General Partner. "AvailableCash" means generally, with respect to any quarter, the sum of all cash receiptsof the Partnership plus net reductions to reserves established in priorquarters, less cash disbursements and net additions to reserves in such quarter.The General Partner has broad discretion in establishing reserves, and itsdecisions regarding reserves could have a significant impact on the amount ofAvailable Cash. The timing and amounts of additions and reductions to reservesmay impact the amount of incentive distributions payable to the General Partner.As a result, distributions to Unitholders may over time be reduced from levelswhich would have been distributed if the General Partner were not able tocontrol the timing of additions and reductions to reserves.

Distributions by the Partnership of Available Cash are generally made 98% tothe Unitholders and 2% to the General Partner, subject to the payment of anincentive distribution to the General Partner to the extent that a target levelof cash distributions to the Unitholders is achieved for any quarter. TheAmended and Restated Agreement of Limited Partnership of the Partnership (the"Partnership Agreement") provides that, after an amount equal to $0.3647 perUnit (the "Target Distribution") has been distributed for any quarter toUnitholders, the General Partner will receive 20% of any then remainingAvailable Cash for such quarter as an incentive distribution (in addition to its2% regular distribution).

ITEM 2. PROPERTIES------------------

Construction of the Geismar complex began over thirty years ago. Acetylene,methanol and VCM-A plants were completed in the early 1960s and ammonia and urea

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plants were added during the period 1965 to 1967. A VCM-E plant and aformaldehyde plant were added in the mid 1970s, a second formaldehyde plant wasbrought on stream in 1986, and a third formaldehyde plant was brought on streamin 1991. In 1983 Borden completed construction of a PVC resin plant at theGeismar complex. During the early 1980s, the methanol, ammonia, and urea plantswere modernized, which reduced energy consumption and expanded capacity. Theurea plant was further modified to produce granular rather than prill product in1993. The PVC resin facility at Illiopolis became operational in 1962, and wassignificantly upgraded in the late 1980s. The Addis Facility began operationsin 1979.

The Geismar complex is located on approximately 490 acres in Ascension Parish,Louisiana, adjacent to the Mississippi River between Baton Rouge and NewOrleans. The Illiopolis PVC resin facility is located on approximately 45 acresin central Illinois between Springfield and Decatur. The Addis Facility islocated on approximately 40 acres of a 220 acre site adjacent to the MississippiRiver, approximately 20 miles from the Geismar complex.

The following table sets forth the approximate annual capacity of each of theprincipal manufacturing plants at the Geismar complex and the PVC plants atIlliopolis and Addis, all of which are owned by the Company except as noted.<TABLE><CAPTION>

1988 1995ANNUAL STATED CAPACITY ANNUAL STATED CAPACITY 7 YEAR CAPACITY



PLANTS (STATED IN MILLIONS) (STATED IN MILLIONS) PERCENTAGE INCREASE----------------------------- -------------------- ----------------------- --------------------<S> <C> <C> <C>Geismar, LA:

PV Polymers ProductsPVC Resins............... 400 lbs. 500 lbs. 25.0%Acetylene-based VCM(1).. 320 lbs. 320 lbs. --

Ethylene-based VCM....... 550 lbs. 630 lbs. 14.5%Acetylene................ 190 lbs. 200 lbs. 5.3%

Methanol and DerivativesMethanol................. 230 gals. 330 gals. 43.5%Formaldehyde I........... 210 lbs. 270 lbs. 28.6%Formaldehyde II(2)....... 160 lbs. 180 lbs. 12.5%Formaldehyde III......... -- 190 lbs. N/M

Nitrogen ProductsAmmonia.................. .40 tons .40 tons --Urea..................... .22 tons .25 tons 13.6%

Illiopolis, IL:PVC Resins................. 350 lbs. 380 lbs. 8.6%

Addis, LA:PVC Resins................. 450 lbs. 450 lbs. --

Total equivalent lbs.(3)..... 5,395 6,608 22.5%</TABLE>

(1) 50% owned by the Company(2) Also capable of producing urea-formaldehyde concentrate at an annual stated

capacity of 125 million pounds.(3) Equivalent pounds is based on 6.63 pounds per gallon of methanol.

Item 3. Legal Proceedings------- -----------------

Louisiana Groundwater Remediation Settlement Agreement------------------------------------------------------

In 1985, LDEQ and Borden entered into a settlement agreement ("SettlementAgreement") that called for the implementation of a long-term groundwater andsoil remediation program at the Geismar complex to address contaminants,including ethylene dichloride ("EDC"). Also during this time frame, Borden

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commenced closure of various units identified to have been contributors to theEDC contamination underlying the Geismar complex. Borden and the Company haveimplemented the Settlement Agreement, and have worked in cooperation with theLDEQ to remediate the groundwater and soil contamination. The SettlementAgreement contemplated, among other things, that Borden would install a seriesof groundwater monitoring and recovery wells, and recovery trench systems. TheCompany is addressing issues raised by LDEQ concerning whether the extent of thegroundwater contamination has been identified. Borden has paid substantiallyall of the costs to date associated with the Settlement Agreement. It isunknown how long the remediation program will continue or whether the LDEQ willrequire the Company to incur costs to take further remedial measures in responseto data generated by the planned additional testing. If the LDEQ requires theCompany to take further remedial measures, the Company anticipates that aportion of such costs would be covered by the Environmental Indemnity Agreement.The extent to which any costs for further remedial measures required by LDEQwill be covered by the Environmental Indemnity Agreement will depend, in largepart, on whether such remedial measures respond to facts or circumstances thatexisted and requirements in effect prior to November 30, 1987, the date of theinitial sale by Borden of the Geismar and Illiopolis plants to the Partnership.See Item 1 "Borden Environmental Indemnity."



Federal Environmental Enforcement Proceeding--------------------------------------------

On October 27, 1994, the DOJ, acting at the request of the EPA, filed anaction against the Operating Partnership, the Partnership, and the GeneralPartner in the United States District Court for the Middle District of Louisiana("Geismar Enforcement Proceeding"). The complaint seeks civil penalties foralleged violations of RCRA, CERCLA and the Clean Air Act at the Geismarfacility, as well as corrective action at that facility. Prior to the filing ofthe complaint, the Company and DOJ had engaged in settlement discussions, andthe Company expects that such discussion will continue.

The federal government's primary allegations for which it seeks penaltiesinclude claims that (i) the Company's international export to South Africa of apartially depleted mercuric chloride catalyst for recycling violated RCRA; (ii)the Company should have applied for a RCRA permit for operation of its VCR unitand related tanks before August 1991; and (iii) the Company should have appliedfor a RCRA permit for the north trench sump at the Geismar complex because suchsump allegedly stored, or disposed of, hazardous waste. The government'sallegations include other claims related to these and other alleged RCRAviolations, as well as claims of alleged violations of immediate releasereporting requirements under CERCLA and requirements governing particulatematter emissions under the Clean Air Act. The Company plans to vigorouslydefend itself against all of the above allegations.

During the early 1990's, the Company sent partially depleted mercuric chloridecatalyst to a facility in South Africa for recovery of the mercury. See thefollowing "Export of Partially Depleted Mercuric Chloride Catalyst." In 1993,

-------------------------------------------------------LDEQ had determined that the catalyst was not a hazardous waste. However,because of a belief by the EPA that the partially depleted catalyst could be ahazardous waste and a reversal of LDEQ's 1993 determination, and pending theoutcome of the Geismar Enforcement Proceeding, the Company has ceased exportingthe partially depleted mercuric chloride catalyst for recycling and is currentlyhandling it as if it were a hazardous waste. Accordingly, even if a courtshould determine that the partially depleted catalyst was a hazardous waste whenit was exported, the Company does not anticipate that it would incur materialadditional expenditures to continue to manage the partially depleted catalyst asa hazardous waste.

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In 1991, as a protective filing, the Company applied for a hazardous wastepermit for the VCR unit and related tanks. In January 1994, in response to apetition from the Company to LDEQ for a determination that the VCR unit does notrequire a RCRA permit, LDEQ determined that the VCR unit is subject to RCRA.The Company continues to maintain that the VCR unit is not subject to RCRA andhas filed appeals of LDEQ's determination in Louisiana State Courts.

In May 1994, the Company filed a Complaint for Declaratory Judgment in theU.S. District Court in Baton Rouge seeking a determination that (i) thepartially depleted mercuric chloride catalyst was not a hazardous waste when itwas exported for recycling, (ii) the materials entering the VCR unit and relatedtanks are not hazardous waste and (iii) the north trench sump does not require aRCRA permit.

In May 1995, certain adjoining landowners at the Geismar complex filed amotion to intervene in the Geismar Enforcement Proceedings claiming rights underCERCLA and RCRA to protect their property interests. The court granted a limitedintervention on November 15, 1995 and the Company is vigorously defendingagainst this intervention.



If the Company is unsuccessful in prosecuting its May 1994 DeclaratoryJudgment Action, or in defending itself against the Geismar EnforcementProceedings, it could be subject to three types of costs: (i) penalties, (ii)corrective action, and (iii) costs needed to obtain a RCRA permit. As topenalties, although the maximum statutory penalties that would apply in asuccessful enforcement action by the United States would be in excess of $150.0million, the Company believes that, assuming the Company is unsuccessful andbased on information currently available to it and an analysis of relevant caselaw and administrative decisions, the more likely amount of any liability forcivil penalties would not exceed several million dollars.

If the Company is unsuccessful in either the Declaratory Judgement Action orthe Geismar Enforcement Proceedings, it may also be subject to costs forcorrective action. The federal government can also require corrective actionfor a facility subject to RCRA permit requirements. Corrective action couldrequire the Company to conduct investigatory and remedial activities at theGeismar complex concurrently with the groundwater monitoring and remedialprogram that the Company is currently conducting under the Settlement Agreementwith LDEQ. The DOJ is seeking facility-wide corrective action to address thecontamination at the Geismar complex. EPA has indicated that it intends toevaluate the adequacy of the existing groundwater remediation project performedunder the Settlement Agreement with LDEQ, and to determine the potential forother areas of contamination on or near the Geismar complex. The cost of anycorrective action could be material, depending on the scope of such correctiveaction. However, the actual cost of a facility-wide corrective action cannot beidentified until the EPA provides substantially more information to the Companyor until additional studies are done.

If the Company is unsuccessful in either proceeding concerning its challengeto the applicability of the RCRA permit requirements to the VCR unit and relatedtanks, or the north trench sump, it will have to incur additional permittingcosts. The Company estimates that its costs to complete the permitting processfor the VCR unit and related tanks would be approximately $1.0 million. TheCompany believes that the costs for amending its pending RCRA permit applicationto include the north trench sump would not be material.

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Because of the complex nature of environmental insurance coverage and therapidly developing case law concerning such coverage, no assurance can be givenconcerning the extent to which insurance may cover environmental claims againstthe Company. However, insurance generally does not cover penalties or the costof obtaining permits.

Export of Partially Depleted Mercuric Chloride Catalyst-------------------------------------------------------

During the early 1990s, the Company shipped partially depleted mercuricchloride catalyst to the facility of Thor Chemicals S.A. (PTY) Limited ("Thor")in Cato Ridge, South Africa for recovery of mercury. In 1993 the LDEQdetermined that the partially depleted catalyst was not a hazardous waste,although LDEQ reversed this position in 1994. The Company disagrees with thisreversal. The Company did not send mercury-containing sludge to the Thorfacility.

The Company believes that Thor's operations have included the production ofmercuric chloride catalyst and the recovery of mercury from partially depletedcatalyst. Recovery of mercury at Thor's facility was discontinued in March 1994when the Department of Health in South Africa refused to renew a temporarylicense that had been granted to Thor. At such time, there were approximately2,900 drums of partially depleted catalyst at the facility which had been



shipped by the Company to Thor. In addition, in the spring of 1994 there wereapproximately 7,400 drums of other materials at the Thor facility which theCompany had not sent there.

In February 1995, Thor and three of its management personnel were tried bySouth Africa for the common law crime of culpable homicide and a number ofalleged violations of the Machinery Occupational Safety Act of 1983 ("MOSA"),because of the deaths of two Thor employees. The prosecution alleged that thedeaths were the result of mercury poisoning. In exchange for a plea by Thorthat it had violated provisions of MOSA, the prosecution dropped the homicidecharges against Thor and all the charges against Thor's management personnel.The court has sentenced Thor to a fine of R13,500.00, which is equivalent toapproximately $3,800. The Company is aware that relatives of two deceased Thoremployees, and a Thor employee allegedly suffering from mercury poisoning, havefiled suit in the United Kingdom against Thor's parent company for negligence.

A Commission of Inquiry, appointed by the President of South Africa,commenced hearings in February 1996, and published the following terms ofreference: (1) to investigate the history and background of the acquisition ofmercury catalyst stockpiled by Thor as well as additional mercury-containingsludge on the premises and to report on the further utilization or disposalthereof; (2) to recommend the best practical environmental option to address theproblem of mercury-containing catalyst and/or waste currently on Thor'spremises; (3) to report the results of the Commission's inquiry to the Presidentof the Republic of South Africa as soon as conveniently possible; (4) toinvestigate deficiencies in the regulation and enforcement relating to themonitoring and control of mercury processing; and (5) to recommend steps whichcould contribute to the minimization of risk and to the protection of workersand the environment. In addition, the Minister of Water Affairs and Forestry hasinstructed his department's regional office to investigate alleged waterpollution at and near the Thor facility. The Government of South Africa has notmade any allegations or asserted any claims against the Company.

The contract between the Company and Thor provides that title to, risk ofloss, and all other incidents of ownership of the partially depleted catalystwould pass from the Company to Thor when the catalyst reached South Africa. TheCompany does not believe that it is liable for disposing of the approximately2,900 drums of partially depleted catalyst remaining at the Thor facility.

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Nonetheless, in the event that the Company should be required to dispose of theapproximately 2,900 drums at the facility shipped by the Company, the Companyestimates that such cost would not be in excess of $4 million.

With regard to the environmental condition of the Thor facility, the Companyhas not been notified by the Government of South Africa that the Company wouldbe liable for any contamination or other conditions at that facility, althoughit is impossible to determine what, if any, allegations any party may make inconnection with the Thor facility in the future. It is unclear under currentSouth African environmental law as to whether any such allegations, if made,would be sustained against the Company, and the Company would vigorously defendagainst any such allegations.

In connection with a federal grand jury investigation in the U.S. DistrictCourt in New Jersey, the Company is providing documents with respect to thepartially depleted catalyst matter.

Emergency Planning and Community Right-to-Know Act Proceeding-------------------------------------------------------------

In February 1993, an EPA Administrative Law Judge held that the Illiopolis



facility had violated CERCLA and EPCRA by failing to report certain relief valvereleases, which occurred between February 1987 and July 1989, that the Companybelieves are exempt from CERCLA and EPCRA reporting. The Company's petition forreconsideration was denied, a penalty hearing will be scheduled, and furtherappeals are possible. Management does not believe that any ultimate penaltyarising from this proceeding would have a material adverse effect on the resultsof operations for the Company. The proposed penalty in EPA's administrativecomplaint initiating this proceeding in 1991 was $1.0 million.

Borden Environmental Indemnity------------------------------

Under the Environmental Indemnity Agreement ("EIA"), subject to certainconditions, Borden has agreed to indemnify the Company in respect ofenvironmental liabilities arising from facts or circumstances that existed andrequirements in effect prior to November 30, 1987, the date of the initial saleof the Geismar and Illiopolis plants to the Company (the "Transfer Date"). TheCompany is responsible for environmental liabilities arising from facts orcircumstances that existed and requirements in effect on or after the TransferDate. With respect to certain environmental liabilities that may arise fromfacts or circumstances that existed and requirements in effect both prior to andafter the Transfer Date, Borden and the Company will share liabilities on anequitable basis considering all of the facts and circumstances including, butnot limited to, the relative contribution of each to the matter and the amountof time each has operated the asset in question (to the extent relevant). Noclaims can be made under the EIA after November 30, 2002, and no claim can, withcertain exceptions, be made with respect to the first $500,000 of liabilitieswhich Borden would otherwise be responsible for thereunder in any year, but suchexcluded amounts shall not exceed $3.5 million in the aggregate. Excludedamounts under the EIA have aggregated approximately $3.0 million throughDecember 31, 1995.

If the United States is successful in requiring the Company to performcorrective action at the Geismar facility or the LDEQ requires the Company totake further remedial measures in connection with the Settlement Agreement, theCompany anticipates that a substantial portion of its corrective action costswould be covered by the EIA. The extent to which any penalties or permit coststhat the Company may incur as a result of pending environmental proceedings will

22

be subject to the EIA will depend, in large part, on whether such penalties orcosts are attributable to facts or circumstances that existed and requirementsin effect prior to the Transfer Date.

Federal Wastewater Permit-------------------------

The Geismar facility has a permit for each of its two wastewater outfalls. TheCompany is challenging conditions in one of these permits. As a result of thegovernment's delay in responding to this challenge, the challenged permit hasexpired and, prior to the expiration, the Company applied for a new permit.Depending on the result of that permit application, the Company's current permitchallenge may be irrelevant.

Other Legal Proceedings-----------------------

The Company manufactures, distributes and uses many different chemicals in itsbusiness. As a result of its chemical operations the Company is subject tovarious lawsuits in the ordinary course of business which seek compensation forphysical injury, pain and suffering, costs of medical monitoring, property



damage and other alleged harm. New or different damage claims arising from theCompany's various chemical operations may be made in the future.

In addition, the Company is subject to various other legal proceedings andclaims which arise in the ordinary course of business. The management of theCompany believes, based upon the information it presently possesses, that therealistic range of liability to the Partnership of these other matters, takinginto account the Partnership's insurance coverage, including its risk retentionprogram, and the EIA with Borden, would not have a material adverse effect onthe financial position or results of operations of the Company.

Item 4. Submission of Matters to a Vote of Security Holders------- ---------------------------------------------------

No matter was submitted during the fourth quarter of 1995 to a vote ofsecurity holders, through the solicitation of proxies or otherwise.

PART II

Item 5 Market for the Registrant's Common Equity and Related------ -----------------------------------------------------

Stockholder Matters-------------------

The high and low sales prices for the Common Units on February 9, 1996 were$13 3/4 and $13 1/2, respectively. As of December 31, 1995, there wereapproximately 6,868 holders of record of Common Units.

The following table sets forth the 1995 quarterly Common Unit data:

<TABLE><CAPTION>

1995 Quarters--------------------------------First Second Third Fourth----- ------ ----- ------

<S> <C> <C> <C> <C>Cash distribution declared $ 1.77 $ 1.42 $ .90 $ .57Market price range:

High 25 1/2 18 3/8 19 3/4 18 1/2Low 15 1/8 15 1/2 16 12 1/4

</TABLE>

23

The high and low prices for the Units during the first quarter of 1996(through February 9) were $14 7/8 and $12 5/8, respectively.<TABLE><CAPTION>

1994 Quarters--------------------------------First Second Third Fourth----- ------ ----- ------

<S> <C> <C> <C> <C>

Cash distributions declared $ .21 $ .65 $ 1.02 $ 1.64Market price range:

High 13 1/4 15 1/8 25 7/8 26 3/8



Low 9 7/8 10 7/8 13 1/4 19 1/4</TABLE>

Item 6. Selected Financial Data------- -----------------------

The following table sets forth selected historical financial information forthe Company for each of the five years ended December 31, 1995.

<TABLE><CAPTION>

1995 1994 1993 1992 1991-------- -------- --------- -------- --------

(in thousands except per Unit data, which isnet of 1% General Partner interest)

<S> <C> <C> <C> <C> <C>

Net revenues $739,587 $657,752 $433,297 $401,803 $410,005Income (loss) beforeextraordinary item 150,926 146,405 (1,435) 27,085 51,553

Net income (loss) 144,014 146,405 (1,435) 27,085 51,553Income (loss) per unitbefore extra-ordinary item 4.07 3.94 (.04) .73 1.39

Net income (loss)per Unit 3.88 3.94 (.04) .73 1.39

Cash distributionsdeclared per Unit 4.66 3.52 .78 1.59 1.98

Total assets 568,507 542,904 444,304 466,729 507,042Long-term debt 200,000 120,000 150,000 150,000 150,000</TABLE>

Item 7. Management's Discussion and Analysis of Financial------- -------------------------------------------------

Condition and Results of Operations-----------------------------------

OVERVIEW AND OUTLOOK

The Company's revenues are derived from three principal product groups: (1) PVCPolymers Products, which consist of PVC resins, VCM, the principal feedstock forPVC resins, and acetylene, (ii) Methanol and Derivatives and (iii) NitrogenProducts, which consist of ammonia and urea.

The markets for and profitability of the Company's products have been, and arelikely to continue to be, cyclical. Periods of high demand, high capacityutilization and increasing operating margins tend to result in new plantinvestment and increased production until supply exceeds demand, followed byperiods of declining prices and declining capacity utilization until the cycleis repeated. In addition, markets for the Company's products are affected bygeneral economic conditions and a downturn in the economy could have a materialadverse effect on the Company, including, but not limited to, its ability toservice its debt obligations. The demand for the Partnership's PVC products is

24

primarily dependent on the construction and automotive industries. Methanoldemand is also dependent on the construction industry, as well as the demand forMTBE. Demand for the Company's Nitrogen Products is dependent primarily on theagricultural and industrial industries.



The principal raw material feedstock for the Company's products is natural gas,the price of which has been volatile in recent years. The other principalfeedstocks are ethylene and chlorine. Prices for these raw materials may changesignificantly from year to year.

The Company experienced strong demand for its PVC Polymers Products in thefirst half of 1995, particularly for its rigid and general purpose resins.Increased activity in the construction industry resulted in increased demand forrigid grade resin for end use in pipe and siding production. The automotiveindustry requirements resulted in increased demand for general purpose resins.Beginning the fourth quarter of 1994, PVC customers began to build up their PVCinventory in anticipation of rising PVC sales prices. This inventory builduppeaked during the second quarter of 1995, resulting in reduced PVC purchasesduring the second half of 1995. This led to a sharp decrease in PVC salesprices which continued through the end of 1995. The Company anticipates PVCpricing will improve during the second half of 1996.

During 1994, due to strength in the construction industry, the Companyexperienced increased demand for methanol and formaldehyde in downstreamapplications, such as adhesives for plywood and other pressed wood products.Methanol demand has also been affected by the use of MTBE to comply with certainrequirements of the Clean Air Act. The Company expects continued strong demandfor methanol products into 1996, subject to the extent of implementation andenforcement of the Clean Air Act and the substitution of other products forMTBE. Published methanol prices increased from approximately $0.47 per gallonduring the fourth quarter of 1993 to approximately $1.50 per gallon during thefourth quarter of 1994, but there has been a sharp decline in methanol salesprices since early 1995 and current published methanol prices are in the rangeof $.40 to $.45 per gallon. The outlook for methanol continues to be uncertain,but the Company believes that its methanol sales prices during 1996 are likelyto remain at current levels.

In Nitrogen Products, ammonia selling prices increased significantly during1994 due primarily to a tighter worldwide supply resulting from restrictedproduction in the former Soviet Union. The decline in non-U.S. production hassignificantly increased the price of ammonia imported into the U.S., which is anet importer of ammonia, and has allowed domestically produced ammonia to risesignificantly in price. In the second half of 1994, urea prices recovered fromdepressed levels in 1993 and early 1994 when competition from lower cost importsforced domestic prices lower. Increased urea purchases overseas, primarily byIndia and China, caused global and domestic prices to strengthen. Demand forammonia and urea remained strong in 1995 with sales prices consistent with 1994levels. The Company expects the foregoing factors to continue into 1996 and,accordingly, expects selling prices and volumes for its Nitrogen Products toremain strong into 1996. However, changes in the market outside of its controlcould adversely affect this outlook. The countries comprising the former SovietUnion control a large portion of worldwide ammonia production capacity. Theunstable economies of these countries could force an increase from their currentproduction levels in order to receive foreign currency, causing an increase inproduct available for import into the U.S. and resulting in downward pressure onselling prices. In addition, there can be no assurance that urea purchases byforeign countries will continue at current levels.

25

The cost of ethylene, the primary feedstock for PVC, rose during the first halfof 1995 but has recently been falling. The Company believes that its PVCoperations have lower exposure to ethylene price increases than many othermanufacturers because the Company is able to produce a portion of its PVC rawmaterial, VCM, from acetylene instead of ethylene. Acetylene-based VCMmanufacturing accounts for approximately one-third of the Partnership's totalVCM production. The primary raw material for acetylene, as well as for methanol



and ammonia, is natural gas, thus the costs of these products are affected bychanges in natural gas prices which, in 1995, declined on average 15% from 1994levels. Chlorine is a feedstock for PVC resins and unit costs have variedsignificantly on a historical basis, as demonstrated in 1991 when chlorine had anegative value in the market due to an extreme oversupply situation. Recently,chlorine prices have remained relatively unchanged. Raw materials costs accountfor a high percentage of the Company's total production costs. The Companypurchases its major raw materials - natural gas, ethylene and chlorine - undermarket sensitive supply contracts. Generally, prices under these contracts areadjusted on a monthly basis and, although the Company generally does notpurchase raw materials at spot prices, its operating results are neverthelesssubject to short-term fluctuations in raw material market prices. These rawmaterials are commodities in nature and fluctuate in price due to generaleconomic conditions, seasonal factors and the supply/demand balance at any pointin time. Natural gas prices vary primarily due to seasonal changes inresidential demand for heating purposes. Ethylene is a derivative of thepetroleum refining industry, with ethylene prices tending to follow supply anddemand factors of ethylene's derivative products. Chlorine and its by-productcaustic soda, a neutralizing agent in numerous manufacturing processes, are bothderivatives of brine. Prices for each of these co-products are driven by supplyand demand for each of the products themselves, as well as the supply and demandfor the co-product such that either product can influence the price of theother. Unit costs for raw materials can vary significantly within shortperiods. For example, during the 1993-1995 period, monthly prices of naturalgas have varied from $1.50 per million BTU to $2.50 per million BTU primarilydue to seasonal variations in demand. Monthly prices of ethylene have variedfrom $0.15 per pound to $0.28 per pound and chlorine has varied from $110 perton to $175 per ton. These fluctuations limit the ability to accuratelyforecast future raw material costs.

On May 2, 1995, the Company, through its subsidiary operating partnership (the"Operating Partnership"), completed the purchase of OxyChem's Addis, LouisianaPVC manufacturing facility and related assets ("Addis facility"). The Addisfacility has an annual proven production capacity of 450 million pounds peryear, which increased the Company's stated annual capacity for PVC resinproduction by approximately 50%. The cash purchase price for the Addis facilitywas $100.4 million (see "Acquisition").

RESULTS OF OPERATIONS

The following table sets forth the dollar amount of revenues and the percentageof total revenues for each of the principal product groups of the Company (inthousands):

<TABLE><CAPTION>

1995 1994 1993--------- ---------- -----------

<S> <C> <C> <C> <C> <C> <C>

PVC Polymers Products $449,657 61% $347,122 53% $261,342 60%Methanol and Derivatives 187,126 25% 236,032 36% 119,779 28Nitrogen Products 102,804 14% 74,598 11% 52,176 12

-------- ---- -------- ---- -------- ----Total Revenues $739,587 100% $657,752 100% $433,297 100%

======== ==== ======== ==== ======== ====</TABLE>

26

The following table summarizes indices of relative average selling pricesreceived per unit of product sold per period for the three principal productgroups of the Company and relative average raw material costs per unit for the



principal raw materials (using 1985 = 100 as the base year for all products soldor purchased per period). The price indices in the table reflect changes in themix and volume of individual products sold as well as changes in selling prices.

<TABLE><CAPTION>

Year Ended December 31,1995 1994 1993

------- ------ ------<S> <C> <C> <C>

Average price received perunit soldPVC Polymers Products 133 124 106Methanol and Derivatives 134 166 94Nitrogen Products 149 120 85

Raw material costs per unit purchased

Natural Gas 69 79 88Ethylene 173 137 115Chlorine 92 116 83

Production volumes (1)(in millions of pounds)

PVC Polymers Products 2,312 2,067 1,849Methanol and Derivatives 2,805 2,660 2,409Nitrogen Products 1,389 1,221 1,207

</TABLE>

----------------

(1) Includes the production of intermediate products.

1995 COMPARED TO 1994

Total Revenues

Total revenues for 1995 increased $81.8 million or 12% to $739.6 million in1995 from $657.8 million in 1994. This increase was the net result of a $102.5million increase in revenues from PVC Polymers Products, a $48.9 milliondecrease in Methanol and Derivatives revenues and a $28.2 million increase inNitrogen Products revenues.

Total revenues for PVC Polymers Products increased 30% as a result of a 21%increase in sales volumes along with a 7% increase in selling prices. Theincrease in volume was mainly attributable to the acquisition of the AddisFacility during 1995.

Total revenues for Methanol and Derivatives decreased 21% as a result of a 19%decrease in selling prices along with a 2% decrease in sales volumes. Thedecrease in selling price was due to the circumstances described above.

Total revenues for Nitrogen Products increased 38% as a result of a 24%increase in selling prices and an 11% increase in sales volumes. Generallystrong market conditions led to increased selling prices and volumes for ammoniaand urea during 1995.

Cost of Goods Sold

27



Total cost of goods sold increased 16% to $516.5 million in 1995 from$446.2 million in 1994. The increase resulted almost entirely from theadditional sales volumes attributed to the acquisition of the Addis Facility.Expressed as a percentage of total revenues, cost of goods sold increased to 70%of total revenues in 1995 from 68% in 1994.

Gross profit for PVC Polymers Products increased 32% as a result of thesignificant increase in sales volumes.

Gross profit for Methanol and Derivatives decreased 27% from recordlevel in 1994. Gross margins for Nitrogen Products almost tripled due toincreased selling prices along with reduced natural gas cost.

Incentive Distribution to General Partner

During 1995, incentive distribution to the General Partner aggregated $29.8million compared to $20.6 during 1994 reflecting overall higher quarterlyresults. Each quarter's distributions during 1995 exceeded $0.3647 per unit, theamount after which the General Partner receives 20% of the remainingdistribution as an incentive distribution.

Interest Expense

Interest expense during 1995 increased 17% to $19.1 million due to the debtassociated with the acquisition of the Addis Facility.

Other Expense, Including Minority Interest

Other (income) and expense decreased to $1.2 million in 1995 from $7.1 millionin 1994 resulting primarily from the absence of the $4.0 million accrualincurred in 1994 relating to various environmental matters.

Extraordinary Loss on Early Extinguishment of Debt

The Partnership incurred a loss of $6.9 million, or 19 cents per Unit, in 1995as a result of a prepayment premium on $150 million in debt retired during theyear. See Acquisition and Financing and Notes to Consolidated FinancialStatements, Note 3.

1994 VS. 1993

Total Revenues

Total revenues for 1994 increased $224.5 million or 52% to $657.8 million from$433.3 million in 1993. This increase was the result of an $85.8 millionincrease in revenues from PVC Polymers Products, a $116.3 million increase inMethanol and Derivatives revenues and a $22.4 million increase in NitrogenProducts revenues.

Total revenues for PVC Polymers Products increased 33% as a result of a 17%increase in selling prices and a 14% increase in sales volumes. These increaseswere due to increased demand for PVC resins resulting from strength in theconstruction and automotive industries, as well as other industries.

28

Total revenues for Methanol and Derivatives increased 97% as a result of a 76%increase in selling prices and a 12% increase in sales volumes. These increaseswere due to the worldwide tightness in the methanol market resulting fromlimited growth in methanol supply and industry consolidations in recent yearsand increased demand for methanol and formaldehyde in downstream applications



such as MTBE and adhesives.

Total revenues for Nitrogen Products increased 43% as a result of a 40%increase in selling prices and a 2% increase in sales volumes. Ammonia sellingprices increased significantly fueled primarily by strong domestic demand andthe worldwide tightness in the ammonia market. Urea volumes and selling pricesshowed modest improvements.

Cost of Goods Sold

Total cost of goods sold increased 12% to $446.2 million in 1994 from $397.8million in 1993. The increase was a result of the increased volumes discussedabove and an aggregate raw material cost increase of approximately 4% comprisedof significant unit cost increases for chlorine and ethylene offset by reducednatural gas costs. Expressed as a percentage of total revenues, cost of goodsold decreased to 68% of total revenues in 1994 from 92% in 1993, resulting ingreatly improved gross margins and net income for the Company.

Gross margins for PVC Polymers Products increased 182% as a result of theimproved selling prices and volumes discussed above, partially offset bysubstantially higher chlorine and ethylene costs.

Gross margins for Methanol and Derivatives increased 552% as a result of theincreased volumes and significantly higher selling prices discussed above,combined with reduced natural gas costs.

Gross margins for Nitrogen Products improved from a slightly negative positionin 1993 to a profitable position in 1994 on the strength of the ammonia sellingprice increases and reduced natural gas costs discussed above.

Incentive Distribution to General Partner

An incentive distribution to the General Partner of $20.6 million wasgenerated in 1994 as a result of improved operating performance. The quarterlydistributions generated in 1993 did not result in incentive distribution to theGeneral Partner.

Other Expense, Including Minority Interest

The net expense for 1994 was $7.1 million compared to $1.6 million in 1993.This increase was primarily due to a $4.0 million provision established in thethird quarter 1994 for potential expenses related to environmental matters. SeeNotes to Consolidated Financial Statements, Note 8. The increase was alsopartially due to the increase in the minority interest in consolidatedsubsidiary due to the subsidiary's improved operating performance.

Net Income (Loss)

Net income was $146.4 million compared to a net loss of $1.4 million in 1993.As discussed above, the primary reasons for the improved operating performancewere significant selling price increases in all product lines and

29

volume improvements in PVC resins and methanol, partially offset by increasedraw material costs.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows from Operations. Cash provided by operations increased to $225.6million for 1995, as compared to $164.2 million for 1994. Operating cash flowswere positively affected by a decrease of $30.6 million in receivables along



with an increase in payables, partially offset by a decrease in incentivedistribution payable. Cash provided by operations for the year ended December31, 1994 increased to $164.2 million, as compared to $38.3 million for the prioryear. The increase was primarily attributable to an increase in net income andincreased accruals for the incentive payable and other liabilities, partiallyoffset by an increase in accounts receivable.

Cash Flows from Investing Activities. The Partnership paid $100.4 million forthe acquisition of a PVC manufacturing facility in 1995. See Acquisition andFinancing.

Capital expenditures for 1995 totaled $27.0 million. This amount included$13.6 million for the expansion of facilities (such as the methanol expansionproject) and for other discretionary capital improvements. Non-discretionarycapital expenditures totaled $13.4 million for 1995, which amount included alarge number of relatively small projects.

Capital expenditures during 1994 totaled $22.6 million, $6.8 million of whichrelated to completion of the urea granulation and expansion project and otherdiscretionary capital projects and $15.8 million of which related to non-discretionary projects, and environmental and safety related projects. Non-discretionary capital expenditures vary from year to year with normal equipmentrenovation requirements.

Cash Flows from Financing Activities. The Partnership makes quarterlydistributions to Unitholders and the General Partner of 100% of its AvailableCash. Available Cash means generally, with respect to any quarter, the sum ofall cash receipts of the Partnership plus net reductions to reserves establishedin prior quarters, less all of its cash distributions and net additions toreserves in such quarter. These reserves are retained to provide for the properconduct of the Partnership's business, to stabilize distributions of cash toUnitholders and the General Partner and as necessary to comply with the terms ofany agreement or obligation of the Partnership. Cash distributions of $213.1million were made during 1995 compared to $76.6 million in 1994 and $33.8million in 1993.

As discussed under Item 1"Business" herein, there are various seasonalityfactors affecting results of operations and, therefore, cash distributions. Inaddition, the amount of Available Cash constituting Cash from Operations for anyperiod does not necessarily correlate directly with net income for such periodbecause various items and transactions affect net income and Available Cashconstituting Cash from Operations differently. For example, depreciationreduces net income but does not affect Available Cash constituting Cash fromOperations, while changes in working capital items (including receivables,accounts payable and other items) generally do not affect net income but doaffect such Available Cash. Moreover, as provided for in the PartnershipAgreements, certain reserves may be established which affect Available Cashconstituting Cash from Operations but do not affect

30

cash balances in financial statements. Such reserves have generally been usedto set cash aside for interest payments, capital expenditures and other accrueditems.

Acquisition and Financing

On May 2, 1995, the Partnership, through the Operating Partnership, completedthe purchase of Occidental Chemical Corporation's Addis, Louisiana PVCmanufacturing facility and related assets. The Addis Facility has an annualproven production capacity of 450 million pounds per year, which will increasethe Operating Partnership's stated annual capacity for PVC resin production by



approximately 50%. The cash purchase price for the Addis assets was $100.4million.

On May 1, 1995, the Partnership issued $200 million aggregate principal amountof senior unsecured notes (the "Senior Notes"). The net proceeds from thisoffering were used to prepay $150 million aggregate principal amount ofoutstanding notes plus a related prepayment premium of $6.9 million reflected asan extraordinary loss in 1995, and accrued interest. The remaining proceedswere used to fund a portion of the purchase price of the Addis Facility.

Liquidity

The Partnership expects to satisfy its cash requirements, including therequirements of the Addis Facility, through internally generated cash andborrowings. In connection with the acquisition of the Addis Facility, thePartnership entered into a Revolving Credit Facility which provides a $100.0million line of credit for capital expenditures (including the acquisition),working capital and general partnership purposes. Borrowings under theRevolving Credit Facility were $40.0 million at December 31, 1995. The amountavailable under the facility reduces to $75.0 million on January 1, 1996, $50.0million on January 1, 1997 and terminates December 31, 1997. The facility maybe extended for one year with the consent of the lenders. The Partnership hasterminated its previous $20.0 million credit facility.

The revolving credit agreement along with the Senior Notes contain a number offinancial and other covenants that management believes are customary in lendingtransactions of these types.

Capital Expenditures

The Partnership currently believes that the level of annual base capitalexpenditures over the next several years will be in the range of $20 to $25million per year. Total capital expenditures for 1996 are anticipated to beapproximately $20 to $25 million. Future capital expenditures would varysubstantially if the Partnership is required to undertake corrective action orincur other environment compliance costs in connection with the proceedingsdiscussed under Item 3 "Legal Proceedings."

Environmental Expenditures

Annual environmental capital expenditures for 1993-1995 ranged from $1.3 to$3.6 million. The 1996 budget for environmental capital expenditures isapproximately $2.6 million, and is included in the budget of $20 to $25 milliondiscussed above.

Annual non-capital environmental expenditures for 1993-1995 ranged from $18.7to $21.7 million. In connection with potential environmental matters,

31

an additional provision of $4.0 million was reflected in the operating resultsin 1994. The 1996 budget for non-capital environmental expenditures isapproximately $21.8 million. The Partnership's actual level of spending wouldvary substantially if it is required to undertake corrective action or incurother environmental compliance costs in connection with the proceedingsdiscussed under Item 3 "Legal Proceedings."<TABLE><CAPTION>

Item 8. Financial Statements and Supplementary Data------- -------------------------------------------



SequentialIndex to Financial Statements Page----------------------------- ----------<S> <C>

Report of Independent Accountants 43Consolidated Statements of Operations for the yearsended December 31, 1995, 1994 and 1993 44

Consolidated Statements of Cash Flows for the yearsended December 31, 1995, 1994 and 1993 45

Consolidated Balance Sheets as of December 31, 1995and 1994 46

Consolidated Statements of Changes in Partners'Capital for the years ended December 31, 1995,1994 and 1993 47

Notes to Consolidated Financial Statements 48-53</TABLE>

Selected Quarterly Financial Data (Unaudited)---------------------------------------------

(in thousands except per Unit data, which is net of 1% General Partnerinterest)

<TABLE><CAPTION>

1995 Quarters--------------------------------------First Second Third Fourth

-------- -------- -------- --------<S> <C> <C> <C> <C>

Revenues $214,806 $187,663 $186,672 $150,446Gross Profit 106,315 58,184 39,899 18,662Income beforeextraordinary item 83,487 36,754 23,811 6,874

Net Income 83,487 29,842 23,811 6,874Income per Unit beforeextraordinary loss 2.25 0.99 0.64 0.19

Net Incomeper Unit 2.25 0.80 0.64 0.19

1994 Quarters--------------------------------------First Second Third Fourth

-------- -------- -------- --------<S> <C> <C> <C> <C>

Revenues $118,981 $149,671 $169,481 $219,619Gross Profit 12,076 37,934 61,998 99,628Net Income 3,628 25,264 40,646 76,867Net Income per Unit 0.10 0.68 1.09 2.07

</TABLE>

32

Item 9. Changes in and Disagreements with Accountants on Accounting------- -----------------------------------------------------------

and Financial Disclosure------------------------



No Form 8-K was issued by the Company for the two most recent years endedDecember 31, 1995 reporting a change in or disagreement with accountants.

PART III

Item 10. Directors and Executive Officers of the Registrant-------- --------------------------------------------------

The Partnership is a limited partnership (of which BCPM is the General Partner)and has no directors or officers. The directors, officers and employees of theGeneral Partner perform management and non-supervisory functions for thePartnership.

Management Organization - Joseph M. Saggese is Chairman, President and ChiefExecutive Officer of BCPM. He is also an Executive Vice President of Borden andPresident and Chief Executive Officer of Borden Chemicals, Inc. John L. Russ IIIand Wayne P. Leonard, who report directly to Mr. Saggese, are responsible forPartnership marketing and manufacturing operations, respectively.

Independent Committee - BCPM is required to maintain an Independent Committeeof its Board of Directors, which shall be composed of at least three directors,each of whom is neither an officer, employee or director of Borden nor anofficer or employee of BCPM. Certain actions require special approval from theIndependent Committee. Such actions include an expansion of the scope ofbusiness of the Partnership, the making of material capital expenditures, thematerial curtailment of operations of any plant, the material expansion ofcapacity of any plant, and the amendment of or entry into by the Partnership ofany agreement with Borden. The members of the Independent Committee are EdwardH. Jennings, and George W. Koch. Daniel M. Galbreath was a member of theIndependent Committee until he passed away in September 1995. On March 5, 1996,Dr. E. Linn Draper, Jr. was appointed to this vacancy.

As sole stockholder of BCPM, Borden elects directors of BCPM on an annualbasis. Set forth below is certain information concerning the directors andofficers of BCPM.

<TABLE><CAPTION>

Served inAge on Present

Position and Office Dec. 31, PositionName with General Partner 1995 Since---- -------------------- -------- ---------<S> <C> <C> <C>Joseph M. Saggese Director, Chairman, President

and Chief Executive Officer 64 1990Edward H. Jennings Director 58 1989George W. Koch Director 69 1987Dr. E. LinnDraper, Jr. Director 53 1996William H. Carter Director 42 1995Joan V. Stapleton Director and Vice President-

Strategy 50 1987*Wayne P. Leonard Executive Vice President -

Operations 54 1987</TABLE>

33

<TABLE><S> <C> <C> <C>



*John L. Russ III Executive Vice President-Sales andMarketing 55 1987

*James O. Stevning Vice President, Chief FinancialOfficer and Treasurer 36 1996

Lawrence L. Dieker Vice President, Secretary,and General Counsel 57 1987

*John R. Beaver Controller and PrincipalAccounting Officer 34 1996

</TABLE>

*Mr. Leonard, Mr. Russ, Mr. Stevning and Mr. Beaver were all elected to theircurrent positions effective January 23, 1996. However, Mr. Leonard and Mr. Russhave served in substantially the same capacity since 1987.

Joseph M. Saggese has been Chairman of the Board of Directors, President andChief Executive Officer of BCPM since July 1990. He is also Executive VicePresident of Borden and President and Chief Executive Officer of BordenChemical, Inc., the successor to a major portion of the former PIP Division ofBorden and its predecessor division, (collectively with the PIP Division the"Chemicals Division"). Positions he has held since July 1990. From January 1989to August 1990 he served as Senior Group Vice President of the ChemicalsDivision. He served as a Senior Vice President of the Chemicals Division fromOctober 1985 to January 1989.

Edward H. Jennings is a director of BCPM. He is also a professor and PresidentEmeritus of The Ohio State University. He served as president of The Ohio StateUniversity from 1981 to 1990. Mr. Jennings is also a director of Super Foods,Inc., a wholesale grocer, Lancaster Colony, Inc., a manufacturer and marketer offood, automotive and glass products, and Hymedia, Inc., a medical productscompany.

George W. Koch is a director of BCPM. He is Of Counsel in the law firm ofKirkpatrick & Lockhart since January 1992. Prior to that he was a partner ofKirkpatrick & Lockhart since April 1990. From 1966 to April 1990, he wasPresident and Chief Executive Officer of the Grocery Manufacturers of America,Inc., a non-profit organization of the leading grocery manufacturers in theUnited States. Mr. Koch is also a director of McCormick & Co., a food productscompany.

Dr. E. Linn Draper, Jr. is a director of BCPM. He is also Chairman, Presidentand Chief Executive Officer of American Electric Power Company, Inc. andAmerican Electric Power Service Corporation, positions he has held since 1992.Dr. Draper is also President of Ohio Valley Electric Corporation. From 1987 to1992, he was Chairman, President and Chief Executive Officer of Gulf StatesUtility Company. Dr. Draper is currently a director of VECTRA Technologies,Inc., the Nuclear Energy Institute and the Institute of Nuclear Power Operation.

William H. Carter is a director of BCPM. He is also Executive Vice Presidentand Chief Financial Officer of Borden, a position he has held since April 1995.Prior to joining Borden, he was a partner of Price Waterhouse LLP.

Joan V. Stapleton is a director and a Vice President of BCPM. Prior to that,she was Vice President of the Chemicals Division, a position she had held since1983. She has served in other capacities with the Borden PIP

34

Division since 1972, including assistant controller, manager of businessplanning/commercial development, and director of planning and development.

Wayne P. Leonard is Executive Vice President of BCPM. From 1984 to 1987, hewas Director of Manufacturing, Basic Chemicals Unit of the Chemicals Division.



Prior thereto, he was manager of the vinyl products sector of the BasicChemicals Unit of the Chemicals Division. He has served in the chemicalbusiness thirty years and at all such times he has worked at the Geismarcomplex.

John L. Russ III is Executive Vice President of BCPM. From 1986 to 1987, hewas General manager, Thermoplastics Units and Petrochemical Chemicals Division.He joined Borden in 1982 as director of sales and marketing for theThermoplastics Unit of the Chemicals Division. He has served in the PVC resinbusiness in sales and marketing capacities for over thirty years.

James O. Stevning is Vice President, Chief Financial Officer and Treasurer ofBCPM. From March 1994 until January 1996, he was Controller and PrincipalAccounting Officer of BCPM. Prior to that, he had been a Group Controller and anAssistant Controller of the Chemicals Division.

Lawrence L. Dieker is Vice President, General Counsel and Secretary of BCPM.He is also a Vice President and General Counsel of Borden Chemical, Inc., aposition he has held since January 1995. He was previously Assistant GeneralCounsel of Borden, a position he held from 1982 to January 1995.

John R. Beaver joined BCPM in November 1995 and was elected Controller andPrincipal Accounting Officer in January 1996. Prior thereto, he was Manager ofFinancial Reporting for Sterling Chemicals, Inc. and has served in the chemicalbusiness in various financial and accounting capacities for fifteen years.

Item 11. Executive Compensation-------- ----------------------

The Partnership has no directors or officers. The directors and officers ofBCPM receive no direct compensation from the Partnership for services to thePartnership. The Partnership reimburses BCPM for all direct and indirect costsincurred in managing the Partnership.

During 1995 the three independent directors of BCPM received a retainer of$15,000 per year plus a fee of $1,000 for each BCPM Board meeting attended. TheBoard functions in part through its Independent and Audit Committees. The threenon-employee members of each of these committees are paid a meeting fee of $700for each committee meeting attended. The committee chairman is also paid anadditional $100 for each committee meeting attended in that capacity. During1995, the Board met five times, and the Independent and Audit Committees metjointly four times.

The Board of Directors of BCPM has approved a long-term incentive plan formanagement and employees of BCPM (and employees of Borden who provide support toor perform services for BCPM). The plan is intended to provide incentives to themanagement and employees of BCPM (and such employees of Borden) to enhance themarket value of the Units. Under the plan, awards of "phantom" appreciationrights in the Holding Company are made to selected BCPM or Borden officers oremployees on the basis of or in relation to services performed, directly orindirectly, for the benefit of the Company. Subject to certain restrictions,such grantees would be entitled to exercise all or any portion of the phantomappreciation rights granted to them. Upon exercise of any such rights, thegrantee would be

35

entitled to receive from BCPM or Borden, an amount in cash calculated to awardthe grantee for any actual appreciation in the market value of the Units in theHolding Company and actual cash distributions made by the Holding Company inrespect of the Units. The benefits under the plan may be in addition to, and not



in lieu of, the benefits provided to management and employees of BCPM (and suchemployees of Borden) under existing plans or employee benefit arrangements. BCPM(or Borden, on behalf of BCPM) will be reimbursed by the Company for allpayments made or expenses incurred by BCPM (or Borden, on behalf of BCPM) underthe plan. Under the plan, an initial grant of approximately 61,500 phantomappreciation rights has been made.

Item 12. Security Ownership of Certain Beneficial Owners and-------- ---------------------------------------------------

Management----------

To the knowledge of BCPM, no person is the beneficial owner of more than fivepercent of the Partnership's Units. As of February 9, 1996 the beneficialownership of Common Units by all directors and officers of BCPM as a group wasapproximately 36,000 Units, which represents less than one percent of the totalUnits outstanding.

Item 13. Certain Relationships and Related Transactions-------- ----------------------------------------------

The Partnership is managed by BCPM pursuant to the Amended and RestatedAgreement of Limited Partnership (the "Agreement") dated December 15, 1988.Under the Agreement BCPM is entitled to reimbursement of certain costs ofmanaging the Partnership. These costs include compensation and benefits payableto officers and employees of BCPM, payroll taxes, general and administrativecosts and legal and professional fees. Note 3 of Notes to ConsolidatedFinancial Statements of the Partnership contained on page 35 of this Form 10-KAnnual Report contains information regarding relationships and relatedtransactions.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports-------- ----------------------------------------------------

on Form 8-K-----------

(a) 1. Financial Statements--------------------

a. The Consolidated Financial Statements, together with the reportthereon of Price Waterhouse LLP dated January 23, 1996 arecontained on pages 44 through 54 of this Form 10-K Annual Report.

2. Financial Statement Schedules-----------------------------

None required.

3. Exhibits--------

2.1/(7)/ Asset Transfer Agreement dated as of August 12, 1994 andamended as of January 10, 1995, and March 16, 1995, between theBorden Chemicals and Plastics Operating Limited Partnership(the "Operating

36

Partnership") and Occidental Chemical Corporation ("OxyChem")and the forms of VCM Supply Agreement and PVC Tolling Agreement



annexed thereto

2.1.1/(7)/ Third Amendment of Asset Transfer Agreement dated as of May 2,1995 between the Operating Partnership and OxyChem

3.0/(8)/ Restated Certificate of Incorporation of BCPM

3.2/(2)/ By-Laws of BCPM

3.3/(1)/ Amended and Restated Certificate of Limited Partnership of thePartnership

3.4/(1)/ Amended and Restated Certificate of Limited Partnership of theOperating Partnership

3.5/(1)/ Amended and Restated Agreement of Limited Partnership of thePartnership dated as of December 15, 1988

3.6/(3)/ Amended and Restated Agreement of Limited Partnership of theOperating Partnership, dated as of November 30, 1987

4.1/(6)/ Form of Depositary Receipt for Common Units

10.1 Indenture dated as of May 1, 1995 of 9 1/2 Notes due 2005between the Operating Partnership and The Chase Manhattan Bank(National Association), as Trustee

10.4 Revolving Credit Agreement, dated as of May 2, 1995, betweenthe Operating Partnership and Credit Suisse, as Agent and as alender and Other Lenders

10.5/(3)/ Service Agreement, dated as of November 30, 1987, betweenBorden and the Operating Partnership

10.6/(3)/ Intercompany Agreement, dated as of November 30, 1987, amongBorden, BCPM, the Partnership and the Operating Partnership

10.7/(1)/ Borden and BCPM Coverant Agreement, dated as of December 15,1988, among Borden and the Partnership

10.8/(1)/ Ethylene Dichloride/Vinyl Chloride Monomer Tolling Agreement,dated as of July 19, 1988, between the Operating Partnershipand Vulcan Chemicals, a division of Vulcan Materials Company

10.9/(3)/ PVC Purchase Agreement, dated as of November 30, 1987, betweenBorden and the Operating Partnership

37

10.10/(3)/ Ammonia Purchase Agreement, dated as of November 30, 1987,between Borden and the Operating Partnership

10.10.1/(1)/ Amendment Agreement No. 1 to Ammonia Purchase Agreement, datedas of December 15, 1988, between Borden and the OperatingPartnership

10.11/(3)/ Urea Purchase Agreement, dated as of November 30, 1987,between Borden and the Operating Partnership

10.11.1/(1)/ Amendment Agreement No. 1 to Urea Purchase Agreement, dated asof December 15, 1988, between Borden and the OperatingPartnership



10.12/(3)/ Methanol Purchase Agreement, dated as of November 30, 1987,between Borden and the Operating Partnership

10.12.1/(1)/ Amendment Agreement No. 1 to Methanol Purchase Agreement, datedas of December 15, 1988, between Borden and the OperatingPartnership

10.13/(3)/ Formaldehyde Processing Agreement, dated as of November 30,1987, between Borden and the Operating Partnership

10.13.1/(1)/ Amendment Agreement No. 1 to Formaldehyde Processing Agreement,dated as of December 15, 1988 between Borden and the OperatingPartnership

10.14/(3)/ Urea-Formaldehyde Concentrate Processing Agreement, dated as ofNovember 30, 1987, between Borden and the Operating Partnership

10.14.1/(1)/ Amendment Agreement No. 1 to Urea-Formaldehyde ConcentrateProcessing Agreement, dated as of December 15, 1988, betweenBorden and the Operating Partnership

10.15/(3)/ Use of Name and Trademark License Agreement, dated as ofNovember 30, 1987, among Borden, the Partnership and theOperating Partnership

10.16/(3)/ Patent and Know-How Agreement, dated November 30, 1987, amongBorden, the Partnership and the Operating Partnership

10.17/(3)/ Environmental Indemnity Agreement, dated as of November 30,1987, among the Partnership, the Operating Partnership andBorden

10.18/(3)/ Lease Agreement, dated as of November 30, 1987, between theOperating Partnership and Borden

10.19/(2)/ Indenture, dated as of June 1, 1962, among Monochem, Inc.,Borden and Uniroyal Chemical Company, Inc. (as successor toUniroyal Inc., which was a successor to United States RubberCompany)

38

10.20/(2)/ Amendment to Indenture, dated as of December 30, 1981, amongMonochem, Inc., Borden and Uniroyal Chemical Company, Inc. (assuccessor to Uniroyal, Inc.)

10.21/(2)/ Restructuring Agreement, dated as of December 9, 1980, amongBorden, Uniroyal Chemical Company, Inc. (as successor toUniroyal, Inc.) and Monochem, Inc.

10.22/(2)/ Amendment to Restructuring Agreement, dated as of December 31,1981, among Borden, Uniroyal Chemical Company, Inc. (assuccessor to Uniroyal, Inc.) and Monochem, Inc.

10.23/(2)/ Restated Basic Agreement, dated as of January 1, 1982, betweenBorden and Uniroyal Chemical Company, Inc. (as successor toUniroyal, Inc.)

10.24/(2)/ Restated Operating Agreement, dated as of January 1, 1982,among Borden, Uniroyal Chemical Company, Inc. (as successor toUniroyal, Inc.) and Monochem, Inc.



10.25/(2)/ Restated Agreement to Amend Operating Agreement, dated as ofJanuary 1, 1983, among Borden, Uniroyal Chemical Company, Inc.(as successor to Uniroyal, Inc.) and Monochem, Inc.

10.26/(2)/ Operating Agreement for Oxygen and Acetylene Plants, datedApril 1, 1982, between Borden and BASF Wyandotte Corporation(subsequently named BASF Corporation) ("BASF")

10.27/(2)/ Amendment to Operating Agreement for Oxygen and AcetylenePlants, dated August 22, 1984, between Borden and BASF

10.28/(2)/ Second Amendment to Operating Agreement for Oxygen andAcetylene Plants, dated December 14, 1984, between Borden andBASF

10.29/(2)/ Third Amendment to Operating Agreement for Oxygen and AcetylenePlants, dated as of October 2, 1985, between Borden and BASF

10.30/(2)/ Fourth Amendment to Operating Agreement, dated August 25, 1987,between Borden and BASF

10.31/(2)/ Fifth Amendment to Operating Agreement, dated November 10,1987, between Borden and BASF

10.32/(1)/ Sixth Amendment to Operating Agreement, dated February 11,1988, between the Operating Partnership and BASF

10.33/(2)/ Third Purchase Agreement, dated August 25, 1987, betweenBorden and BASF

39

10.34/(2)/ Operating Agreement, dated December 14, 1984 among Borden,BASF, Liquid Air Corporation ("LAC") and LAI Properties, Inc.("LAI")

10.35/(2)/ Amendment No. 1 to Operating Agreement, dated October 2, 1985,among Borden, BASF, LAC and LAI

10.36/(1)/ Amendment No. 2 to the Operating Agreement, dated February 11,1988, among Borden, the Operating Partnership, BASF, LAC andLAI

10.37/(2)/ Second Operating Agreement, dated October 2, 1985, amongBorden, BASF, LAC and LAI

10.38/(1)/ Restated Second Operating Agreement, dated February 11, 1988among Borden, the Operating Partnership, BASF, LAC and LAI

10.39/(1)/ Acetylene Sales Agreement No. 1, dated February 11, 1988,between the Operating Partnership and BASF

10.40/(1)/ Acetylene Sales Agreement No. 2, dated February 11, 1988,between the Operating Partnership and BASF

10.41/(3)/ Railroad Car Master Sublease Agreement, dated as of November30, 1987, between Borden and the Operating Partnership,relating to ACF Industries, Incorporated Master ServiceContract

10.42/(3)/ Railroad Car Master Sublease Agreement, dated as of November



30, 1987, between Borden and the Operating Partnership,relating to Pullman Leasing Company Lease of Railroad Equipment

10.43/(3)/ Railroad Car Master Sublease Agreement, dated as of November30, 1987, between Borden and the Operating Partnership,relating to Union Tank Car Company Service Agreement

10.44/(3)/ Railroad Car Master Sublease Agreement, dated as of November30, 1987, between Borden and the Operating Partnership,relating to General Electric Railroad Service Corporation CarLeasing Agreement

10.45/(3)/ Railroad Car Master Sublease Agreement, dated as of November30, 1987, between Borden and the Operating Partnership,relating to General American Transportation Corporation TankCar Service Contract

10.46/(3)/ Railroad Car Sublease Agreement, dated as of November 30, 1987,between Borden and the Operating Partnership, relating to EHFLeasing Corporation Railroad Equipment Lease

10.47/(3)/ Railroad Car Sublease Agreement, dated as of November 30, 1987,between Borden and the Operating

40

Partnership, relating to Bank of New York Lease of RailroadEquipment (as amended)

10.48/(2)/ Form of Rail Service Agreement between Borden and the OperatingPartnership

10.49/(4)/ Form of Letter Agreement with Directors

10.50/(3)/ Illiopolis Indemnity Agreement

10.51/(3)/ 1995 Long-Term Incentive Plan

__________________

/(1)/ Filed as an exhibit to the joint Registration Statement on Form S-1 andForm S-3 of the Partnership, Borden, Inc. and Borden Delaware Holdings,Inc. (File No. 33-25371) and is incorporated herein by reference in thisForm 10-K Annual Report.

/(2)/ Filed as an exhibit to the Partnership's Registration Statement on FormS-1 (File No. 33-17057) and is incorporated herein by reference in thisForm 10-K Annual Report.

/(3)/ Filed as an exhibit to the Partnership's Registration Statement on FormS-1 (File No. 33-18938) and is incorporated herein by reference in thisForm 10-K Annual Report.

/(4)/ Filed as an exhibit to the Registrant's 1989 Form 10-K Annual Report andis incorporated herein by reference in this Form 10-K Annual Report.

/(5)/ Exhibits 10.8, 10.32, 10.36, 10.37 and 10.38, which were previously filed,contain information which has been deleted pursuant to an application forconfidential treatment pursuant to Rule 406 of the Securities Act of 1933,with respect to which an order has been granted by the Commission.

/(6)/ Filed as an exhibit to the Registrant's 1992 Form 10-K Annual Report and



is incorporated herein by reference in this Form 10-K Annual Report.

/(7)/ Filed as an exhibit to Borden Chemicals and Plastics Limited Partnership'sQuarterly Report on Form 10-Q for the quarter ended March 31, 1995.Confidential treatment has been granted as to certain provisions.

/(8)/ Filed as an exhibit to Borden Chemicals and Plastics Limited Partnership'sQuarterly Report on Form 10-Q for the quarter ended June 30, 1995.

(b) Reports on Form 8-K-------------------

No reports on Form 8-K were filed by the Registrant during the fourthquarter 1995.

41

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the Registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.

BORDEN CHEMICALS AND PLASTICSLIMITED PARTNERSHIPBy BCP Management, Inc.,General Partner

By /s/ James O. Stevning----------------------------

James O. StevningVice President, Chief Financial

Officer and Treasurer

By /s/ John R. Beaver---------------------------

John R. BeaverController and PrincipalAccounting Officer

Date: February 9, 1996

Pursuant to the requirements of the Securities Exchange Act of 1934,this report has been signed below by the following persons on behalf of theRegistrant and in the capacities (with BCP Management, Inc., General Partner)indicated, on the date set forth above.

Signature Title--------- -----

/s/ Joseph M. Saggese Director, Chairman, President----------------------------Joseph M. Saggese and Chief Executive Officer

/s/ Edward H. Jennings Director----------------------------Edward H. Jennings

/s/ George W. Koch Director



----------------------------George W. Koch

/s/ Joan V. Stapleton Director and Vice President----------------------------Joan V. Stapleton

/s/ William H. Carter Director---------------------------William H. Carter

42

REPORT OF INDEPENDENT ACCOUNTANTS

TO THE PARTNERS OF BORDEN CHEMICALSAND PLASTICS LIMITED PARTNERSHIP

In our opinion, the accompanying consolidated balance sheets and therelated consolidated statements of operations, of changes in partners' capitaland of cash flows present fairly, in all material respects, the financialposition of Borden Chemicals and Plastics Limited Partnership at December 31,1995 and 1994, and the results of its operations and its cash flows for each ofthe three years in the period ended December 31, 1995, in conformity withgenerally accepted accounting principles. These financial statements are theresponsibility of the Partnership's management; our responsibility is to expressan opinion on these financial statements based on our audits. We conducted ouraudits of these statements in accordance with generally accepted auditingstandards which require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements, assessing theaccounting principles used and significant estimates made by management, andevaluating the overall financial statement presentation. We believe that ouraudits provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

Columbus, OhioJanuary 23, 1996

43

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS(IN THOUSANDS, EXCEPT PER UNIT DATA)

<TABLE><CAPTION>

YEAR ENDED DECEMBER 31,-------------------------------

1995 1994 1993



--------- --------- ---------<S> <C> <C> <C>REVENUES

Net trade sales $608,070 $514,499 $349,200Net affiliated sales 131,517 143,253 84,097

-------- -------- --------Total revenues 739,587 657,752 433,297

-------- -------- --------

EXPENSESCost of goods soldTrade 424,492 352,700 321,966Affiliated 92,035 93,516 75,805

Marketing, general & administrative expense 22,127 21,092 18,993Interest expense 19,066 16,342 16,356General Partner incentive 29,783 20,616 0Other expense,

including minority interest 1,158 7,081 1,612-------- -------- --------

Total expenses 588,661 511,347 434,732-------- -------- --------

INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 150,926 146,405 (1,435)Extraordinary loss on early extinguish-

ment of debt (6,912) 0 0-------- -------- --------

NET INCOME (LOSS) 144,014 146,405 (1,435)Less 1% General Partner interest (1,440) (1,464) 14

-------- -------- --------NET INCOME (LOSS) APPLICABLE TO LIMITED

PARTNERS' INTEREST $142,574 $144,941 $ (1,421)======== ======== ========

PER UNIT DATA, NET OF 1% GENERAL PARTNERINTEREST

Income (loss) per unit before extra-ordinary item $ 4.07 $3.94 $(0.04)

Extraordinary loss per Unit (0.19) 0 0-------- -------- --------

Net income (loss) per Unit $ 3.88 $3.94 $(0.04)======== ======== ========

Average number of Units outstandingduring the year 36,750 36,750 36,750

======== ======== ========

Cash distributions declared per Unit $ 4.66 $ 3.52 $ .78======== ======== ========

</TABLE>

See notes to consolidated financial statements

44


CONSOLIDATED STATEMENTS OF CASH FLOWS(IN THOUSANDS)

<TABLE>



<CAPTION>

YEAR ENDED DECEMBER 31,---------------------------------

1995 1994 1993---------- ---------- ---------

<S> <C> <C> <C>

CASH FLOWS FROM OPERATIONSNet income (loss) $ 144,014 $ 146,405 $ (1,435)Adjustments to reconcile net incometo net cash provided by operatingactivities:Extraordinary loss on early extinguish-

ment of debt 6,912 0 0Depreciation 49,198 44,305 42,946Decrease (increase) in receivables 30,641 (54,374) (11,821)(Increase) decrease in inventories (10,612) 1,126 (5,418)Increase in payables 14,186 6,298 13,698(Decrease) increase in incentivedistribution payable (9,955) 11,865 0

Increase in accrued interest 1,417 0 0Other, net ( 213) 8,583 517

--------- --------- --------225,588 164,208 38,487

--------- --------- --------

CASH FLOWS FROM INVESTING ACTIVITIESCash paid for acquisition (100,376) 0 0Capital expenditures ( 27,085) ( 22,578) (15,041)

--------- --------- --------(127,461) ( 22,578) (15,041)

--------- --------- --------

CASH FLOWS FROM FINANCING ACTIVITIESNet proceeds from issuance of long-

term debt 200,000 0 0Proceeds from short-term borrowing (net) 40,000 0 0Payment of debt issuance costs (9,815) 0 0Repayment of long-term debt, including

prepayment penalty (156,912) 0 0Cash distributions paid (213,105) (76,558) (33,781)

--------- --------- --------(139,832) (76,558) (33,781)

--------- --------- --------

(Decrease) increase in cash and equivalents (41,705) 65,072 (10,335)

Cash and equivalents at beginning of year 74,126 9,054 19,389--------- --------- --------

Cash and equivalents at end of year $ 32,421 $ 74,126 $ 9,054========= ========= ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOWINFORMATIONInterest paid during the year $ 17,649 $ 16,342 $ 16,356

========= ========= ========</TABLE>




45


CONSOLIDATED BALANCE SHEETS(IN THOUSANDS)

<TABLE><CAPTION>

DECEMBER 31, DECEMBER 31,1995 1994

------------ ------------<S> <C> <C>ASSETS

Cash and equivalents $ 32,421 $ 74,126Accounts receivable (less allowance fordoubtful accounts of $457 and $627,respectively)Trade 75,788 84,330Affiliated 15,202 37,301

InventoriesFinished and in process goods 33,418 19,591Raw materials and supplies 9,654 8,540

Other current assets 3,541 2,831---------- ---------

Total current assets 170,024 226,719---------- ---------

Investments in and advances toaffiliated companies 4,437 3,772

Other assets 39,415 29,094---------- ---------

43,852 32,866---------- ---------

Land 14,106 12,051Buildings 44,216 37,931Machinery and equipment 633,484 523,517

---------- ---------691,806 573,499

Less accumulated depreciation ( 337,175) (290,180)---------- ---------

Total assets 354,631 283,319---------- ---------$ 568,507 $ 542,904========== =========

LIABILITIES ANDPARTNERS' CAPITAL

Accounts and drafts payable $ 64,892 $ 50,706Cash distributions payable 21,179 60,999Short-term borrowing 40,000 0Current portion of long-term debt 0 30,000Incentive distribution payable to

General Partner 1,910 11,865Accrued interest 3,262 1,845Other accrued liabilities 13,468 14,330

---------- ---------Total current liabilities 144,711 169,745

Long-term debt 200,000 120,000



Other liabilities 5,677 5,471Minority interest in consolidated subsidiary 1,655 1,953

---------- ---------Total liabilities 352,043 297,169

---------- ---------

Commitments and contingencies (See Note 8)

Partners' capitalLimited Partners 215,762 244,443General Partner 702 1,292

---------- ---------Total partners' capital 216,464 245,735

---------- ---------$ 568,507 $ 542,904========== =========

</TABLE>


46


CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL(IN THOUSANDS)

<TABLE><CAPTION>

PREFERENCES COMMON GENERALUNITHOLDERS UNITHOLDERS PARTNER TOTAL----------- ----------- ------- -----

<S> <C> <C> <C> <C>Balances at December 31, 1992 $ 210,923 $ 48,025 $ 1,647 $ 260,595Combination of Preference and (210,923) 210,923Common units

Net loss (1,421) (14) (1,435)Cash distributions declared (28,665) (290) (28,955)

--------- --------- ------- ---------

Balances at December 31, 1993 0 228,862 1,343 230,205Net income 144,941 1,464 146,405Cash distributions declared (129,360) (1,515) (130,875)

--------- --------- ------- ---------

Balances at December 31, 1994 0 244,443 1,292 245,735Net income 142,574 1,440 144,014Cash distributions declared (171,255) (2,030) (173,285)

--------- --------- ------- ---------

Balances at December 31, 1995 $ 0 $ 215,762 $ 702 $ 216,464========= ========= ======= =========

</TABLE>

See notes to consolidated financial statements.

47



BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP-------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS------------------------------------------

(In thousands except Unit and per Unit data)

1. ORGANIZATION

Borden Chemicals and Plastics Limited Partnership (the "Partnership"), aDelaware limited partnership, was formed in 1987 when the Partnership, throughits subsidiary operating partnership, acquired the basic chemicals and polyvinylchloride ("PVC") resins operations of Borden, Inc. ("Borden"). The operationsare comprised of highly integrated plants in Geismar, Louisiana, which producebasic petrochemical products, PVC resins and industrial gases and a PVC resinsplant located in Illiopolis, Illinois. In 1995, the Partnership, through itssubsidiary operating partnership completed the purchase of a PVC manufacturingfacility in Addis, Louisiana (the "Addis Facility"). See Acquisition andFinancing Note 3. The Partnership conducts its activities through BordenChemicals and Plastics Operating Limited Partnership (the "OperatingPartnership"). The Partnership, as the sole limited partner, owns a 98.9899%interest and BCP Management, Inc. ("BCPM"), a Delaware corporation and wholly-owned subsidiary of Borden, owns a 1.0101% interest as the sole general partner("General Partner") in the Operating Partnership. The General Partner's interestin the Operating Partnership is reflected in the accompanying consolidatedfinancial statements as minority interest. BCPM also owns a 1% general partnerinterest in the partnership, resulting in an aggregate 2% interest in thepartnerships.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies summarized below are in conformity withgenerally accepted accounting principles; however, this is not the basis forreporting taxable income to Unitholders. The preparation of financial statementsin conformity with generally accepted accounting principles require the use ofmanagement's estimates.

Principles of Consolidation - The consolidated financial statements includethe accounts of the Partnership and the Operating Partnership after eliminationof interpartnership accounts and transactions.

Revenues - Sales and related cost of sales are recognized upon shipment ofproducts. Net trade and net affiliated sales are net of sales discounts andproduct returns and allowances.

Cash Equivalents - The Partnership considers all highly liquid investmentspurchased with an original maturity of three months or less to be cashequivalents.

Inventories - Inventories are stated at the lower of cost or market.Cost is determined using the average cost and first-in, first-out methods.

Investments in and advances to affiliated companies - The Partnership'sproportionate ownership of a joint venture that provides utilities to theGeismar complex is accounted for by the equity method. Utilities provided by thejoint venture are allocated to joint venture partners at cost. The cost of thePartnership's proportionate share of utilities is included in cost of goodssold.

48



Other Assets - Included in Other Assets are spare parts totalling $22,182 and$19,643 at December 31, 1995 and 1994, respectively. Debt issuance costs arecapitalized and are amortized over the term of the associated debt or creditagreement.

Property and Equipment - The amount of the purchase price originallyallocated by the Partnership at its formation to land, buildings, and machineryand equipment was based upon their relative fair values. Expenditures madesubsequent to the formation of the Partnership have been capitalized at costexcept that the purchase price for Addis assets (Note 3) have been allocated toproperties based upon their relative fair values.

Depreciation is recorded on the straight-line basis by charges to costs andexpenses at rates based on the estimated useful lives of the proper ties(average rates for buildings - 4%; machinery and equipment - 8%).

Major renewals and betterments are capitalized. Maintenance, repairs andminor renewals totaling $34,298 in 1995, $32,144 in 1994, and $29,905 in 1993were expensed as incurred. When properties are retired or otherwise disposed of,the related cost and accumulated depreciation are removed from the accounts.

Income Taxes - The Partnership is not a separate taxable entity for Federaland state and local income tax purposes. Accordingly, any taxable income orloss, which may vary substantially from income or loss reported under generallyaccepted accounting principles, is included in the tax returns of the individualpartners. Under current tax law the Partnership will be treated as a partnershipuntil December 31, 1997; thereafter, it will be taxed as a corporation.Effective January 1, 1993 the Partnership adopted statement of FinancialAccounting Standard ("SFAS") No. 109 "Accounting for Income Taxes." The adoptionof this statement did not have a material effect on 1993 results. Because ofavailable tax planning strategies which management intends to implement to "stepup" the tax basis of partnership assets to the generally higher partners' basisin their units, no provision for deferred income taxes is required for thefuture reversal of temporary differences between the book and tax basis ofpartnership assets.

3. ACQUISITION AND FINANCING

On May 2, 1995, the Partnership, through the Operating Partnership, completedthe purchase of Occidental Chemical Corporation's Addis, Louisiana PVCmanufacturing facility and related assets. The cash purchase price for the Addisassets was $100,400.

On May 1, 1995, the Operating Partnership issued $200,000 aggregate principalamount of senior unsecured notes (the "Senior Notes"). The proceeds from thisoffering, net of $9,815 of debt issuance costs, were used to prepay $150,000aggregate principal amount of outstanding notes plus a related $6,912 prepaymentpremium and accrued interest. The remaining proceeds were used to fund a portionof the purchase price of the Addis Facility.

A $100,000 revolving credit facility was obtained during the second quarterof 1995. Borrowing under this facility was $40,000 at December 31, 1995.

49

The following financial information presents the proforma effect of theacquisition and financing transactions discussed above on the historical resultsof operations for the twelve months ended December 31, 1995 and 1994,respectively, as if the transactions occurred on January 1, 1994.



<TABLE><CAPTION>

TWELVE MONTHS ENDED-----------------------------------DECEMBER 31, 1995 DECEMBER 31, 1994----------------- -----------------

<S> <C> <C>Total revenues $794,393 $795,075

Income before extraordinary item:Income $155,168 $149,606Income per Unit, net of 1% General $ 4.18 $ 4.03

Partner interest</TABLE>

4. RELATED PARTY TRANSACTIONS

The Partnership is managed by the General Partner. Under certain agreements,the General Partner and Borden are entitled to reimbursement of costs incurredrelating to the business activities of the Partnership. The Partnership isengaged in various transactions with Borden and its affiliates in the ordinarycourse of business. Such transactions include, among other things, the sharingof certain general and administrative costs, sales of products to and purchasesof raw materials from Borden or its affiliates, and usage of rail cars owned orleased by Borden.

The employees of BCPM (together with employees of Borden providing support toor services for BCPM) operate the Partnership and participate in various Bordenbenefit plans including pension, retirement savings, and health and lifeinsurance. Employee benefit plan expenses are determined by Borden's actuarybased on annual employee census data. The Partnership is charged for generalinsurance expense, which includes liability and property damage insurance, basedon calculations made by Borden's Risk Management Department. Under its riskretention program, Borden maintains deductibles of $2,500, $500 and $500 peroccurrence for property and related damages at the Geismar, Illiopolis and Addisfacilities, respectively, and deductibles ranging from $1,000 to $3,000 perevent for liability insurance. The Partnership has first dollar liabilityinsurance coverage from Borden. The cost of Borden's corporate informationservices and corporate staff department services is allocated to the Partnershipbased on usage of resources such as personnel and data processing equipment.

The Partnership has no direct liability for postretirement benefits since thePartnership does not directly employ any of the persons responsible for managingand operating the Partnership, but instead reimburses Borden (on its own orBCPM's behalf) for their services. As a result of Borden's adoption of SFAS No.106 "Employers' Accounting for Postretirement Benefits Other Than Pensions",1995 and 1994 charges to the Partnership for such services were actuariallydetermined. The Partnership expensed the full amount of such charges but onlyreimbursed Borden (on its own or BCPM's behalf) for actual postretirementbenefits paid. The difference between cash payments to Borden (on its own orBCPM's behalf) and postretirement expense is accrued on the Partnership's books.

50

Benefit plan and general insurance expenses, and allocation for usage ofresources such as personnel and data processing equipment were $11,628 in 1995,$9,991 in 1994, $9,506 in 1993. Management believes the allocation methods usedare reasonable. Although no specific analysis has been undertaken, if thePartnership were to directly provide such services and resources at the samecost as Borden, management believes the allocations would be indicative of coststhat would be incurred on a stand-alone basis.



The Partnership sells methanol, ammonia, urea and PVC resins to, andprocesses formaldehyde and urea-formaldehyde concentrate for, Borden and itsaffiliates at prices which approximate market.

The Partnership entered into long-term agreements with Borden which requireBorden to purchase from the Partnership at least 85% of Borden's requirementsfor PVC resins, ammonia, urea and methanol and to utilize specified percentagesof the Partnership's capacity to process formaldehyde and urea-formaldehydeconcentrate.

5. DEBT

At December 31, long-term debt consists of the following:

<TABLE><CAPTION>

1995 1994-------- --------

<S> <C> <C>9.5% notes due 2005... $200,000 --10.7% note due 1997... -- $90,00011.1% note due 1999... -- 60,000

-------- --------200,000 150,000

Less current portion.. -- 30,000-------- --------$200,000 $120,000======== ========

</TABLE>

On May 1, 1995, the Operating Partnership issued $200,000 aggregate principalamount of senior unsecured notes. The net proceeds from this offering were usedto prepay $150,000 aggregate principal amount of outstanding notes, plus arelated prepayment premium of $6,912 reflected as an extraordinary loss in 1995,and accrued interest. The remaining proceeds were used to fund a portion of thepurchase price of the Addis Facility.

The aggregate fair value of the Partnership's outstanding debt was $215,493at December 31, 1995 and $152,914 at December 31, 1994, which was calculatedbased on current yields for debt with similar characteristics.

The Partnership obtained a short-term working capital facility of up to$100,000 under a revolving credit agreement during 1995. Borrowings under thisfacility were $40,000 at December 31, 1995. The total amount available under therevolving credit agreement reduces to $75,000 on January 1, 1996 and $50,000 onJanuary 1, 1997. The revolving credit agreement expires on December 31, 1997 atwhich time any outstanding balance is due. A commitment fee of .375% per annumis payable on the unused portion. Borrowings under the revolving creditagreement bear interest at rates fixed at the time of each borrowing. Theaverage interest rate of these borrowings at December 31, 1995 was 7.5%. ThePartnership's revolving credit agreement also allows an additional $20,000 ofborrowings outside the agreement, none of which was utilized during 1995. Itprovides that no recourse is available against the General Partner.

51

The revolving credit agreement and the Senior Notes contain a number offinancial and other covenants that management believes are customary in lendingtransactions of these types.

6. ALLOCATION OF INCOME AND LOSS



Income and loss of the Partnership is allocated in proportion to thepartners' percentage interests in the Partnership, provided that at least 1% ofthe income or loss of the Partnership and Operating Partnership is allocated tothe General Partner. For income tax purposes, certain items are speciallyallocated to account for differences between the tax basis and fair market valueof property contributed to the Partnership by Borden and to facilitateuniformity of Units. In addition, the Partnership Agreement generally providesfor an allocation of gross income to the Unitholders and the General Partner toreflect disproportionate cash distributions, on a per Unit basis.

7. CASH DISTRIBUTIONS

The Partnership makes quarterly distributions to Unitholders and the GeneralPartner of 100% of its Available Cash. Available Cash each quarter generallyconsists of cash receipts less cash disbursements (excluding cash distributionsto Unitholders and the General Partner) and reserves.

Distributions of Available Cash are generally made 98% to the Unitholders and2% to the General Partner, subject to the payment of an incentive distributionto the General Partner after a target level of cash distributions to theUnitholders is achieved for the quarter. The incentive distribution is 20% ofany remaining Available Cash for the quarter (in addition to the GeneralPartner's 2% regular distribution). Incentive distributions are accounted for asan expense of the Partnership.

8. CONTINGENCIES

Environmental and Legal Proceedings

On October 27, 1994, the U.S. Department of Justice ("DOJ"), at the requestof the U.S. Environmental Protection Agency (the "EPA"), filed an action againstthe Company and BCPM in the U.S. District Court for the Middle District ofLouisiana. The complaint seeks facility-wide corrective action and civilpenalties for alleged violations of the federal Resource, Conservation andRecovery Act ("RCRA"), the federal Comprehensive Environmental Response,Compensation and Liability Act ("CERCLA"), and the Clean Air Act at the Geismarcomplex. If the Partnership is unsuccessful in this proceeding, or otherwisesubject to RCRA permit requirements, it may be subject to three types of costs:(i) corrective action; (ii) penalties; and (iii) costs needed to obtain a RCRApermit, portions of each which could be subject to the Environmental IndemnityAgreement ("EIA") discussed below. As to penalties, although the maximumstatutory penalties that would apply in a successful enforcement action by theUnited States would be in excess of $150,000, management believes that, assumingthe Partnership is unsuccessful, based on information currently available, andan analysis of relevant case law and administrative decisions, the more likelyamount of any liability for civil penalties would not exceed several milliondollars.

52

The Partnership is subject to extensive federal, state and localenvironmental laws and regulations which impose limitations on the discharge ofpollutants into the air and water, establish standards for the treatment,storage, transportation and disposal of solid and hazardous wastes, and imposeobligations to investigate and remediate contamination in certain circumstances.The Partnership has expended substantial resources, both financial andmanagerial, and it anticipates that it will continue to do so in the future.Failure to comply with the extensive federal, state and local environmental lawsand regulations could result in significant civil or criminal penalties, andremediation costs.



Under the EIA, Borden has agreed, subject to certain specified limitations,to indemnify the Partnership in respect of environmental liabilities arisingfrom facts or circumstances that existed and requirements in effect prior toNovember 30, 1987, the date of the initial sale of the Geismar and Illiopolisplants to the Partnership. The Partnership is responsible for environmentalliabilities arising from facts or circumstances that existed and requirementsthat become effective on or after such date. With respect to certainenvironmental liabilities that may arise from facts or circumstances thatexisted and requirements in effect both prior to and after such date, Borden andthe Partnership will share liabilities on an equitable basis considering all ofthe facts and circumstances including, but not limited to, the relativecontribution of each to the matter and the amount of time each has operated theassets in question (to the extent relevant). No claims can be made under the EIAafter November 30, 2002, and no claim can, with certain exceptions, be made withrespect to the first $500 of liabilities which Borden would otherwise beresponsible for thereunder in any year, but such excluded amounts shall notexceed $3,500 in the aggregate. Excluded amounts under the EIA have aggregatedapproximately $3,000 through December 31, 1995.

In connection with potential environmental matters, a $4,000 provision hasbeen included in the Partnership's 1994 operating results. Because of variousfactors (including the nature of any settlement with appropriate regulatoryauthorities or the outcome of any proceeding, actual environmental conditions,the scope of the application of the EIA and the timing of actions, if any,required to be taken by the Partnership), the Partnership cannot reasonablyestimate the full range of costs it might incur with respect to theenvironmental matters discussed herein. The costs incurred in any quarter oryear could be material to the Partnership's results of operations for suchquarter or year, although, on the basis of the relevant facts and circumstances,management believes this to be unlikely. However, management believes that suchcosts should not have a material adverse effect on the Partnership's financialposition.

The Partnership is subject to legal proceedings and claims which arise in theordinary course of business. In the opinion of the management of thePartnership, the amount of the ultimate liability, taking into account itsinsurance coverage, including its risk retention program and EnvironmentalIndemnity Agreement with Borden would not materially affect the financialposition or results of operations of the Partnership.

53



________________________________________________________________________________

BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP

BCP FINANCE CORPORATION

9 1/2% Notes Due 2005

_______________________

INDENTURE

Dated as of May 1, 1995

_______________________

THE CHASE MANHATTAN BANK (National Association),

As Trustee

________________________________________________________________________________

CROSS-REFERENCE TABLE/1/

TIA IndentureSection Section------- ---------

310(a)(1) ............................ 7.10(a)(2) ............................ 7.10(a)(3) ............................ N.A.(a)(4) ............................ N.A.(b) ............................ 7.08; 7.10(c) ............................ N.A.

311(a) ............................ 7.11(b) ............................ 7.11(c) ............................ N.A.

312(a) ............................ 2.05(b) ............................ 10.03(c) ............................ 10.03



313(a) ............................ 7.06(b)(1) ............................ N.A.(b)(2) ............................ 7.06(c) ............................ 10.02(d) ............................ 7.06

314(a) ............................ 4.02; 10.02(b) ............................ N.A.(c)(1) ............................ 10.04(c)(2) ............................ 10.04(c)(3) ............................ N.A.(d) ............................ N.A.(e) ............................ 10.05(f) ............................ 4.12

315(a) ............................ 7.01(b) ............................ 7.05; 10.02(c) ............................ 7.01(d) ............................ 7.01(e) ............................ 6.11

316(a)(lastsentence) ............................ 10.06(a)(1)(A) ............................ 6.05(a)(1)(B) ............................ 6.04(a)(2) ............................ N.A.(b) ............................ 6.07

317(a)(1) ............................ 6.08(a)(2) ............................ 6.09(b) ............................ 2.04

318(a) ............................ 10.01

N.A. means Not Applicable.

__________________________/1/ Note: This Cross-Reference Table shall not, for any purpose, be deemed to bepart of the Indenture.

TABLE OF CONTENTS

Page

ARTICLE I

Definition and Incorporation by Reference

SECTION 1.01. Definitions........................................... 1SECTION 1.02. Other Definitions..................................... 16SECTION 1.03. Incorporation by Reference of Trust Indenture Act..... 16SECTION 1.04. Rules of Construction................................. 17

ARTICLE II



The Securities

SECTION 2.01. Form and Dating....................................... 18SECTION 2.02. Execution and Authentication.......................... 18SECTION 2.03. Registrar and Paying Agent............................ 18SECTION 2.04. Paying Agent To Hold Money In Trust................... 19SECTION 2.05. Securityholder Lists.................................. 19SECTION 2.06. Transfer and Exchange................................. 20SECTION 2.07. Replacement Securities................................ 20SECTION 2.08. Outstanding Securities................................ 20SECTION 2.09. Temporary Securities; Global Securities............... 21SECTION 2.10. Cancellation.......................................... 22SECTION 2.11. Defaulted Interest.................................... 22

ARTICLE III

Redemption

SECTION 3.01. Notices to Trustee.................................... 23SECTION 3.02. Selection of Securities To Be Redeemed................ 23SECTION 3.03. Notice of Redemption.................................. 23SECTION 3.04. Effect of Notice of Redemption........................ 24SECTION 3.05. Deposit of Redemption Price........................... 24SECTION 3.06. Securities Redeemed in Part........................... 24

ARTICLE IV

Covenants

SECTION 4.01. Payment of Securities................................ 25SECTION 4.02. SEC Reports.......................................... 25SECTION 4.03. Limitation on Restricted Payments.................... 25SECTION 4.04. Limitation on Debt................................... 28SECTION 4.05. Limitation on Restrictions on Distributions from

Subsidiaries......................................... 29

-i-

SECTION 4.06. Limitation on Sales of Assets and SubsidiaryStock................................................ 29

SECTION 4.07. Limitation on Debt and Preferred Stock ofSubsidiaries......................................... 32

SECTION 4.08. Limitation on Liens Securing Debt.................... 33SECTION 4.09. Limitation on Sale and Leaseback Transactions........ 34SECTION 4.10. Limitation on Transactions with Affiliates........... 34SECTION 4.11. Change of Control.................................... 35SECTION 4.12. Uncompleted Acquisition Offer........................ 36



SECTION 4.13. Compliance Certificate............................... 38

ARTICLE V

Successors

SECTION 5.01. When the Company May Merge or Transfer Assets........ 38SECTION 5.02. When Finance Corp. May Merge or Transfer Assets...... 38SECTION 5.03. Obligations After Merger or Transfer................. 39

ARTICLE VI

Defaults and Remedies

SECTION 6.01. Events of Default.................................... 40SECTION 6.02. Acceleration......................................... 41SECTION 6.03. Other Remedies....................................... 42SECTION 6.04. Waiver of Past Defaults.............................. 42SECTION 6.05. Control by Majority.................................. 42SECTION 6.06. Limitation on Suits.................................. 43SECTION 6.07. Rights of Holders to Receive Payment................. 43SECTION 6.08. Collection Suit by Trustee........................... 43SECTION 6.09. Trustee May File Proofs of Claim..................... 43SECTION 6.10. Priorities........................................... 44SECTION 6.11. Undertaking for Costs................................ 44SECTION 6.12. Waiver of Stay or Extension Laws..................... 44

ARTICLE VII

Trustee

SECTION 7.01. Duties of Trustee.................................... 45SECTION 7.02. Rights of Trustee.................................... 46SECTION 7.03. Individual Rights of Trustee......................... 47SECTION 7.04. Trustee's Disclaimer................................. 47SECTION 7.05. Notice of Defaults................................... 47SECTION 7.06. Reports by Trustee to Holders........................ 47SECTION 7.07. Compensation and Indemnity........................... 47SECTION 7.08. Replacement of Trustee............................... 48SECTION 7.09. Successor Trustee by Merger.......................... 49

(ii)

SECTION 7.10. Eligibility; Disqualification........................ 49SECTION 7.11. Preferential Collection of Claims Against Issuers.... 50

ARTICLE VIII

Discharge of Indenture; Defeasance



SECTION 8.01. Discharge of Liability on Securities; Defeasance..... 50SECTION 8.02. Conditions to Defeasance............................. 51SECTION 8.03. Application of Trust Money........................... 52SECTION 8.04. Repayment to the Company............................. 52SECTION 8.05. Indemnity for Government Obligations................. 52SECTION 8.06. Reinstatement........................................ 52

ARTICLE IX

Amendments

SECTION 9.01. Without Consent of Holders........................... 53SECTION 9.02. With Consent of Holders.............................. 53SECTION 9.03. Compliance with Trust Indenture Act.................. 54SECTION 9.04. Revocation and Effect of Consents and Waivers........ 54SECTION 9.05. Notation on or Exchange of Securities................ 55SECTION 9.06. Trustee to Sign Amendments........................... 55

ARTICLE X

Miscellaneous

SECTION 10.01. Trust Indenture Act Controls......................... 55SECTION 10.02. Notices.............................................. 55SECTION 10.03. Communication by Holders with Other Holders.......... 56SECTION 10.04. Certificate and Opinion as to Conditions Precedent... 56SECTION 10.05. Statement Required in Certificate or Opinion......... 56SECTION 10.06. When Securities Disregarded.......................... 57SECTION 10.07. Rules by Trustee, Paying Agent and Registrar......... 57SECTION 10.08. Legal Holidays....................................... 57SECTION 10.09. Governing Law........................................ 57SECTION 10.10. No Recourse Against Others........................... 57SECTION 10.11. Successors........................................... 58SECTION 10.12. Multiple Originals................................... 58SECTION 10.13. Table of Contents; Headings.......................... 58EXHIBIT A [FORM OF SECURITY]................................... 60

(iii)

INDENTURE dated as of May 1, 1995, among BORDEN CHEMICALS AND PLASTICSOPERATING LIMITED PARTNERSHIP, a Delaware limited partnership, BCP FINANCECORPORATION, a Delaware corporation, and THE CHASE MANHATTAN BANK (NATIONALASSOCIATION), a national association organized under the laws of the UnitedStates of America.

Each party agrees as follows for the benefit of the other party andfor the equal and ratable benefit of the Holders of the 9 1/2% Notes Due 2005(the "Securities"):

ARTICLE I



Definition and Incorporation by Reference-----------------------------------------

SECTION 1.01. Definitions.-----------

"Accounts Receivable" means (i) any accounts receivable (whether ornot earned by performance), chattel paper, instruments, documents, generalintangibles, trade acceptances, any other rights to receive installment, rentalor other payments for, or relating to amounts due or to become due on accountof, goods or equipment sold or leased or to be sold or leased or servicesrendered or to be rendered or funds advanced or loaned or to be advanced orloaned and other similar rights to payment of any kind, (ii) any proceeds of anyof the foregoing and (iii) any interest in any property or asset of any kind(whether of the obligor with respect to such accounts receivable or any otherperson securing the payment of any item listed in clause (i) above) .

"Acquisition" means the purchase of the Addis Assets pursuant to theAsset Transfer Agreement.

"Addis Assets" means a polyvinyl chloride production facility locatedin Addis, Louisiana and certain related assets to be purchased pursuant to theAsset Transfer Agreement.

"Affiliate" of any person means (i) any person that, directly orindirectly, is in control of, is controlled by or is under common control withsuch person or (ii) any person who is a director or officer (A) of such person,(B) of any Subsidiary of such person or (C) of any person described in clause(i) above. For purposes of this definition, control of a person means the power,direct or indirect, to direct or cause the direction of the management andpolicies of such person whether by contract or otherwise; and the terms"controlling" and "controlled" have meanings correlative to the foregoing.

"Asset Disposition" means any sale, lease, transfer or otherdisposition (or series of related sales, leases, transfers or dispositions) ofCapital Stock of a Subsidiary (other than directors' qualifying shares),property or other assets (each

referred to for the purposes of this definition as a "disposition") by theCompany or any of its Subsidiaries, including any disposition by means of amerger, consolidation or similar transaction, other than (i) a disposition bythe Company or a Subsidiary to the Company or a Wholly Owned Subsidiary, (ii) adisposition of property or assets at fair market value in the ordinary course ofbusiness, (iii) a disposition of obsolete assets in the ordinary course ofbusiness, (iv) a disposition that constitutes a Restricted Payment or a sale andleaseback transaction and (v) any sale, transfer or other disposition by theCompany or any Subsidiary of Accounts Receivable or of any Subsidiarysubstantially all the assets of which are Accounts Receivable, which sale,



transfer or other disposition constitutes a "sale" under generally acceptedaccounting principles (as in effect at the time thereof).

"Asset Transfer Agreement" means the Asset Transfer Agreement, datedas of August 12, 1994, as amended, between the Company and Occidental PetroleumCompany.

"Attributable Debt" in respect of a sale and leaseback arrangementmeans, as at the time of determination, the present value (discounted at theinterest rate borne by the Securities, compounded annually) of the totalobligations of the lessee for rental payments during the remaining term of thelease included in such arrangement (including any period for which such leasehas been extended).

"Available Cash" has the meaning given to such term in the Amended andRestated Agreement of Limited Partnership of Borden Chemical and PlasticsOperating Limited Partnership, dated as of November 30, 1987, as amended to thedate of this Indenture.

"Average Life" means, as of the date of determination, with respectto any Debt, the quotient obtained by dividing (a) the sum of the products of(i) the numbers of years from the date of determination to the dates of eachsuccessive scheduled principal payment or redemption or similar payment withrespect to such Debt multiplied by (ii) the amount of such payment, by (b) thesum of all such payments.

"BCPM" means BCP Management, Inc., a Delaware corporation, and itssuccessors.

"Board of Directors" means the Board of Directors of the Company (or,if the Company is a limited partnership or a general partnership, of any of itsgeneral partner or partners, respectively, authorized to act on behalf of suchlimited partnership or general partnership, as the case may be, in connectionwith this Indenture) or any committee thereof duly authorized to act on behalfof such Board.

2

"Borden" means Borden, Inc., a New Jersey corporation, and itssuccessors (other than as a result of any transaction described in clause (a)(i)of the definition of "Change of Control" as if Borden, Inc. were deemed for suchpurposes to be the Company).

"Business Day" means each day that is not a Legal Holiday.

"Capital Lease Obligations" of a person means any obligation which isrequired to be classified and accounted for as a capital lease on the face of abalance sheet of such person prepared in accordance with generally acceptedaccounting principles; the amount of such obligation shall be the capitalizedamount thereof, determined in accordance with generally accepted accounting



principles; and the stated maturity thereof shall be the date of the lastpayment of rent or any other amount due under such lease prior to the first dateupon which such lease may be terminated by the lessee without payment of apenalty.

"Capital Stock" means any and all shares, interests, rights topurchase, warrants, options, participations or other equivalents of or interestsin (however designated) capital stock, including any preferred stock, and withrespect to a partnership, any interest therein (whether general or limited) thatconfers on a person the right to receive a share of the profits and losses of,or distributions of assets of, such partnership; provided that Capital Stockshall not include any debt security that is convertible into or exchangeable forCapital Stock.

A "Change of Control" occurs when (a) (i) any person or "group" forpurposes of Section 13(d) of the Exchange Act (a "Group"), other than PermittedHolders, shall beneficially own, directly or indirectly, more than 50% of thetotal voting power of all classes of Voting Stock of BCPM, the Holding Companyor the Company, (ii) (A) the Company shall sell, lease, convey or otherwisedispose of all or substantially all the Company's assets to any person orGroup or (B) the Company shall consolidate with or merge into another person oranother person shall consolidate with or merge into the Company, in case ofeither of the foregoing, in a transaction in which the outstanding Voting Stockof the Company is reclassified or changed into or exchanged for cash, securitiesor other property, other than, in the case of either of clauses (A) or (B), to,with or into, as applicable, one or more Permitted Holders or a person, morethan 50% of the total voting power of all classes of Voting Stock of which,after giving effect to such transaction, is beneficially owned, directly orindirectly, by one or more Permitted Holders or (iii) the Company, the HoldingCompany or BCPM shall adopt a plan of liquidation or dissolution (unless all orsubstantially all the Company's assets are distributed

3

pursuant to such plan to one or more Permitted Holders) and (b) a Rating Declineoccurs within the period of 60 days following the first public announcement ofany of the events described in clause (a) (the "Announcement") (which periodshall be extended if during such 60 days either both Rating Agencies shall haveplaced the Company on credit watch (with negative implications) or one of theRating Agencies shall have placed the Company on credit watch (with negativeimplications) and the other Rating Agency shall have made the determinationdescribed in the definition of Rating Decline, until such time as it can bedetermined whether or not there has been a Rating Decline). A "Rating Decline"shall be deemed to have occurred (i) in the event the Securities are rated belowInvestment Grade by each Rating Agency on the day before the Announcement, ifeach such rating is reduced by more than one gradation (whether or not withinthe same Rating Category) and (ii) in the event the Securities are ratedInvestment Grade by either or both of the Rating Agencies on the day before theAnnouncement, if the Securities cease to be rated Investment Grade by at leastone Rating Agency. "Rating Agency" means either Standard & Poor's Corporation



and its successors ("S&P"), or Moody's Investors Service Inc. and its successors("Moody's"), or if S&P and Moody's or both shall not make a rating of theSecurities publicly available, a nationally recognized statistical rating agencyor agencies, as the case may be, selected by the Company which shall besubstituted for S&P or Moody's or both, as the case may be; and "RatingCategory" means each major rating category symbolized by (x) in the case of S&P,AAA, AA, A, BBB, BB, B, CCC, CC and C and each such Rating Category shallinclude pluses or minuses ("gradations") modifying such capital letters; (y) inthe case of Moody's, Aaa, Aa, A, Baa, Ba, B, Caa, Ca, and C and each such RatingCategory shall include added numerals such as 1, 2, or 3 ("gradations")modifying such letters; and (z) with respect to any other Rating Agency,equivalent symbols. "Investment Grade" means (i) with respect to S&P, any of theRating Categories from and including AAA to and including BBB-and (ii) withrespect to Moody's, any of the Rating Categories from and including Aaa to andincluding Baa3.

"Company" means Borden Chemicals and Plastics Operating LimitedPartnership, a Delaware limited partnership, until a successor replaces itpursuant to the applicable provisions of this Indenture, and thereafter meansthe successor.

"Consolidated EBITDA Coverage Ratio" as of any date of determinationmeans the ratio of (i) the aggregate amount of EBITDA for the period of the mostrecent four consecutive fiscal quarters ending at least 5 days prior to the dateof such determination to (ii) Consolidated Interest Expense for such four fiscalquarters; provided however, that (1) if the Company or any Subsidiary has issuedany Debt since the beginning of such period that remains outstanding as of suchdate of determination or if the transaction giving rise to the need to calculatethe

4

Consolidated EBITDA Coverage Ratio is an issuance of Debt, or both, EBITDA andConsolidated Interest Expense for such period shall be calculated after givingeffect on a pro forma basis to such Debt as if such Debt has been issued on thefirst day of such period and the discharge of any other Debt repaid,repurchased, defeased or otherwise discharged with the proceeds of such new Debtas if such discharge had occurred on the first day of such period, (2) if sincethe beginning of such period the Company or any Subsidiary shall have made anyAsset Disposition, the EBITDA for such period shall be reduced by an amountequal to the EBITDA (if positive) directly attributable to the assets that werethe subject of such Asset Disposition for such period, or increased by an amountequal to the EBITDA (if negative), directly attributable thereto for suchperiod, and Consolidated Interest Expense for such period shall be reduced by anamount equal to the Consolidated Interest Expense directly attributable to anyDebt or Preferred Stock of the Company or any Subsidiary repaid, repurchased,defeased or otherwise discharged with respect to the Company and its continuingSubsidiary or from which the Company or such continuing Subsidiary has beenreleased by reason of the assumption thereof by the transferee of such AssetDisposition, in connection with such Asset Dispositions for such period (or, if



the Capital Stock of any Subsidiary is sold, the Consolidated Interest Expensefor such period directly attributable to the Debt or Preferred Stock of suchSubsidiary to the extent the Company and its continuing Subsidiaries are nolonger liable for such Debt or Preferred Stock after such sale), (3) if sincethe beginning of such period the Company or any Subsidiary (by merger orotherwise) shall have made an Investment in any Subsidiary (or any person whichbecomes a Subsidiary) or an acquisition or assets, including any acquisition ofassets occurring in connection with a transaction causing a calculation to bemade hereunder, which constitutes all or substantially all of an operating unitof a business, EBITDA and Consolidated Interest Expense for such period shall becalculated after giving pro forma effect thereto (including the issuance of anyDebt) as if such Investment or acquisition occurred on the first day of suchperiod and (4) if since the beginning of such period any person (thatsubsequently became a Subsidiary or was merged with or into the Company or anySubsidiary since the beginning of such period) shall have made any AssetDisposition or any Investment that would have required an adjustment pursuant toclause (2) or (3) above if made by the Company or a Subsidiary during suchperiod, EBITDA and Consolidated Interest Expense for such period shall becalculated after giving pro forma effect thereto as if such Asset Disposition orInvestment occurred on the first day of such period. For purposes of thisdefinition, whenever pro forma effect is to be given to an acquisition ofassets, the amount of income or earnings relating thereto, and the amount ofConsolidated Interest Expense associated with any Debt or Preferred Stock issuedin connection therewith, shall be determined on a pro forma basis in good faithby a responsible financial or accounting Officer of the Company. If any Debt

5

bears a floating rate of interest and is being given pro forma effect, theinterest of such Debt shall be calculated as if the rate in effect on the dateof determination had been the applicable rate for the entire period (taking intoaccount any Interest Rate Protection Agreement applicable to such Debt if suchInterest Rate Protection Agreement has a remaining term in excess of 12 months).

"Consolidated Interest Expense" means, for any period, the totalinterest expense of the Company and its consolidated Subsidiaries, including (i)interest expense attributable to Capital Lease Obligations, (ii) amortization ofdebt discount and debt issuance cost, (iii) capitalized interest, (iv) non-cashinterest payments, (v) commissions, discounts and other fees and charges owedwith respect to letters of credit and bankers' acceptance financing, (vi) netcosts under Interest Rate Protection Agreements (including amortization offees), (vii) Preferred Stock dividends in respect of all Preferred Stock held bypersons other than the Company or a Wholly Owned Subsidiary, (viii) interestincurred in connection with investments in discontinued operations and (ix)interest actually paid by the Company or any of its consolidated Subsidiariesunder any guarantee of Debt or other obligation of any other person.

"Consolidated Net Income" means, for any period, the net income of theCompany and its consolidated Subsidiaries; provided, however, that there shallnot be included in such Consolidated Net Income:



(i) any net income of any person if such person is not a Subsidiary,except that (A) the Company's equity in the net income of any such personfor such period shall be included in such Consolidated Net Income up to theaggregate amount of cash actually distributed by such person during suchperiod to the Company or a Subsidiary as a dividend or other distribution(subject, in the case of a dividend or other distribution to a Subsidiary,to the limitations contained in clause (iii) below) and (B) the Company'sequity in a net loss of any such person for such period shall be includedin determining such Consolidated Net Income;

(ii) any net income of any person acquired by the Company or aSubsidiary in a pooling of interests transaction for any period prior tothe date of such acquisition;

(iii) any net income of any Subsidiary that is subject torestrictions, directly or indirectly, on the payment of dividends or themaking of distributions by such Subsidiary, directly or indirectly, to theCompany, except that (A) the Company's equity in the net income of any suchSubsidiary for such period shall be included in such Consolidated Net

6

Income up to the aggregate amount of cash actually distributed by suchSubsidiary during such period to the Company or another Subsidiary as adividend or other distribution (subject, in the case of a dividend or otherdistribution to another Subsidiary, to the limitation contained in thisclause) and (B) the Company's equity in a net loss of any such Subsidiaryfor such period shall be included in determining such Consolidated NetIncome;

(iv) any gain (or loss) realized upon the sale or other dispositionof any property, plant or equipment of the Company or its consolidatedSubsidiaries (including pursuant to any sale-and-leaseback arrangement)which is not sold or otherwise disposed of in the ordinary course ofbusiness and any gain (or loss) realized upon the sale or other dispositionof any Capital Stock of any person; and

(v) the cumulative effect of a change in accounting principles.

"Consolidated Net Tangible Assets" means the total assets of theCompany and its Subsidiaries appearing on a consolidated balance sheet of theCompany and its Subsidiaries (prepared in accordance with generally acceptedaccounting principles) as of any date selected by the Company not more than 90days prior to the date of determination, after (i) adding thereto allAttributable Debt of the Company and its Subsidiaries in respect of any sale andleaseback arrangement not capitalized on such balance sheet, (ii) eliminatingall intercompany transactions and all amounts properly attributable to minorityinterests, if any, in the stock and surplus of Subsidiaries and (iii) deducting



therefrom (without duplication of deductions):

(a) all liabilities of the Company and its Subsidiaries other thanDebt;

(b) the net book amount of all assets, after deducting any reservesapplicable thereto, which would be treated as intangible under generallyaccepted accounting principles, including such items as goodwill,trademarks, trade names, service marks, brand names, copyrights, patentsand licenses, and rights with respect to the foregoing, unamortized debtdiscount and expense and organization expenses;

(c) any write-up in the book value of any asset on the books of theCompany or any Subsidiary resulting from a revaluation thereof subsequentto the date of this Indenture (other than the write-up of the book value ofan asset made in accordance with purchase accounting under generallyaccepted accounting principles in connection with the purchase of suchasset);

7

(d) all deferred charges (other than prepaid expenses); and

(e) all reserves, including, without limitation, reserves fordeferred income taxes, liabilities (fixed or contingent), depreciation,obsolescence, depletion, insurance and inventory valuation, which appear orunder generally accepted accounting principles are required to appear onsuch balance sheet.

"Consolidated Net Worth" of any person means the total of the amountsshown on the balance sheet of such person and its consolidated Subsidiaries,determined on a consolidated basis in accordance with generally acceptedaccounting principles, as of the end of the most recent fiscal quarter of suchperson ending at least 5 days prior to the taking of any action for the purposeof which the determination is being made, as (i) if such person is apartnership, the consolidated equity of the partners less (x) any amountsattributable to Redeemable Stock and (y) any amounts attributable toExchangeable Stock and (ii) if such person is not a partnership, (A) the par orstated value of all outstanding Capital Stock of such person plus (B) paid-incapital or capital surplus relating to such Capital Stock plus (C) any retainedearnings or earned surplus less (1) any accumulated deficit, (2) any amountsattributable to Redeemable Stock and (3) any amounts attributable toExchangeable Stock.

"Credit Facility" means the credit facility under that certainRevolving Credit Agreement, dated as of November 2, 1987, by and between theCompany and Wachovia Bank and Trust Company, N.A., including any related notes,instruments and agreements executed in connection therewith, and which may bereplaced with a facility between the Company and certain lenders, providing forup to $100.0 million of credit borrowings, including any related notes,



instruments and agreements executed in connection therewith, in each as amended,modified, renewed, refunded, replaced or refinanced from time to time.

"Debt" of any person means, without duplication,

(i) the principal of and premium, if any, in respect of (A)indebtedness of such person for money borrowed and (B) indebtednessevidenced by notes, debentures, bonds or other similar instruments for thepayment of which such person is responsible or liable;

(ii) all Capital Lease Obligations of such person;

(iii) all obligations of such person issued or assumed as thedeferred purchase price of property, all conditional sale obligations ofsuch person and all obligations of such person under any title retention

8

agreement (but excluding trade accounts payable arising in the ordinarycourse of business);

(iv) all obligations of such person for the reimbursement of anyobligor on any letter of credit, banker's acceptance or similar credittransaction (other than obligations with respect to letters of creditsecuring obligations (other than obligations described in (i) through (iii)above) entered into in the ordinary course of business of such person tothe extent such letters of credit are not drawn upon or, if and to theextent drawn upon, such drawing is reimbursed no later than the thirdBusiness Day following receipt by such person of a demand for reimbursementfollowing payment on the letter of credit);

(v) the amount of all obligations of such person with respect to theredemption, repayment or other repurchase of any Redeemable Stock (butexcluding any accrued dividends);

(vi) all obligations of the type referred to in clauses (i) through(v) of other persons and all dividends of other persons for the payment ofwhich, in either case, such person is responsible or liable, directly orindirectly, as obligor, guarantor or otherwise, including by means of anyagreement which has the economic effect of a guarantee; and

(vii) all obligations of the type referred to in clauses (i) through(vi) of other persons secured by any Lien on any property or asset of suchperson (whether or not such obligation is assumed by such person), theamount of such obligation being deemed to be the lesser of the value ofsuch property or assets or the amount of the obligation so secured.

"Default" means any event that is, or after notice or passage of timeor both would be, and Event of Default.



"Depository" means, (i) with respect to any Global Security offeredfor sale solely outside of the United States, a common depository for MorganGuaranty Trust Company of New York, Brussels office, operator of the Euro-clearSystem, and Centrale de Livraison de Valeurs Mobilieres. S.A., and (ii) withrespect to any Global Security offered for sale in the United States, a clearingagency registered under the Exchange Act, which shall in either case bedesignated by the Company pursuant to Section 2.09.

"Disqualified Capital Stock" means any Capital Stock that isRedeemable Stock or Exchangeable Stock.

9

"EBITDA" for any period means the Consolidated Net Income for suchperiod, plus the following to the extent deducted in calculating suchConsolidated Net Income: (i) income tax expense, (ii) Consolidated InterestExpense, (iii) depreciation expense, (iv) amortization expense and (v) all othernoncash items reducing Consolidated Net Income, less all noncash itemsincreasing Consolidated Net Income.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Exchangeable Stock" means any Capital Stock that is exchangeable orconvertible into another security (other than Capital Stock of the Company thatis neither Exchangeable Stock nor Redeemable Stock).

"Finance Corp." means BCP Finance Corporation, a Delaware corporation,and its successors.

"Global Security" means a Security executed by the Company andauthenticated and delivered by the Trustee to the Depositary or pursuant to theDepositary's instruction, all in accordance with this Indenture includingSection 2.09, and which shall represent, and shall be denominated in an amountequal to the aggregate principal amount of, all the outstanding Securities or aportion thereof, in either case having the same terms as other Securities."Global Security" shall include any temporary Global Security and any permanentGlobal Security.

"Guarantee" means any obligation, contingent or otherwise, of anyperson directly or indirectly guaranteeing any Debt or other obligation of anyperson and any obligation, direct or indirect, contingent or otherwise, of suchperson (i) to purchase or pay (or advance or supply funds for the purchase orpayment of) such Debt or other obligation of such person (whether arising byvirtue of partnership arrangements, or by agreement to keep-well, to purchaseassets, goods, securities or services, to take-or-pay, or to maintain financialstatement conditions or otherwise) or (ii) entered into for purposes of assuringin any other manner the obligee of such Debt or other obligation of the paymentthereof (in whole or in part); provided, however, that the term "Guarantee"shall not include endorsements for collection or deposit in the ordinary courseof business. The term "Guarantee" used as a verb has a corresponding meaning.



"Holder" or "Securityholder" means the person in whose name a Securityis registered on the Registrar's books.

"Holding Company" means Borden Chemicals and Plastics LimitedPartnership, a Delaware limited partnership, and its successors.

10

"Independent Committee" means a standing committee of the Board ofDirectors composed entirely of Independent Directors; provided that if there isno such standing committee, then "Independent Committee" means all theIndependent Directors.

"Independent Directors" means members of the Board of Directors whoare neither officers nor employees of the Company or any of its Affiliates (or,if the Company is a limited or general partnership, of any general partnerthereof or any of its Affiliates).

"Indenture" means this Indenture as amended or supplemented from timeto time.

"Interest Rate Protection Agreement" means any interest rate swapagreement, interest rate cap agreement or other financial agreement orarrangement designed to protect the Company or any Subsidiary againstfluctuations in interest rates.

"Investment" in any person means any loan or advance to, anyacquisition of Capital Stock, obligation or other security of, or capitalcontribution or other investment in, such person.

"issue" means issue, assume, guarantee, incur or otherwise becomeliable for; provided, however, that any Debt or Capital Stock or a personexisting at the time such person becomes a Subsidiary (whether by merger,consolidation, acquisition or otherwise) shall be deemed to be issued by suchSubsidiary at the time it become a Subsidiary.

"Issuers" means the Company and Finance Corp., as joint and severalobligors under the Securities.

"Lien" means any mortgage, pledge, security interest, conditional saleor other title retention agreement or other similar lien.

"Net Available Cash" from an Asset Disposition means cash paymentsreceived (including any cash payments received by way of deferred payment ofprincipal pursuant to a note or installment receivable or otherwise, but only asand when received, and excluding any other consideration received in the form ofassumption by the acquiring person of Debt or other obligations relating to suchproperties or assets or received in any other noncash form) therefrom, in eachcase net of all legal, title and recording tax expenses, commissions and other



fees and expenses incurred, and all Federal, state, provincial, foreign andlocal taxes required to be accrued as a liability under generally acceptedaccounting principles, as a consequence of such Asset Disposition, and in eachcase net of all payments made on any Debt which is secured by any assets subjectto such Asset Disposition, in accordance with the terms of any lien upon or

11

other security agreement of any kind with respect to such assets, or which mustby its terms, or in order to obtain a necessary consent to such AssetDisposition, or by applicable law be repaid out of the proceeds from such AssetDisposition, and net of amounts thereof allocable to minority interest holdersin Subsidiaries.

"Net Cash Proceeds", with respect to any issuance or sale of CapitalStock, means the cash proceeds of such issuance or sale net of attorneys' fees,accountants' fees, underwriters' or placement agents' fees, discounts orcommissions and brokerage, consultant and other fees actually incurred inconnection with such issuance or sale and net of taxes paid or payable as aresult thereof.

"Officer" means the Chairman of the Board, the President, any VicePresident, the Treasurer, the Principal Accounting Officer or the Secretary ofthe Company (or, if the Company is a limited partnership or a generalpartnership, of any of its general partners or partners, respectively,authorized to act on behalf of such limited partnership or general partnership,as the case may be, in connection with this Indenture) or of Finance Corp., asthe case may be.

"Officers' Certificate" means a certificate signed by two Officers.

"Opinion of Counsel" means a written opinion from legal counsel, whichmay be an employee of or counsel to the Company or the Trustee.

"Pari Passu Debt" means any Debt of the Company (other than theSecurities), whether or not secured, that is pari passu in right of payment tothe Securities.

"Permitted Holders" means, as of the date of determination, any andall of (a) Borden and its Subsidiaries, (b) Kohlberg Kravis Roberts & Co., itssuccessors and its Affiliates and (c) (i) any officer or other member ofmanagement employed by Borden, BCPM, the Company or any Subsidiary for the12-month period prior to the date of determination; (ii) any persons describedin clause (i) who have retired (including as the result of disability) after theinitial date of this Indenture from the employment of Borden, BCPM, the Companyor any Subsidiary in the ordinary course of business; (iii) family members orthe relatives of the persons described in clauses (i) and (ii); (iv) any trustscreated for the benefit of the persons described in clauses (i), (ii), (iii) or(v); (v) in the event of the incompetence or death of any of the personsdescribed in clauses (i), (ii) and (iii), such person's estate, executor,



administrator, committee or other personal representative, or beneficiaries, ineach case who at any particular date shall beneficially own or have the right toacquire, directly or

12

indirectly, Capital Stock and (vi) any person, the management of which iscontrolled by one or more persons described in clause (i) or (ii); provided,however, that in connection with the transaction that otherwise would constitutea Change of Control were the persons described in this clause (c) not PermittedHolders, any Debt incurred as a result thereof shall not be recourse to any ofthe assets of the Company or any Subsidiary. The management of a person shall bedeemed to be controlled by the chief executive officer (or equivalent executive)of such person.

"Permitted Investments" shall mean (i) investments in directobligations of the United States of America or any agency or instrumentalitythereof maturing within one year of the date of acquisition thereof, (ii)investments in certificates of deposit maturing within one year of the date ofacquisition thereof issued by a bank or trust company which is organized underthe laws of the United States or any state thereof having capital, surplus andundivided profits aggregating in excess of $50.0 million or the debt of which israted P-1 (or higher) by Moody's or A-1 (or higher) by S&P and (iii) investmentsin commercial paper given the highest rating by two established national creditrating agencies and maturing not more than nine months from the date ofacquisition thereof.

"Permitted Liens" means (i) Liens that exist on the date of thisIndenture, (ii) Liens on property or assets (or any income or profits therefrom)existing at the time of acquisition of such property or assets, (iii) Liens onproperty or assets (or any income or profits therefrom) of a person existing atthe time such person is merged into or consolidated with or acquired by theCompany or its Subsidiaries, (iv) Liens in favor of any governmental authorityto secure any payment obligation under any statute, (v) Liens of landlords andLiens of carriers, warehousemen, mechanics and materialmen incurred in theordinary course of business, (vi) Liens incurred for the purpose of financingall or any part of the purchase price or the cost of construction or improvementof the property or assets subject to such Liens; provided, however, that suchLien shall not extend to or cover any other property or assets other than suchproperty or assets or any improvements thereon and shall attach to suchproperty, assets, or improvements within 180 days of the acquisition orconstruction thereof, (vii) Liens incurred to secure (or to obtain letters ofcredit that secure) the performance of tenders, statutory obligations, surety orappeal bonds, bids, leases, performance or return-of-money bonds, purchase,construction or sale contracts or other obligations of a like nature incurred inthe ordinary course of business, (viii) Liens on Capital Stock of a Subsidiaryand Liens on intercompany notes issued by such Subsidiary to the Company, ineither case to secure Debt incurred by such Subsidiary in connection with theCompany's acquisition of such Subsidiary or the business of such Subsidiary,(ix) Liens securing any Debt



13

owed to the Company or any Subsidiary, (x) Liens on any Accounts Receivable orinventory granted to secure Debt issued pursuant to the Credit Facility (or anyRefinancing Agreement) referred to in clause (b)(1) or pursuant to clause (b)(5)of Section 4.04, (xi) Liens to secure any extension, renewal, refunding orrefinancing (or successive extensions, renewals, refundings or refinancings), inwhole or in part, of any Debt secured by Liens referred to in the foregoingclauses (i) through (x) so long as such Liens do not extend to any otherproperty or assets and the aggregate principal amount of the Debt so secured isnot increased, and (xii) Liens securing Debt of a person, the aggregateprincipal amount of which, together with the aggregate principal amount of allother Debt of such person secured by Liens (excluding Debt secured by Lienspermitted in the foregoing clauses (i) through (xi)) and the aggregate amount ofAttributable Debt deemed to be outstanding in respect of all sale and leasebacktransactions permitted by clause (i) of Section 4.09 (excluding any such saleand leaseback transactions otherwise permitted by the foregoing clauses (i)through (xi)), does not exceed 5% of Consolidated Net Tangible Assets.

"person" means any individual, corporation, partnership, association,joint-stock company, limited liability company, trust, unincorporatedorganization, government or any agency or political subdivision thereof or anyother entity.

"Preferred Stock", as applied to the Capital Stock of any person,means Capital Stock of any class or classes (however designated) which ispreferred as to the payment of dividends, or as to the distribution of assetsupon any voluntary or involuntary liquidation or dissolution of such person,over the Capital Stock of any other class of such person.

"principal" of a Security means the principal of the Security plus thepremium, if any, payable on the Security which is due or overdue or is to becomedue at the relevant time.

"Redeemable Stock" means any Capital Stock that by its terms orotherwise is required to be redeemed prior to the first anniversary of theStated Maturity of the Securities or is redeemable at the option of the holderthereof at any time prior to the first anniversary of the Stated Maturity of theSecurities.

"Refinance" means, in respect of any Debt or Preferred Stock, torefinance, extend, renew, refund, repay, prepay, redeem, defease or retire, orto issue Debt or Preferred Stock in exchange or replacement for, such Debt orPreferred Stock. "Refinanced" and "Refinancing" shall have correlative meanings.

"Refinancing Agreement" means any credit agreement, indenture or otheragreement pursuant to which the Company or any Subsidiary Refinances, in wholeor in part, Debt of the Company



14

or any Subsidiary issued under clause (b)(1) of Section 4.04; provided, however,that the principal amount of the Refinancing Debt issued pursuant to suchRefinancing Agreement may not exceed the principal amount of the Debt soRefinanced.

"SEC" means the Securities and Exchange Commission.

"Securities" means the Securities issued under this Indenture.

"Significant Subsidiary" means any Subsidiary that would be a"significant subsidiary" of the Company within the meaning of Rule 1-02 underRegulation S-X as promulgated by the SEC.

"Stated Maturity" means, with respect to any security, the datespecified in such security as the fixed date on which the principal of suchsecurity is due and payable, including pursuant to any mandatory redemptionprovision.

"Subordinated Obligation" means any Debt of the Company (whetheroutstanding on the date hereof or hereafter incurred) that is subordinate orjunior in right of payment to the Securities.

"Subsidiary" means any corporation, association, partnership or otherbusiness entity of which more than 50% of the total voting power of theoutstanding Capital Stock (or other interests entitled (without regard to theoccurrence of any contingency) to vote in the election of directors, generalpartners, managers, managing members, managing partners or trustees thereof or,if such persons are not elected, to vote on any matter that is submitted to thevote of all persons holding ownership interests in such entity) is at the timeowned or controlled, directly or indirectly, by (i) the Company, (ii) theCompany and one or more Subsidiaries or (iii) one or more Subsidiaries.

"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. SS------

77aaa-77bbbb) as in effect on the date of this Indenture.

"Total Debt" means, as of any date of determination, the total Debt ofthe Company and its consolidated Subsidiaries .

"Trustee" means The Chase Manhattan Bank (National Association), untila successor replaces it pursuant to the applicable provisions of this Indenture,and thereafter means the successor.

"Trust Officer" means the Chairman of the Board, the President or anyofficer or assistant officer of the

15



Trustee assigned by the Trustee to administer its corporate trust matters.

"Uniform Commercial Code" means the New York Uniform Commercial Codeas in effect from time to time.

"U.S. Government Obligations" means direct obligations (orcertificates representing an ownership interest in such obligations) of theUnited States of America (including any agency or instrumentality thereof) forthe payment of which the full faith and credit of the United States of Americais pledged and which are not callable at the issuer's option.

"Voting Stock" of any person means, with respect to a corporation, allclasses of Capital Stock of such corporation then outstanding and normallyentitled to vote in the election of directors or, with respect to a partnership(whether general or limited), any general partner interest in such partnership.

"Wholly Owned Subsidiary" of any person means a Subsidiary of suchperson all the outstanding Capital Stock or other ownership interests or, in thecase of a limited partnership, all the partners' Capital Stock (other than up toa 2% general partner interest), of which (other than directors' qualifyingshares) shall at the time be owned by such person or by one or more Wholly OwnedSubsidiaries of such person.

SECTION 1.02. Other Definitions.-----------------

<TABLE><CAPTION>

Defined inTerm Section---- ----------

<S> <C>"Bankruptcy Law"........................................... 6.01"covenant defeasance option"............................... 8.01(b)"Custodian"................................................ 6.01"Event of Default"......................................... 6.01"legal defeasance option".................................. 8.01(b)"Legal Holiday"............................................ 10.08"Paying Agent"............................................. 2.03"Registrar"................................................ 2.03</TABLE>

SECTION 1.03. Incorporation by Reference of Trust Indenture Act.-------------------------------------------------

Whenever this Indenture refers to a provision of the TIA, the provision isincorporated by reference in and made a part of this Indenture. The followingTIA terms used in this Indenture have the following meanings:

"Commission" means the SEC.



"indenture securities" means the Securities.

"indenture security holder" means a Securityholder.

16

"indenture to be qualified" means this Indenture.

"indenture trustee" or "institutional trustee" means the Trustee.

"obligor" on the indenture securities means the Issuers and any otherobligor on the indenture securities.

All other TIA terms used in this Indenture that are defined by theTIA, defined by TIA reference to another statute or defined by SEC rule have themeanings assigned to them by such definitions.

SECTION 1.04. Rules of Construction. Unless the context otherwise---------------------

requires:

(1) a term has the meaning assigned to it;

(2) an accounting term not otherwise defined has the meaning assignedto it in accordance with generally accepted accounting principles, and theterm "generally accepted accounting principles" with respect to anydetermination required or permitted hereunder shall mean such accountingprinciples as are generally accepted in the United States at the date ofsuch determination;

(3) "or" is not exclusive;

(4) "including" means including, without limitation;

(5) words in the singular include the plural and words in the pluralinclude the singular;

(6) unsecured debt shall not be deemed to be subordinate or junior tosecured debt merely by virtue of its nature as unsecured debt;

(7) the principal amount of any noninterest bearing or other discountsecurity at any date shall be the principal amount thereof that would beshown on a balance sheet of the issuer dated such date prepared inaccordance of principal on such security shall be deemed to be the issuanceof Debt; and

(8) the principal amount of Redeemable Stock shall be (i) the maximumliquidation value of such Redeemable Stock or (ii) the maximum mandatory



redemption or mandatory repurchase price with respect to such RedeemableStock, whichever is greater.

17

ARTICLE II

The Securities--------------

SECTION 2.01. Form and Dating. The Securities and the Trustee's---------------

certificate of authentication with respect thereto shall be substantially in theform of Exhibit A hereto, which is hereby incorporated in and expressly made apart of this Indenture. The Securities may have notations, legends orendorsements required by law, stock exchange rule, agreements to which theIssuers are subject, if any, or usage (provided that any such notation legend orendorsement is in a form acceptable to the Issuers). Each Security shall bedated the date of its authentication. The terms of the Securities set forth inExhibit A are part of the terms of this Indenture.

SECTION 2.02. Execution and Authentication. Two Officers shall sign----------------------------

the Securities for each of the Issuers by manual or facsimile signature.

If an Officer whose signature is on a Security no longer holds thatoffice at the time the Trustee authenticates the Security, the Security shall bevalid nevertheless.

A Security shall not be valid until an authorized signatory of theTrustee manually signs the certificate of authentication on the Security. Thesignature shall be conclusive evidence that the Security has been authenticatedunder this Indenture.

The Trustee shall authenticate and deliver Securities for originalissue in an aggregate principal amount of $200,000,000, upon a written order ofthe Company and Finance Corp. signed by two Officers or by an Officer and anAssistant Treasurer or an Assistant Secretary of the Company and Finance Corp.Such order shall specify the amount of the Securities to be authenticated andthe date on which the original issue of Securities is to be authenticated. Theaggregate principal amount of Securities outstanding at any time shall notexceed such amount as provided in Section 2.07.

The Trustee may appoint an authenticating agent reasonably acceptableto the Company to authenticate the Securities. Unless limited by the terms ofsuch appointment, an authenticating agent may authenticate Securities wheneverthe Trustee may do so. Each reference in this Indenture to authentication by theTrustee includes authentication by such agent. An authenticating agent has thesame rights as any Registrar, Paying Agent or agent for service of notices anddemands.



SECTION 2.03. Registrar and Paying Agent. The Issuers shall maintain--------------------------

an office or agency where Securities may be

18

presented for registration of transfer or for exchange (the "Registrar") and anoffice or agency where Securities may be presented for payment (the "PayingAgent"). The Registrar shall keep a registrar of the Securities and of theirtransfer and exchange. The Issuers may have one or more co-registrars and one ormore additional paying agents. The term "Paying Agent" includes any additionalpaying agent.

The Issuers shall enter into an appropriate agency agreement with anyRegistrar, Paying Agent or co-registrar not a party to this Indenture, whichshall incorporate the terms of the TIA. The agreement shall implement theprovisions of this Indenture that relate to such agent. The Issuers shall notifythe Trustee of the name and address of any such agent. If the Issuers fail tomaintain a Registrar or Paying Agent, the Trustee shall act as such and shall beentitled to appropriate compensation therefor pursuant to Section 7.07. TheCompany or any Subsidiary or Affiliate may act as Paying Agent, Registrar,co-registrar or transfer agent.

The Issuers initially appoint the Trustee as Registrar and PayingAgent in connection with the Securities.

SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each due-----------------------------------

date of the principal and interest on any Security, the Issuers shall depositwith the Paying Agent a sum sufficient to pay such principal and interest whenso becoming due. The Issuers shall require each Paying Agent (other than theTrustee) to agree in writing that the Paying Agent shall hold in trust for thebenefit of Securityholders or the Trustee all money held by the Paying Agent forthe payment of principal of or interest on the Securities and shall notify theTrustee of any default by the Issuers in making any such payment. If the Companyor a domestically incorporated Wholly Owned Subsidiary acts as Paying Agent, itshall segregate the money held by it as Paying Agent and hold it as a separatetrust fund. The Issuers at any time may require a Paying Agent to pay all moneyheld by it to the Trustee and to account for any funds disbursed by the PayingAgent. Upon complying with this Section, the Paying Agent shall have no furtherliability for the money delivered to the Trustee.

SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as--------------------

current a form as is reasonably practicable the most recent list available to itof the names and addresses of Securityholders. If the Trustee is not theRegistrar, the Issuers shall furnish to the Trustee, in writing at least five



Business Days before each interest payment date and at such other times as theTrustee may request in writing, a list in such form and as of such date as theTrustee may reasonably require of the names and addresses of Securityholders.

19

SECTION 2.06. Transfer and Exchange. The Securities shall be issued---------------------

in registered form and shall be transferable only upon the surrender of aSecurity for registration of transfer. When a Security is presented to theRegistrar or a co-registrar with a request to register a transfer, the Registrarshall register the transfer as requested if the requirements of Section 8-401(1)of the Uniform Commercial Code are met. When Securities are presented to theRegistrar or a co-registrar with a request to exchange them for an equalprincipal amount of Securities of other denominations, the Registrar shall makethe exchange as requested if the same requirements are met. To permitregistration of transfers and exchanges, the Issuers shall execute and theTrustee shall authenticate Securities at the Registrar's or co-registrar'srequest. The Issuers may require payment of a sum sufficient to pay all taxes,assessments or other governmental charges. The Issuers shall not be required tomake and the Registrar need not register transfers or exchanges of Securitiesselected for redemption (except, in the case of Securities to be redeemed inpart, the portion thereof not to be redeemed) or any Securities for a period of15 days before a selection of Securities to be redeemed or any Securities 15days before an interest payment date.

Prior to the due presentation for registration of transfer of anySecurity, the Issuers, the Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the person in whose name a Security is registeredas the absolute owner of such Security for the purpose of receiving payment ofprincipal of and interest on such Security and for all other purposeswhatsoever, whether or not such Security is overdue, and none of the Issuers,the Trustee, the Paying Agent, the Registrar or any co-registrar shall beaffected by notice to the contrary.

SECTION 2.07. Replacement Securities. If a mutilated Security is----------------------

surrendered to the Registrar or if the Holder of a Security claims that theSecurity has been lost, destroyed or wrongfully taken, the Issuers shall issueand the Trustee shall authenticate a replacement Security if the requirements ofSection 8-405 of the Uniform Commercial Code are met and the Holder satisfiesany other reasonable requirements of the Trustee. If required by the Trustee orthe Issuers, such Holder shall furnish an indemnity bond sufficient in thejudgment of the Issuers and the Trustee to protect the Issuers, the Trustee, thePaying Agent, the Registrar and any co-registrar from any loss which any of themmay suffer if a Security is replaced. The Issuers and the Trustee may charge theHolder for their expenses in replacing a Security.

Every replacement Security is an additional obligation of the Issuers.



SECTION 2.08. Outstanding Securities. Securities outstanding at any----------------------

time are all Securities authenticated by the

20

Trustee except for those cancelled by it, those delivered to it for cancellationand those described in this Section as not outstanding. A Security does notcease to be outstanding because the Company or an affiliate of the Company holdsthe Security.

If a Security is replaced pursuant to Section 2.07, it ceases to beoutstanding unless the Trustee and the Issuers receive proof satisfactory tothem that the replaced Security is held by a bona fide purchaser.

If the Paying Agent segregates and holds in trust, in accordance withthis Indenture, on a redemption date or maturity date money sufficient to payall principal and interest payable on that date with respect to the Securitiesto be redeemed or maturing, as the case may be, then on and after that date suchSecurities cease to be outstanding and interest on them ceases to accrue.

SECTION 2.09. Temporary Securities; Global Securities. (a) Until---------------------------------------

definitive Securities are ready for delivery, the Issuers may prepare and theTrustee shall authenticate temporary Securities. Temporary Securities shall besubstantially in the form of definitive Securities but may have variations thatthe Issuers consider appropriate for temporary Securities. Every temporarySecurity shall be executed by the Issuers and authenticated by the Trustee, andregistered by the Registrar, upon the same conditions, and with like effect, asa definitive Security. Without unreasonable delay, the Issuers shall prepare andthe Trustee shall authenticate definitive Securities and deliver them inexchange for temporary Securities. All references herein to "definitiveSecurities" shall be deemed to apply equally to permanent Global Securities.

(b) If the Issuers shall advise the Trustee that the Securities areto be issued as one or more Global Securities, then the Issuers shall executeand the Trustee shall, in accordance with Section 2.02, authenticate and deliverto the Depositary or pursuant to the Depositary's instruction one or moreGlobal Securities. Each Global Security shall bear a legend substantially to thefollowing effect: "Except as otherwise provided in Section 2.09 of theIndenture, this Security may be transferred, in whole but not in part, only toanother nominee of the Depositary or to a successor Depositary or to a nomineeof successor Depositary."

(c) Notwithstanding any other provision of this Section 2.09 or ofSection 2.06, except for exchanges of Global Securities as provided in Section2.09(e), a Global Security may be transferred, in whole but not in part and inthe manner provided in Section 2.06, only to another nominee of the Depositary,or to a successor Depositary selected or approved by the Issuers or to a nominee



of such successor Depositary.

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(d) If at any time the Depositary notifies the Issuers that it isunwilling or unable to continue as Depositary or, with respect to a Depositarycontemplated by clause (ii) of the definition thereof, if at any time theDepositary shall no longer be registered or in good standing under the ExchangeAct or other applicable statute or regulation and, in any such case, a successorDepositary is not appointed by the Issuers within 90 days after the Issuersreceive such notice or becomes aware of such condition, as the case may be, thisSection 2.09 shall no longer be applicable to the Securities and the Issuerswill execute, and the Trustee will authenticate and deliver, Securities indefinitive form, in authorized denominations, and in an aggregate principalamount equal to the principal amount of the Global Security in exchange for suchGlobal Security.

(e) Upon any exchange of a part of a temporary or permanent GlobalSecurity for definitive Securities, the temporary or permanent Global Security,as the case may be, shall be endorsed by the Trustee or an authenticating agentfor the Trustee to reflect the reduction of its principal amount by an amountequal to the aggregate principal amount of definitive Securities so exchangedand endorsed.

SECTION 2.10. Cancellation. The Issuers at any time may deliver------------

Securities to the Trustee for cancellation. The Registrar and the Paying Agentshall forward to the Trustee any Securities surrendered to them for registrationof transfer, exchange or payment. The Trustee and no one else shall cancel anddestroy (subject to the record retention requirements of the Exchange Act) allSecurities surrendered for registration of transfer, exchange, payment orcancellation and deliver a certificate of such destruction to the Company unlessthe Company directs the Trustee to deliver cancelled Securities to the Company.The Issuers may not issue new Securities to replace Securities they haveredeemed, paid or delivered to the Trustee for cancellation.

SECTION 2.11. Defaulted Interest. If the Issuers default in a------------------

payment of interest on the Securities, the Issuers shall pay defaulted interest(plus interest on such defaulted interest to the extent lawful) in any lawfulmanner. The Issuers may determine to pay the defaulted interest to the personswho are Securityholders on a subsequent special record date, which date shall beat least five Business Days prior the payment date. If the Issuers so determine,the Issuers shall fix or cause to be fixed any such special record date andpayment date, and, at least 15 days before any such special record date, theIssuers shall mail to each Securityholder a notice that states the specialrecord date, the payment date and the amount of defaulted interest to be paid.

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ARTICLE III

Redemption----------

Section 3.01. Notices to Trustee. If the Issuers elect to redeem------------------

Securities pursuant to paragraph 5 of the Securities, they shall notify theTrustee in writing of the redemption date and the principal amount of Securitiesto be redeemed.

The Issuers shall give each notice to the Trustee provided for in thisSection at least 45 days before the redemption date and at least 15 days priorto the notice mailed to Holders pursuant to Section 3.03, unless the Trusteeconsents to a shorter period, provided, however, that if the Issuers haveincurred any obligation to repurchase the Securities pursuant to Section 4.11,then such notice to the Trustee or any Securityholder shall be givensimultaneously with the notice given to the Securityholders relating to a Changeof Control. Such notice shall be accompanied by an Officers' Certificate fromthe Company to the effect that such redemption will comply with the conditionsherein. If fewer than all the Securities are to be redeemed, the record daterelating to such redemption shall be selected by the Issuers given to theTrustee, which record date shall be not less than 15 days after the date ofnotice to the Trustee.

SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than--------------------------------------

all the Securities are to be redeemed, the Trustee shall select the Securitiesto be redeemed pro rata or by lot or by a method that complies with applicablelegal and securities exchange requirements, if any, and that the Trusteeconsiders fair and appropriate and in accordance with methods generally used atthe time of selection by fiduciaries in similar circumstances. The Trustee shallmake the selection from outstanding Securities not previously called forredemption. The Trustee may select for redemption portions of the principal ofSecurities that have denominations larger than $1,000. Securities and portionsthereof that the Trustee selects shall be in amounts of $1,000 or a wholemultiple of $1,000. Provisions of this Indenture that apply to Securities calledfor redemption also apply to portions of Securities called for redemption. TheTrustee shall notify the Issuers promptly of the Securities or portions ofSecurities to be redeemed.

Section 3.03. Notice of Redemption. At least 30 days but not more--------------------

than 60 days before a date for redemption of Securities, the Issuers shall maila notice of redemption by first-class mail to each Holder of Securities to beredeemed.

The notice shall identify the Securities to be redeemed pursuant toparagraph 5 thereof and shall state:



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(1) the redemption date;

(2) the redemption price of and accrued and unpaid interest on suchSecurities;

(3) the name and address of the Paying Agent;

(4) that Securities called for redemption must be surrendered to thePaying Agent to collect the redemption price;

(5) if fewer than all the outstanding Securities are to be redeemed,the identification and principal amounts of the particular Securities to beredeemed;

(6) that, unless the Issuers default in making such redemptionpayment or the Paying Agent is prohibited from making such payment pursuantto the terms of this Indenture, interest on Securities (or portion thereof)called for redemption ceases to accrue on and after the redemption date;and

(7) that no representation is made as to the correctness or accuracyof the CUSIP number, if any, listed in such notice or printed on theSecurities.

At the Issuers' request, the Trustee shall give the notice ofredemption in the Issuers' name and at the Issuers' expense. In such event, theIssuers shall provide the Trustee with the information required by clauses (1)through (3).

SECTION 3.04. Effect of Notice of Redemption. Once notice of------------------------------

redemption is mailed, Securities called for redemption become due and payable onthe redemption date and at the redemption price stated in the notice. Uponsurrender to the Paying Agent, such Securities shall be paid at the redemptionprice stated in the notice, plus accrued and unpaid interest to the redemptiondate. Failure to give notice or any defect in the notice to any Holder shall notaffect the validity of the notice to any other Holder.

SECTION 3.05. Deposit of Redemption Price. Prior to the redemption---------------------------

date, the Issuers shall deposit with the Paying Agent (or, if the Company or adomestically incorporated Wholly Owned Subsidiary is the Paying Agent, shallsegregate and hold in trust) money sufficient to pay the redemption price of andaccrued and unpaid interest on all Securities to be redeemed on that date otherthan Securities or portions of Securities called for redemption which have beendelivered by the Issuers to the Trustee for cancellation.



SECTION 3.06. Securities Redeemed in Part. Upon surrender of a---------------------------

Security that is redeemed in part, the Issuers

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shall execute and the Trustee shall authenticate for the Holder (at theIssuers's expense) a new Security equal in principal amount to the unredeemedportion of the Security surrendered.

ARTICLE IV

Covenants---------

SECTION 4.01. Payment of Securities. The Issuers shall promptly pay---------------------

the principal of and interest on the Securities on the dates and in the mannerprovided in the Securities and in this Indenture. Principal and interest shallbe considered paid on the date due if on such date the Trustee or the PayingAgent holds in accordance with this Indenture money sufficient to pay allprincipal and interest then due and the Trustee or the Paying Agent, as the casemay be, is not prohibited from paying such money to the Securityholders on thatdate pursuant to the terms of this Indenture.

The Issuers shall pay interest on overdue principal at the rate borneby the Securities plus 1% per annum, and they shall pay interest on overdueinstallments of interest at the same rate to the extent lawful.

The obligations of the Issuers under this Section 4.01 shall be jointand several.

SECTION 4.02. SEC Reports. The Issuers shall file with the Trustee-----------

and provide Securityholders, within 15 days after they file them with the SEC,copies of their annual report or reports and of the information, documents andother reports (or copies of such portions of any of the foregoing as the SEC mayby rules and regulations prescribe) which the Issuers are required to file withthe SEC pursuant to Section 13 or 15(d) of the Exchange Act. In the event theCompany or Finance Corp. is at any time no longer subject to the reportingrequirements of Section 13 or 15(d) of the Exchange Act, it shall continue toprovide the Trustee with reports containing substantially the same informationas would have been required to be filed with the SEC had it continued to havebeen subject to such reporting requirements. In such event, such reports shallbe provided at the times the Company or Finance Corp. would have been requiredto provide reports had it continued to have been subject to such reportingrequirements. The Issuers also shall comply with the other provisions of TIA (S)314(a).



SECTION 4.03. Limitation on Restricted Payments. (a) The Company----------------------------------

shall not, and shall not permit any of its Subsidiaries, directly or indirectly,to: (1) declare or pay any dividend or make any distribution on or in respect ofits Capital Stock, including any payment in connection with any merger orconsolidation involving the Company (except dividends or

25

distributions payable solely in its Capital Stock (other than DisqualifiedCapital Stock) or payable to the Company or a Subsidiary), (2) purchase, redeemor otherwise acquire or retire for value any Capital Stock of the Company or ofany direct or indirect parent of the Company, (3) purchase, repurchase, redeem,defease or otherwise acquire or retire for value, prior to scheduled maturity,scheduled repayment or scheduled sinking fund payment, and SubordinatedObligations (other than the purchase, repurchase or other acquisition ofSubordinated Obligations purchased in anticipation of satisfying a sinking fundobligation, principal installment or final maturity, in each case due within oneyear of the date of acquisition) or (4) make any Investment in any Affiliate ofthe Company other than a Subsidiary or a person which will become a Subsidiaryas a result of any such Investment (any such dividend, distribution, purchase,redemption, repurchase, defeasance, other acquisition, retirement or Investmentbeing herein referred to as a "Restricted Payment"), unless, at the time of suchRestricted Payment:

(i) no Default or Event of Default shall have occurred and becontinuing or would occur as a consequence thereof;

(ii) the Consolidated EBITDA Coverage Ratio exceeds 3.0 to 1;

(iii) Total Debt does not exceed 60% of Consolidated Net TangibleAssets on a pro forma basis as of the end of the most recently completedfiscal quarter ending at least 5 days prior to the date on which suchRestricted Payment is made; and

(iv) such Restricted Payment (the amount of any such payment, ifother than cash, to be determined by the Board of Directors, whosedetermination shall be conclusive and evidenced by a resolution in anOfficers' Certificate from the Company delivered to the Trustee), togetherwith the aggregate of all other Restricted Payments (other than anyRestricted Payments permitted by the provisions of clauses (i), (ii) or(iii) of Section 4.03 (b)) made by the Company and its Subsidiaries in thefiscal quarter during which such Restricted Payment is made shall notexceed an amount equal to Available Cash of the Company for the immediatelypreceding fiscal quarter.

(b) The provisions of this Section shall not prohibit:

(i) Any purchase, redemption, repurchase, defeasance, otheracquisition or retirement (a "purchase of redemption") of Capital Stock or



Subordinated Obligations of the Company made by exchange for, or out of theproceeds of the substantially concurrent sale (other than to a Subsidiary)of, Capital Stock of the Company (other than Disqualified

26

Capital Stock); provided, however, that (A) such purchase or redemption shall beexcluded in the calculation of the amount of Restricted Payments and (B) the NetCash Proceeds from such sale (to the extent so used) shall be excluded in thecalculation of the amount of Available Cash in clause Section 4.03 (a) (iv);

(ii) Any purchase or redemption of Subordinated Obligations of theCompany made by exchange for, or out of the proceeds of the substantiallyconcurrent sale (other than to a Subsidiary) of, Debt of the Company; provided,however, that such Debt shall be subordinated to the Securities to at least thesame extent as the Subordinated Obligations so exchanged, purchased or redeemed,shall have a Stated Maturity later than the earlier of the Stated Maturity ofthe Securities and the Stated Maturity such Subordinated Obligations and shallhave an Average Life greater than the lesser of the Average Life of theSecurities and the Average Life of such Subordinated Obligations; providedfurther, however, that (A) such purchase or redemption shall be excluded in thecalculation of the amount of Restricted Payments and (B) the Net Cash Proceedsfrom such sale (to the extent so used) shall be excluded in the calculation ofthe amount of Available Cash in Section 4.03(a) (iv);

(iii) Any purchase or redemption of Subordinated Obligations from NetAvailable Cash to the extent permitted under Section 4.06; provided,however, that (A) such purchase or redemption shall be excluded in thecalculation of the amount of Restricted Payments and (B) the Net Available Cashfrom such sale (to the extent so used) shall be excluded from the definition ofAvailable Cash in Section 4.03 (a) (iv); or

(iv) Dividends paid within 60 days after the date of declarationthereof if at such date of declaration such dividend would have compliedwith this provision; provided, however, that at the time of payment of suchdividend, no further Default shall have occurred and be continuing (orwould result therefrom); provided further, however, that such dividendshall be included (when paid, but not when declared) in the calculation ofthe amount of Restricted Payments.

(c) Not later than the date of making any Restricted Payment, the Companyshall deliver to the Trustee an Officers' Certificate of the Company statingthat such Restricted Payment is permitted and setting forth the basis upon whichthe calculations required by this Section 4.03 were computed, which calculationsmay be based upon the Company's latest available financial statements.

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SECTION 4.04. Limitation on Debt. (a) The Company shall not, and------------------

shall not permit any of its Subsidiaries to, directly or indirectly, issue anyDebt unless, at the time of such issuance, the Consolidated EBITDA CoverageRatio as of the date such Debt is issued exceeds 2.5 to 1.

(b) Notwithstanding the foregoing, the Company and its Subsidiaries mayissue the following Debt:

(1) (A) Commercial paper of the Company having a maturity of 12months or less in an aggregate principal amount not to exceed $50.0million outstanding at any time and (B) Debt issued pursuant to the CreditFacility (or any Refinancing Agreement);

(2) Debt issued to and held by the Company or a Wholly OwnedSubsidiary; provided, however, that any subsequent issuance or transfer ofany Capital Stock that results in any such Wholly Owned Subsidiary ceasingto be a Wholly Owned Subsidiary or any transfer of such Debt (other than tothe Company or a Wholly Owned Subsidiary) shall be deemed, in each case, toconstitute the issuance of such Debt by the issuer thereof;

(3) The Securities and Debt issued in exchange for, or the proceedsof which are used to Refinance, any Debt permitted by this clause (3);provided, however, that (i) the principal amount of the Debt so issuedshall not exceed the principal amount of the Debt so Refinanced and (ii)the Debt so issued (A) shall have a Stated Maturity no earlier than theStated Maturity of the Debt so Refinanced and (B) shall have an AverageLife no less than the remaining Average Life of the Debt so Refinanced;

(4) Debt (other than Debt described in clause (1), (2) or (3) above)outstanding on the date on which the Securities were originally issued orDebt issued in exchange for, or the proceeds of which are used toRefinance, any Debt permitted by this clause (4) or permitted by clause (a)above; provided, however, that the principal amount of the Debt so issuedshall not exceed the principal amount of the Debt so Refinanced and theDebt so issued (A) shall have a Stated Maturity no earlier than the StatedMaturity of the Debt so Refinanced and (B) shall have an Average Life noless than the remaining Average Life of the Debt so Refinanced; and

(5) Debt in an aggregate principal amount which, together with allother Debt of the Company then outstanding (other than Debt permitted byclauses (1) through (4) above or clause (a) above) does not exceed $20.0million (less the amount of any Debt and Preferred Stock of Subsidiariesthen

28

outstanding and incurred pursuant to clause (e) of Section 4.07).



SECTION 4.05. Limitation on Restrictions on Distributions from------------------------------------------------

Subsidiaries. The Company shall not permit any of its Subsidiaries to create or------------permit to exist or become effective any consensual encumbrance or restriction onthe ability of any Subsidiary to (1) pay dividends or make any otherdistributions on its Capital Stock or pay any Debt or other obligation owed tothe Company, (2) make any loans or advances to the Company or (3) transfer anyof its tangible property or tangible assets to the Company, except:

(a) Any encumbrance or restriction pursuant to an agreement in effectat or entered into on the date the Securities are issued, including anyencumbrance or restriction existing pursuant to the Credit Facility ineffect on the date the Securities are issued;

(b) Any encumbrance or restriction with respect to a Subsidiarypursuant to an agreement relating to any Debt issued by such Subsidiary onor prior to the date on which such Subsidiary was acquired by the Company(other than Debt issued as consideration in, or to provide all or anyportion of the funds utilized to consummate, the transaction or series ofrelated transactions pursuant to which such Subsidiary became a Subsidiaryor was acquired by the Company) and outstanding on such date;

(c) Any encumbrance or restriction pursuant to an agreement effectinga Refinancing of Debt issued pursuant to an agreement referred to in clause(a) or (b) of this Section 4.05 or contained in any amendment to anagreement referred to in such clause (a) or (b); provided, however, thatthe encumbrances and restrictions contained in any of such refinancingagreement or amendment are no less favorable to the Securityholders thanencumbrances and restrictions contained in such agreements;

(d) In the case of clause (3) above, any such encumbrance orrestriction consisting of the covenant set forth in Section 4.10 or other,similar covenants or agreements; and

(e) In the case of clause (3) above, restrictions contained insecurity agreements securing Debt of a Subsidiary to the extent suchrestrictions restrict the transfer of the property subject to such securityagreements.

SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock.--------------------------------------------------

The Company shall not, and shall not permit any of its Subsidiaries to, make anyAsset Disposition unless (i)

29

the Company or such Subsidiary receives consideration at the time of such AssetDisposition at least equal to the fair market value, as determined in good faithby the Board of Directors or the board of directors of the relevant Subsidiary



(including as to the value of all non-cash consideration), of the shares andassets subject to such Asset Disposition and at lease 80% of the considerationthereof received by the Company or such Subsidiary is in the form of cash orcash equivalents or consists of assets in which the Company or such Subsidiary,as the case may be, would have been able to invest pursuant to the election setforth in clause (B) below, and (ii) an amount equal to 100% of the Net AvailableCash from such Asset Disposition is applied by the Company (or such Subsidiary,as the case may be) (A) first, to the extent the Company elects (or is requiredby the terms of any Pari Passu Debt), to prepay, repay or purchase Pari PassuDebt or Debt of a Wholly Owned Subsidiary or such Subsidiary elects (or isrequired by the terms of any Pari Passu Debt) to prepay, repay or purchase Debtor Pari Passu Debt (in each case other than Debt owed to the Company or anAffiliate of the Company) within 60 days from the later of the date of suchAsset Disposition or the receipt of such Net Available Cash; (B) second, to theextent of the balance of such Net Available Cash after any application inaccordance with clause (A), at the election of the Company or such Subsidiary,as the case may be, to acquire assets to replace its assets that were thesubject of such Asset Disposition or to acquire assets (or to make improvementsto existing assets) that (as determined by the Board of Directors or the boardof directors of such Subsidiary, as the case may be) will be used in thebusiness of the Company and its Subsidiaries existing on the date of originalissuance of the Securities or in businesses reasonably related thereto, in eachcase by the later of (x) the date that is 180 days from the date of such AssetDisposition or (y) the date of the receipt of such Net Available Cash (the laterof (x) and (y) being hereinafter called the "New Asset Acquisition Date"); (C)third, to the extent of any balance of such Net Available Cash after applicationand in accordance with clauses (A) and (B), to make an offer (the "Net AvailableCash Offer") pursuant to and subject to the conditions contained in thisIndenture, to the holders of the Securities (and to holders of other Pari PassuDebt designated by the Company) to purchase Securities (and such other PariPassu Debt) at a purchase price of 100% of the principal amount thereof (withoutpremium) plus accrued and unpaid interest (or in respect of such other PariPassu Debt such lesser price, if any, as may be provided for by the terms ofsuch other Pari Passu Debt) (the aggregate amount of such purchase price beinghereinafter called the "Net Available Cash Payment") and (D) fourth, to theextent of the balance of such Net Available Cash after application in accordancewith clauses (A), (B) and (C), to any application not prohibited by thisIndenture; provided, however, that in connection with any prepayment, repaymentor purchase of Debt pursuant to clause (A) or (C) above, the Company or suchSubsidiary shall retire such Debt and shall cause the related loan commitment(if any) to be

30

permanently reduced in an amount equal to the principal amount so prepaid,repaid or purchased. Notwithstanding the foregoing provisions of this paragraph,the Company and its Subsidiaries shall not be required to apply any NetAvailable Cash (other than Net Available Cash from an Asset Dispositionconsisting of a sale and leaseback transaction that the Company has elected totreat as an Asset Disposition pursuant to clause (ii) of Section 4.09) in



accordance with this paragraph except to the extent that the aggregate NetAvailable Cash from all Asset Dispositions which are not applied in accordancewith this paragraph exceeds $10.0 million. Pending application of Net AvailableCash pursuant to this covenant, such Net Available Cash shall be invested inPermitted Investments.

Within 30 days after the New Asset Acquisition Date, the Company shallcommence a Net Available Cash Offer by mailing a notice to the Trustee and eachHolder stating:

(i) that the Net Available Cash Offer is being made pursuant to thisSection and that all Securities validly tendered will be accepted forpayment on a pro rata basis;

(ii) the purchase price and the date of purchase (which shall be aBusiness Day no earlier than 30 days nor later than 60 days from the datenotice is mailed) (the "Net Available Cash Payment Date");

(iii) that any Security not tendered will continue to accrue interestas provided in this Indenture;

(iv) that, unless the Company defaults in the payment therefore, anySecurity accepted for payment pursuant to the Net Available Cash Offershall cease to accrue interest after the Net Available Cash Payment Date;

(v) that Holders electing to have a Security purchased pursuant tothe Net Available Cash Offer will be required to surrender the Security,together with the form entitled "Option of Holder to Elect Purchase" on thereverse side of the Security duly completed, to the Paying Agent at theaddress specified in the notice prior to the close of business on theBusiness Day immediately preceding the Net Available Cash Payment Date;

(vi) that Holders will be entitled to withdraw their election if thePaying Agent receives, not later than the close of business on the thirdBusiness Day immediately preceding the Net Available Cash Payment Date, afacsimile transmission or letter setting forth the name of such Holder, theprincipal amount of Securities delivered for purchase and a statement thatsuch Holder is withdrawing his election to have such Securities purchased;and

31

(vii) that Holders whose Securities are being purchased only in partwill be issued new Securities of like tenor equal in principal amount tothe unpurchased portion of the Securities surrendered; provided, however,that each Security purchased and each new Security issued shall be in anoriginal principal amount of $1,000 or integral multiples thereof.

On or prior to the date notice is mailed to the Trustee and eachHolder, the Company shall furnish the Trustee with an Officers' Certificate of



the Company stating the amount of the Net Available Cash Payment.

On the Net Available Cash Payment Date, the Company shall:

(i) accept for payment on a pro rata basis Securities or portionsthereof tendered pursuant to the Net Available Cash Offer;

(ii) deposit with the Paying Agent money sufficient to pay thepurchase price of all Securities or portions thereof so accepted; and

(iii) deliver, or cause to be delivered, to the Trustee, Securities orportions thereof so accepted together with an Officers' Certificate of theCompany specifying the Securities or portions thereof accepted for paymentby the Company.

The Company will publicly announce the results of the Net AvailableCash Offer as soon as practicable after the Net Available Cash Payment Date.

Notwithstanding the foregoing, the Company may modify the proceduresset forth above for a Net Available Cash Offer in any manner not adverse toholders of the Securities.

The Company shall comply, to the extent applicable, with therequirements of Section 14(e) of the Exchange Act and any other securities lawsor regulations in connection with the repurchase of Securities pursuant to thiscovenant. To the extent that the provisions of any securities laws orregulations conflict with provisions of this covenant, the Company shall complywith the applicable securities laws and regulations and shall not be deemed tohave breached its obligations under this clause by virtue thereof.

SECTION 4.07. Limitation on Debt and Preferred Stock of Subsidiaries.------------------------------------------------------

The Company shall not permit any Subsidiary to issue, directly or indirectly,any Debt or Preferred Stock except:

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(a) Debt or Preferred Stock issued to and held by the Company or aWholly Owned Subsidiary; provided, however, that (i) any subsequentissuance or transfer of any Capital Stock that results in any such WhollyOwned Subsidiary ceasing to be a Wholly Owned Subsidiary or (ii) anysubsequent transfer of such Debt or Preferred Stock (other than to theCompany or a Wholly Owned Subsidiary) shall be deemed, in each case, toconstitute the issuance of such Debt or Preferred Stock by the issuerthereof;

(b) Debt or Preferred Stock of a Subsidiary issued and outstanding onor prior to the date on which such Subsidiary was acquired by the Company(other than Debt or Preferred Stock issued as consideration in, or toprovide all or any portion of the funds or credit support utilized to



consummate, the transaction or series of transactions pursuant to whichsuch Subsidiary became a Subsidiary or was acquired by the Company);

(c) Any other Debt or Preferred Stock (other than any described inclause (a) or (b)) issued and outstanding on the date the Securities areissued;

(d) Debt or Preferred Stock issued in exchange for, or the proceedsof which are used to Refinance, Debt or Preferred Stock referred to in theforegoing clause (b) or (c); provided, however, the principal amount orliquidation value of such Debt or Preferred Stock so issued shall notexceed the principal amount or the liquidation value of the Debt orPreferred stock so Refinanced and (ii) the Debt or Preferred Stock soissued (A) shall have a Stated Maturity no earlier than the Stated Maturityof the Debt or Preferred Stock being exchanged or Refinanced and (B) shallhave an Average Life no less than the remaining Average Life of the Debt orPreferred Stock being Refinanced; and

(e) Debt and Preferred Stock in an aggregate principal amount which,together with any other Debt or Preferred stock of Subsidiaries thenoutstanding (other than Debt or Preferred Stock permitted by clauses (a)through (d) of this covenant) does not exceed $20.0 million (less theamount of any Debt then outstanding and incurred pursuant to Section4.04(b)(5)).

SECTION 4.08. Limitation on Liens Securing Debt. The Company shall---------------------------------

not, and shall not permit any Subsidiary to, directly or indirectly, create,incur, assume or otherwise cause or suffer to exist or become effective any Liensecuring Debt of any kind (other than Permitted Liens) upon any of theirrespective property or assets, now owned or hereafter acquired, or any income orprofits therefrom, unless the Company makes or causes to be made effectiveprovision whereby payment of the principal and interest on the Securities willbe secured by such

-33-

Lien equally and ratably with (or prior to) such Debt for so long as such Debtshall be secured; provided, however, that (i) in the event of any sale, transferor other disposition by the Company or any Subsidiary of Accounts Receivable orof any Subsidiary substantially all the assets of which are Accounts Receivable,which sale, transfer or other disposition constitutes a "sale" under generallyaccepted accounting principles (as in effect at the time thereof), neither suchsale, transfer or other disposition nor any recourse provided by the Company orany Subsidiary in connection therewith shall, in any event, constitute Debt or aLien and (ii) neither the satisfaction and discharge of any Debt pursuant to anyindenture or other instrument governing such Debt, nor the defeasance of anyDebt pursuant to any indenture or other instrument governing such Debt, shall bedeemed the creation, incurrence, assumption or existence of any Lien securingDebt.



SECTION 4.09. Limitation on Sale and Leaseback Transactions. The---------------------------------------------

Company shall not, and shall not permit any Subsidiary to, enter into anyarrangement with any person providing for the leasing by the Company or anySubsidiary of any real or tangible personal property (except for leases for aterm of not more than one year (including renewal rights) or between the Companyand a Subsidiary or between Subsidiaries), which property has been or is to besold or transferred by the Company or such Subsidiary to such person incontemplation of such leasing, unless (i) the Company or such Subsidiary wouldbe entitled to create a Lien on such property securing Debt in an amount equalto the Attributable Debt with respect to such arrangement without equally andratably securing the Securities pursuant to Section 4.08 or (ii) the Company orsuch Subsidiary shall have received consideration from such arrangement at leastequal to the fair market value of the property subject thereto (which shall bedetermined in good faith by the Board of Directors and evidenced by a resolutionof the Board of Directors) and elects to treat the assets subject to sucharrangement as an Asset Disposition subject to Section 4.06.

SECTION 4.10. Limitation on Transactions with Affiliates. The Company------------------------------------------

shall not, and shall not permit any Subsidiary to, conduct any business or enterinto any transaction or series of similar transactions (including the purchase,sale, lease or exchange of any property or the rendering of any service) withany Affiliate of the Company (other than (i) a Wholly Owned Subsidiary or (ii)an employee stock ownership plan, unless the terms of such business, transactionor series of transactions are fair and reasonable to the Company. All suchbusiness, transaction or series of transactions that are approved by the Boardof Directors (including by a majority of the Independent Committee of the Boardof Directors) shall be deemed fair and reasonable to the Company. This Section,however, will not prohibit any management compensation arrangements consistentwith industry practice, and all such business, transactions or

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series of transactions that have been completed or with respect to whichagreements have been entered into prior to the date of this Indenture shall bedeemed fair and reasonable to the Company.

SECTION 4.11. Change of Control. (a) Upon a Change of Control, each-----------------

Holder shall have the right to require that the Issuers repurchase such Holder'sSecurities (other than Securities called for redemption pursuant to Article III)at a purchase price in cash equal to 101% of the principal amount thereof plusaccrued and unpaid interest, if any, to the date of purchase, in accordance withthe terms contemplated in this Section 4.11.

(b) Within 30 days following any Change of Control, the Issuers shall maila notice to each Holder (other than each Holder to which the Issuers havetheretofore mailed a notice of redemption pursuant to Section 3.03 in connection



with the redemption of all the Securities held by such Holder) with a copy tothe Trustee stating: (1) that a Change of Control has occurred and that suchHolder has the right to require the Issuers to purchase such Holder's Securities(other than Floating Rate Securities called for redemption pursuant to ArticleIII) at a purchase price in cash equal to 101% of the principal amount thereofplus accrued and unpaid interest, if any, to the date of purchase; (2) thecircumstances and relevant facts regarding such Change of Control; (3) therepurchase date (which shall be no earlier than 30 days nor later than 60 daysfrom the date such notice is mailed); and (4) the instructions, determined bythe Issuers consistent with this Indenture, that a Holder must follow in orderto have its Securities purchased.

(c) Holders electing to have a Security purchased will be required tosurrender the Security, with the attached form entitled "Option of Holder toElect Purchase" duly completed, to the Issuers at the address specified in thenotice referred to in paragraph (b) above at least 10 Business Days prior to therepurchase date. Holders will be entitled to withdraw their election if theTrustee or the Issuers receive, not later than three Business Days prior to therepurchase date, a telegram, telex, facsimile transmission or letter settingforth the name of the Holder, the principal amount of the Security delivered forpurchase by the Holder and a statement that such Holder is withdrawing hiselection to have such Security purchased.

(d) On the purchase date, all Securities purchased by the Issuers underthis Section shall be delivered by the Trustee for cancellation, and the Issuersshall pay the purchase price plus accrued and unpaid interest, if any, to theHolders entitled thereto.

(e) The Issuers shall comply, to the extent applicable, with therequirements of Section 14(e) of the Exchange Act and

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any other securities laws or regulations in connection with the repurchase ofSecurities pursuant to this Section. To the extent that the provision of anysecurities laws or regulations conflict with the provisions of this Section, theIssuers shall comply with the applicable securities laws and regulations andshall not be deemed to have breached their obligations under this Section byvirtue thereof.

SECTION 4.12. Uncompleted Acquisition Offer. If the Company does not-----------------------------

consummate the Acquisition by June 15, 1995 (the "Uncompleted AcquisitionDate"), the Issuers will be required to make an offer (the "UncompletedAcquisition Offer"), pursuant to and subject to the conditions contained in thisIndenture, to the holders of the Securities to purchase up to $35,000,000principal amount of Securities at a purchase price of 100% of the principalamount thereof plus accrued and unpaid interest to the date of purchase.

Within 30 days after the Uncompleted Acquisition Date, the Issuers



shall commence an Uncompleted Acquisition Offer by mailing a notice to theTrustee and each Holder stating:

(i) that the Uncompleted Acquisition Offer is being madepursuant to this Section and that all Securities validly tendered will beaccepted for payment on a pro rata basis;

(ii) the purchase price and the date of purchase (whichshall be a Business Day no earlier than 30 days nor later than 60 days fromthe date notice is mailed) (the "Uncompleted Acquisition Offer PaymentDate");

(iii) that any Security not tendered will continue to accrueinterest as provided in this Indenture;

(iv) that, unless the Issuers default in the paymenttherefore, any Security accepted for payment pursuant to the UncompletedAcquisition Offer shall cease to accrue interest after the UncompletedAcquisition Offer Payment Date;

(v) that Holders electing to have a Security purchasedpursuant to the Offer will be required to surrender the Security, togetherwith the form entitled "Option of Holder to Elect Purchase" on the reverseside of the Security duly completed, to the Paying Agent at the addressspecified in the notice prior to the close of business on the Business Dayimmediately preceding the Uncompleted Acquisition Offer Payment Date;

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(vi) that Holders will be entitled to withdraw their election if thePaying Agent receives, not later than the close of business on the thirdBusiness Day immediately preceding the Uncompleted Acquisition OfferPayment Date, a facsimile transmission or letter setting forth the name ofsuch Holder, the principal amount of Securities delivered for purchase anda statement that such Holder is withdrawing his election to have suchSecurities purchased; and

(vii) that Holders whose Securities are being purchased only in partwill be issued new Securities of like tenor equal in principal amount tothe unpurchased portion of the Securities surrendered; provided, however,that each Security purchased and each new Security issued shall be in anoriginal principal amount of $1,000 or integral multiples thereof.

On or prior to the date notice is mailed to the Trustee and each Holder,the Company shall furnish the Trustee with an Officers' Certificate of theCompany stating the amount of the payment.

On the Uncompleted Acquisition Payment Date, the Company shall:

(i) accept for payment on a pro rata basis Securities or portions



thereof tendered pursuant to the Uncompleted Acquisition Offer;

(ii) deposit with the Paying Agent money sufficient to pay thepurchase price of all Securities or portions thereof so accepted; and

(iii) deliver, or cause to be delivered, to the Trustee, Securitiesor portions thereof so accepted together with an Officers' Certificate ofthe Company specifying the Securities or portions thereof accepted forpayment by the Company.

Notwithstanding the foregoing, the Company may modify the procedures setforth above for an Uncompleted Acquisition Offer in any manner not adverse toholders of the Securities.

The Issuers shall comply, to the extent applicable, with the requirementsof Section 14(e) of the Exchange Act and any other securities laws orregulations in connection with the repurchase of Securities pursuant to thiscovenant. To the extent that the provisions of any securities laws orregulations conflict with provisions of this covenant, the Issuers shall complywith the applicable securities laws and regulations and

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shall not be deemed to have breached its obligations under this clause by virtuethereof.

SECTION 4.13. Compliance Certificate. Each of the Issuers shall----------------------

deliver to the Trustee within 120 days after the end of each fiscal year anOfficers' Certificate stating that in the course of the performance by thesigners of their duties as Officers of the Company or Finance Corp., as the casemay be, they would normally have knowledge of any Default by the Company orFinance Corp., as the case may be, and whether or not the signers know of anyDefault that occurred during such period. If they do, the certificate shalldescribe the Default, its status and what action the Company or Finance Corp.,as the case may be, is taking or purposes to take with respect thereto.

ARTICLE V---------

Successors----------

SECTION 5.01. When the Company May Merge or Transfer Assets. The---------------------------------------------

Company shall not consolidate with or merge with or into, or sell, convey,transfer or lease all or substantially all its assets to, another person unless(i) the resulting, surviving or transferee person or lessee (if other than theCompany) shall be a person organized and existing under the laws of the UnitedStates or any State thereof or the District of Columbia and such entity shall



assume by supplemental indenture all the obligations of the Company under theSecurities and this Indenture, (ii) immediately after giving effect to suchtransaction, no Default shall have happened and be continuing, (iii) immediatelyafter giving effect to such transaction, the resulting, surviving or transfereeperson would be able to issue an additional $1.00 of Debt pursuant to the firstsentence of Section 4.04, (iv) immediately after giving effect to suchtransaction, the resulting, surviving or transferee person has a ConsolidatedNet Worth which is not less than the Consolidated Net Worth of the Companyimmediately prior to such transaction and (v) the Company shall have deliveredto the Trustee an Officers' Certificate of the Company and an Opinion of Counselof the Company, each stating that such consolidation, merger, sale, conveyance,transfer or lease and such supplemental indenture comply with this Indenture.

SECTION 5.02. When Finance Corp. May Merge or Transfer Assets.-----------------------------------------------

Finance Corp. shall not consolidate with or merge with or into, or sell, convey,transfer or lease all or substantially all its assets to, another person unless(i) the resulting, surviving or transferee person or lessee (if other thanFinance Corp.) shall be an entity organized or existing under the laws of theUnited States or any state thereof or the District of Columbia and such entityexpressly assumes by supplemental indenture all the obligations of the Companyunder the Securities

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and this Indenture, (ii) immediately after giving effect to such transaction, noDefault shall have happened and be continuing and (iii) Finance Corp. shall havedelivered to the Trustee an Officers' Certificate of Finance Corp. and anOpinion of Counsel of Finance Corp., each stating that such consolidation,merger, sale, conveyance, transfer or lease and such supplemental indenturecomply with this Indenture.

SECTION 5.03. Obligations After Merger or Transfer. Upon any such------------------------------------

consolidation, merger, sale, conveyance, transfer or lease, and following suchan assumption by the resulting, surviving or transferee person or lessee, (i)such resulting, surviving or transferee person or lessee shall succeed to and besubstituted for the Company or Finance Corp., as the case may be, with the sameeffect as if it had been named herein and (ii) the Company or Finance Corp., asthe case may be, shall be released and discharged from all obligations andcovenants under this Indenture; provided, however, that in the event of any suchlease, the Company or Finance Corp., as the case may be, shall not, by operationof this Section 5.03, be released or discharged from its obligation to pay theprincipal of and interest on the Securities at the times, places and rateprescribed in this Indenture and the Securities. In the case of the Company orFinance Corp., as the case may be, such resulting, surviving or transfereeperson or lessee may cause to be signed, and may issue either in its own name orin the name of the Company or Finance Corp., as the case may be, prior to suchsuccession any or all of the Securities issuable hereunder which theretoforeshall not have been signed by the Company or Finance Corp., as the case may be,



and delivered to the Trustee; and, upon the order of such resulting, survivingor transferee person or lessee instead of the Company or Finance Corp., andsubject to all the terms, conditions and limitations in this Indentureprescribed, the Trustee shall authenticate and shall deliver any Securitieswhich previously shall have been signed and delivered by the officers of theCompany or Finance Corp. to the Trustee for authentication, and any Securitieswhich such resulting, surviving or transferee person or lessee thereafter shallcause to be signed and delivered to the Trustee for that purpose. All theSecurities so issued shall in all respects have the same legal rank and benefitunder this Indenture as the Securities theretofore or thereafter issued inaccordance with the terms of this Indenture.

In case of any such consolidation, merger, sale, conveyance, transferor lease, such changes in phraseology and form (but not in substance) may bemade in the Securities thereafter to be issued as may be appropriate.

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ARTICLE VI

Defaults and Remedies---------------------

SECTION 6.01. Events of Default. An "Event of Default" occurs if:-----------------

(1) the Issuers default in any payment of interest on any Securitywhen the same becomes due and payable, and such default continues for aperiod of 30 days;

(2) the Issuers default in the payment of the principal of anySecurity when the same becomes due and payable at its Stated Maturity, uponredemption, upon declaration or otherwise;

(3) the Company or Finance Corp. fails to comply with Section 5.01;

(4) the failure by the Company to comply for 30 days after noticewith any of its obligations under Section 4.02, 4.03, 4.04, 4.05, 4.06,4.07, 4.08, 4.09, 4.10 or 4.11 (other than a failure to purchaseSecurities);

(5) the Issuers fail to comply with any of their respectiveagreements in the Securities or this Indenture (other than those referredto in (1), (2), (3) or (4) above) and such failure continues for 60 daysafter the notice specified below;

(6) Debt of the Company, Finance Corp. or any Significant Subsidiaryis not paid within any applicable grace period after final maturity or isaccelerated by the holders thereof because of a default and the totalamount of such Debt unpaid or accelerated exceeds $20,000,000 and such



failure continues for 10 days after notice;

(7) the Company, Finance Corp. or any Significant Subsidiary pursuantto or within the meaning of any Bankruptcy Law:

(A) commences a voluntary case;

(B) consents to the entry of an order for relief against it inan involuntary case;

(C) consents to the appointment of a Custodian of it or for anysubstantial part of its property; or

(D) makes a general assignment for the benefit of its creditors;

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(8) a court of competent jurisdiction enters an order or decreeunder any Bankruptcy Law that:

(A) is for relief against the Company, Finance Corp. or anySignificant Subsidiary in an involuntary case;

(B) appoints a Custodian of the Company, Finance Corp. or anySignificant Subsidiary or for any substantial part of their respectiveproperty; or

(C) order the winding up or liquidation of the Company or anySignificant Subsidiary; or

(9) any judgment or decree for the payment of money in excess of$20,000,000 (to the extent not covered by insurance) shall be renderedagainst either of the Issuers, and there is a period of 60 days followingsuch judgment during which such judgment or decree is not discharged,waived or the execution thereof stayed and such judgment or decree is notsatisfied, discharged, waived or the execution stayed within 10 days afterthe notice specified below.

The term "Bankruptcy Law" means Title 11, United States Code, or any------------------

similar Federal or state law for the relief of debtors. The term "Custodian"means any receiver, trustee, assignee, liquidator, custodian or similar officialunder any Bankruptcy Law.

A Default under clause (4), (5), (6) or (9) is not an Event of Defaultuntil the Trustee or the Holders of at least 25% in principal amount of theSecurities notify the Issuers of the Default and the Issuers do not cure suchDefault within the time specified after receipt of such Notice. Such Notice mustspecify the Default, demand that it be remedied and state that such notice is a"Notice of Default".



The Company shall deliver to the Trustee, within 30 days after theoccurrence thereof, written notice in the form of an Officers' Certificate ofany Default or Event of Default, its status and what action the Issuers aretaking or propose to take with respect thereto.

SECTION 6.02. Acceleration. If an Event of Default (other than an------------

Event of Default specified in Section 6.01(7) or (8)) occurs and is continuing,the Trustee by notice to the Issuers, or the Holders of at least 25% inprincipal amount of the Securities by notice to the Issuers and the Trustee, maydeclare the principal of and the accrued interest on all the Securities to bedue and payable. Upon such a declaration, such principal and interest shall bedue and payable immediately. If an Event of Default specified in Section 6.01(7)or (8) occurs and is continuing, the principal of and interest on all the

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Securities shall ipso facto become and be immediately due and payable without---- -----

any declaration or other act on the part of the Trustee or any Securityholders.The Holders of a majority in principal amount of the Securities by notice to theTrustee may rescind an acceleration and its consequences if the rescission wouldnot conflict with any judgment or decree and if all existing Events of Defaulthave been cured or waived except nonpayment of principal or interest that hasbecome due solely because of acceleration. No such rescission shall affect anysubsequent Default or impair any right consequent thereto.

SECTION 6.03. Other Remedies. If an Event of Default occurs and its--------------

continuing, the Trustee may pursue any available remedy to collect the paymentof principal of or interest on the Securities or to enforce the performance ofany provision of the Securities or this Indenture.

The Trustee may maintain a proceeding even if it does not possess anyof the Securities or does not produce any of them in the proceeding. A delay oromission by the Trustee or any Securityholder in exercising any right or remedyaccruing upon an Event of Default shall not impair the right of remedy orconstitute a waiver of or acquiescence in the Event of Default. No remedy isexclusive of any other remedy. All available remedies are cumulative.

SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in-----------------------

principal amount of the Securities by notice to the Trustee may waive anexisting Default and its consequences (including in connection with a tenderoffer or exchange offer for Securities) except (1) a Default in the payment ofthe principal of or interest on a Security or (2) a Default in respect of aprovision that under Section 9.02 cannot be amended without the consent of eachSecurityholder affected. When a Default is waived, it is deemed cured, but nosuch waiver shall extend to any subsequent or other Default or impair any



consequent right.

SECTION 6.05. Control by Majority. The Holders of a majority in-------------------

principal amount of the Securities may direct the time, method and place ofconducting any proceeding for any remedy available to the Trustee or ofexercising any trust or power conferred on the Trustee (including in connectionwith a tender offer or exchange offer for Securities). However, the Trustee mayrefuse to follow any direction that conflicts with law or this Indenture, or,subject to Section 7.01, that the Trustee determines is unduly prejudicial tothe rights of other Securityholders or would involve the Trustee in personalliability, provided, however, that the Trustee may take any other action deemedproper by the Trustee that is not inconsistent with such direction. Prior totaking any action hereunder, the Trustee shall be entitled to indemnificationsatisfactory to it

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in its sole discretion against all losses and expenses caused by taking or nottaking such action.

SECTION 6.06. Limitation on Suits. A Securityholder may not pursue-------------------

any remedy with respect to this Indenture or the Securities unless:

(1) the Holder gives to the Trustee written notice stating that anEvent of Default is continuing;

(2) the Holders of at least 25% in principal amount of the Securitiesmake a written request to the Trustee to pursue the remedy;

(3) such Holder or Holders offer to the Trustee reasonable securityor indemnity against any loss, liability or expense;

(4) the Trustee does not comply with the request within 60 days afterreceipt of the request and the offer of security or indemnity; and

(5) the Holders of a majority of principal amount of the Securitiesdo not give the Trustee a direction inconsistent with the request duringsuch 60-day period.

A Securityholder may not use this Indenture to prejudice the rights ofanother Securityholder or to obtain a preference or priority over anotherSecurityholder.

SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding------------------------------------

any other provision of this Indenture, the right of any Holder to receivepayment of principal of and interest on the Securities held by such Holder, onor after the respective due dates expressed in the Securities, or to bring suit



for the enforcement of any such payment on or after such respective dates, shallnot be impaired or affected without the consent of such Holder.

SECTION 6.08. Collection Suit by Trustee. If an Event of Default in--------------------------

payment of interest or principal specified in Section 6.01(1) or (2) occurs andis continuing, the Trustee may recover judgment in its own name and as trusteeof an express trust against the Issuers for the whole amount of principal andinterest remaining unpaid (together with interest on such unpaid interest tothe extent lawful) and the amounts provided for in Section 7.07.

SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file--------------------------------

such proofs of claim and other papers or documents as may be necessary oradvisable in order to have the claims of the Trustee and the Securityholdersallowed in any judicial proceedings relative to the Company or Finance Corp., or

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their respective creditors or property, and, unless prohibited by law orapplicable regulations, may vote on behalf of the Holders in any election of atrustee in bankruptcy or other person performing similar functions, and anyCustodian in any such judicial proceeding is hereby authorized by each Holder tomake payments to the Trustee and, in the event that the Trustee shall consent tothe making of such payments directly to the Holders, to pay to the Trustee anyamount due it for the reasonable compensation, expenses, disbursements andadvances of the Trustee, its agents and its counsel, and any other amounts duethe Trustee under Section 7.07.

SECTION 6.10. Priorities. If the Trustee collects any money or----------

securities pursuant to this Article 6, it shall pay out such money or securitiesin the following order:

FIRST: to the Trustee for amounts due under Section 7.07;

SECOND: to Securityholders for amounts due and unpaid on theSecurities for principal and interest, ratably, without preference or priorityof any kind, according to the amounts due and payable on the Securities forprincipal and interest, respectively; and

THIRD: to the Company.

The Trustee may fix a record date and payment date for any payment toSecurityholders pursuant to this Section. At least 15 days before such recorddate, the Issuers shall mail to each Securityholder and the Trustee a noticethat states the record date, the payment date and amount to be paid.

SECTION 6.11. Undertaking for Costs. In any suit for the enforcement---------------------



of any right or remedy under this Indenture or in any suit against the Trusteefor any action taken or omitted by it as Trustee, a court in its discretion mayrequire the filing by any party litigant in the suit of an undertaking to paythe costs of the suit, and the court in its discretion may assess reasonablecosts, including reasonable attorneys' fees, against any party litigant in thesuit, having due regard to the merits and good faith of the claims or defensesmade by the party litigant. This Section does not apply to a suit by theTrustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders ofmore than 10% in principal amount of the Securities.

SECTION 6.12. Waiver of Stay or Extension Laws. Neither the Company--------------------------------

nor Finance Corp. (to the extent they may lawfully do so) shall at any timeinsist upon, or plead, or in any manner whatsoever claim or take the benefit oradvantage of, any stay or extension law wherever enacted, now or at any timehereafter in force, which may affect the covenants or the performance of thisIndenture; and the Company and Finance Corp.

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(to the extent that they may lawfully do so) hereby expressly waive all benefitor advantage of any such law, and shall not hinder, delay or impede theexecution of any power herein granted to the Trustee, but shall suffer andpermit the execution of every such power as though no such law had been enacted.

ARTICLE VIITrustee-------

SECTION 7.01. Duties of Trustee. (a) If an Event of Default has-----------------

occurred and is continuing, the Trustee shall exercise the rights and powersvested in it by this Indenture and use the same degree of care and skill intheir exercise as a prudent person would exercise or use under the circumstancesin the conduct of such person's own affairs.

(b) Except during the continuance of an Event of Default:

(1) the Trustee undertakes to perform such duties and only suchduties as are specifically set forth in this Indenture and no impliedcovenants or obligations shall be read into this Indenture against theTrustee; and

(2) in the absence of bad faith on its part, the Trustee mayconclusively rely, as to the truth of the statements and thecorrectness of the opinions expressed therein, upon certificates oropinions furnished to the Trustee and conforming to the requirementsof this Indenture. However, the Trustee shall examine the certificatesand opinions to determine whether or not they conform to therequirements of this Indenture.



(c) The Trustee may not be relieved from liability for its ownnegligent action, its own negligent failure to act or its own wilful misconduct,except that:

(1) this paragraph does not limit the effect of paragraph (b) ofthis Section;

(2) the Trustee shall not be liable for any error of judgmentmade in good faith by a Trust Officer unless it is proved that theTrustee was negligent in ascertaining the pertinent facts; and

(3) the Trustee shall not be liable with respect to any actionit takes or omits to take in good faith in accordance with a directionreceived by it pursuant to Section 6.05.

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(d) Every provision of this Indenture that in any way relates to theTrustee is subject to paragraphs (a), (b) and (c) of this Section.

(e) The Trustee shall not be liable for interest on any moneyreceived by it except as the Trustee may agree in writing with the Issuers.

(f) Money held in trust by the Trustee need not be segregated fromother funds except to the extent required by law.

(g) No provision of this Indenture shall require the Trustee toexpend or risk its own funds or otherwise incur financial liability in theperformance of any of its duties hereunder or in the exercise of any of itsrights or powers, if it shall have reasonable grounds to believe that repaymentof such funds or adequate indemnity against such risk or liability is notreasonably assured to it.

(h) Every provision of this Indenture relating to the conduct oraffecting the liability of or affording protection to the Trustee shall besubject to the provisions of this Section and to the provisions of the TIA.

SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on any-----------------

document believed by it to be genuine and to have been signed or presented bythe proper person. The Trustee need not investigate any fact or matter stated inthe document.

(b) Before the Trustee acts or refrains from acting, it may requirean Officers' Certificate or an Opinion of Counsel. The Trustee shall not beliable for any action it takes or omits to take in good faith in reliance on theOfficers' Certificate or Opinion of Counsel.

(c) The Trustee may act through agents and shall not be responsible



for the misconduct or negligence of any agent appointed with due care.

(d) The Trustee shall not be liable for any action it takes or omitsto take in good faith which it believes to be authorized or within its rights orpowers; provided, however, that the Trustee's conduct does not constitutewilful misconduct, negligence or bad faith.

(e) The Trustee may consult with counsel, and the advice or opinionof counsel with respect to legal matters relating to this Indenture and theSecurities shall be full and complete authorization and protection fromliability in respect to any action taken, omitted or suffered by it hereunder ingood faith and in accordance with the advice or opinion of such counsel.

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SECTION 7.03. Individual Rights of Trustee. The Trustee in its----------------------------

individual or any other capacity may become the owner or pledgee of Securitiesand may otherwise deal with the Company or its affiliates with the same rightsit would have if it were not Trustee. Any Paying Agent, Registrar, co-registraror co-paying agent may do the same with like rights. However, the Trustee mustcomply with Sections 7.10 and 7.11.

SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be--------------------

responsible for and makes no representation as to the validity or adequacy ofthis Indenture or the Securities, it shall not be accountable for the Issuers'use of the proceeds from the Securities, and it shall not be responsible for anystatement of the Company or Finance Corp. in the Indenture or in any documentissued in connection with the sale of the Securities or in the Securities otherthan the Trustee's certificate of authentication.

SECTION 7.05. Notice of Defaults. If a Default occurs and is------------------

continuing and if it is known to the Trustee, the Trustee shall mail to eachSecurityholder notice of the Default within 90 days after it occurs. Except inthe case of a Default in payment of principal of or interest on any Security(including payments pursuant to the mandatory redemption provisions of suchSecurity), the Trustee may withhold the notice if and so long as a committee ofits Trust Officers in good faith determines that withholding the notice is inthe interests of Securityholders.

SECTION 7.06. Reports by Trustee to Holders. On or before July 15,-----------------------------

1996 and or on before July 15 in every year thereafter, the Trustee shall mailto each Securityholder a brief report dated as of May 16 that complies with TIA(S) 313(a). The Trustee also shall comply with TIA (S) 313(b).

A copy of each report at the time of its mailing to Securityholdersshall be filed with the SEC and each stock exchange on which the Securities are



listed. The Company agrees to notify promptly the Trustee whenever theSecurities become listed on any stock exchange and of any delisting thereof.

SECTION 7.07. Compensation and Indemnity. The Issuers shall pay to the--------------------------

Trustee from time to time reasonable compensation for its services. TheTrustee's compensation shall not be limited by any law on compensation of atrustee of an express trust. The Issuers shall reimburse the Trustee uponrequest for all reasonable out-of-pocket expenses incurred or made by it,including costs of collection, in addition to the compensation for its services.Such expenses shall include the reasonable compensation and expensesdisbursement and advances of the Trustee's agents, counsel, accountants andexperts. The Issuers shall indemnify the Trustee against any and all loss,liability or expense (including reasonable attorneys' fees and expenses)incurred by it in connection with the administration of

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this trust and the performance of its duties hereunder. The Trustee shall notifythe Issuers promptly of any claim for which it may seek indemnity. Failure bythe Trustee to so notify the Issuers shall not relieve the Issuers of theirobligations hereunder. The Issuers shall defend such claim and the Trustee shallcooperate in the defense. The Trustee may have separate counsel and the Issuersshall pay the reasonable fees and expenses of such counsel. The Issuers need notreimburse any expense or indemnify against any loss, liability or expenseincurred by the Trustee through the Trustee's own wilful misconduct, negligenceor bad faith.

To secure the Issuers' payment obligations in this Section, theIssuers and the Holders agree that the Trustee shall have a lien prior to theSecurities on all money or property held or collected by the Trustee, exceptthat held in trust to pay principal of and interest on particular Securities.

The Issuers' payment obligations pursuant to this Section shallsurvive the discharge of this Indenture. When the Trustee incurs fees andexpenses (including reasonable attorneys' fees and expenses) after theoccurrence of a Default specified in Section 6.01(7) or (8), such fees andexpenses are intended to constitute expenses of administration under theBankruptcy Law.

SECTION 7.08. Replacement of Trustee. The Trustee may resign at any----------------------

time by so notifying the Issuers. The Holders of a majority in principal amountof the Securities may remove the Trustee by so notifying the Trustee and mayappoint a successor Trustee. The Issuers shall remove the Trustee if:

(1) the Trustee fails to comply with Section 7.10;



(2) the Trustee is adjudged a bankrupt or insolvent;

(3) a receiver or other public officer takes charge of the Trustee orits property; or

(4) the Trustee otherwise becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in theoffice of Trustee for any reason (the Trustee in such event being referred toherein as the retiring Trustee), the Issuers shall promptly appoint a successorTrustee.

A successor Trustee shall deliver a written acceptance of itsappointment to the retiring Trustee and to the Issuers. Thereupon theresignation or removal of the retiring Trustee shall become effective, and thesuccessor Trustee shall have all the rights, powers and duties of the Trusteeunder this Indenture. The successor Trustee shall mail a notice of itssuccession to Securityholders. The retiring Trustee shall promptly transfer allproperty held by it as Trustee to the

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successor Trustee, subject to the lien provided for in Section 7.07.

If a successor Trustee does not take office within 60 days after theretiring Trustee resigns or is removed, the retiring Trustee, the Issuers or theHolders of a majority in principal amount of the Securities may petition anycourt of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.10, any Securityholdermay petition any court of competent jurisdiction for the removal of the Trusteeand the appointment of a successor Trustee.

Notwithstanding the replacement of the Trustee pursuant to thisSection, the Issuers' obligations under Section 7.07 shall continue for thebenefit of the retiring Trustee.

SECTION 7.09. Successor Trustee by Merger. If the Trustee---------------------------

consolidates with, merges or converts into, or transfers all or substantiallyall its corporate trust business or assets to, another corporation or bankingassociation, the resulting, surviving or transferee corporation without anyfurther act shall be the successor Trustee.

In case at the time such successor or successors by merger, conversionor consolidation to the Trustee shall succeed to the trusts created by thisIndenture any of the Securities shall have been authenticated but not delivered,any such successor to the Trustee may adopt the certificate of authentication ofany predecessor trustee, and deliver such Securities so authenticated; and incase at that time any of the Securities shall not have been authenticated, any



successor to the Trustee may authenticate such Securities either in the name ofany predecessor hereunder or in the name of the successor to the Trustee; and inall such cases such certificates shall have the full force which it is anywherein the Securities or in this Indenture provided that the certificate of theTrustee shall have.

SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all-----------------------------

times satisfy the requirements of TIA (S) 310(a). The Trustee shall have acombined capital and surplus of at least $50,000,000 as set forth in its mostrecent published annual report of condition. The Trustee shall comply with TIA(S) 310(b), including the optional provision permitted by the second sentence ofTIA (S) 310(b)(9); provided, however, that there shall be excluded from theoperation of TIA (S) 310(b)(1) any indenture or indentures under which othersecurities or certificates of interest or participation in other securities ofthe Issuers are outstanding if the requirements for such exclusion set forth inTIA (S) 310(b)(1) are met.

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SECTION 7.11. Preferential Collection of Claims Against Issuers. The-------------------------------------------------

Trustee shall comply with TIA S 311(a), excluding any creditor relationshiplisted in TIA S 311(b). A Trustee who has resigned or been removed shall besubject to TIA S 311(a) to the extent indicated.

ARTICLE VIII

Discharge of Indenture: Defeasance----------------------------------

SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)------------------------------------------------

When (i) the Issuers deliver to the Trustee all outstanding Securities (otherthan Securities replaced pursuant to Section 2.07) for cancellation or (ii) alloutstanding Securities have become due and payable and the Issuers irrevocablydeposit with the Trustee funds sufficient to pay at maturity all outstandingSecurities, including interest thereon (other than Securities replaced pursuantto Section 2.07), and if in either case the Issuers pay all other sums payablehereunder by the Issuers, then this Indenture shall, subject to Sections 8.01(c)and 8.06, cease to be of further effect. The Trustee shall acknowledgesatisfaction and discharge of this Indenture on demand of the Issuersaccompanied by an Officers' Certificate of the Company and an Opinion of Counseland at the cost and expense of the Issuers.

(b) Subject to Section 8.01(c) and 8.06, the Issuers at any time mayterminate (i) all their obligations under the Securities and this Indenture("legal defeasance option") or (ii) their obligations under Sections 4.02, 4.03,4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 5.01 and 5.02 and the operationof Sections 6.01(3), 6.01(4), 6.01(5), 6.01(6), 6.01(7) (only with respect to



Significant Subsidiaries), 6.01(8) (only with respect to SignificantSubsidiaries) and 6.01(9) ("covenant defeasance option"). The Issuers mayexercise their legal defeasance option notwithstanding their prior exercise oftheir covenant defeasance option.

If the Issuers exercise their legal defeasance option, payment of theSecurities may not be accelerated because of an Event of Default. If the Issuersexercise their covenant defeasance option, payment of the Securities may not beaccelerated because of an Event of Default specified in Section 6.01(3),6.01(4), 6.01(5), 6.01(6), 6.01(7) (only with respect to SignificantSubsidiaries), 6.01(8) (only with respect to Significant Subsidiaries) or6.01(9).

Upon satisfaction of the conditions set forth herein and upon requestof the Issuers, the Trustee shall acknowledge in writing the discharge of thoseobligations that the Issuers terminate.

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(c) Notwithstanding clauses (a) and (b) above, the Issuers'obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and8.06 shall survive until the Securities have been paid in full. Thereafter, theIssuers' obligations in Sections 7.07, 8.04 and 8.05 shall survive.

SECTION 8.02. Conditions to Defeasance. The Issuers may exercise------------------------

their legal defeasance option or their covenant defeasance option only if:

(1) the Issuers irrevocably deposit in trust with the Trustee moneyor U.S. Government Obligations for the payment of principal and interest onthe outstanding Securities to maturity or redemption, as the case may be;

(2) the Issuers deliver to the Trustee a certificate from anationally recognized firm of independent accountants expressing theiropinion that the payments of principal and interest when due and withoutreinvestment on the deposited U.S. Government Obligations plus anydeposited money without investment will provide cash at such times and insuch amounts (but, in the case of the legal defeasance option only, notmore than such amounts) as will be sufficient to pay principal and interestwhen due on all the outstanding Securities to maturity or redemption, asthe case may be;

(3) 123 days pass after the deposit is made and during the 123-dayperiod no Default (with respect to the Issuers) specified in Section6.01(7) or (8) occurs which is continuing at the end of the period;

(4) no Default has occurred and is continuing on the date of suchdeposit and after giving effect thereto;

(5) the deposit does not constitute a default under any other



agreement binding on either of the Issuers; and

(6) the Company delivers an Opinion of Counsel to the effect thatSecurityholders will not recognize income, gain or loss for Federal incometax purposes as a result of such deposit and defeasance and will be subjectto Federal income tax on the same amount and in the same manner and at thesame times as would have been the case if such deposit and defeasance hadnot occurred (and, in the case of legal defeasance only, such Opinion ofCounsel must be based on a ruling of the Internal Revenue Service or achange in applicable Federal income tax law); and

(7) the Company delivers to the Trustee an Officers' Certificate andan Opinion of Counsel, each stating that all conditions precedent to thedefeasance and discharge of the Securities as contemplated by this Article8 have been complied with.

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Before or after a deposit, the Issuers may make arrangementssatisfactory to the Trustee for the redemption of Securities at a future date inaccordance with Article 3.

SECTION 8.03. Application of Trust Money. The Trustee shall hold in--------------------------

trust money or U.S. Government Obligations deposited with it pursuant to thisArticle 8. It shall apply the deposited money and the money from U.S. GovernmentObligations through the Paying Agent and in accordance with this Indenture tothe payment of principal of and interest on the Securities.

SECTION 8.04. Repayment to the Company. The Trustee and the Paying------------------------

Agent shall promptly turn over to the Company upon request any excess money orsecurities held by them at any time.

Subject to any applicable abandoned property law, the Trustee and thePaying Agent shall pay to the Company upon request any money held by them forthe payment of principal or interest that remains unclaimed for two years, and,thereafter, Securityholders entitled to the money must look to the Issuers forpayment as general creditors.

SECTION 8.05. Indemnity for Government Obligations. The Issuers shall------------------------------------

pay and shall indemnify the Trustee against any tax, fee or other charge imposedon or assessed against deposited U.S. Government Obligations or the principaland interest received on such U.S. Government Obligations.

SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable-------------

to apply any money or U.S. Government Obligations in accordance with thisArticle 8 by reason of any legal proceeding or by reason of any order or



judgment of any court or governmental authority enjoining, restraining orotherwise prohibiting such application, the Issuers' obligations under thisIndenture and the Securities shall be revived and reinstated as though nodeposit had occurred pursuant to this Article 8 until such time as the Trusteeor Paying Agent is permitted to apply all such money or U.S. GovernmentObligations in accordance with this Article 8; provided, however, that, if theIssuers have made any payment of interest on or principal of any Securitiesbecause of the reinstatement of its obligations, the Issuers shall be subrogatedto the rights of the Holders of such Securities to receive such payment from themoney or U.S. Government Obligations held by the Trustee or Paying Agent.

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ARTICLE IX

Amendments----------

SECTION 9.01. Without Consent of Holders. The Company, Finance Corp.--------------------------

and the Trustee may amend this Indenture or the Securities without notice to orconsent of any Securityholder:

(1) to cure any ambiguity, omission, defect or inconsistency;

(2) to comply with Article V;

(3) to provide for uncertificated Securities in addition to or inplace of certificated Securities; provided, however, that theuncertificated Securities are issued in registered form for purposes ofSection 163(f) of the Internal Revenue Code of 1986, as amended, or in amanner such that the uncertificated Securities are described in Section163(f)(2)(B) of the Internal Revenue Code of 1986, as amended;

(4) to add guarantees with respect to the Securities;

(5) to add to the covenants of the Issuers for the benefit of theHolders or to surrender any right or power herein conferred upon theIssuers;

(6) to comply with any requirements of the SEC in connection withqualifying this Indenture under the TIA; or

(7) to make any change that does not adversely affect the rights ofany Securityholder.

After an amendment under this Section becomes effective, the Issuersshall mail to Securityholders a notice briefly describing such amendment. Thefailure to give such notice to all Securityholders, or any defect therein, shall



not impair or affect the validity of an amendment under this Section.

SECTION 9.02. With Consent of Holders. Subject to the next sentence,-----------------------

the Company, Finance Corp. and the Trustee may amend this Indenture or theSecurities in any respect without notice to any Securityholder but with thewritten consent of the Holders of at least a majority in principal amount of theSecurities (including consents obtained in connection with a tender offer orexchange offer for Securities). However, without the consent of eachSecurityholder affected, no amendment shall:

(1) reduce the amount of Securities whose Holders must consent to anamendment;

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(2) reduce the rate of or extend the time for payment of interest onany Security;

(3) reduce the principal of or extend the fixed maturity of anySecurity;

(4) reduce the premium payable upon the redemption of any Security orchange the time at which any Security may or shall be redeemed;

(5) make any Security payable in money other than that stated in theSecurity; or

(6) make any change in Section 6.04 or 6.07 or this Section.

It shall not be necessary for the consent of the Holders under thisSection 9.02 to approve the particular form of any proposed amendment, but itshall be sufficient if such consent approves the substance thereof.

After an amendment under this Section becomes effective, the Issuersshall mail to Securityholders a notice briefly describing such amendment. Thefailure to give such notice to all Securityholders, or any defect therein, shallnot impair or affect the validity of an amendment under this Section.

SECTION 9.03. Compliance with Trust Indenture Act. Every amendment-----------------------------------

to this Indenture or the Securities shall comply with the TIA as then in effect.

SECTION 9.04. Revocation and Effect of Consents and Waivers. A---------------------------------------------

consent to an amendment or a waiver by a Holder of a Security shall bind theHolder and every subsequent Holder of that Security or portion of the Securitythat evidences the same debt as the consenting Holder's Security, even ifnotation of the consent or waiver is not made on the Security. However, any suchHolder or subsequent Holder may revoke the consent or waiver as to such Holder's



Security or portion of the Security if the Trustee receives the notice ofrevocation before the date the amendment or waiver becomes effective. After anamendment or waiver becomes effective, it shall bind every Securityholder.

The Issuers may, but shall not be obligated to, fix a record date forthe purpose of determining the Securityholders entitled to give their consent ortake any other action described above. If a record date is fixed, thennotwithstanding the immediately preceding paragraph, those persons who wereSecurityholders at such record date (or their duly designated proxies), and onlythose persons, shall be entitled to give such consent or to revoke any consentpreviously given or to take any such action, whether or not such personscontinue to be Holders

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after such record date. No such consent shall be valid or effective for morethan 120 days after such record date.

SECTION 9.05. Notation on or Exchange of Securities. If an amendment-------------------------------------

changes the terms of a Security, the Trustee may require the Holder of theSecurity to deliver it to the Trustee. The Trustee may place an appropriatenotation on the Security regarding the changed terms and return it to theHolder. Alternatively, if the Issuers or the Trustee so determine, the Issuersin exchange for the Security shall issue and the Trustee shall authenticate anew Security that reflects the changed terms. Failure to make the appropriatenotation or to issue a new Security shall not affect the validity of suchamendment.

SECTION 9.06. Trustee to Sign Amendments. The Trustee shall sign any--------------------------

amendment authorized pursuant to this Article 9 if the amendment does noteadversely affect the rights, duties, liabilities or immunities of the Trustee.If it does, the Trustee may but need not sign it. In signing such amendment theTrustee shall be entitled to receive indemnity reasonably satisfactory to it andto receive, and shall be fully protected in relying upon, an Officers'Certificate and an Opinion of Counsel stating that such amendment is authorizedor permitted by this Indenture and that all conditions precedent, if any, havebeen satisfied.

ARTICLE X

Miscellaneous-------------

SECTION 10.01. Trust Indenture Act Controls. If any provision of this----------------------------

Indenture limits, qualifies or conflicts with another provision which isrequired to be included in this Indenture by the TIA, the required provisionshall control.



SECTION 10.02. Notices. Any notice or communication shall be in-------

writing and delivered in person or mailed by first-class mail addressed asfollows:

if to the Company or Finance Corp.:BCP Management, Inc.180 East Broad StreetColumbus, Ohio 43215Attention: Secretary

if to the Trustee:The Chase Manhattan Bank (National Association)4 Chase MetroTech Center - 3rd FloorBrooklyn, New York 11245Attention: Institutional Trust Group

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The Company, Finance Corp. or the Trustee by notice to the other maydesignate additional or different addresses for subsequent notices orcommunications.

Any notice or communication mailed to a Security holder shall bemailed to the Securityholder at the Securityholder's address as it appears onthe registration books of the Registrar and shall be sufficiently given if somailed within the time prescribed.

Failure to mail a notice or communication to a Securityholder or anydefect in it shall not affect its sufficiency with respect to otherSecurityholders. If a notice or communication is mailed in the manner providedabove it is duly given, whether or not the addressee receives it.

SECTION 10.03. Communication by Holders with Other Holders.--------------------------------------------

Securityholders may communicate pursuant to TIA S 312(b) with otherSecurityholders with respect to their rights under this Indenture or theSecurities. The Company, Finance Corp., the Trustee, the Registrar and anyoneelse shall have the protection of TIA S 312(c).

SECTION 10.04. Certificate and Opinion as to Conditions Precedent.---------------------------------------------------

Upon any request or application by the Issuers to the Trustee to take or refrainfrom taking any action under this Indenture, the Company shall furnish to theTrustee:

(1) an Officers' Certificate stating that, in the Opinion of thesigners, all conditions precedent, if any, provided for in this Indenture



relating to the proposed action have been complied with; and

(2) an Opinion of Counsel stating that, in the opinion of suchcounsel, all such conditions precedent have been complied with.

SECTION 10.05. Statement Required in Certificate or Opinion. Each---------------------------------------------

certificate or opinion with respect to compliance with a covenant or conditionprovided for in this Indenture shall include:

(1) a statement that the person making such certificate or opinionhas read such covenant or condition;

(2) a brief statement as to the nature and scope of the examinationor investigation upon which the statements or opinions contained in suchcertificate or opinion are based;

(3) a statement that, in the opinion of such person, he has made suchexamination or investigation as is necessary to enable him to express aninformed opinion as to

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whether or not such covenant or condition has been complied with; and

(4) a statement as to whether or not, in the opinion of such person,such covenant or condition has been complied with.

SECTION 10.06. When Securities Disregarded. In determining whether----------------------------

the Holders of the required principal amount of Securities have concurred in anydirection, waiver or consent, Securities owned by the Issuers or by any persondirectly or indirectly controlling or controlled by or under direct or indirectcommon control with the Issuers shall be disregarded and deemed not to beoutstanding, except that, for the purpose of determining whether the Trusteeshall be protected in relying on any such direction, waiver or consent, onlySecurities which the Trustee knows are so owned shall be so disregarded. Also,subject to the foregoing, only Securities outstanding at the time shall beconsidered in any such determination.

SECTION 10.07 Rules by Trustee, Paying Agent and Registrar. The---------------------------------------------

Trustee may make reasonable rules for action by or meeting of Securityholders.The Registrar and the Paying Agent may make reasonable rules for theirfunctions.

SECTION 10.08. Legal Holidays. A "Legal Holiday" is a Saturday, a---------------

Sunday or a day on which banking institutions are not required to be open in theState of New York. If a payment date is a Legal Holiday, payment shall be made



on the next succeeding day that is not a Legal Holiday, and no interest shallaccrue for the intervening period. If a regular record date is a Legal Holiday,the record date shall not be affected.

SECTION 10.09. Governing Law. This Indenture and the Securities shall--------------

be governed by, and construed in accordance with, the laws of the State of NewYork but without giving effect to applicable principles of conflicts of law tothe extent that the application of the laws of another jurisdiction would berequired thereby.

SECTION 10.10. No Recourse Against Others. (a) No director, officer,---------------------------

employee, partner or stockholder, as such, of the Company or of Finance Corp.(or of such partner or stockholder) shall have any liability for any obligationsof the Company or of Finance Corp., as the case may be, under the Securities orthis Indenture or for any claim based on, in respect of or by reason of suchobligations or their creation. By accepting a Security, each Securityholdershall waive and release all such liability. The waiver and release shall be apart of the consideration for the issue of the Securities.

(b) without limiting the generality of the foregoing, if the Companyis a limited partnership, the obligations of the

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Company hereunder and under the Securities will be non-recourse to the generalpartner (the "General Partner") of the Company (and its affiliates (other thanthe Company)), and principal of and interest on the Securities will be payableonly out of the cash flow and assets of the Company. The Trustee hereby agrees,and each holder of a Security will be deemed to have agreed, that,notwithstanding any statutory and/or common law liability of a general partnerfor the debts and obligations of a partnership, neither the General Partner norits assets (nor any of its affiliates (other than the Company) nor theirrespective assets) shall be liable for any of the obligations of the Companyhereunder or under the Securities, it being expressly agreed and acknowledgedthat all such obligations of the Company shall be payable and satisfied onlyfrom the cash flow and assets of the Company.

SECTION 10.11. Successors. All agreements of the Company and Finance----------

Corp. in this Indenture and the Securities shall bind their respectivesuccessors. All agreements of the Trustee in this Indenture shall bind itssuccessors.

SECTION 10.12. Multiple Originals. The parties may sign any number of------------------

copies of this Indenture. Each signed copy shall be an original, but all of themtogether represent the same agreement. One signed copy is enough to prove thisIndenture.



SECTION 10.13. Table of Contents; Headings. The table of contents,----------------------------

cross-reference sheet and headings of the Articles and Sections of thisIndenture have been inserted for convenience of reference only, are not intendedto be considered a part hereof and shall not modify or restrict any of the termsor provisions thereof.

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IN WITNESS WHEREOF, the parties have caused this Indenture to be dulyexecuted as of the date first written above.

BORDEN CHEMICALS AND PLASTICSOPERATING PARTNERSHIP

by: BCP MANAGEMENT, INC.,its General Partner,

Attest: by: /S/ JOSEPH M. SAGGESE---------------------------

Name: Joseph M. SaggeseTitle: President

/S/ LAWRENCE L. DIEKER------------------------------Name: Lawrence L. DiekerTitle: Secretary


Attest: by: /S/ JOSEPH M. SAGGESE---------------------------

Name: Joseph M. SaggeseTitle: President

/S/ LAWRENCE L. DIEKER------------------------------Name: Lawrence L. DiekerTitle: Secretary

THE CHASE MANHATTAN BANK(NATIONAL ASSOCIATION),as Trustee

Attest: by: /S/ THOMAS J. PROVENZANO---------------------------

Name: Thomas J. ProvenzanoTitle: Second Vice President

/S/ SHIEK WILTSHIRE------------------------------



Name: Shiek WiltshireTitle: Assistant Secretary

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EXHIBIT A

[FORM OF SECURITY]

BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIPBCP FINANCE CORPORATION

No. $

9 1/2% Note Due 2005

BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, aDelaware limited partnership, and BCP FINANCE CORPORATION, a Delawarecorporation, as joint and several obligors, promise to pay to , orregistered assigns, the principal sum of Dollars on May 1, 2005.

Interest Payment Dates: May 1 and November 1

Record Dates: April 15 and October 15

Additional provisions of this Security are set forth on the other sideof this Security.

Dated:

BORDEN CHEMICALS AND PLASTICSOPERATING LIMITED PARTNERSHIP

By: BCP MANAGEMENT, INC.as General Partner

By:____________________________

President

____________________________Secretary


By:____________________________

President



____________________________Secretary

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TRUSTEE'S CERTIFICATE OFAUTHENTICATION

THE CHASE MANHATTAN BANK (National Association),as Trustee, certifies that thisis one of the Securities referredto in the Indenture.

By:

______________________________Authorized Signatory

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[FORM ON REVERSE SIDE OF SECURITY]

9 1/2% Note Due 2005

1. Interest--------

BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, aDelaware limited partnership (such partnership, and its successors and assignsunder the Indenture hereinafter referred to, being herein called the "Company"),and BCP FINANCE CORPORATION, a Delaware corporation (such corporation, and itssuccessors and assigns under the Indenture hereinafter referred to, being hereincalled "Finance Corp."; the Company and Finance Corp. are collectively referredto herein as the "Issuers"), jointly and severally promise to pay interest onthe principal amount of this Security at the rate per annum shown above. TheIssuers will pay interest semiannually on May 1 and November 1 of each year(beginning November 1, 1995). Interest on Securities will accrue from the mostrecent date to which interest has been paid or, if no interest has been paid orduly provided for, from May 1, 1995. Interest will be computed on the basis of a360-day year of twelve 30-day months. The Issuers shall pay interest on overdueprincipal at the rate borne by the Securities plus 1% per annum, and they shallpay interest on overdue installments of interest at the same rate to the extentlawful.

2. Method of Payment-----------------

The Issuers will pay interest on the Securities (except defaulted



interest) to the persons who are registered holders of Securities at the closeof business on the April 15 or October 15 next preceding the interest paymentdate even if Securities are cancelled after the record date and on or before theinterest payment date. Holders must surrender Securities to a Paying Agent tocollect principal payments. The Issuers will pay principal and interest in moneyof the United States that at the time of payment is legal tender for payment ofpublic and private debts. However, the Issuers may pay principal and interest bycheck payable in such money and may mail an interest check to a Holder'sregistered address.

3. Paying Agent and Registrar--------------------------

Initially, The Chase Manhattan Bank (National Association), acorporation organized under the laws of the United States of America("Trustee"), will act as Paying Agent and Registrar. The Issuers may appoint andchange and Paying Agent, Registrar or co-registrar without notice. The Companyor

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any of its domestically incorporated Wholly Owned Subsidiaries may act as PayingAgent, Registrar or co-registrar.

4. Indenture---------

The Company issued the Securities under an Indenture dated as of May1, 1995 ("Indenture"), among the Company, Finance Corp. and the Trustee. Theterms of the Securities include those stated in the Indenture, and those madepart of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.

------SS 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). TheSecurities are subject to all such terms, and Securityholders are referred tothe Indenture and the Act for a statement of those terms. Capitalized terms usedherein and not defined herein have the meaning ascribed thereto in theIndenture. The Issuers will furnish to any Securityholder upon written requestand without charge to the Securityholder a copy of the Indenture which has in itthe text of this Security in larger type.

The Securities are general unsecured obligations of the Issuerslimited to $200,000,000 aggregate principal amount (subject to Section 2.07 ofthe Indenture). The Indenture imposes certain limitations on (i) the payment ofdividends on, and redemption of, capital stock of the Company and itssubsidiaries and the redemption of certain subordinated obligations of theCompany, (ii) the issuance of additional debt by the Company, (iii) limitationson restrictions on distributions from subsidiaries of the Company, (iv) sales ofassets and subsidiary stock, (v) the issuance of debt and preferred stock by theCompany's subsidiaries, (vi) sale and leaseback transactions and (vii)transactions with affiliates. The Indenture also provides that if the Company



does not consummate the acquisition of the Addis Assets by June 15, 1995, theIssuers will be required to offer to purchase up to $35.0 million in principalamount of the Securities at 100% of the principal amount thereof plus accruedand unpaid interest to the date of purchase.

5. Optional Redemption-------------------

The Securities may not be redeemed prior to May 1, 2000. On and afterthat date, the Issuers may redeem all the Securities in whole at any time or inpart from time to time at the following redemption prices (expressed inpercentages of principal amount) plus accrued interest to the redemption date:

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If redeemed during the 12 month period beginning May 1,

<TABLE><CAPTION>

RedemptionYear Price---- ----------<S> <C>2000 ........................................... 104.00%2001 ........................................... 102.50%2002 ........................................... 101.25%2003 and thereafter ............................. 100.00%

</TABLE>

6. Notice of Redemption--------------------

Notice of redemption will be mailed at least 30 days but not more than60 days before the redemption date to each Holder of Securities to be redeemedat his, her or its registered address. Securities in denominations larger than$1,000 may be redeemed in part but only in whole multiples of $1,000. If moneysufficient to pay the redemption price of accrued and unpaid interest on allSecurities (or portions thereof) to be redeemed on the redemption date isdeposited with the Paying Agent on or before the redemption date and certainother conditions are satisfied on or after such date interest ceases to accrueon such Securities (or such portions thereof) called for redemption.

7. Change of Control-----------------

Upon a Change of Control, each Holder shall have the right (subject toany right of the Issuers to redeem all or any part of the Securities pursuant toArticle III of the Indenture) to require that the Issuers repurchase suchHolder's Securities at a purchase price in cash equal to 101% of the principalamount thereof plus accrued and unpaid interest, if any, to the date of



purchase, in accordance with Section 4.11 of the Indenture.

8. Denominations; Transfer; Exchange---------------------------------

The Securities are in registered form without coupons in denominationsof $1,000 and whole multiples of $1,000. A Holder may transfer or exchangeSecurities in accordance with the Indenture. The Registrar may require a Holder,among other things, to furnish appropriate endorsements or transfer documentsand to pay any taxes and fees required by law or permitted by the Indenture. TheRegistrar need not register the transfer of or exchange any Securities selectedfor redemption (except, in the case of a Security to be redeemed in part, theportion of the Security not to be redeemed) or any Securities for a period of 15days before a selection of Securities to be redeemed or 15 days before aninterest payment date.

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9. Persons Deemed Owners---------------------

The registered holder of this Security may be treated as the owner ofit for all purposes.

10. Unclaimed Money---------------

If the money for the payment of principal or interest remainsunclaimed for two years, the Trustee or Paying Agent shall pay the money back tothe Company at its request unless an abandoned property law designates anotherperson. After any such payment, Holders entitled to the money must look only tothe Issuers and not to the Trustee for payment.

11. Defeasance----------

Subject to certain conditions, the Issuers at any time may terminatesome or all of their obligations under the Securities and the Indenture if theIssuers deposit with the Trustee money or U.S. Government Obligations for thepayment of principal, premium and interest on the Securities to the date fixedfor redemption or maturity, as the case may be.

12. Amendment, Waiver-----------------

Subject to certain exceptions set forth in the Indenture, (i) theIndenture or the Securities may be amended with the written consent of theHolders of at least a majority in principal amount outstanding of the Securities(including consents obtained in connection with a tender offer or exchange offerfor Securities) and (ii) any default or noncompliance with any provision may be



waived with the written consent of the Holders of a majority in principal amountoutstanding of the Securities (including consents obtained in connection witha tender offer or exchange offer for Securities). Subject to certain exceptionsset forth in the Indenture, without the consent of any Securityholder, theCompany, Finance Corp. and the Trustee may amend the Indenture or the Securitiesto cure any ambiguity, omission, defect or inconsistency, or to comply withArticle 5 of the Indenture, or to provide for uncertificated Securities inaddition to or in place of certificated Securities, or to comply with the Act orto add additional covenants or surrender the Issuers' rights, or to make certainchanges in the subordination provisions, or to make any change that does notadversely affect the rights of any Securityholder.

13. Defaults and Remedies---------------------

Under the Indenture, Events of Default include (i) default for 30 daysin payment of interest on the Securities; (ii) default in payment of principalon the Securities at maturity, upon redemption pursuant to paragraph 5 hereof,upon declaration or otherwise; (iii) failure by the Issuers to comply

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with other agreements in the Indenture or the Securities, in certain casessubject to notice and lapse of time; (iv) failure to pay other debt after finalmaturity or after acceleration thereof, if the total amount of such debt exceeds$20,000,000; (v) certain events of bankruptcy or insolvency; and (vi) certainjudgments or decrees for the payment of money in excess of $20,000,000. If anyEvent of Default occurs and is continuing, the Trustee or the Holders of atleast 25% in principal amount of the Securities may declare all the Securitiesto be due and payable immediately. Certain events of bankruptcy or insolvencyare Events of Default which will result in the Securities being due and payableimmediately upon the occurrence of such Events of Default.

Securityholders may not enforce the Indenture or the Securities exceptas provided in the Indenture. The Trustee may refuse to enforce the Indenture orthe Securities unless it receives reasonable indemnity or security. Subject tocertain limitations, Holders of a majority in principal amount of the Securitiesmay direct the Trustee in its exercise of any trust or power. The Trustee maywithhold from Securityholders notice of any continuing Default (except a Defaultin payment of principal or interest) if it determines that withholding notice isin their interest.

14. Trustee Dealings with the Issuers---------------------------------

Subject to certain limitations imposed by the Act, the Trustee underthe Indenture, in its individual or any other capacity, may become the owner orpledgee of Securities and may otherwise deal with and collect obligations owedto it by the Company or its affiliates and may otherwise deal with the Companyor its affiliates with the same rights it would have if it were not Trustee.



15. No Recourse Against Others--------------------------

A director, officer, employee, partner or stockholder, as such, of theCompany, Finance Corp. or the Trustee shall not have any liability for anyobligations of the Company or Finance Corp., as the case may be, under theSecurities or the Indenture or for any claim based on, in respect of or byreason of such obligations or their creation. By accepting a Security, eachSecurityholder waives and releases all such liability. The waiver and releaseare part of the consideration for the issue of the Securities.

Without limiting the generality of the foregoing, if the Company is alimited partnership, the obligations of the Company hereunder and under theIndenture will be non-recourse to the general partner (the "General Partner") ofthe Company (and its affiliates (other than the Company)), and principal of and

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interest on this Security will be payable only out of the cash flow and assetsof the Company. The Trustee hereby agrees, and each holder of a Security will bedeemed to have agreed, that, notwithstanding any statutory and/or common lawliability of a general partner for the debts and obligations of a partnership,neither the General Partner nor its assets (nor any of its affiliates (otherthan the Company) nor their respective assets) shall be liable for any of theobligations of the Company hereunder or under the Indenture, it being expresslyagreed and acknowledged that all such obligations of the Company shall bepayable and satisfied only from the cash flow and assets of the Company.

16. Authentication--------------

This Security shall not be valid until an authorized signatory of theTrustee (or an authenticating agent) manually signs the certificate ofauthentication on the other side of this Security.

17. Abbreviations-------------

Customary abbreviations may be used in the name of a Securityholder oran assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by theentireties), JT TEN (=joint tenants with rights of survivorship and not astenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to MinorsAct).

18. CUSIP Numbers-------------

Pursuant to a recommendation promulgated by the Committee on UniformSecurity Identification Procedures, the Issuers have caused CUSIP numbers to be



printed on the Securities and have directed the Trustee to use CUSIP numbers innotices of redemption as a convenience to Securityholders. No representation ismade as to the accuracy of such numbers either as printed on the Securities oras contained in any notice of redemption and reliance may be placed only on theother identification numbers placed thereon.

19. Notices-------

Any notice or communication shall be in writing and delivered inperson or mailed by first-class addressed as follows:

if to the Company or Finance Corp.:BCP Management, Inc.180 East Broad StreetColumbus, Ohio 43215Attention: Secretary

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if to the Trustee:The Chase Manhattan Bank (National Association)4 Chase MetroTech Center - 3rd FloorBrooklyn, New York 11245Attention: Institutional Trust Group

The Company, Finance Corp. or the Trustee by notice to the other maydesignate additional or different addresses for subsequent notices orcommunications.

Any notice or communication mailed to a Securityholder shall be mailedto the Securityholder at the Securityholder's address as it appears on theregistration books of the Registrar and shall be sufficiently given if so mailedwithin the time prescribed.

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________________________________________________________________________________

ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

________________________________________________________________________________

________________________________________________________________________________



________________________________________________________________________________(Print or type assignee's name, address and zip code)

________________________________________________________________________________(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint agent totransfer this Security on the books of the Company. The agent may substituteanother to act for him.

________________________________________________________________________________

Date: _________________________ Your Signature: ____________________________

________________________________________________________________________________Sign exactly as your name appears on the other side of this Security.

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OPTION OF HOLDER TO ELECT PURCHASE

To elect to have this Security purchased by the Issuers pursuant toSection 4.06, 4.11 or 4.12 of the Indenture, check the box below:

{__} Section 4.06 {__} Section 4.11 {__} Section 4.12

To elect to have only part of this Security purchased by the Issuerspursuant to Section 4.06, Section 4.11 or Section 4.12 of the Indenture, statethe amount you elect to have purchased (in integral multiples of $1,000):$__________________

Date: __________________ Your Signature: ___________________________________

(Sign exactly as your name appears on this Security)

Tax Identification No.: ___________________________

Signature Guarantee.

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================================================================================

CLOSING DOCUMENTS

================================================================================

CREDIT AGREEMENT

$100,000,000

DATED AS OF

MAY 2, 1995

AMONG

BORDEN CHEMICALS AND PLASTICSOPERATING LIMITED PARTNERSHIP,

AS THE COMPANY,

THE BANKS DEFINED HEREIN

AND

CREDIT SUISSE,AS AGENT,

ANDINDIVIDUALLY, AS A BANK

================================================================================

Andrews & Kurth L.L.P.


$100,000,000 LOAN FROM CREDIT SUISSEAND THE BANKS NAMED IN THE CREDIT AGREEMENT

DATED MAY 2, 1995

INDEX TO CLOSING DOCUMENTS

DOCUMENT TAB-------- ---

Credit Agreement dated May 2, 1995 and executed by Borden Chemicals and 1Plastics Operating Limited Partnership, a limited partnership organizedand existing under the New York Limited Partnership Act (the "Company"),whose sole general partner is BCP Management Inc., a Delawarecorporation ("BCPM"), the banks and other financial institutions listedon the signature pages under the caption ("Banks" and Credit Suisse,("Credit Suisse"), individually as a Bank and as agent for the otherBanks (in such capacity together with any other Person who becomes theAgent, the "Agent")

Revolving Credit Notes in the amount of each Bank's commitment 2

Officer's Certificate of the Company certifying: 3

. and attaching Certificate of Incorporation, Bylaws and Resolutionsof the General Partner and the Partnership Agreement of the Company

. other items in Section 5.01(d) of the Credit Agreement---------------

Opinion of Sidley & Austin, counsel to the Company 4



Opinion of General Counsel of the Company 5

Certificates of Good Standing and Existence for the Company and its 6General Partner

. Delaware

. Louisiana

. Illinois

Wachovia Bank and Trust Company, N.A. Termination Agreement 7

================================================================================

CREDIT AGREEMENT

$100,000,000

DATED AS OF

MAY 2, 1995

AMONG

BORDEN CHEMICALS AND PLASTICSOPERATING LIMITED PARTNERSHIP,

AS THE COMPANY,

THE BANKS DEFINED HEREIN

AND

CREDIT SUISSE,AS AGENT,

ANDINDIVIDUALLY, AS A BANK

================================================================================

TABLE OF CONTENTS

CREDIT AGREEMENT

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS ................... 1

Section 1.01 Definitions ........................................ 1Section 1.02 Types of Loans and Borrowings ...................... 21Section 1.03 Accounting Terms and Determinations ................ 21Section 1.04 Computation of Time Periods ........................ 21

ARTICLE II LOANS .............................................. 22

Section 2.01(a) Commitment ......................................... 22Section 2.02(b) Swing Loan Commitment .............................. 22Section 2.02 Minimum Amount of Each Borrowing ................... 22Section 2.03 Notice of Borrowing ................................ 23Section 2.04 Disbursement of Funds .............................. 23Section 2.05 Notes .............................................. 24Section 2.06 Conversions and Continuances ....................... 24Section 2.07 Pro Rata Borrowings ................................ 25Section 2.08 Interest ........................................... 25Section 2.09 Interest Periods ................................... 26Section 2.10 Interest Rate Not Ascertainable .................... 27Section 2.11 Reserve Requirements; Change in Circumstances ...... 27Section 2.12 Change in Legality ................................. 29Section 2.13 Indemnity .......................................... 30Section 2.14 Special Provisions for Swing Loans ................. 31

ARTICLE III LETTERS OF CREDIT .................................. 32

Section 3.01 Letters of Credit .................................. 32



Section 3.02 Letter of Credit Requests .......................... 33Section 3.03 Letter of Credit Participants ...................... 34Section 3.04 Agreement to Repay Letter of Credit Drawings ....... 35Section 3.05 Increased Costs .................................... 37Section 3.06 Conflict between Applications and Agreements ....... 37

ARTICLE IV FEES; COMMITMENTS; PAYMENTS ........................ 38

Section 4.01 Fees ............................................... 38Section 4.02 Voluntary Reduction of Commitment .................. 39Section 4.03 Mandatory Reduction of Commitment .................. 39Section 4.04 Voluntary Prepayments .............................. 40Section 4.05 Mandatory Repayments ............................... 40Section 4.06 Method and Place of Payment ........................ 41Section 4.07 Net Payments ....................................... 41Section 4.08 Tax Forms .......................................... 42Section 4.09 Maturity Date Extension Option ..................... 42

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ARTICLE V CONDITIONS PRECEDENT ............................... 43

Section 5.01 Conditions Precedent to the Initial Borrowing ofLoans ............................................ 43

Section 5.02 Conditions Precedent to All Credit Events .......... 44Section 5.03 Conditions Precedent to Conversions ................ 44Section 5.04 Delivery of Documents .............................. 45

ARTICLE VI REPRESENTATIONS AND WARRANTIES ..................... 45

Section 6.01 Organization and Qualification ..................... 45Section 6.02 Authorization and Validity ......................... 45Section 6.03 Governmental Consents .............................. 46Section 6.04 Conflicting or Adverse Agreements or Restrictions .. 46Section 6.05 Title to Assets .................................... 46Section 6.06 Litigation ......................................... 46Section 6.07 Financial Statements, Projections and Information

Memorandum ...................................... 46Section 6.08 Default ............................................ 47Section 6.09 Investment Company Act ............................. 47Section 6.10 Public Utility Holding Company Act ................. 47Section 6.11 ERISA .............................................. 47Section 6.12 Tax Returns and Payments ........................... 47Section 6.13 Environmental Matters .............................. 48Section 6.14 Purpose of Loans ................................... 48Section 6.15 Franchises and Other Rights ........................ 49Section 6.16 Subsidiaries ....................................... 49Section 6.17 Solvency ........................................... 49Section 6.18 Material Contracts ................................. 49

ARTICLE VII AFFIRMATIVE COVENANTS .............................. 49

Section 7.01 Information Covenants .............................. 49Section 7.02 Books, Records and Inspections ..................... 51Section 7.03 Insurance and Maintenance of Properties ............ 51Section 7.04 Payment of Taxes ................................... 51Section 7.05 Corporate Existence ................................ 52Section 7.06 Compliance with Statutes ........................... 52Section 7.07 ERISA .............................................. 52

ARTICLE VIII NEGATIVE COVENANTS ................................. 53

Section 8.01 Change in Business ................................. 53Section 8.02 Consolidation, Merger or Sale of Assets ............ 53Section 8.03 Liens .............................................. 53Section 8.04 Limitation on Debt ................................. 54Section 8.05 Investments ........................................ 55Section 8.06 Restricted Payments ................................ 55Section 8.07 Change in Accounting; Fiscal Year .................. 57Section 8.08 Consolidated EBITDA Coverage Ratio ................. 57

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Section 8.09 Total Debt to Consolidated Net Tangible AssetsRatio ............................................ 57

Section 8.10 Transactions with Affiliates ....................... 57Section 8.11 Limitation on Sales of Assets and Subsidiary Stock . 58Section 8.12 Limitation on Debt and Preferred Stock of



Subsidiaries ..................................... 59Section 8.13 Limitation on Sale and Leaseback Transactions ...... 60

ARTICLE IX EVENTS OF DEFAULT AND REMEDIES ..................... 60

Section 9.01 Events of Default and Remedies ..................... 60Section 9.02 Other Remedies ..................................... 62Section 9.03 Obligations Non Recourse as to General Partner ..... 63

ARTICLE X THE AGENT .......................................... 63

Section 10.01 Authorization and Action ........................... 63Section 10.02 Agent's Reliance ................................... 63Section 10.03 Agent and Affiliates; Credit Suisse (in its capacity

as a Bank) and Affiliates ........................ 64Section 10.04 Bank Credit Decision ............................... 65Section 10.05 Agent's Indemnity .................................. 65Section 10.06 Successor Agent .................................... 66Section 10.07 Notice of Default .................................. 66

ARTICLE XI MISCELLANEOUS ...................................... 66

Section 11.01 Amendments ......................................... 66Section 11.02 Notices ............................................ 67Section 11.03 No Waiver; Remedies ................................ 68Section 11.04 Costs, Expenses and Taxes .......................... 68Section 11.05 Indemnity .......................................... 69Section 11.06 Right of Setoff .................................... 69Section 11.07 Governing Law ...................................... 69Section 11.08 Interest ........................................... 70Section 11.09 Binding Effect ..................................... 71Section 11.10 Successors and Assigns; Participants ............... 71Section 11.11 Confidentiality .................................... 74Section 11.12 Pro Rata Treatment ................................. 74Section 11.13 Independence of Covenants .......................... 75Section 11.14 Separability ....................................... 75Section 11.15 Execution in Counterparts .......................... 75Section 11.16 Interpretation ..................................... 75Section 11.17 Submission to Jurisdiction ......................... 76Section 11.18 Final Agreement of the Parties ..................... 77Section 11.19 Waiver of Jury Trial ............................... 77

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Exhibits:--------

Exhibit 1.01-A Administrative QuestionnaireExhibit 2.03 Form of Notice BorrowingExhibit 2.05 Form of Revolving Credit NoteExhibit 2.14 Swing Loan Participation CertificateExhibit 3.02 Form of Letter of Credit RequestExhibit 5.01(e) Form of OpinionExhibit 11.10 Form of Assignment and Acceptance

Schedules:---------

Schedule 6.13 Exceptions to Environmental MattersSchedule 8.05 Investments

-iv-

CREDIT AGREEMENT

THIS CREDIT AGREEMENT dated as of May 2, 1995 (this "Agreement") is---------

among Borden Chemicals and Plastics Operating Limited Partnership, a Delawarelimited partnership (with its successors and permitted assigns, the "Company"),

-------whose sole general partner is BCP Management, Inc., a Delaware corporation, thebanks and other financial institutions listed on the signature pages hereofunder the caption "Banks" (together with each other Person who becomes a Bank

-----pursuant to Section 11.10, collectively, the "Banks") and Credit Suisse,

------------- -----("Credit Suisse"), individually as a Bank and as agent for the other Banks (in

-------------



such capacity together with any other Person who becomes the Agent pursuant toSection 10.06, the "Agent").------------- -----

RECITALS

The Company has requested that the Banks make available to the Companya revolving line of credit in the aggregate principal amount of $100,000,000 forthe purpose of refinancing certain existing debt and for working capital,capital expenditures and general corporate purposes. The Company and the Bankshave requested that Credit Suisse act as the Agent for the Banks. The Banks andCredit Suisse are amenable to such requests upon the terms and conditions setforth herein. Accordingly, the Company, the Agent and the Banks now enter intothis Agreement.

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Definitions. As used in this Agreement, the following-----------

terms shall have the following meanings:

"Accounts Receivable" means (a) any accounts receivable (whether ornot earned by performance), chattel paper, instruments, documents, generalintangibles, trade acceptances, and other rights to receive installment, rentalor other payments for, or relating to amounts due or to become due on accountof, goods or equipment sold or leased or to be sold or leased or servicesrendered or to be rendered or funds advanced or loaned or to be advanced orloaned and other similar rights to payment of any kind, (b) any proceeds of anyof the foregoing and (c) any interest in any property or asset of any kind(whether of the obligor with respect to such accounts receivable or any otherPerson) securing the payment of any item listed in clause (a) above.

"Administrative Questionnaire" means an Administrative Questionnairesubstantially in the form of Exhibit 1.01A, which each Bank has completed and

-------------provided to the Agent and the Company.

"Affiliate" of any Person, means (i) any Person that, directly orindirectly, is in control of, is controlled by or is under common control withsuch Person or (ii) any Person who is a director or officer (A) of such Person,(B) of any Subsidiary of such Person or (C) of any Person described in clause(i) above. For purposes of this

definition, control of a Person means the power, direct or indirect, to director cause the direction of the management and policies of such Person whether bycontract or otherwise; and the terms "controlling" and "controlled" havemeanings correlative to the foregoing.

"Agent" has the meaning specified in the introduction to thisAgreement.

"Agent's Fee" has the meaning specified in Section 4.01(d).---------------

"Agent's Letter" means that certain letter dated April 5, 1995 fromCredit Suisse to the Company and acknowledged by the Company setting forth(among other things) the terms of the Agent's Fee.

"Agreement" has the meaning specified in the introduction to thisCredit Agreement.

"Applicable Lending Office" means, with respect to each Bank, suchBank's Domestic Lending Office in the case of a Base Rate Loan and such Bank'sEurodollar Lending Office in the case of a Eurodollar Loan.

"Application" means an application in the form used by the IssuingBank from time to time requesting the Issuing Bank to open a Letter of Credit.

"Asset Disposition" means any sale, lease, transfer or otherdisposition (or series of related sales, leases, transfers or dispositions) ofCapital Stock of a Subsidiary (other than directors' qualifying shares),property or other assets (each referred to for the purposes of this definitionas a "disposition") by the Company or any of its Subsidiaries, including anydisposition by means of a merger, consolidation or similar transaction, otherthan (a) a disposition by the Company or a Subsidiary to the Company or a WhollyOwned Subsidiary, (b) a disposition of property or assets at fair market valuein the ordinary course of business, (c) a disposition of obsolete assets in theordinary course of business, (d) a disposition that constitutes a Restricted



Payment or a sale and leaseback transaction and (e) any sale, transfer or otherdisposition by the Company or any Subsidiary of Accounts Receivable or of anySubsidiary substantially all the assets of which are Accounts Receivable, whichsale, transfer or other disposition constitutes a "sale" under generallyaccepted accounting principles (as in effect at the time thereof).

"Assignment and Acceptance" has the meaning specified in Section-------

11.10(c).--------

"Attributable Debt" in respect of a sale and leaseback arrangementmeans, as at the time of determination, the present value (discounted at theBase Rate, compounded annually) of the total obligations of the lessee forrental payments during the remaining term of the lease included in sucharrangement (including any period for which such lease had been extended).

"Available Cash" has the meaning given to such term in the Amended and

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Restated Agreement of Limited Partnership of the Company, dated as of November30, 1987, as amended to the date of this Agreement.

"Average Life" means, as of the date of determination, with respect toany Debt, the quotient obtained by dividing (a) the sum of the products of (i)the numbers of years from the date of determination to the dates of eachsuccessive scheduled principal payment or redemption or similar payment withrespect to such Debt multiplied by (ii) the amount of such payment, by (b) thesum of all such payments.

"Bank" has the meaning provided in the introduction to this Agreement.

"Bankruptcy Code" has the meaning specified in Section 9.01(e).---------------

"Base Rate" means, a fluctuating interest rate per annum in effectfrom time to time, which rate per annum shall at all times be equal to thehigher of (a) the rate of interest announced publicly by the Agent, from time totime, as the Agent's base lending rate for commercial loans in dollars; and (b)1/2 of 1% per annum above the Federal Funds Rate. The base lending rate is notthe lowest rate of interest charged by the Agent in connection with extensionsof credit.

"Base Rate Borrowing" means a Borrowing comprised of Base Rate Loans.

"Base Rate Loan" means any Loan bearing interest at a rate determinedby reference to the Base Rate in accordance with the provisions of Article II.

----------

"BCPM" means BCP Management, Inc., a Delaware corporation, and itssuccessors.

"Board" means the Board of Governors of the Federal Reserve System ofthe United States (or any successor).

"Board of Directors" means the Board of Directors of the Company (or,if the Company is a limited partnership or a general partnership, the Board ofDirectors of any of its general partners or partners, respectively, authorizedto act on behalf of such limited partnership or general partnership, as the casemay be, in connection with this Agreement) or any committee thereof dulyauthorized to act on behalf of such Board.

"Borden" means Borden, Inc., a New Jersey corporation, and itssuccessors (other than as a result of any transaction described in clause (a) ofthe definition of "Change of Control", as if Borden, Inc. were deemed for suchpurposes to be the Company).

"Borrowing" means a borrowing pursuant to a Notice of Borrowingcomprised of a single Type of Loan from all the Banks (or resulting from aconversion or conversions on the same date having in the case of Eurodollar RateLoans the same Interest Period (except as otherwise provided in this Agreement))made by all of the Banks concurrently to the Company.

-3-

"Borrowing Date" means, with respect to each Borrowing, the BusinessDay upon which the proceeds of such Borrowing are to be made available to theCompany.



"Business Day" means any day (other than a day which is a Saturday,Sunday or legal holiday in the State of New York) on which banks are open forbusiness in New York, New York; provided, however, that, when used in connectionwith a Eurodollar Loan, the term "Business Day" shall also exclude any day onwhich banks are not open for dealings in dollar deposits in the Eurodollarinterbank market.

"Capital Lease" means, as to any Person, any lease in respect of whichthe rental obligations of such Person constitute Capital Lease Obligations.

"Capital Lease Obligations" of a Person means any obligation which isrequired to be classified and accounted for as a capital lease on a balancesheet of such Person prepared in accordance with GAAP; the amount of suchobligation shall be the capitalized amount thereof, determined in accordancewith GAAP; and the stated maturity thereof shall be the date of the last paymentof rent or any other amount due under such lease prior to the first date uponwhich such lease may be terminated by the lessee without payment of a penalty.

"Capital Stock" means any and all shares, interests, rights topurchase, warrants, options, participations or other equivalents of or interestsin (however designated) capital stock, including any preferred stock, and withrespect to a partnership, any interest therein (whether general or limited) thatconfers on a Person the right to receive a share of the profits and losses of,or distributions of assets of, such partnership; provided that Capital Stockshall not include any debt security that is convertible into or exchangeable forCapital Stock.

A "Change of Control" occurs when (a) any Person or "group" forpurposes of Section 13(d) of the Exchange Act (a "Group"), other than PermittedHolders, shall beneficially own, directly or indirectly, more than 50% of thetotal voting power of all classes of Voting Stock of the General Partner,Holding Company or the Company or (b)(i) the Company shall sell, lease, conveyor otherwise dispose of all or substantially all of the Company's assets to anyPerson or Group or (ii) the Company shall consolidate with or merge into anotherPerson or another Person shall consolidate with or merge into the Company, incase of either of the foregoing, in a transaction in which the outstandingVoting Stock of the Company is reclassified or changed into or exchanged forcash, securities or other property, other than, in the case of either of clauses(i) or (ii), to, with or into, as applicable, one or more Permitted Holders or aPerson, more than 50% of the total voting power of all classes of Voting Stockof which, after giving effect to such transaction, is beneficially owned,directly or indirectly, by one or more Permitted Holders or (iii) the Company,Holding Company or the General Partner shall adopt a plan of liquidation ordissolution (unless all or substantially all the Company's assets aredistributed pursuant to such plan to one or more Permitted Holders).

-4-

"Code" means Internal Revenue Code of 1986, as amended from time totime, and the regulations promulgated thereunder.

"Commitment" means, with respect to each Bank, the amount set forthopposite the name of such Bank under the heading "Commitment" on the signaturepage for such Bank, or, in the case of any Person who becomes a Bank after theExecution Date, on the signature page of the Assignment and Acceptance executedby such Person, in each case, as the same may be reduced from time to time orterminated pursuant to Section 4.02, Section 4.03 or Article IX and with respect

------------ ------------ ----------to the Commitment for the Swing Loan Bank shall include the Swing LoanCommitment.

"Commitment Fee" has the meaning specified in Section 4.01(b).---------------

"Company" has the meaning specified in the introduction to thisAgreement.

"Consolidated EBITDA Coverage Ratio", as of any date of determination,means the ratio of (a) the aggregate amount of EBITDA for the period of the fourmost recent consecutive fiscal quarters to (b) Consolidated Interest Expense forsuch four fiscal quarters; provided, however, that (i) if the Company or anySubsidiary has issued any Debt since the beginning of such period that remainsoutstanding as of such date of determination, EBITDA and Consolidated InterestExpense for such period shall be calculated after giving effect on a pro formabasis to such Debt as if such Debt had been issued on the first day of suchperiod and the discharge of any other Debt repaid, repurchased, defeased orotherwise discharged with the proceeds of such new Debt as if such discharge hadoccurred on the first day of such period, (ii) if, since the beginning of suchperiod, the Company or any Subsidiary shall have made any Asset Disposition, theEBITDA for such period shall be reduced by an amount equal to the EBITDA (if



positive) directly attributable to the assets that were the subject of suchAsset Disposition for such period, or increased by an amount equal to the EBITDA(if negative), directly attributable thereto for such period, and ConsolidatedInterest Expense for such period shall be reduced by an amount equal to theConsolidated Interest Expense directly attributable to any Debt or PreferredStock of the Company or any Subsidiary repaid, repurchased, defeased orotherwise discharged with respect to the Company and its continuing Subsidiaryor from which the Company or such continuing Subsidiary has been released byreason of the assumption thereof by the transferee of such Asset Disposition, inconnection with such Asset Dispositions for such period (or, if the CapitalStock of any Subsidiary is sold, the Consolidated Interest Expense for suchperiod directly attributable to the Debt or Preferred Stock of such Subsidiaryto the extent the Company and its continuing Subsidiaries are no longer liablefor such Debt or Preferred Stock after such sale), (iii) if since the beginningof such period the Company or any Subsidiary (by merger or otherwise) shall havemade an Investment in any Subsidiary (or any Person which becomes a Subsidiary)or an acquisition of assets, which constitutes all or substantially all of anoperating unit of a business, EBITDA and Consolidated Interest Expense for suchperiod shall be calculated after giving pro forma effect thereto (including theissuance of any Debt) as if such Investment or acquisition occurred on the firstday of such period and (iv) if since the beginning of such period

-5-

any Person (that subsequently became a Subsidiary or was merged with or into theCompany or any Subsidiary since the beginning of such period) shall have madeany Asset Disposition or any Investment that would have required an adjustmentpursuant to clause (ii) or (iii) above if made by the Company or a Subsidiaryduring such period, EBITDA and Consolidated Interest Expense for such periodshall be calculated after giving pro forma effect thereto as if such AssetDisposition or Investment occurred on the first day of such period. For purposesof this definition, whenever pro forma effect is to be given to an acquisitionof assets, the amount of income or earnings relating thereto, and the amount ofConsolidated Interest Expense associated with any Debt or Preferred Stock issuedin connection therewith, shall be determined on a pro forma basis in good faithby a responsible financial or accounting Officer of the Company. If any Debtbears a floating rate of interest and is being given pro forma effect, theinterest of such Debt shall be calculated as if the rate in effect on the dateof determination had been the applicable rate for the entire period (taking intoaccount any Interest Rate Protection Agreement applicable to such Debt if suchInterest Rate Protection Agreement has a remaining term in excess of 12 months).

"Consolidated Interest Expense" means, for any period, (a) the totalinterest expense of the Company and its consolidated Subsidiaries, including (i)interest expense attributable to Capital Lease Obligations, (ii) amortization ofdebt discount and debt issuance cost, (iii) capitalized interest, (iv) non-cashinterest payments, (v) commissions, discounts and other fees and charges owedwith respect to letters of credit and bankers' acceptance financing, (vi) netcosts under Interest Rate Protection Agreements (including amortization offees), (vii) Preferred Stock dividends in respect of all Preferred Stock held byPersons other than the Company or a Wholly Owned Subsidiary, (viii) interestincurred in connection with investments in discontinued operations and (ix)interest actually paid by the Company or any of its consolidated Subsidiariesunder any guarantee of Debt or other obligation of any other Person minus (b)the total interest income of the Company and its consolidated Subsidiaries.

"Consolidated Net Income" means, for any period, the net income of theCompany and its consolidated Subsidiaries; provided, however, that there shallnot be included in such Consolidated Net Income:

(a) any net income of any Person if such Person is not a Subsidiary,except that (i) the Company's equity in the net income of any such Personfor such period shall be included in such Consolidated Net Income up to theaggregate amount of cash actually distributed by such Person during suchperiod to the Company or a Subsidiary as a dividend or other distribution(subject, in the case of a dividend or other distribution to a Subsidiary,to the limitations contained in clause (c) below) and (ii) the Company'sequity in a net loss of any such Person for such period shall be includedin determining such Consolidated Net Income;

(b) any net income of any Person acquired by the Company or aSubsidiary in a pooling of interests' transaction for any period prior tothe date of such acquisition;

-6-

(c) any net income of any Subsidiary that is subject to restrictions,directly or indirectly, on the payment of dividends or the making of



distributions by such Subsidiary, directly or indirectly, to the Company,except that (i) the Company's equity in the net income of any suchSubsidiary for such period shall be included in such Consolidated NetIncome up to the aggregate amount of cash actually distributed by suchSubsidiary during such period to the Company or another Subsidiary as adividend or other distribution (subject in the case of a dividend or otherdistribution to another Subsidiary, to the limitation contained in thisclause) and (ii) the Company's equity in a net loss of any such Subsidiaryfor such period shall be included in determining such Consolidated NetIncome;

(d) any gain (or loss) realized upon the sale or other disposition ofany property, plant or equipment of the Company or its consolidatedSubsidiaries (including pursuant to any sale-and-leaseback arrangement)which is not sold or otherwise disposed of in the ordinary course ofbusiness and any gain (or loss) realized upon the sale or other dispositionof any Capital Stock of any Person; and

(e) the cumulative effect of a change in accounting principles.

"Consolidated Net Tangible Assets" means the total assets of theCompany and its Subsidiaries appearing on a consolidated balance sheet of theCompany and its Subsidiaries (prepared in accordance with GAAP) as of the mostrecent fiscal quarter, after (a) adding thereto all Attributable Debt of theCompany and its Subsidiaries in respect of any sale and leaseback arrangementnot capitalized on such balance sheet, (b) eliminating all intercompanytransactions and all amounts properly attributable to minority interests, ifany, in the stock and surplus of Subsidiaries and (b) deducting therefrom(without duplication of deductions):

(i) all liabilities of the Company and its Subsidiaries other thanDebt;

(ii) the net book amount of all assets, after deducting any reservesapplicable thereto, which would be treated as intangible under GAAP,including such items as goodwill, trademarks, trade names, service marks,brand names, copyrights, patents and licenses, and rights with respect tothe foregoing, unamortized debt discount and expense and organizationexpenses;

(iii) any write-up in the book value of any asset on the books of theCompany or any Subsidiary resulting from a revaluation thereof subsequentto the date of this Agreement (other than the write-up of the book value ofan asset made in accordance with purchase accounting under GAAP inconnection with the purchase of such asset);

(iv) all deferred charges (other than prepaid expenses); and

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(v) all reserves, including, without limitation, reserves fordeferred income taxes, liabilities (fixed or contingent), depreciation,obsolescence, depletion, insurance and inventory valuation, which appear orunder GAAP are required to appear on such balance sheet.

"Consolidated Net Worth" of any Person, means the total of the amountsshown on the balance sheet of such Person and its consolidated Subsidiaries,determined on a consolidated basis in accordance with GAAP, as of the end of themost recent fiscal quarter of such Person, and (a) if such Person is apartnership, the consolidated equity of the partners less (x) any amountsattributable to Redeemable Stock and (y) any amounts attributable toExchangeable Stock and (b) if such Person is not a partnership, (i) the par orstated value of all outstanding Capital Stock of such Person plus (ii) paid-incapital or capital surplus relating to such Capital Stock plus (iii) anyretained earnings or earned surplus less (A) any accumulated deficit, (B) anyamounts attributable to Redeemable Stock and (C) any amounts attributable toExchangeable Stock.

"Conversion Date" means that date upon which the Borrower shall betreated as a corporation for federal income tax purposes pursuant to Section7704 of the Internal Revenue Code of 1986, as amended and Section 10211(c) ofP.L. 100-203, the Omnibus Budget Reconciliation Bill of 1987, as amended bySection 2004(f)(2), of P.L. 100-647, the Technical and Miscellaneous Revenue Actof 1988, as amended or supplemented from time to time.

"Credit Event" means the making of any Loan or the issuance or theextension of any Letter of Credit.

"Credit Suisse" has the meaning specified in the introduction to thisAgreement.



"CS First Boston" means CS First Boston Corporation in its capacity asthe arranger of this Agreement pursuant to a written agreement dated April 5,1995 with the Company.

"Debt" of any Person means, without duplication,

(a) the principal of and premium, if any, in respect of (i)indebtedness of such Person for money borrowed and (ii) indebtednessevidenced by notes, debentures, bonds or other similar instruments for thepayment of which such Person is responsible or liable;

(b) all Capital Lease Obligations and all Attributable Debt of suchPerson;

(c) all obligations of such Person issued or assumed as the deferredpurchase price of property, all conditional sale obligations of such Personand all obligations of such Person under any title retention agreement (butexcluding trade accounts payable arising in the ordinary course ofbusiness);

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(d) all obligations of such Person for the reimbursement of anyobligor on any letter of credit, banker's acceptance or similar credittransaction (other than obligations with respect to letters of creditsecuring obligations (other than obligations described in (a) through (c)above) entered into in the ordinary course of business of such Person tothe extent such letters of credit are not drawn upon or, if and to theextent drawn upon, such drawing is reimbursed no later than the thirdBusiness Day following receipt by such Person of a demand for reimbursementfollowing payment on the letter of credit);

(e) the amount of all obligations of such Person with respect to theredemption, repayment or other repurchase of any Redeemable Stock (butexcluding any accrued dividends);

(f) all obligations of the type referred to in clauses (a) through(e) of other Persons and all dividends of other Persons for the payment ofwhich, in either case, such Person is responsible or liable, directly orindirectly, as obligor, guarantor or otherwise, including by means of anyagreement which has the economic effect of a guarantee; and

(g) all obligations of the type referred to in clauses (a) through(f) of other Persons secured by any Lien on any property or asset of suchPerson (whether or not such obligation is assumed by such Person), theamount of such obligation being deemed to be the lesser of the value ofsuch property or assets or the amount of the obligation so secured.

"Default" means the occurrence of any event which with the giving ofnotice or the passage of time or both would become an Event of Default.

"Default Rate" has the meaning specified in Section 2.08(c).---------------

"Designated Payment Date" means the last Business Day of each calendarquarter during the term hereof.

"Disqualified Capital Stock" means any Capital Stock that isRedeemable Stock or Exchangeable Stock.

"Domestic Lending Office" means, with respect to any Bank, the officeof such Bank specified as its "Domestic Lending Office" on such Bank's signature

-----------------------page to this Agreement or, as to any Person who becomes a Bank after the datehereof, on the signature page of the Assignment and Acceptance executed by suchPerson, in the Administrative Questionnaire delivered by such Person or suchother office of such Bank as such Bank may hereinafter designate from time totime its "Domestic Lending Office" by notice to the Company and the Agent.

"Drawing" has the meaning specified in Section 3.04(b).---------------

"EBITDA" for any period, means the Consolidated Net Income for suchperiod, plus the following to the extent deducted in calculating suchConsolidated Net Income: (a) income tax expense, (b) Consolidated InterestExpense, (c) depreciation

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expense, (d) amortization expense and (e) all other non-cash items reducingConsolidated Net Income, less all non-cash items increasing Consolidated NetIncome.

"Effective Date" means the date on which all conditions to borrowingset forth in Article V are first met or waived in accordance with Section 11.01

--------- -------------hereof.

"Eligible Assignee" means (a) any Bank, (b) a commercial bank or anysimilar financial institution having combined capital and surplus in excess of$500,000,000 and (c) any other bank or similar financial institution approved bythe Agent and the Company, which approval shall not be unreasonably withheld.

"Environmental Laws" means (a) federal, state or local laws pertainingto conservation or protection of the environment in effect at the time inquestion, including the Clean Air Act, the Comprehensive Environmental ResponseCompensation and Liability Act, ("CERCLA"), the Federal Water Pollution Control

------Act, the Occupational Safety and Health Act, the Resource Conservation andRecovery Act, the Safe Drinking Water Act, the Toxic Substances Control Act, theSuperfund Amendment and Reauthorization Act of 1986, the Hazardous MaterialsTransportation Act, and comparable state and local laws, and other environmentalconservation and protection laws, (b) final rules or regulations of anygovernmental regulatory agency (or interim or temporary rules or regulations inrespect of which the issuing agency has appropriately indicated their presentapplicability pending the finalization process) adopted pursuant to authoritygranted pursuant to any law listed in (a) above, and (c) any judicial, arbitralor administrative order, judgment, permit or approval, pursuant to any lawlisted in (a) or rule or regulation listed in (b), to the extent that suchorder, judgment, permit or approval is binding upon the Company or its propertyor assets.

"ERISA" means the Employee Retirement Income Security Act of 1974, asamended, and the regulations promulgated thereunder.

"ERISA Affiliate" means any trade or business (whether or notincorporated) which is either a member of the same "controlled group" or under"common control," within the meaning of Sections 414(b) and 414(c) of the Codeand the regulations thereunder, with the Company.

"Eurocurrency Liabilities" has the meaning specified in Regulation Dof the Board as in effect from time to time.

"Eurodollar Lending Office" means, with respect to each Bank, thebranches or affiliates of such Bank which such Bank has designated as its"Eurodollar Lending Office" on such Bank's signature page to this Agreement or,as to any Person who becomes a Bank after the date hereof, on the signature pageof the Assignment and Acceptance executed by such Person, in the AdministrativeQuestionnaire delivered by such Person or such other office of such Bank as suchBank may hereafter designate from time to time as its "Eurodollar LendingOffice" by notice to the Company and the Agent.

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"Eurodollar Rate" means, for any Interest Period for each EurodollarRate Loan comprising part of the same Borrowing, an interest rate per annumequal to the rate per annum obtained by dividing (a) the average (rounded upwardto the nearest whole multiple of 1/16 of 1% per annum, if such average is notsuch a multiple) of the rate per annum at which deposits in U.S. dollars areoffered by the principal office of each of the Reference Banks in London,England to prime banks in London interbank market at 11:00 a.m. (London Time)two Business Days before the first day of such Interest Period for a periodequal to such Interest Period by (b) a percentage equal to 100% minus theReserve Percentage for such Interest Period. The Eurodollar Rate for anyInterest Period for each Eurodollar Rate Loan comprising part of the sameBorrowing shall be determined by the Agent on the basis of applicable ratesfurnished to and received by the Agent from the Reference Banks two BusinessDays before the first day of such Interest Period.

"Eurodollar Rate Borrowing" means a Borrowing comprised of aEurodollar Rate Loans.

"Eurodollar Rate Loan" means any Loan bearing interest at a ratedetermined by reference to the Eurodollar Rate in accordance with the provisionsof Article II.

----------

"Events of Default" has the meaning specified in Section 9.01.



------------

"Exchange Act" means the Securities and Exchange Act of 1934, asamended.

"Exchangeable Stock" means any Capital Stock that is exchangeable orconvertible into another security (other than Capital Stock of the Companythat is neither Exchangeable Stock nor Redeemable Stock).

"Execution Date" means the earliest date upon which all of thefollowing shall have occurred: counterparts of this Agreement shall have beenexecuted by the Company, the Agent and each Bank listed on the signature pageshereof and the Agent shall have received such counterparts via telecopy orotherwise.

"Extension Request" has the meaning specified in Section 4.09.------------

"Federal Funds Rate" means, for any period, a fluctuating interestrate per annum equal for each day during such period to the weighted average ofthe rates on overnight Federal funds transactions with members of the FederalReserve System arranged by Federal funds brokers, as published for such day (or,if such day is not a Business Day, for the next preceding Business Day) by theFederal Reserve Bank of New York, or, if such rate is not so published for anyday which is a Business DAy, the average of the quotations for such day on suchtransaction received by the Agent from three Federal funds brokers of recognizedstanding selected by it.

"Fees" means all amounts payable pursuant to Section 4.01.------------

"Financials" has the meaning specified in Section 6.07.------------

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"Financial Statement Delivery Date" means the date on which thequarterly or annual financial statements of the Company are delivered pursuantto Section 7.01(a) or Section 7.01(b), as the case may be.

--------------- ---------------

"Form 1001" has the meaning specified in Section 4.08.------------

"Form 4224" has the meaning specified in Section 4.08.------------

"GAAP" means generally accepted accounting principles as in effectfrom time to time as set forth in the opinions, statements and pronouncements ofthe Accounting Principles Board of the American Institute of Certified PublicAccountants, the Financial Accounting Standards Board and such other Persons whoshall be approved by a significant segment of the accounting profession andconcurred in by the independent certified public accountants certifying anyaudited financial statements of the Company.

"General Partner" shall mean BCP Management, Inc., a Delawarecorporation, and its successors.

"Hazardous Materials" means (a) hazardous waste as defined in theResource Conservation and Recovery Act of 1976, or in any applicable federal,state or local law or regulation, (b) hazardous substances, as defined inCERCLA, or in any applicable state or local law or regulation, (c) gasoline, orany other petroleum product or by-product, (d) toxic substances, as defined inthe Toxic Substances Control Act of 1976, or in any applicable federal, state orlocal law or regulation or (e) insecticides, fungicides, or rodenticides, asdefined in the Federal Insecticide, Fungicide, and Rodenticide Act of 1975, orin any applicable federal, state or local law or regulation, as each such Act,statute or regulation, may be amended from time to time.

"Highest Lawful Rate" means, as to any Bank, the maximum nonusuriousrate of interest that, under applicable law, may be contracted for, taken,reserved, charged or received by such Bank on the Loans or under the LoanDocuments at any time or from time to time. If the maximum rate of interestwhich, under applicable law, the Banks are permitted to charge the Company onthe Loans shall change after the date hereof, to the extent permitted byapplicable law, the Highest Lawful Rate shall be automatically increased ordecreased, as the case may be, as of the effective time of such change withoutnotice to the Company or any other Person.

"Holding Company" means Borden Chemicals and Plastics Limited



Partnership, a Delaware limited partnership and its successors.

"Indenture" means that certain Indenture dated as of May 1, 1995 amongthe Company, BCP Finance Corporation, a Delaware corporation, and The ChaseManhattan Bank (National Association), a corporation organized under the laws ofthe United States of America providing for, among other things, issuance of theSecurities by the Company and BCP Finance Corporation, and any agreement under

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which the Company incurs Debt to Refinance any portion of its Debt under theIndenture, as each of same may be amended or supplemented from time to time.

"Independent Committee" means a standing committee of the Board ofDirectors composed entirely of Independent Directors; provided that if there isno such standing committee, then "Independent Committee" means all theIndependent Directors.

"Information Memorandum" means that certain information memorandumregarding the Loans dated April 1995 compiled by CS First Boston Corporationfrom information (other than the information contained in the Industry OverviewSection thereof) provided by the Company, which Information Memorandum has beenpreviously distributed to the Banks.

"Interest Period" has the meaning specified in Section 2.09.------------

"Interest Rate Protection Agreement" means any interest rate swapagreement, interest rate cap agreement or other financial agreement orarrangement designed to protect the Company or any Subsidiary againstfluctuations in interest rates.

"Investment" in any Person means, as applied to any Person, any director indirect purchase or other acquisition by such Person of stock or othersecurities of any other Person, or any direct or indirect loan, or advance to,any acquisition of Capital Stock, obligation or other security of, or capitalcontribution or other investment in, such Person by such Person to any otherPerson, and any other item which would be classified as an "investment" on abalance sheet of such Person, including any direct or indirect contribution bysuch Person of property or assets to a joint venture, partnership or otherbusiness entity in which such Person retains an interest.

"Issuing Bank" means, Credit Suisse and its successors and permittedassigns.

"Letter of Credit" has the meaning provided in Section 3.01.------------

"Letter of Credit Fee" has the meaning specified in Section 4.01(c).---------------

"Letter of Credit Limit" means $30,000,000.

"Letter of Credit Outstandings" means, at any time, the sum of (a) theaggregate Stated Amount of all outstanding Letters of Credit and (b) the amountof all Unpaid Drawings in respect of all Letters of Credit.

"Letter of Credit Request" has the meaning specified in Section 3.02.------------

"Lien" means, when used with respect to any Person, any mortgage,lien, charge, pledge, security interest or encumbrance of any kind (whethervoluntary or involuntary and whether imposed or created by operation of law orotherwise) upon,

-13-

or pledge of, any of its property or assets, whether now owned or hereafteracquired, or any lease intended as security, any Capital Lease in the nature ofthe foregoing, any conditional sale agreement or other title retentionagreement, in each case, for the purpose, or having the effect, of protecting acreditor against loss or securing the payment or performance of an obligation toa creditor.

"Loan" and "Loans" shall mean an extension of credit by (i) the Banksto the Company under Article II in the form of Base Rate Loans and EurodollarRate Loans and (ii) the Swing Loan Bank in the form of a Swing Loan.

"Loan Documents" means this Agreement, the Notes, the Letter of Credit



Requests and the Applications.

"Majority Banks" means, at any time, Banks holding at least 51% of theTotal Commitment or, if the Commitments shall have been terminated, holdingNotes evidencing at least 51% of the aggregate unpaid principal amount of theLoans.

"Margin" means, with respect to any Loan, the rate of interest perannum determined as set forth below as a function of the Type of such Loan:

Eurodollar BaseRate Loan Rate Loan--------- ---------

1.00% 0%

"Material Adverse Effect" means, relative to any circumstance,condition, occurrence or series of occurrences of whatever nature (including anyadverse determination in any litigation, arbitration or governmentalinvestigation or proceeding) affecting the business, condition (financial orotherwise), operations, performance or properties of the Company and itsSubsidiaries taken as a whole which after taking into account actual insurancecoverage and effective indemnification with respect to such occurrence,materially impairs the ability of the Company to make payment hereunder or underthe Notes.

"Maturity Date" means with respect to (a) Base Rate Loans andEurodollar Loans, December 31, 1997, as same may be extended pursuant to theMaturity Date Extension Option, or the earlier date of the acceleration of thematurity of the Obligations pursuant to Section 9.01 and (b) Swing Loans, the

-------------earlier to occur of (i) the seventh (7th) day after such Swing Loan is made and(ii) the Maturity Date for Base Rate Loans and Eurodollar Loans as discussed in(a) above.

"Maturity Date Extension Option" shall have the meaning specified inSection 4.09.------------

"Maximum Permissible Rate" has the meaning specified in Section 11.08.-------------

"Moody's" means Moody's Investors Service, Inc., and its successors.

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"Multiemployer Plan" means any plan which is a "multiemployer plan"(as such term is defined in Section 4001(a)(3) of ERISA).

"Net Available Cash" from an Asset Disposition or sale of AccountsReceivable, means cash payments received (including any cash payments receivedby way of deferred payment of principal pursuant to a note or installmentreceivable or otherwise, but only as and when received, and excluding any otherconsideration received in the form of assumption by the acquiring Person of Debtor other obligations relating to such properties or assets or received in anyother non-cash form) therefrom, in each case net of all legal, title andrecording tax expenses, commissions and other fees and expenses incurred, andall Federal, state, provincial, foreign and local taxes required to be accruedas a liability under GAAP, as a consequence of such Asset Disposition or sale ofAccounts Receivable, and in each case net of all payments made on any Debt whichis secured by any assets subject to such Asset Disposition or sale of AccountsReceivable, in accordance with the terms of any Lien upon or other securityagreement of any kind with respect to such assets, or which must by its terms,or in order to obtain a necessary consent to such Asset Disposition, or byapplicable law be repaid out of the proceeds from such Asset Disposition or saleof Accounts Receivable, and net of amounts thereof allocable to minorityinterest holders in Subsidiaries.

"Net Cash Proceeds", with respect to any issuance or sale of CapitalStock, means the cash proceeds of such issuance or sale net of attorneys' fees,accountants' fees, underwriters' or placement agents' fees, discounts orcommissions and brokerage, consultant and other fees actually incurred inconnection with such issuance or sale and net of taxes paid or payable as aresult thereof.

"Note" and "Notes" have the meanings specified in Section 2.05(a).---------------

"Notice of Borrowing" has the meaning provided in Section 2.03.------------



"Notice of Conversion" has the meaning provided in Section 2.06.------------

"Notice of Default" has the meaning specified in Section 9.01.------------

"Obligations" means all the obligations of the Company now orhereafter existing under the Loan Documents, whether for principal, UnpaidDrawings, interest, Fees, expenses, indemnification or otherwise.

"Officer" or "Responsible Officer" means the Chairman of the Board,the President, any Vice President, the Treasurer, the Principal AccountingOfficer or the Secretary of the Company (or, if the Company is a limitedpartnership or a general partnership, the Chairman of the Board of any of itsgeneral partners or partners, respectively, authorized to act on behalf of suchlimited partnership or general partnership, as the case may be, in connectionwith this Agreement).

"Operating Rights" has the meaning specified in Section 6.15.------------

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"Pari Passu Debt" means any Debt of the Company (other than theObligations), whether or not secured, that is pari passu in right of payment tothe Obligations.

"Payment Office" means the office of the Agent located at 12 East 49thStreet, 39th Floor, New York, New York 10017, or such other office as the Agentmay hereafter designate in writing as such to the other parties hereto.

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

"Percentage Participation" means, for each Bank at any time, thatpercentage obtained when dividing the amount of such Bank's Commitment by theTotal Commitment at such time or, if the Commitments shall have been terminated,that percentage obtained by dividing the outstanding principal amount of suchBank's Loans by the aggregate outstanding principal amount of the Loans at suchtime.

"Permitted Holders" means, as of the date of determination, any andall of (a) Borden and its Subsidiaries, (b) Kohlberg Kravis Roberts & Co., itssuccessors and its Affiliates and (c) (i) any officer or other member ofmanagement employed by Borden, BCPM, the Company or any Subsidiary for the12-month period prior to the date of determination; (ii) any Persons describedin clause (i) who have retired (including as the result of disability) after theinitial date of this Agreement from the employment of Borden, BCPM, the Companyor any Subsidiary in the ordinary course of business; (iii) family members orrelatives of the Persons described in clause (i) and (ii); (iv) any trustscreated for the benefit of the Persons described in clause (i), (ii), (iii) or(v); (v) in the event of the incompetence or death of any of the Personsdescribed in clauses (i), (ii) and (iii), such Person's estate, executor,administrator, committee or other personal representative, or beneficiaries, ineach case who at any particular date shall beneficially own or have the right toacquire, directly or indirectly, Capital Stock and (vi) any Person, themanagement of which is controlled by one or more Persons described in clause (i)or (ii); provided, however, that in connection with the transaction thatotherwise would constitute a Change of Control were the Persons described inthis clause (c) not Permitted Holders, any debt incurred as a result thereofshall not be recourse to any of the assets of the Company or any Subsidiary. Themanagement of a Person shall be deemed to be controlled by the chief executiveofficer (or equivalent executive) of such Person.

"Permitted Investments" shall mean (a) investments in directobligations of the United States of America or any agency or instrumentalitythereof maturing within one year of the date of acquisition thereof, (b)investments in dollar denominated certificates of deposit of, eurodollarcertificates of deposit of, banker's acceptances of or time deposits (including,without limitation, eurodollar time deposits) maturing within one year of thedate of acquisition thereof with (i) any Bank or (ii) any commercial Bank havingcapital, surplus and undivided profits aggregating in excess of $500,000,000 orthe debt of which is rated P-1 (or higher) by Moody's or A-1 (or higher) by S&Por which has a bank rating of B/C (or higher) by Thomson Bank Watch and (c)investments in commercial paper given the highest

-16-



rating by two established national credit rating agencies and maturing not morethan nine months from the date of acquisition thereof.

"Permitted Liens" means the following, to the extent that the Debtsecured thereby does not exceed 10% of the Company's Consolidated Net TangibleAssets: (a) Liens that exist on the date hereof, (b) Liens on property or assets(or any income or profits therefrom) existing at the time of acquisition of suchproperty or assets, (c) Liens on property or assets (or any income or profitstherefrom) of a Person existing at the time such Person is merged into orconsolidated with or acquired by the Company or its Subsidiaries, (d) Liens infavor of any governmental authority to secure any payment obligation under anystatute, (e) Liens of landlords and Liens of carriers, warehousemen, mechanicsand materialmen incurred in the ordinary course of business, (f) Liens incurredfor the purpose of financing all or any part of the purchase price or the costof construction or improvement of the property or assets subject to such Liens;provided, however, that such Lien shall not extend to or cover any otherproperty or assets other than such property or assets and any improvementsthereon and shall attach to such property, assets, or improvements within 180days of the acquisition or construction thereof, (g) Liens incurred to secure(or to obtain letters of credit that secure) the performance of tenders,statutory obligations, surety or appeal bonds, bids, leases, performance orreturn-of-money bonds, purchase, construction or sale contracts or otherobligations of a like nature incurred in the ordinary course of business, (h)Liens on Capital Stock of a Subsidiary and Liens on intercompany notes issued bysuch Subsidiary to the Company, in either case to secure Debt incurred by suchSubsidiary in connection with the Company's acquisition of such Subsidiary orthe business of such Subsidiary, (i) Liens securing any Debt owed to the Companyor any Subsidiary, (j) Liens to secure any extension, renewal, refunding orrefinancing (or successive extensions, renewals, refundings or refinancings), inwhole or in part, of any Debt secured by Liens referred to in the foregoingclauses (a) through (i) so long as such Liens do not extend to any otherproperty or assets and the aggregate principal amount of the Debt so secured isnot increased, and (k) Liens securing Debt of a Person, the aggregate principalamount of which, together with the aggregate principal amount of all other Debtof such Person secured by Liens (excluding Debt secured by Liens permitted inthe foregoing clauses (a) through (j) and the aggregate amount of AttributableDebt deemed to be outstanding in respect of all sale and leaseback transactionspermitted by clause (a) of Section 8.13, does not exceed 5% of Consolidated Net

------------Tangible Assets.

"Person" means an individual, partnership, corporation (including abusiness trust), limited liability company, joint stock company, trust,unincorporated association, joint venture or other entity, or a foreign ordomestic state or political subdivision thereof or any agency of such state orsubdivision.

"Plan" means any employee pension benefit plan (as defined in Section3(2) of ERISA), subject to Title IV of ERISA or Section 412 of the Code, otherthan a Multiemployer Plan, with respect to which the Company or an ERISAAffiliate contributes or has an obligation or liability to contribute, includingany such plan that may have been terminated.

-17-

"Preferred Stock", as applied to the Capital Stock of any Person,means Capital Stock of any class or classes (however designated) which ispreferred as to the payment of dividends, or as to the distribution of assetsupon any voluntary or involuntary liquidation or dissolution of such Person,over the Capital Stock of any other class of such Person.

"Prospectus" means the prospectus with respect to the Securities datedApril 21, 1995.

"Redeemable Stock" means, at any time, any Capital Stock that by itsterms or otherwise is required to be redeemed prior to the first anniversary ofthe then applicable Maturity Date of the Base Rate Loans and the Eurodollar RateLoans or is redeemable at the option of the holder thereof at any time prior tothe first anniversary of such then applicable Maturity Date.

"Reference Banks" means Credit Suisse and The Chase Manhattan Bank,N.A.

"Refinance" means, in respect of any Debt or Preferred Stock, torefinance, extend, renew, refund, repay, prepay, redeem, defease or retire, orto issue Debt or Preferred Stock in exchange or replacement for, such Debt orPreferred Stock. "Refinanced" and "Refinancing" shall have correlative meanings.

"Refinancing Agreement" means any credit agreement, indenture or other



agreement pursuant to which the Company or any Subsidiary Refinances, in wholeor in part, Debt of the Company or any Subsidiary issued under Section 8.04;

------------provided, however, that the principal amount of the Refinancing Debt issuedpursuant to such Refinancing Agreement may not exceed the principal amount ofthe Debt so Refinanced.

"Register" has the meaning specified in Section 11.10(e).----------------

"Regulation A" means Regulation A of the Board (respecting loans todepository institutions), as the same is from time to time in effect, and allofficial rulings and interpretations thereunder or thereof.

"Regulation D" means Regulation D of the Board (respecting reserverequirements), as the same is from time to time in effect, and all officialrulings and interpretations thereunder or thereof.

"Regulation U" means Regulation U of the Board (respecting margincredit extended by banks), as the same is from time to time in effect, and allofficial rulings and interpretations thereunder or thereof.

"Regulation X" means Regulation X of the Board (respecting borrowerswho obtain margin credit), as the same is from time to time in effect, and allofficial rulings and interpretations thereunder or thereof.

-18-

"Release" means any spilling, leaking, pumping, pouring, emitting,emptying, discharging, injecting, escaping, leaching, dumping or disposing intothe environment (including the abandonment or discarding of barrels, containersand other closed receptacles).

"Reportable Event" means an event described in Section 4043(b) ofERISA with respect to a Plan as to which the 30-day notice requirement has notbeen waived by the PBGC.

"Requirements of Environmental Laws" means, as to any Person, therequirements of any applicable Environmental Law relating to or affecting suchPerson or the condition or operation of such Person's business or itsproperties, both real and Personal.

"Reserve Percentage" for any Interest Period for all Eurodollar RateLoans comprising part of the same Borrowing means the reserve percentage if andto the extent actually applicable two Business Days before the first day of suchInterest Period under regulations issued from time to time by the Board (or anysuccessor) for determining the reserve requirement (including, withoutlimitation, any emergency, supplemental or other marginal reserve requirement)for each Bank with respect to liabilities or assets consisting of or includingEurocurrency Liabilities (or with respect to any other category of liabilitiesthat includes deposits by reference to which the interest rate on EurodollarRate Loans is determined) having a term equal to such Interest Period.

"Restricted Payment" has the meaning set forth in Section 8.06.------------

"S & P" means Standard & Poor's Corporation, and its successors.

"Securities" means the debt instruments issued pursuant to theIndenture.

"Significant Subsidiary" means any Subsidiary that would be a"significant subsidiary" of the Company within the meaning of Rule 1-02 underRegulation S-X as promulgated by the Securities and Exchange Commission.

"Stated Amount" means, with respect to each Letter of Credit, at anytime, the maximum amount then available to be drawn thereunder (without regardto whether any condition to drawing thereon could be met).

"Stated Maturity" means, with respect to any security, the datespecified in such security as the fixed date on which the principal of suchsecurity is due and payable, including pursuant to any mandatory redemptionprovision.

"Subordinated Obligation" means any Debt of the Company (whetheroutstanding on the date hereof or hereafter incurred) that is subordinate orjunior in right of payment of the Notes.

"Subsidiary" means any corporation, association, partnership or otherbusiness entity of which more than 50% of the total voting power of the



outstanding

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Capital Stock (or other interests entitled (without regard to the occurrence ofany contingency) to vote in the election of directors, general partners,managers, managing members, managing partners or trustees thereof or, if suchPersons are not elected, to vote on any matter that is submitted to the vote ofall Persons holding ownership interests in such entity) is at the time owned orcontrolled, directly or indirectly, by (a) the Company, (b) the Company and oneor more Subsidiaries or (c) one or more Subsidiaries.

"Swing Loan" means an extension of credit by the Swing Loan Bank underArticle II in the form of a Swing Loan.

"Swing Loan Bank" means Credit Suisse, its successors and permittedassigns.

"Swing Loan Commitment" means the commitment of the Swing Loan Bank tomake loans from time to time pursuant to Section 2.01(b) in an aggregate amount

---------------not to exceed on any date the amount of $10,000,000 (in minimum increments of$1,000,000 with additional increments of $500,000), as the same shall bereduced as a result of a reduction in the Swing Loan Commitment pursuant toSection 4.02, Section 4.03 and Article IX; provided that the Swing Loan------------ ------------ ----------Commitment is a part of the combined Total Commitments, rather than a separate,independent commitment.

"Swing Loan Participation Certificate" means a participationcertificate substantially in the form of Exhibit 2.14.

------------

"Threshold Debt" has the meaning set forth in Section 9.01(d).---------------

"Total Commitment" means all Commitments of all of the Banks, which onthe Effective Date is $100,000,000 and may be reduced from time to time pursuantto Section 4.02, Section 4.03 or Article IX and by the election of any Bank not

------------ --------------------------to participate in the Maturity Date Extension Option.

"Total Debt" means, as of any date of determination, the total Debt ofthe Company and its consolidated Subsidiaries.

"Total Unutilized Commitment" means the aggregate UnutilizedCommitment for all of the Banks.

"Type" has the meaning set forth in Section 1.02.------------

"Unfunded Current Liability" means, with respect to any Plan, theamount, if any, by which the present value of the accrued benefits under thePlan as of the close of its most recent Plan year exceeds the fair market valueof the assets allocable thereto, determined in accordance with Section 412 ofthe Code and based upon the actuarial assumption in the Plan.

---------

"Unpaid Drawing" has the meaning specified in Section 3.04(a).---------------

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"Unutilized Commitment" for any Bank, at any time, means the remainderof (a) such Bank's Commitment at such time less (b) the sum of (i) theoutstanding Loans (excluding Swing Loans) made by such Bank and (ii) the productof (A) the Letter of Credit Outstandings at such time multiplied by (B) suchBank's Percentage Participation.

"Up Front Fee" has the meaning specified in Section 4.01(a).---------------

"Voting Stock" of any Person, means, with respect to a corporation,all classes of Capital Stock of such corporation then outstanding and normallyentitled to vote in the election of directors or, with respect to a partnership(whether general or limited), any general partner interest in such partnership.

"Wachovia Credit Facility" means the credit facility under thatcertain Revolving Line of Credit Agreement, dated November 2, 1987, by and



between the Company and Wachovia Bank and Trust Company, N.A., providing up to$20,000,000 of credit borrowings, including any related notes, instruments andagreements executed in connection therewith, in each case as amended, modified,renewed, refunded, replaced or refinanced from time to time.

"Wholly Owned Subsidiary" of any Person, means a Subsidiary of suchPerson all the outstanding Capital Stock or other ownership interests or, in thecase of a limited partnership, all the partners' Capital Stock (other than up toa 2% general partner interests), of which (other than directors' qualifyingshares) shall at the time be owned by such Person or by one or more Wholly OwnedSubsidiaries of such Person.

SECTION 1.02. Types of Loans and Borrowings. Loans and Borrowings-----------------------------

hereunder are distinguished by "Type". The Type of a Loan refers to thedetermination whether such Loan is a Eurodollar Rate Loan or a Base Rate Loan.The Type of a Borrowing refers to the determination whether such Borrowing is aEurodollar Rate Borrowing or a Base Rate Borrowing.

SECTION 1.03. Accounting Terms and Determinations. Unless otherwise-----------------------------------

specified herein, all accounting terms used herein shall be interpreted, allaccounting determinations hereunder shall be made, and all financial statementsrequired to be delivered hereunder shall be prepared in accordance with GAAP,applied on a basis consistent (except for changes concurred in by the Company'sindependent public accountants) with the most recent audited consolidatedfinancial statements of the Company and its consolidated Subsidiaries deliveredto the Banks; provided that, if the Company notifies the Agent that the Companywishes to amend any covenant in Article VIII to eliminate the effect of thechange in GAAP on the operation of such covenant (or if the Agent notifies theCompany that the Majority Banks wish to amend Article VIII for such purposes),then the Company's compliance with such covenant shall be determined on thebasis of GAAP in effect immediately before the relevant changes in GAAP becameeffective, until either such notice is withdrawn or such covenant is amended ina manner satisfactory to the Company and the Majority Banks.

SECTION 1.04. Computation of Time Periods. In this Agreement in the---------------------------

computation of periods of time from a specified date to a later specified date,the word

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"from" means "from and including" and the words "to" and "until" each means "tobut excluding".

ARTICLE II

LOANS

SECTION 2.01(a). Commitment. Subject to and upon the terms and----------

conditions herein set forth, each Bank severally agrees at any time and fromtime to time on and after the Effective Date and prior to the Maturity Date withrespect to Base Rate Loans and Eurodollar Rate Loans, to make and maintain aLoan or Loans to the Company, which Loans (a) shall, at the option of theCompany, be made and maintained pursuant to one or more Borrowings comprised ofBase Rate Loans or Eurodollar Rate Loans; provided that, except as otherwisespecifically provided herein, all Loans comprising all or a portion of the sameBorrowing shall at all times be of the same Type, (b) shall be repaid and may bereborrowed in accordance with the provisions hereof and (c) (including SwingLoans) shall, in the aggregate, not exceed the total principal amount at anytime outstanding that amount which, when added to the product of such Bank'sPercentage Participation of the Letter of Credit Outstandings at such time,equals the Commitment of such Bank. Notwithstanding the foregoing, the sum ofthe aggregate outstanding principal amount of the Loans of all Banks plus (i)the Letter of Credit Outstandings and (ii) the outstanding principal amount ofthe Debt of the Company permitted under Section 8.04(b)(i)(A), shall at no time

---------------------exceed the Total Commitment.

SECTION 2.01(b). Swing Loan Commitment. Subject to the terms and---------------------

conditions of this Agreement, the Swing Loan Bank agrees to make one or moreLoans to the Company (each such loan, a "Swing Loan") from time to time on any

----------Business Day during the period from the Effective Date to the Maturity Date, inan aggregate amount not to exceed the Swing Loan Commitment; provided,however, that, after giving effect to any Borrowing of Swing Loans, theaggregate outstanding amount of all Loans of the Banks plus (i)_the Letter of



Credit Outstanding and (ii) the outstanding principal amount of the Debt of the--------

Company permitted under Section 8.04(b)(i)(A), shall not at any time exceed the---------------------

Total Commitment; and provided further, that the aggregate outstanding principalamount of any Bank's Loans (excluding Swing Loans) when added to the product ofsuch Bank's Percentage Participation of (i) Swing Loans and (ii) Letter ofCredit Outstandings, shall not at any time exceed such Bank's Commitment. Withinthe limits of the Swing Loan Commitment, and subject to the other terms andconditions hereof, the Company may borrow Swing Loans under this subsection

----------2.01(b), prepay Swing Loans under Section 4.04 and reborrow Swing Loans under------ ------------subsection 2.01(b).------------------

SECTION 2.02. Minimum Amount of Each Borrowing. The aggregate--------------------------------

principal amount of each Borrowing, shall not be less than the lesser of (a)$5,000,000 and, if greater, shall be an integral multiple of $1,000,000 and (b)the Total Unutilized Commitment. More than one Borrowing may occur on the sameday but at no time shall there be outstanding more than ten Borrowings ofEurodollar Rate Loans.

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SECTION 2.03. Notice of Borrowing. (a) Whenever the Company desires to-------------------

make a Borrowing hereunder, the Company shall give written notice (a " Notice of---------

Borrowing") (or telephonic notice promptly confirmed in writing) to the Agent---------(i) in the case of a Borrowing to be comprised of Base Rate Loans, not laterthan 11:00 a.m. (New York time) one Business Day prior to the Borrowing Datefor such Borrowing and (ii) in the case of a Borrowing comprised of EurodollarRate Loans, not later than 11:00 a.m. (New York time) three Business Days priorto the Borrowing Date for such Borrowing. Each Notice of Borrowing shall beirrevocable and shall be in the form of Exhibit 2.03 specifying (A) the

------------aggregate principal amount of the Loans to be made pursuant to such Borrowing,(B) the Borrowing Date (which shall be a Business Day), (C) whether such Loansare to be initially maintained as Base Rate Loans or Eurodollar Rate Loans and(D) if the proposed Borrowing is to be comprised of Eurodollar Rate Loans,

the initial Interest Period to be applicable thereto. The Company may submit oneor more Notices of Borrowing on any Business Day.

(b) The Agent shall promptly give the Banks written notice ortelephonic notice (promptly confirmed in writing) of each proposed Borrowingunder Section 2.03(a) above, of each Bank's proportionate share thereof and of

--------------the other matters covered by each Notice of Borrowing.

(c) Swing Loans. Each Borrowing of Swing Loans shall be made upon the------------

irrevocable written notice by the Company delivered to the Agent in the form ofa Notice of Borrowing, which notice must be received by the Agent at or prior to11:00 a.m. (New York time) on the requested Borrowing Date, specifying: (i) theamount of the Borrowing, which shall be in an aggregate minimum amount of$1,000,000 with additional increments of $500,000; and (ii) the Borrowing Date,which shall be a Business Day. All Swing Loans shall be Base Rate Loans.

SECTION 2.04. Disbursement of Funds. (a) No later than 1:00 p.m. (New---------------------

York time) on the Borrowing Date each Bank will, except with respect toborrowing of Swing Loans, make available its pro rata portion of the amount ofsuch Borrowing in U.S. dollars and in immediately available funds at the PaymentOffice. The Agent will credit in immediately available funds the amounts soreceived to the general deposit account of the Company with the Agent or suchother single account as directed in writing by the Company. The Swing Loan Bankwill make available to the Company at its account at the Swing Loan Bank or suchother single account as directed in writing by the Company, no later than 2:30p.m. (New York time) on the requested Borrowing Date, in immediately availablefunds, the proceeds of the Swing Loans being made on such date.

(b) Unless the Agent shall have been notified by any Bank prior to theBorrowing Date that such Bank does not intend to make available to the Agentsuch Bank's portion of the Borrowing to be made on such date, the Agent mayassume that such Bank has made such amount available to the Agent on such dateof Borrowing and the Agent may, in reliance upon such assumption, make availableto the Company a corresponding amount. If such corresponding amount is not in



fact made available to the Agent by such Bank and the Agent has made availablesame to the Company, the Agent shall be entitled to recover such correspondingamount on demand from such Bank. If such Bank does not pay such correspondingamount

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forthwith upon the Agent's demand therefor, the Agent shall promptly notify theCompany, and the Company shall pay such corresponding amount to the Agent withintwo Business Days after demand therefor. The Agent shall also be entitled torecover interest on such corresponding amount from the date such correspondingamount was made available by the Agent to the Company to the date suchcorresponding amount is recovered by the Agent, (i) from such Bank at a rate perannum equal to the lesser of (A) the Highest Lawful Rate or (B) the FederalFunds Rate or (ii) from the Company at a rate per annum equal to the lesser of(A) the Highest Lawful Rate or (B) the applicable Margin plus the relevantEurodollar Rate or Base Rate, as applicable. Nothing herein shall be deemed torelieve any Bank from its obligation to fulfill its commitments hereunder or toprejudice any rights which the Company may have against any Bank as a result ofany default by such Bank hereunder.

SECTION 2.05. Notes. (a) The Company's obligation to pay the principalof, and interest on, all the Loans made by each Bank shall be evidenced by apromissory note duly executed and delivered by the Company substantially in theform of Exhibit 2.05 hereto with blanks appropriately completed in conformity

------------herewith (each a "Note" and collectively, the "Notes"), which Note shall (i) be

---- -----payable to the order of such Bank and be dated the Effective Date, (ii) be in astated principal amount equal to the Commitment of such Bank, (iii) be payableprior to maturity as provided in Article IV and mature, with respect to the

----------Loans evidenced thereby, on the Maturity Date, (iv) bear interest as provided inthe appropriate clause of Section 2.08 in respect of the Base Rate Loans and

------------Eurodollar Rate Loans, as the case may be, evidenced thereby and (v) be entitledto the benefits of this Agreement, and, to the extent applicable, the other LoanDocuments.

(b) Each Bank will note on its internal records, to the extentapplicable, the date, amount, Type and Interest Period for each Loan made bysuch Bank to the Company hereunder, and the amount of each payment in respectthereof and will, prior to any transfer of any of its Notes, endorse on thereverse side thereof the outstanding principal amount of Loans evidencedthereby. Failure to make any such notation shall not affect the Company'sobligation in respect of such Loans.

SECTION 2.06. Conversions and Continuances. The Company shall have the----------------------------

option to convert on any Business Day all or a portion of the outstandingprincipal amount of one Type of its Loans made pursuant to one or moreBorrowings into a Borrowing or Borrowings of the other Type of Loans provided,that (a) except as otherwise provided in Section 2.11, no partial conversion of

------------Eurodollar Rate Loans shall reduce the outstanding principal amount ofEurodollar Rate Loans made pursuant to any single Borrowing to less than$5,000,000 (b) Base Rate Loans may only be converted into Eurodollar Rate Loans,and Eurodollar Rate Loans may only be continued as further Eurodollar RateLoans, if and only if, in either case no Default or Event of Default is inexistence on the date of the conversion or continuance and (c) no Swing Loansmay be converted to Eurodollar Rate Loans. Each such conversion or continuanceshall be effect by the Company giving the Agent notice (each a "Notice of

---------Conversion") prior to 10:00 a.m. (New York time) (i) at least three Business----------Days prior to the date of such conversion or continuance in the case of aconversion into or continuance as Eurodollar Rate Loans and (ii) on the

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Business Day of such conversion or continuance in the case of a conversion intoor continuance as Base Rate Loans, specifying each Type of Borrowing (orportions thereof) to be so converted and, if to be converted into or continuanceas Eurodollar Rate Loans, the Interest Period to be initially applicablethereto. The Agent shall promptly give the Banks written or telephonic notice(promptly confirmed in writing) of any such proposed conversion affecting any of



its Loans.

SECTION 2.07. Pro Rata Borrowings. Other than as set forth in Section------------------- -------

2.14 with respect to Swing Loans, all Borrowings under this Agreement shall be----incurred from the Banks pro rata on the basis of their respective PercentageParticipations. It is understood that no Bank shall be responsible for anydefault by any other Bank in its obligation to make Loans hereunder and thateach Bank shall be obligated to make the Loans provided to be made by ithereunder, regardless of the failure of any other Bank to fulfill itscommitments hereunder.

SECTION 2.08 Interest. (a) Subject to Section 11.08, the Company-------- -------------

agrees to pay interest in respect of the unpaid principal amount of each BaseRate Loan from the date of the respective Borrowing to maturity (whether byacceleration or otherwise) at a rate per annum which shall at all times be equalto the lesser of (i) the Highest Lawful Rate and (ii) the applicable Margin plusthe Base Rate in effect from time to time. Interest on Base Rate Loans shall becomputed on the basis of the actual number of days elapsed over a year of 360days.

(b) Subject to Section 11.08, the Company agrees to pay interest in-------------

respect of the unpaid principal amount of each Eurodollar Rate Loan from thedate of the respective Borrowing to maturity (whether by acceleration orotherwise) at a rate per annum (computed on the basis of the actual number ofdays elapsed over a year of 360 days) which shall be equal to the lesser of (i)the Highest Lawful Rate and (ii) the applicable Margin plus the relevantEurodollar Rate for such Interest Period.

(c) Subject to Section 11.08, overdue principal and, to the extent-------------

permitted by law, overdue interest in respect of each Loan and all other overdueamounts owing hereunder shall bear interest for each day that such amounts areoverdue at a rate per annum equal to the lesser of (i) the Highest Lawful Rateand (ii) the Base Rate per annum in effect from time to time plus 2% (suchlesser rate of interest being the "Default Rate"); provided, that no Loan shall

------------bear interest after maturity (whether by acceleration or otherwise) at a rateper annum less than the lesser of (i) the rate of interest applicable thereto atmaturity and (ii) the Hightest Lawful Rate.

(d) Interest on each Loan shall accrue from and including the date ofsuch Loan to but excluding the date of any repayment thereof and shall bepayable (i) in respect of Eurodollar Rate Loans (A) on the last day of theInterest Period applicable thereto and in the case of any Interest Period inexcess of three months, at three months intervals and on the last day of suchInterest Period and (B) on the date of any voluntary prepayment, or mandatoryprepayment or any conversion with respect to such Eurodollar Rate Loan, (ii) inrespect of each Base Rate Loan (A) on each Designated Payment Date and (B) onthe date of any voluntary or mandatory prepayment or any conversion with respectto such Base Rate Loan and (iii) in respect

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of each Loan, at maturity (whether by acceleration or otherwise) and, aftermaturity, on demand.

(e) The Agent, upon determining the Eurodollar Rate for any InterestPeriod, shall notify the Company and the Banks thereof. Each such determinationshall, absent manifest error, be final and conclusive and binding on all partieshereto. In addition, prior to the due date for the payment of interest on anyLoans set forth in Section 2.08(d) the Agent shall notify the Company by

---------------telecopy of the amount of interest due by the Company on all outstanding Loanson the applicable due date.

SECTION 2.09 Interest Periods. (a) At the time the Company gives any----------------

Notice of Borrowing or Notice of Conversion in respect of the making of, orconversion or continuance into, a Eurodollar Rate Borrowing, the Company shallhave the right to elect, by giving the Agent on the dates and at the timesspecified in Section 2.03 or Section 2.06, as the case may be, notice of the

------------ ------------interest period (each an "Interest Period") applicable to such Eurodollar Rate

---------------Borrowing, which Interest Period shall be either a one, two, three or six monthperiod, or such longer period as the Agent in its reasonable discretion may



determine is available at the relevant time; provided, that:

(i) all Loans comprising a Eurodollar Rate Borrowing shall atall times have the same Interest Period;

(ii) the initial Interest Period for any Eurodollar RateBorrowing shall commence on the date of such Eurodollar Rate Borrowing(including the date of any conversion thereto pursuant to Section 2.06) and

------------each Interest Period occurring thereafter in respect of such EurodollarRate Borrowing shall commence on the day on which the next precedingInterest Period expires;

(iii) if any Interest Period relating to a Borrower of EurodollarRate Loans begins on a day for which there is no numericallycorresponding day in the calendar month at the end of such Interest Period,such Interest Period shall end on the last Business Day of such calendarmonth;

(iv) if any Interest Period would otherwise expire on a daywhich is not a Business Day, such Interest Period shall expire on the nextsucceeding Business Day; provided, however, that if any Interest Period inrespect of a Borrowing of Eurodollar Rate Loans would otherwise expire on aday which is not a Business Day, but is a day of the month after which nofurther Business Day occurs in such month, such Interest Period shallexpire on the next preceding Business Day;

(v) no Interest Period shall extend beyond the Maturity Date;and

(vi) at no time shall there be more than ten Interest Periodsin effect under this Agreement.

(b) If upon the expiration of any Interest Period applicable to aEurodollar Rate Borrowing, the Company has failed to elect a new InterestPeriod to

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be applicable to such Borrowing as provided above, the Company shall be deemedto have elected to convert such Borrowing into a Base Rate Borrowing effectiveas of the expiration date of such current Interest Period.

SECTION 2.10 Interest Rate Not Ascertainable. In the event that the-------------------------------

Agent shall have reasonably determined (which determination shall, absentmanifest error, be final, conclusive and binding upon all parties) that on anydate for determining the Eurodollar Rate for any Interest Period, by reason ofany changes arising after the date of this Agreement affecting the Eurodollarinterbank market, adequate and fair means do not exist for ascertaining theapplicable interest rate on the basis provided for in the definition ofEurodollar Rate, then, and in any such event, the Agent shall forthwith givenotice to the Company and to the Banks of such determination. Until the Agentnotifies the Company that the circumstances giving rise to the suspensiondescribed herein no longer exist, the obligations of the Bank to make EurodollarRate Loans shall be suspended.

SECTION 2.11 Reserve Requirements; Change in Circumstances. (a)---------------------------------------------

Notwithstanding any other provision herein, but subject to Section 11.08, if-------------

after the Execution Date the application or effectiveness of any applicable lawor regulation or any change in application or effectiveness of any applicablelaw or regulation or any change in applicable law or regulation or in theinterpretation or administration thereof, or compliance by any Bank with anyapplicable guideline or request made after the Execution Date from any centralbank or governmental authority (whether or not having the force of law) (i)shall change the basis of taxation of payments to any Bank of the principal ofor interest on any Eurodollar Rate Loan made by such Bank or any other fees oramount payable hereunder (other than (x) taxes imposed on the overall net incomeof such Bank or its Applicable Lending Office or franchise taxes imposed upon itby the jurisdiction in which such Bank or its Applicable Lending Office has anoffice or by any political subdivision or taxing authority therein (or any taxwhich is enacted or adopted by such jurisdiction, political subdivision ortaxing authority as a direct substitute for any such taxes) or (y) any tax,assessment, or other governmental charge that would not have been imposed butfor the failure of any Bank to comply with any certification, information,documentation, or other reporting requirement), (ii) shall impose, modify ordeem applicable any reserve, special deposit or similar requirement againstassets of, deposits with or for the account of, or credit extended by, such Bank



or (iii) shall impose on such Bank, or the Eurodollar interbank market any othercondition affecting this Agreement or any Eurodollar Rate Loan made by suchBank, and the result of any of the foregoing shall be to increase the cost tosuch Bank of maintaining its Commitment or of making or maintaining anyEurodollar Rate Loan or to reduce the amount of any sum received or receivableby such Bank hereunder (whether of principal, interest or otherwise) in respectthereof by an amount deemed in good faith by such Bank to be material, then theCompany shall pay to the Agent for the account of such Bank such additionalamount or amounts as will compensate such Bank for such increase or reduction tosuch Bank upon demand by such Bank. Nothwithstanding the foregoing, in no eventshall the compensation payable under this paragraph (to the extent, if any,constituting interest under applicable laws), together with all amountsconstituting interest under applicable laws and payable in connection with thisAgreement, the Notes and the other Loan Documents, exceed the Highest LawfulRate.

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(b) If any Bank shall have determined in good faith that any law,rule, regulation or guideline regarding capital adequacy, or any change therein,or any change in the interpretation or administration thereof or compliance byany Bank (or any lending office of such Bank) with any request or directiveregarding capital adequacy (whether or not having the force of law) of any suchauthority, central bank or comparable agency has or would have the effect ofreducing the rate of return on the capital of such Bank as a consequence of, orwith reference to, such Bank's obligations hereunder to a level below that whichsuch Bank could have achieved but for such adoption, change or compliance by anamount deemed by such Bank to be material, then, from time to time, the Companyshall pay to the Agent for the account of such Bank such additional amount oramounts as will reasonably compensate such Bank for such reduction by such Bank.Notwithstanding the foregoing, in no event shall the compensation payable underthis paragraph (to the extent, if any, constituting interest under applicablelaws) together with all amounts constituting interest under applicable laws andpayable in connection with this Agreement, the Notes or the other LoanDocuments, exceed the Highest Lawful Rate.

(c) Each Bank will notify the Company through the Agent of any eventoccurring after the date of this Agreement which will entitle such Bank tocompensation pursuant to this Section, as promptly as practicable, and in anyevent within 60 days after it becomes aware thereof provided that in the eventsuch notification is given after 60 days after such Bank becomes aware thereof,such Bank shall be entitled to recover only those amounts otherwise recoverablehereunder which accrue after the date of such notice. A certificate of a Banksetting forth in reasonable detail (i) such amount or amounts as shall benecessary to compensate such Bank as specified in paragraph (a) or (b) above, asthe case may be and (ii) the calculation of such amount or amounts under clause(a)(i), shall be delivered to the Company (with a copy to the Agent) and shallbe conclusive absent manifest error. The Company shall pay to the Agent for theaccount of such Bank the amount shown as due on any such certificate as willreasonably compensate such Bank for such matters within 30 days after itsreceipt of the same. Upon the request of the Company, each Bank agrees that itwill use reasonable efforts to designate a different Applicable Lending Officefor the Loans due to it affected by the matters described in subsection (a) and(b) above, if such designation will avoid or reduce the liability of the Companyto such Bank under this Section so long as such designation is not materiallydisadvantageous to such Bank as determined by such Bank in its reasonablediscretion.

(d) Except as expressly provided in subsection (c) above, failure onthe part of any Bank to demand compensation for any increased costs or reductionin amounts received or receivable or reduction in return on capital with respectto any Interest Period shall not constitute a waiver of such Bank's rights todemand compensation for any increased costs or reduction in amounts received orreceivable or reduction in return on capital with respect to such InterestPeriod or any other Interest Period.

(e) In the event any Bank shall seek compensation pursuant to thisSection or shall fail to fund any of its Loans in accordance with thisAgreement, the

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Company may give notice to such Bank (with copies to the Agent) that it wishesto seek one or more Eligible Assignees to assume the Commitment of such Bank andto purchase its outstanding Loans, other Obligations and Notes. Each Bankrequesting compensation pursuant to this Section agrees to sell its Commitment,Loans, other Obligations, Notes and interest in this Agreement and the otherLoan Documents pursuant to subsection (c) above to any such Eligible Assignee



for an amount equal to the sum of the outstanding unpaid principal of andaccrued interest on such Loans, such other Obligations and Notes plus all otherfees, amounts and compensation due such Bank hereunder calculated, in each case,to the date such Commitment, Loans, other Obligations, Notes and interest arepurchased, whereupon such Bank shall have no further Commitment or otherobligation to the Company hereunder or under any Note.

SECTION 2.12. Change in Legality. (a) Notwithstanding anything to------------------

the contrary herein contained, if any change in any law or regulation or in theinterpretation thereof by any governmental authority charged with theadministration or interpretation thereof shall in the reasonable determinationof a Bank or its legal counsel make it unlawful for any Bank or its EurodollarLending Office to make or maintain any Eurodollar Rate Loan or to give effect toits obligations as contemplated hereby, then, by prompt written notice to theCompany and to the Agent, such Bank may:

(i) declare that Eurodollar Rate Loans will not thereafter bemade by such Bank hereunder, whereupon the Company shall be prohibited fromrequesting Eurodollar Rate Loans from such Bank hereunder unless suchdeclaration is subsequently withdrawn; and

(ii) require that all outstanding Eurodollar Rate Loans made byit be converted to Base Rate Loans, in which event (A) all such EurodollarRate Loans shall be automatically converted to Base Rate Loans as of theeffective date of such notice as provided in paragraph (b) below and (B)all payments and prepayments of principal which would otherwise have beenapplied to repay the converted Eurodollar Rate Loans shall instead beapplied to repay the Base Rate Loans resulting from the conversion of suchEurodollar Rate Loans.

Each Bank agrees that it will use reasonable efforts to designate a differentApplicable Lending Office for the Eurodollar Loans due to it affected by thisSection, if such designation will avoid the illegality described in this Sectionso long as such designation will not be materially disadvantageous to such Bankas determined by such Bank in its reasonable discretion.

(b) For purposes of this Section, a notice to the Company (with acopy to the Agent) by any Bank pursuant to paragraph (a) above shall beeffective on the date of receipt thereof by the Company.

(c) In the event any Bank shall give a notice to the Company pursuantto this Section or Section 3.05, the Company may give notice to such Bank (withcopies to the Agent) that it wishes to seek one or more Eligible Assignees toassume the Commitment of such Bank and to purchase its outstanding Loans,Obligations

-29-

and Notes. Each Bank giving a notice to the Company pursuant to this Sectionagrees to sell its Commitment, Loans, Obligations, Notes and interest in thisAgreement and the other Loan Documents to any such Eligible Assignee for anamount equal to the sum of the outstanding unpaid principal of and accruedinterest on such Loans, Obligations and Notes plus all other fees, amounts andcompensation due such Bank hereunder calculated, in each case, to the date suchCommitment, Loans, Obligations, Notes and interest are purchased, whereupon suchBank shall have no further Commitment or other obligation to the Companyhereunder or under any Note.

SECTION 2.13. INDEMNITY. THE COMPANY SHALL INDEMNIFY EACH BANK---------

AGAINST ANY LOSS OR REASONABLE EXPENSE WHICH SUCH BANK MAY SUSTAIN OR INCUR AS ACONSEQUENCE OF (A) ANY FAILURE BY THE COMPANY TO FULFILL ON THE DATE OF ANYBORROWING HEREUNDER THE APPLICABLE CONDITIONS SET FORTH IN ARTICLE V, (B) IF,

---------FOR ANY REASON (OTHER THAN THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCHBANK), A BORROWING OF OR A CONVERSION FROM OR INTO EURODOLLAR RATE LOANS DOESNOT OCCUR ON THE DATE SPECIFIED THEREFOR IN A NOTICE OF BORROWING OR NOTICE OFCONVERSION, (C) ANY PAYMENT, PREPAYMENT OR CONVERSION OF A EURODOLLAR RATE LOANREQUIRED BY ANY PROVISION OF THIS AGREEMENT (OTHER THAN SECTION 2.12) OROTHERWISE MADE ON A DATE OTHER THAN THE LAST DAY OF THE APPLICABLE INTERESTPERIOD, (D) ANY DEFAULT IN THE PAYMENT OR PREPAYMENT OF THE PRINCIPAL AMOUNTOF ANY LOAN OR ANY PART THEREOF OR INTEREST ACCRUED THEREON, AS AND WHEN DUE ANDPAYABLE (AT THE DUE DATE THEREOF OR INTEREST ACCRUED THEREON, AS AND WHEN DUEAND PAYABLE (AT THE DUE DATE THEREOF, BY NOTICE OF PREPAYMENT OR OTHERWISE) OR(E) THE OCCURRENCE OF ANY EVENT OF DEFAULT, INCLUDING, IN THE CASE OF ANY OF THEEVENTS SET FORTH IN CLAUSES (A) THROUGH (D) OF THIS SECTION, ANY LOSS ORREASONABLE EXPENSE SUSTAINED OR INCURRED OR TO BE SUSTAINED OR INCURRED INLIQUIDATING OR EMPLOYING DEPOSITS FROM THIRD PARTIES ACQUIRED TO EFFECT ORMAINTAIN SUCH LOAN OR ANY PART THEREOF AS A EURODOLLAR RATE LOAN. FOR PURPOSES



OF THIS SECTION, "LOSS OR REASONABLE EXPENSE" SHALL MEAN AN AMOUNT EQUAL TO THEEXCESS, IF ANY, AS REASONABLY DETERMINED BY EACH BANK OF (I) ITS ACTUAL COST OFOBTAINING THE FUNDS FOR THE LOAN BEING PAID, PREPAID OR CONVERTED OR NOTBORROWED (BASED ON THE THEN APPLICABLE EURODOLLAR RATE) FOR THE PERIOD FROM THEDATE OF SUCH PAYMENT, PREPAYMENT OR CONVERSION OR FAILURE TO BORROW TO THE LASTDAY OF THE INTEREST PERIOD FOR SUCH LOAN (OR, IN THE CASE OF A FAILURE TOBORROW, THE INTEREST PERIOD FOR THE LOAN WHICH WOULD HAVE COMMENCED ON THE DATEOF SUCH FAILURE TO BORROW) OVER (II) THE AMOUNT OF INTEREST (AS REASONABLYDETERMINED BY SUCH BANK) THAT WOULD BE REALIZED BY SUCH BANK IN REEMPLOYING THEFUNDS SO PAID, PREPAID OR CONVERTED OR NOT BORROWED FOR SUCH PERIOD OR INTERESTPERIOD, AS THE CASE MAY BE. EACH BANK WILL NOTIFY THE COMPANY THROUGH THE AGENTOF ANY LOSS OR EXPENSE WHICH WILL ENTITLE SUCH BANK TO COMPENSATION PURSUANT TOTHIS SECTION, AS PROMPTLY AS POSSIBLE AND IN ANY EVENT WITHIN 60 DAYS AFTER ITBECOMES AWARE THEREOF PROVIDED THAT IN THE EVENT SUCH NOTIFICATION IS GIVENAFTER 60 DAYS AFTER SUCH BANK BECOMES AWARE THEREOF, SUCH BANK SHALL BE ENTITLEDTO RECOVER ONLY THOSE AMOUNTS OTHERWISE RECOVERABLE HEREUNDER WHICH ACCRUE AFTERTHE DATE OF SUCH NOTICE. A CERTIFICATE OF EACH BANK SETTING FORTH ANY AMOUNT ORAMOUNTS WHICH SUCH BANK IS ENTITLED TO RECEIVE PURSUANT TO THIS SECTION SHALL BEDELIVERED TO THE COMPANY (WITH A COPY TO THE AGENT) AND SHALL BE CONCLUSIVE, IFMADE IN GOOD FAITH, ABSENT MANIFEST ERROR. THE

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COMPANY SHALL PAY TO THE AGENT FOR THE ACCOUNT OF EACH BANK THE AMOUNT SHOWN ASDUE ON ANY CERTIFICATE WITHIN 30 DAYS AFTER ITS RECEIPT OF THE SAME.NOTWITHSTANDING THE FOREGOING, IN NO EVENT SHALL THE COMPENSATION PAYABLE UNDERTHIS SECTION (TO THE EXTENT, IF ANY, CONSTITUTING INTEREST UNDER APPLICABLELAWS) TOGETHER WITH ALL AMOUNTS CONSTITUTING INTEREST UNDER APPLICABLE LAWS ANDPAYABLE IN CONNECTION WITH THIS AGREEMENT OR THE NOTES, EXCEED THE HIGHESTLAWFUL RATE. WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER OBLIGATIONS OF THECOMPANY HEREUNDER, THE OBLIGATIONS OF THE COMPANY UNDER THIS SECTION SHALLSURVIVE THE TERMINATION OF THIS AGREEMENT, THE PAYMENT OF THE OBLIGATIONS ANDTHE ASSIGNMENT OF ANY OF THE NOTES.

SECTION 2.14. Special Provisions for Swing Loans.------------------------------------

(a) Banks to Make Revolving Loans.------------------------------

(i) The Swing Loan Bank, at any time in its discretion, uponwritten request to the Banks through the Agent (with a copy to the applicableCompany) on or before 11.00 a.m. (New York time) on the requested Borrowing Date(which shall be a Business Day), may require each Bank (including the Swing LoanBank) to make a Base Rate Loan in an amount equal to such Bank's PercentageParticipation of the outstanding Swing Loans. Promptly upon receipt of any suchrequest, the Agent shall give notice thereof to the Banks. The Agent shallapply the proceeds of such Loans to prepay the Swing Loans of the Swing LoanBank; provided, however, that the Agent shall be obligated to make the proceedsof such Loans available only to the extent received by it from the Banks. AllLoans made pursuant to this Section 2.14(a) shall be Base Rate Loans.

---------------

(ii) In the event the Agent advances proceeds from any Loan tothe Swing Loan Bank and one or more of the Banks (other than the Swing LoanBank) fail to fund all or any portion of such Loan immediately upon receipt ofnotice from the Agent, then the Agent shall promptly notify the Company, and theCompany shall pay such corresponding amount to the Agent within two BusinessDays after demand therefor. The Agent shall also be entitled to recover fromeither such Bank or the Company interest on such corresponding amount from thedate such corresponding amount was made available by the Agent to the Company tothe date such corresponding amount is recovered by the Agent, (i) from such Bankat a rate per annum equal to the lesser of (A) the Highest Lawful Rate or (B)the Federal Funds Rate or (ii) from the Company at a rate per annum equal to thelesser of (A) the Highest Lawful Rate or (B) the applicable Margin plus the BaseRate. Nothing herein shall be deemed to relieve any Bank from its obligation tofulfill its commitments hereunder or to prejudice any rights which the Companymay have against any Bank as a result of any default by such Bank hereunder.

(b) Participations in Swing Loans.-----------------------------

(i) If, at any time prior to the making of Loans pursuant toSection 2.14(a)(i) hereof, any Event of Default shall have occurred, each Bank,------------------on the date such Loan was to have been made or, if no request for Loans hadbeen made pursuant to Section 2.14(a)(i) hereof, promptly upon request by the

------------------Swing Loan Bank delivered



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to the Agent, shall purchase an undivided participation interest in alloutstanding Swing Loans in an amount equal to its Percentage Participation timesthe outstanding amount of such Swing Loans. Each Bank (other than the Swing LoanBank) will transfer immediately to the Swing Loan Bank, in immediately availablefunds, the amount of its participation and, upon receipt thereof, the Swing LoanBank will deliver to such other Bank a Swing Loan Participation Certificate,dated the date of receipt of such funds and in the amount of such Bank'sparticipation.

(ii) Whenever, at any time after the Swing Loan Bank hasreceived from any other Bank such other Bank's participating interest in a SwingLoan, the Swing Loan Bank receives any payment on account thereof, the SwingLoan Bank will distribute to such other Bank its participating interest in suchamount (appropriately adjusted, in the case of interest payments, to reflect theperiod of time during which such Bank's participating interest was outstandingand funded); provided, however, that in the event that any payment received bythe Swing Loan Bank is required to be returned, such other Bank will return tothe Swing Loan Bank any portion thereof previously distributed to it.

(c) Acknowledged Privity. The Company expressly agrees that, in--------------------

respect of each Bank's funded participation interest in any Swing Loan, suchBank shall be deemed to be in privity of contract with the Company and have thesame rights and remedies against the Company under the Loan Documents as if suchfunded participation interest in such Swing Loan were a Loan.

(d) Unconditional Obligation. Each Bank's obligation to make the------------------------

Loans or to purchase participation interests in the Swing Loans as provided inthis Section 2.14 shall be absolute and unconditional and shall not be affected

------------by any circumstance, including without limitation, (i) any set-off,counterclaim, recoupment, defense or other right which such Bank may haveagainst the Swing Loan Bank, the Company or any other Person for any reasonwhatsoever, (ii) the existence of any Default or Event of Default at any time(iii) the occurrence of any event or existence of any condition that might havea Material Adverse Effect, or (iv) any other circumstance, happening or eventwhatsoever, whether or not similar to any of the foregoing.

ARTICLE III

LETTERS OF CREDIT

SECTION 3.01. Letters of Credit. (a) Subject to and upon the terms-----------------

and conditions herein set forth, the Issuing Bank agrees that it will, at anytime and from time to time on or after the Effective Date and prior to theMaturity Date with respect to Base Rate Loans and Eurodollar Rate Loans,following its receipt of a Letter of Credit Request, issue for the account ofthe Company and in support of the obligations of the Company, one or moreirrevocable letters of credit (all such letters of credit collectively, the"Letters of Credit" and individually, a "Letter of Credit"); provided that the----------------- ----------------

Issuing Bank shall not issue any Letter of Credit if at the time of suchissuance:

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(i) the Stated Amount of such Letter of Credit shall begreater than an amount which when added to (x) the Letter of CreditOutstandings at such time (y) the aggregate principal amount of all Loansthen outstanding and (z) the outstanding principal amount of the Debt ofthe Company allowed under Section 8.04(b)(i)(A), would exceed the Total

---------------------Commitment; or

(ii) the Stated Amount of such Letter of Credit shall begreater than an amount which when added to the Letter of CreditOutstandings at such time, would exceed the Letter of Credit Limit; or

(iii) the expiry date or, in the case of any Letter of Creditcontaining an expiry date that is extendible at the option of the IssuingBank, the initial expiry date of such Letter of Credit is a date that islater than the earlier to occur of (i) a date which is one year after the



date of issuance or (ii) the Maturity Date with respect to Base Rate Loansand Eurodollar Rate Loans.

(b) the Issuing Bank shall neither renew nor permit the renewal ofany Letter of Credit if any of the conditions precedent to such renewal setforth in Section 5.02 are not satisfied or, after giving effect to such renewal,

------------the expiry date of such Letter of Credit would be a date that is later than theMaturity Date with respect to Base Rate Loans and Eurodollar Rate Loans.

SECTION 3.02. Letter of Credit Requests. (a) Whenever the Company-------------------------

desires that a Letter of Credit be issued for its account or that the existingexpiry date shall be extended, it shall give the Issuing Bank (with copies tobe sent to the Agent and each other Bank) (i) in the case of a Letter of Creditto be issued, at least five Business Days' prior written request therefor and(ii) in the case of the extension of the existing expiry date of any Letter ofCredit, at least five Business Days' prior written request to the date on whichthe Issuing Bank must notify the beneficiary thereof that the Issuing Bank doesnot intend to extend such existing expiry date. Each such request shall beexecuted by the Company and shall be in the form of Exhibit 3.02 attached hereto

------------(each a "Letter of Credit Request") and, in the case of the issuance of each

------------------------Letter of Credit, shall be accompanied by an Application therefor, completed tothe satisfaction of the Issuing Bank, and such other certificates documents andother papers and information as the Issuing Bank or any Bank (through the Agent)may reasonably request. Each Letter of Credit shall be denominated in U.S.dollars, shall expire no later than the date specified in Section 3.01, shall

------------not be in an amount greater than is permitted under clauses (ii) or (iii) ofSection 3.01(a) and shall be in such form as may be reasonably approved from---------------time to time by the Issuing Bank and the Company.

(b) The making of each Letter of Credit Request shall be deemed to bea representation and warranty by the Company that such Letter of Credit may beissued in accordance with, and will not violate the requirements of thisAgreement. Unless the Issuing Bank has received notice from any Bank before itissues the respective Letter of Credit or extends the existing expiry date of aLetter of Credit that one or more of the conditions specified in Article V are

---------not then satisfied, or that the issuance of such Letter of Credit would violatethis Agreement, then the Issuing Bank may issue the requested Letter of Creditfor the account of the Company in

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accordance with the Issuing Bank's usual and customary practices. Upon itsissuance of any Letter of Credit or the extension of the existing expiry date ofany Letter of Credit, as the case may be, the Issuing Bank shall promptly notifythe Company, the Agent and each Bank of such issuance or extension.

SECTION 3.03. Letter of Credit Participations. (a) All Letters of-------------------------------

Credit issued subsequent hereto shall be deemed to have been sold andtransferred by the Issuing Bank to each Bank, and each Bank shall be deemedirrevocably and unconditionally to have purchased and received from the IssuingBank, without recourse or warranty, an undivided interest and participation, tothe extent of such Bank's Percentage Participation in each such Letter of Credit(including extensions of the expiry date thereof), each substitute letter ofcredit, each drawing made thereunder and the obligations of the Company underthis Agreement and the other Loan Documents with respect thereto.

(b) In determining whether to pay under any Letter of Credit, theIssuing Bank shall have no obligation relative to the Banks other than toconfirm that any documents required to be delivered under such Letter of Creditappear to have been delivered and that they appear to comply on their face withthe requirements of such Letter of Credit and applicable law.

(c) In the event that the Issuing Bank makes any payment under anyLetter of Credit and the Company shall not have reimbursed such amount in fullto such Issuing Bank pursuant to Section 3.04(a), such Issuing Bank shall

---------------promptly notify the Agent, which shall promptly notify each Bank of suchfailure, and each Bank shall promptly and unconditionally pay to the Agent forthe account of such Issuing Bank the amount of such Bank's PercentageParticipation of such unreimbursed payment in U. S. dollars and in same dayfunds. If the Agent so notifies, prior to 10:00 a.m. (New York time) on anyBusiness Day, any Bank required to fund a payment under a Letter of Credit, such



Bank shall make available to the Agent for the account of such Issuing Bank suchBank's Percentage Participation of the amount of such payment on such BusinessDay in same day funds. If and to the extent such Bank shall not have so made itsPercentage Participation of the amount of such payment available to the Agentfor the account of such Issuing Bank, such Bank agrees to pay to the Agent forthe account of such Issuing Bank, forthwith on demand such amount, together withinterest thereon, for each day from such date until the date such amount is paidto the Agent for the account of such Issuing Bank at the lesser of (i) theFederal Funds Rate and (ii) the Highest Lawful Rate. The failure of any Bank tomake available to the Agent for the account of such Issuing Bank, its PercentageParticipation of any payment under any Letter of Credit shall not relieve anyother Bank of its obligation hereunder to make available to the Agent for theaccount of such Issuing Bank its Percentage Participation of any payment underany Letter of Credit on the date required, as specified above, but no Bank shallbe responsible for the failure of any other Bank to make available to the Agentfor the account of such Issuing Bank such other Bank's Percentage Participationof any such payment.

(d) Whenever an Issuing Bank receives a payment of a reimbursementobligation as to which the Agent has received for the account of such IssuingBank

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any payments from the Banks pursuant to clause (b) above, such Issuing Bankshall pay promptly to the Agent and the Agent shall promptly pay to each Bankwhich has paid its Percentage Participation thereof, in U.S. dollars and insame day funds, an amount equal to such Bank's Percentage Participation thereoftogether with any interest on such reimbursement obligation allocable to suchBank's Percentage Participation paid by the Company to such Issuing Bankpursuant to Section 3.04(a) and received by the Agent.

---------------

(e) The obligations of the Banks to make payments (other thanpayments resulting solely from the gross negligence or wilfull misconduct of theIssuing Bank) to the Agent for the account of the Issuing Bank with respect toLetters of Credit shall be irrevocable and not subject to any qualification orexception whatsoever and shall be made in accordance with the terms andconditions of this Agreement under all circumstances, including any of thefollowing circumstances:

(i) any lack of validity or enforceability of this Agreementor any of the other Loan Documents;

(ii) the existence of any claim, setoff, defense or other rightwhich the Company may have at any time against a beneficiary named in aLetter of Credit, any transferee of any Letter of Credit, the Agent, anyIssuing Bank, any Bank, or any other Person, whether in connection withthis Agreement, any Letter of Credit, the transactions contemplated hereinor any unrelated transactions (including any underlying transaction betweenthe Company and the beneficiary named in any such Letter of Credit);

(iii) any draft, certificate or any other document presentedunder the Letter of Credit proving to be forged, fraudulent, invalid orinsufficient in any respect or any statement therein being untrue orinaccurate in any respect;

(iv) the surrender or impairment of any security for theperformance or observance of any of the terms of any of the Loan Documents;or

(v) the occurrence of any Default or Event of Default.

SECTION 3.04. Agreement to Repay Letter of Credit Drawings. (a) Upon--------------------------------------------

the receipt by the Issuing Bank of any Drawing from a beneficiary under a Letterof Credit, the Issuing Bank promptly will provide the Agent, the Banks and theCompany with telecopy notice thereof. The Company hereby agrees to reimbursesuch Issuing Bank by making payment to the Agent in immediately available fundsat the Payment office, for any payment made by the Issuing Bank under any Letterof Credit issued by it (each such amount so paid until reimbursed, an "Unpaid

------Drawing"). Such reimbursement payment shall be due and payable (x) not later-------than 2:00 p.m. (New York time) on the date the Issuing Bank notifies the Companyof such Drawing, if such notice is received at or before 11:00 a.m. (New Yorktime) on such date, or (y) not later than 11:00 a.m. (New York time) on thefirst Business Day succeeding the date such notice is received, if such noticeis received after 11:00 a.m. (New York time). The Company shall pay interest onthe amount so paid by the Issuing Bank, to the extent not reimbursed on the date



of such payment, from and

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including the date paid to but excluding the date reimbursement is made asprovided above, at a rate per annum equal to the Default Rate, such interest tobe payable on demand.

(b) The Company's obligations under this Section to reimburse theIssuing Bank with respect to Unpaid Drawings (including, in each case, interestthereon) shall be absolute and unconditional under any and all circumstances andirrespective of any setoff, counterclaim or defense to payment which the Companymay have or have had against any Bank (including such Issuing Bank in itscapacity as the issuer of a Letter of Credit or any Bank as a participanttherein), including any defense based upon the failure of any drawing under aLetter of Credit (each a "Drawing") to conform to the terms of the Letter of

-------Credit or any non-application or misapplication by the beneficiary of theproceeds of such Drawing, unless such matter arises out of the gross negligenceor willful misconduct of the Issuing Bank in paying such Drawing.

(c) The Company also agrees with the Issuing Bank and the Banks thatthe Issuing Bank shall not be responsible for, and the Company's reimbursementobligations under subsection (a) above shall not be affected by, among otherthings, the validity or genuineness of documents or of any endorsements thereon,even though such documents shall in fact prove to be invalid, fraudulent orforged, or any dispute between the Company and the beneficiary of any Letter ofCredit or any other party to which such Letter of Credit may be transferred orany claims whatsoever of the Company against any beneficiary of such Letter ofCredit or any such transferee other than the gross negligence or willfulmisconduct of the Issuing Bank in paying such Drawing.

(d) THE ISSUING BANK SHALL NOT BE LIABLE FOR ANY ERROR, OMISSION,INTERRUPTION OR DELAY IN TRANSMISSION, DISPATCH OR DELIVERY OF ANY MESSAGE ORADVICE, HOWEVER TRANSMITTED, IN CONNECTION WITH ANY LETTER OF CREDIT, BUT SHALLBE LIABLE FOR ERRORS OR OMISSIONS CAUSED BY SUCH ISSUING BANK'S GROSS NEGLIGENCEOR WILLFUL MISCONDUCT. THE COMPANY AGREES TO INDEMNIFY THE ISSUING BANK, ITSOFFICERS, DIRECTORS, EMPLOYEES AND AGENTS AND HOLD SUCH PARTIES HARMLESS FROMANY AND ALL LOSSES, LIABILITIES, CLAIMS OR DAMAGES (INCLUDING REASONABLEATTORNEYS FEES) ARISING OUT OF OR RESULTING FROM ANY ACTION TAKEN OR OMITTED BYSUCH PERSON UNDER OR IN CONNECTION WITH ANY LETTER OF CREDIT OR ANY RELATEDDRAFT OR DOCUMENT WHICH ACTION TAKEN OR OMITTED WAS CAUSED BY SUCH PERSON'S SOLEOR CONTRIBUTORY NEGLIGENCE. THE COMPANY AGREES THAT ANY ACTION TAKEN OR OMITTEDBY AN ISSUING BANK UNDER OR IN CONNECTION WITH ANY LETTER OF CREDIT ORTHE RELATED DRAFTS OR DOCUMENTS, IF DONE IN ACCORDANCE WITH THE STANDARDS OFCARE SPECIFIED IN THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993REVISION), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 (AND ANYSUBSEQUENT REVISIONS THEREOF APPROVED BY A CONGRESS OF THE INTERNATIONAL CHAMBEROF COMMERCE AND ADHERED TO BY THE ISSUING BANKS) AND, TO THE EXTENT NOTINCONSISTENT THEREWITH, THE UNIFORM COMMERCIAL CODE OF THE STATE OF NEW YORK,SHALL NOT RESULT IN ANY LIABILITY OF AN ISSUING BANK TO THE COMPANY.

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SECTION 3.05. Increased Costs. (a) Notwithstanding any other---------------

provision herein, but subject to Section 11.08, if any Bank shall have-------------

determined in good faith that any law, rule, regulation or guideline or theapplication or effectiveness of any applicable law or regulation or any changein applicable law or regulation or any change after the Execution Date in theinterpretation or administration thereof, or compliance by any Bank (or anylending office of such Bank) with any applicable guideline or request from anycentral bank or governmental authority (whether or not having the force of law)either (i) shall impose, modify or make applicable any reserve, deposit, capitaladequacy or similar requirement against letters of credit issued, orparticipated in, by any Bank or (ii) shall impose on any Bank any otherconditions affecting this Agreement or any Letter of Credit; and the result ofany of the foregoing is to increase the cost to any Bank of issuing, maintainingor participating in any Letter of Credit, or reduce the amount received orreceivable by any Bank hereunder with respect to Letters of Credit, by an amountdeemed by such Bank to be material, then, from time to time, the Company shallpay to the Agent for the account of such Bank such additional amount or amountsas will reasonably compensate such Bank for such increased cost or reduction bysuch Bank. Notwithstanding the foregoing, in no event shall the compensationpayable under this paragraph (to the extent, if any, constituting interest underapplicable laws) together with all amounts constituting interest underapplicable laws and payable in connection with this Agreement, the Notes or theother Loan Documents, exceed the Highest Lawful Rate.



(b) Each Bank will notify the Company through the Agent of any eventoccurring after the date of this Agreement which will entitle such Bank tocompensation pursuant to subsection (a) above, as promptly as practicable, andin any event within 30 days after it becomes aware thereof provided that in theevent such notification is given after 60 days after such Bank becomes awarethereof, such Bank shall be entitled to recover only those amounts otherwiserecoverable hereunder which accrue after the date of such notice. A certificateof a Bank setting forth in reasonable detail such amount or amounts as shall benecessary to compensate such Bank as specified in subsection (a) above may bedelivered to the Company (with a copy to the Agent) and shall be conclusiveabsent manifest error. The Company shall pay to the Agent for the account ofsuch Bank the amount shown as due on any such certificate within 30 days afterits receipt of the same.

SECTION 3.06. Conflict between Applications and Agreement. To the-------------------------------------------

extent that any provision of any Application related to any Letter of Credit isinconsistent with the provisions of this Agreement, the provisions of thisAgreement shall control.

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ARTICLE IV

FEES; COMMITMENTS; PAYMENTS

SECTION 4.01 Fees. (a) The Company agrees to pay to the Agent on the----

Execution Date for pro rata distribution to the Banks (based upon theirrespective Percentage Participations in the amount of the Total Commitment) afee equal to 0.25% of the Total Commitment (the "Up Front Fee").

------------

(b) The Company agrees to pay to the Agent for distribution to eachBank a Commitment fee (the "Commitment Fee") for the period from the Execution

--------------Date to the date upon which the Total Commitment shall have been terminated,computed at a rate equal to 0.375% per annum on the daily average UnutilizedCommitment of such Bank. Accrued Commitment Fees shall be calculated to the dayimmediately preceding each Designated Payment Date and to the date immediatelypreceding such date upon which the Total Commitment is terminated and shall bedue and payable in arrears on each Designated Payment Date commencing June 30,1995 and on the date upon which the Total Commitment is terminated. TheCommitment Fee (i) shall be paid in immediately available funds and (ii) shallbe calculated on the basis of the actual number of days elapsed over a year of365 or 366 days, as the case may be.

(c) The Company agrees to pay to the Agent for pro rata distributionto the Banks (based upon their respective Percentage Participations) a fee inrespect of each Letter of Credit issued for the account of the Company (the"Letter of Credit Fee"), for the period from the date of issuance of such Letter--------------------

of Credit to the expiry date of such Letter of Credit, computed at the rate of1% per annum on the daily average Stated Amount of each Letter of Credit. TheCompany agrees to pay to the Issuing Bank, for its own account, a fee in respectof each Letter of Credit issued for the account of the Company, for the periodfrom the date of issuance of such Letter of Credit to the expiry date of suchLetter of Credit, computed at the rate of 0.1% per annum on the daily averageStated Amount of such Letter of Credit. Accrued Letter of Credit Fees and feesdue to the Issuing Bank pursuant to this Section shall be due and payable inarrears on each Designated Payment Date commencing June 30, 1995, and on theMaturity Date with respect to Base Rate Loans and Eurodollar Rate Loans or, ifearlier, on the date upon which the Total Commitment is terminated. The Letterof Credit Fees (i) will be in lieu of all commissions and fees for the Lettersof Credit other than customary administrative, issuance, amendment, payment andnegotiation charges, (ii) shall be paid in immediately available funds and (iii)shall be calculated on the basis of the actual number of days elapsed over ayear of 365 or 366 days, as the case may be.

(d) The Company agrees to pay to the Agent for its sole account anAgent's fee (the "Agent's Fee") as previously agreed to in writing by the

-----------Company and the Agent. The Agent's Fee shall be due and payable on the ExecutionDate and on each one year anniversary of the Execution Date during the termhereof as consideration for the performance of the Agent's duties hereunder.

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(e) The Company agrees to pay to CS First Boston Corporation for itssole account an arranger fee (the "Arranger Fee") as previously agreed to in

------------writing by the Company and CS First Boston Corporation. The Arranger Fee shallbe due and payable on the Execution Date.

(f) In no event shall the Fees payable under this Section (to theextent, if any, constituting interest under applicable laws) together with allamounts constituting interest under applicable laws and payable in connectionwith this Agreement, the Notes and the other Loan Documents exceed the HighestLawful Rate.

SECTION 4.02. Voluntary Reduction of Commitment. Upon at least two---------------------------------

Business Days' prior telephonic notice confirmed in writing to the Agent (whichnotice the Agent shall promptly transmit to each of the Banks), the Companyshall have the right, without premium or penalty, to irrevocably terminate theUnutilized Commitment in part or in whole; provided, that (a) any such reductionshall apply proportionately to the Commitment of each of the Banks and (b) anypartial reduction of the Total Commitment shall be in the amount of $10,000,000or, if greater, an integral multiple of $1,000,000. If and to the extent thatthe Company specifies in such notice that it desires to terminate all or anypart of the Swing Loan Commitment, then (i) the Swing Loan Commitment shall bereduced by the amount so requested, (ii) the reduction shall be appliedproportionately to the Commitment of each Bank and (iii) that portion of theSwing Loan Bank's Commitment not constituting a part of the Swing LoanCommitment shall be increased by the aggregate amount of the reductions appliedto reduce proportionately the Commitments of each of the Banks. All reductionsof the Unutilized Commitment made pursuant to this Section 4.02 shall be applied

------------proportionately to each of the mandatory reductions of the Total Commitmentrequired under Section 4.03 (a) and Section 4.03(b).

---------------- ---------------

SECTION 4.03. Mandatory Reduction of Commitment. (a) The Total---------------------------------

Commitment, if not sooner terminated, shall terminate on the Maturity Date withrespect to Base Rate Loans and Eurodollar Rate Loans.

(b) The Total Commitment, if not sooner reduced or terminated, shallbe reduced by the Company to not more than (i) $75,000,000 on January 1, 1996and (ii) $50,000,000 on January 1, 1997.

(c) The Total Commitment, if not sooner terminated, shall be reducedby the total amount of all prepayments of the Loans required to be made inaccordance with Section 8.11 as a result of Asset Dispositions and Section 8.03

------------ ------------as a result of sales of Accounts Receivable. All reductions of the UnutilizedCommitment made pursuant to this Section 4.03 (c) shall be appliedproportionately to each of the mandatory reductions of the Total Commitmentrequired under Section 4.03 (a) and Section 4.03(b).

---------------- ---------------

(d) The Total Commitment, if not sooner terminated, shall beterminated or reduced as required by Section 4.05(c).

---------------

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(e) The reductions in the Total Commitment required by Section 4.03(b)---------------

and Section 4.03(c) shall with respect to the portion thereof applied to reduce---------------

the Commitment of Credit Suisse, be applied proportionately to the Swing LoanCommitment and the balance of the Credit Suisse Commitment.

SECTION 4.04. Voluntary Prepayments. The Company may (x) by giving---------------------

telephonic notice (promptly confirmed in writing) by Noon (New York time) onBusiness Day of such prepayment, in the case of Base Rate Borrowings, and (y)upon at least three Business Days' notice, in the case of Eurodollar RateBorrowings, in each case to the Agent stating the proposed date and aggregateprincipal amount of the prepayment, and if such notice is given the Companyshall, prepay the outstanding aggregate principal amount of the Loansconstituting part of the same Borrowing in whole or in part, together withaccrued, unpaid interest to the date of such prepayment on the aggregateprincipal amount prepaid, provided that (a) no Eurodollar Rate Loan may beprepaid prior to the last day of its Interest Period unless, simultaneouslytherewith, the Company pays to the Agent for the benefit of the Banks, all sums



due and payable under Section 2.13 hereof; (b) each partial prepayment shall be------------

in an initial aggregate principal amount of $1,000,000 and, if greater, anintegral multiple of $500,000; and (c) each prepayment pursuant to this Sectionshall be applied pro rata among the designated outstanding Loans of each of theBanks, first, to the payment of accrued and unpaid interest, then, to theoutstanding principal of such Loans in the inverse order of maturity thereof.

SECTION 4.05. Mandatory Repayments. (a) On the Maturity Date the--------------------

Company shall pay the aggregate principal amount of the Loans outstanding onsuch date, together with all accrued, unpaid interest due thereon.

(b) Subject to Section 2.13, the Company shall repay the outstanding------------

principal amount of the Loans on any day on which the aggregate outstandingprincipal amount of the Loans, when added to (i) Letter of Credit Outstandingsand (ii) the outstanding principal amount of the Debt of the Company allowedunder Section 8.04(b)(i)(A) exceeds the Total Commitment, in the amount of such

---------------------excess. If, after giving effect to the prepayment of all outstanding Loans, theLetter of Credit Outstandings exceed the difference between (i) TotalCommitment and (ii) the outstanding principal amount of the Debt of the Companyallowed under Section 8.04(b)(i)(A), the Company shall pay an amount of cashequal to such excess Letter of Credit Outstandings to the Agent, such cashhereby pledged and to be held as security for all obligations of the Companyhereunder and under the other Loan Documents.

(c) Upon the occurrence of a Change of Control, the Company shall paythe aggregate principal amount of the Loans outstanding, together with allaccrued, unpaid interest due thereon and the Total Commitment shall terminateunless such payment and termination is waived by the Majority Banks (i) in acase where the Company is a voluntary party to the relevant transaction, priorto the effectiveness of such Change of Control or (ii) in a case where theCompany is not a voluntary party to the relevant transaction, prior to the fifthday following the occurrence of such Change of Control, in each case pursuant toSection 11.01. Such payment shall be made (i) immediately upon the occurrence of-------------a Change of Control in a case where the

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Company is a voluntary party to the relevant transaction and (ii) within fivedays after any Change of Control in a case where the Company is not a voluntaryparty to the relevant transaction. In the event that the Company requests such awaiver the Banks will respond to such request (i) in a case where the Company isa voluntary party to the relevant transaction within ten Business Days or (ii)in a case where the Company is not a voluntary party to the relevanttransaction, prior to the fifth day following the occurrence of such Change ofControl; provided, that the failure of the Banks to so respond shall constitutethe Majority Bank's rejection of such waiver request.

(d) Each repayment pursuant to this Section shall be applied pro rataamong the designated outstanding Loans of each of the Banks, first, to thepayment of accrued and unpaid interest, then, in the case of all Loans, to theoutstanding principal of such Loans.

SECTION 4.06. Method and Place of Payment. Except as otherwise---------------------------

specifically provided herein, all payments under this Agreement shall be made tothe Agent for the account of the Bank or Banks entitled thereto not later thanNoon (New York time) on the date when due and shall be made in lawful money ofthe United States in immediately available funds at the Payment Office. If theAgent fails to send to any Bank its portion of any payment timely received bythe Agent by the close of business on the day such payment was received, theAgent shall pay such Bank interest on its portion of such payment at the lesserof (i) the Federal Funds Rate and (ii) the Highest Lawful Rate for the periodfrom the day such payment was timely received by the Agent to the date suchBank's portion of such payment is sent to such Bank. Whenever any payment to bemade hereunder or under any Note shall be stated to be due on a day which is nota Business Day, the due date thereof shall be extended to the next succeedingBusiness Day and, with respect to payments of principal, interest shall bepayable at the applicable rate during such extension.

SECTION 4.07. Net Payments. Except with respect to withholdings of------------

United States taxes, as provided in Section 4.08, all payments (whether of------------

principal, interest, Fees, reimbursements or otherwise) by the Company underthis Agreement shall be made without set-off or counterclaim and shall be made



free and clear of and without deduction for any present or future tax, levy,impost or any other charge, if any, of any nature whatsoever, other than incometaxes, or franchise or similar taxes, now or hereafter imposed by any taxingauthority. Except with respect to withholdings of United States taxes asprovided in Section 4.08, if the making of such payments by the Company is

------------prohibited by law unless such a tax, levy, impost or other charge is deducted orwithheld therefrom, the Company shall pay to the Agent, on the date of each suchpayment, such additional amounts (without duplication of any amounts required tobe paid by the Company pursuant to Section 2.11 or Section 3.05) as may be

------------ ------------necessary in order that the net amounts received by the Banks after suchdeduction or withholding shall equal the amounts which would have been receivedif such deduction or withholding were not required. The Company shall confirmthat all applicable taxes, if any, imposed on this Agreement or transactionshereunder shall have been properly and legally paid by it to the appropriatetaxing authorities by sending official tax receipts or notarized copies of suchreceipts to the Agent within 30 days after payment of any applicable tax.

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Notwithstanding the foregoing, in no event shall the compensation payable underthis Section 4.07 (to the extent, if any, constituting interest under

------------applicable laws) together with all amounts constituting interest underapplicable laws and payable in connection with this Agreement, the Notes and theother Loan Documents exceed the Highest Lawful Rate.

SECTION 4.08. Tax Forms. With respect to each Bank that is organized---------

under the laws of a jurisdiction outside the United States, on the date of theinitial Borrowing hereunder, and from time to time thereafter if requested bythe Company or the Agent, each such Bank shall provide the Agent and the companytwo duly completed copies of the United States Internal Revenue Service Form1001 (or such other documentation or information as may, under applicable UnitedStates federal income tax statutes or regulations, be required in order to claiman exemption or reduction from United States income tax withholding by reason ofan applicable treaty with the United States, such documentation or otherinformation being hereafter referred to as "Form 1001") or 4224 (or such other

---------documentation or information as may, under applicable United States federalincome tax statutes or regulations, be required in order to claim an exemptionform United States income tax withholding for income that is effectivelyconnected with the conduct of a trade or business within the United States, suchdocumentation or other information being hereafter referred to as "Form 4224"),

---------as the case may be, indicating in each case that such Bank is either entitled toreceive payments under this Agreement and the Notes without deduction orwithholding of any United States federal income taxes or, as the case may be, issubject to such limited deduction or withholding as it is capable of recoveringin full from a source other than the Company. Each Bank which delivers to theCompany and the Agent a Form 1001 or 4224 pursuant to the next precedingsentence further undertakes to deliver to the Company and the Agent two furthercopies of the said Form 1001 or 4224, or successor applicable form orcertificate, as the case may be, as and when the previous form filed by ithereunder shall expire or shall become incomplete or inaccurate in any respect,unless in any of such cases an event has occurred prior to the date on which anysuch delivery would otherwise be required which renders such form inapplicable.

SECTION 4.09. Maturity Date Extension Option. In the event the------------------------------

Company desires to extend the Maturity Date with respect to Base Rate Loans andEurodollar Rate Loans for a period of one year form December 31, 1997 untilDecember 31, 1998 it shall give the Agent written notice to such effect (an"Extension Request") no earlier than October 31, 1997 and no later than November-----------------

30, 1997. An Extension Request shall be irrevocable and must be accompanied bythe Company's (a) pro forma balance sheet as of the Conversion Date and (b) thefinancial information and certificate described in Section 7.01(a) and Section

--------------- -------7.01(d) , respectively, applicable to the most recently ended quarterly-------accounting period of the Company. The Agent shall promptly give the Bankswritten notice or telephonic notice (promptly confirmed in writing) of theCompany's Extension Request. Each Bank shall have the option, in its sole andabsolute discretion, to extend its Commitment in accordance with the ExtensionRequest. Any Bank electing to grant the Extension Request shall notify theCompany (with a copy to the Agent and the other Banks) on or before thirty (30)days after the date of receipt of the Extension Request, which notificationshall constitute an extension of such Bank's Commitment



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until December 31, 1998. The failure of any Bank to so notify the Company of itsacceptance of the Company's Extension Request shall constitute a rejection ofsuch Extension Request.

ARTICLE V

CONDITIONS PRECEDENT

SECTION 5.01. Conditions Precedent to the Initial Borrowing of Loans.------------------------------------------------------

The obligation of each Bank to make its initial Loan or issue a Letter of Creditfor the account of the Company is subject to the following conditions:

The Agent shall received the following, each in form and substancesatisfactory to the Agent:

(a) this Agreement executed by each party hereto;

(b) a Note executed by the Company and payable to the order of eachBank;

(c) a Notice of Borrowing with respect to the Loans, if any, to beborrowed on the initial Borrowing Date meeting the requirements of Section 2.03;

------------

(d) a certificate of an Officer and of the secretary or an assistantsecretary of the Company certifying, inter alia, (i) true and complete copies ofthe certificate of incorporation of the General Partner, as amended and ineffect, the bylaws of the General Partner, as amended and in effect, the Amendedand Restated Agreement of Limited Partnership of the Company and the resolutionsadopted by the Board of Directors (A) authorizing the executing, delivery andperformance by the Company of this Agreement and the other Loan Documents andthe Borrowings to be made and the Letters of Credit to be issued hereunder, (B)approving the forms of the Loan Documents which will be delivered at or prior tothe initial Borrowing Documents and any related documents, including, anyagreement contemplated by this Agreement, (ii) the incumbency and specimensignatures of the Officers of the General Partner executing any documents onbehalf of the Company (iii) (A) that the representations and warranties made bythe Company in any Loan Document and which will be delivered at or prior to thedate of the initial Borrowing Date are true and correct in all materialrespects, (B) the absence of any proceedings for the dissolution or liquidationof the Company and (C) the absence of the occurrence of any MaterialAdverse Effect or the occurrence and continuance of any Default or Event ofDefault; (iv) that the closing under the Asset Transfer Agreement dated as ofAugust 12, 1994 between Occidental Chemical Corporation and the Company, asamended, shall have occurred substantially as described in the Prospectus; (v)that the closing under the Underwriting Agreement dated April 21, 1995 betweenthe Company, BCPM, BLP Finance Corporation and CS First Boston Corporation shallhave occurred and the Securities shall have been issued as described in theProspectus; and (vi) that the Wachovia Credit Agreement has been terminated;

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(e) a favorable, signed opinions addressed to the Agent and theBanks from the general counsel of the General Partner and counsel to the Companyand from Sidley & Austin, counsel to the Company, in substantially the formattached hereto as Exhibit 5.01(e);

---------------

(f) the payment to the Agent and the Banks, as applicable, of allfees then due under Section 4.01 hereof and all other reasonable fees and

------------expenses (including the reasonable fees and disbursements pursuant to Section

-------11.04) to be paid on or prior to the Effective Date; and-----

(g) certificates of appropriate public officials as to the existenceand good standing of the Company and the General Partner issued in the state ofincorporation or formation and each state wherein the Company is or should bequalified to do business as a foreign entity.

SECTION 5.02. Conditions Precedent to All Credit Events. The-----------------------------------------

obligation of the Banks to make any Loan or to issue or extend any Letter ofCredit is subject to the further conditions precedent that on the date of such



Credit Event (other than any conversion of existing Loans into Base Rate Loans):

(a) The Effective Date shall have occurred.

(b) The representations and warranties set forth in Article VI,-----------

excluding those contained in Section 6.07(a), 6.07(c) and 6.07(d), shall be-----------------------------------------------------------------true and correct in all material respects as of, and as if such representationsand warranties were made on, the date of the proposed Loan or Letter of Credit,as the case may be (unless such representation and warranty expressly relatesto an earlier date), and the Company shall be deemed to have certified to theAgent and the Banks that such representations and warranties are true andcorrect in all material respects by submitting a Notice of Borrowing or a Letterof Credit Request, as the case may be.

(c) The Company shall have complied with the provisions of Section-------

2.03 or Section 3.02, as applicable.---- ------------

(d) No Default or Event of Default shall have occurred and becontinuing or would result from such Credit Event.

(e) No Material Adverse Effect shall have occurred since the deliveryof the Financials.

The acceptance of the benefits of each such Credit Event shall constitute arepresentation and warranty by the Company, to each of the Banks that all of theconditions specified in this Section above exist as of that time.

SECTION 5.03. Conditions Precedent to Conversions. The obligation-----------------------------------

of the Banks to convert any existing Borrowing into a Borrowing consisting ofEurodollar Rate Loans is subject to the condition precedent that on the date ofsuch conversion no Default or Event of Default shall have occurred and becontinuing or would result from the making of such conversion. The acceptance ofthe benefits of

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each such conversion shall constitute a representation and warranty by theCompany to each of the Banks that no Default or Event of Default shall haveoccurred and be continuing or would result from the making of such conversion.

SECTION 5.04. Delivery of Documents. All of the Notes,---------------------

certificates, legal opinions and other documents and papers referred to in thisArticle V, unless otherwise specified, shall be delivered to the Agent for the---------account of each of the Banks and, except for the Notes, in sufficientcounterparts for each of the Banks and shall be reasonably satisfactory in formand substance to the Banks.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

In order to induce the Banks to enter into this Agreement and to makethe Loans provided for herein and issue Letters of Credit, the Company makes, onor as of the Effective Date and the occurrence of each Credit Event (except tothe extent such representations or warranties relate to an earlier date or areno longer true and correct in all material respects solely as a result oftransactions permitted by the Loan Documents), the following representations andwarranties to the Agent and the Banks:

SECTION 6.01. Organization and Qualification. Each of the Company------------------------------

and the General Partner (a) is a corporation or partnership duly organized,validly existing and in good standing under the laws of the state of itsincorporation or organization, (b) has the corporate or partnership power to ownits property and to carry on its business as now conducted and (c) is dulyqualified as a foreign corporation or foreign partnership to do business and isin good standing in every jurisdiction in which the failure to be so qualifiedwould, have a Material Adverse Effect.

SECTION 6.02. Authorization and Validity. The Company has the power--------------------------

and authority to execute, deliver and perform its obligations hereunder andunder the other Loan Documents, and all such action has been duly authorized by



all necessary corporate proceedings on the part of the General Partner. TheGeneral Partner has the corporate power and authority to execute and deliver asthe General Partner the Loan Documents, and all of such action has been dulyauthorized by all necessary corporate proceedings on its part. This Agreementhas been duly and validly executed and delivered by the Company and constitutesa valid and legally binding agreement enforceable in accordance with its termsand the Notes and the other Loan Documents, when duly executed and delivered bythe Company, will constitute valid and legally binding obligations of theCompany enforceable in accordance with the respective terms thereof and of thisAgreement, except, in each case, as such enforceability may be limited bybankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or othersimilar laws relating to or affecting the enforcement of creditors' rightsgenerally, and by general principles of equity (regardless of whether suchenforceability is a proceeding in equity or at law).

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SECTION 6.03. Governmental Consents. No authorization, consent,---------------------

approval, license or exemption of or filing or registration with any court orgovernmental department, commission, board, bureau, agency or instrumentality,domestic or foreign, which has not been obtained is necessary for the validexecution, delivery or performance by the Company of any Loan Document.

SECTION 6.04. Conflicting or Adverse Agreements or Restrictions.-------------------------------------------------

Neither the execution nor delivery of the Loan Documents nor compliance with theterms and provisions hereof or thereof will be contrary to the provisions of, orconstitute a default under (a) the charter, bylaws or partnership agreement ofthe Company or any of its Subsidiaries or (b) any applicable law (includingRegulation U) or any applicable regulation, order, writ, injunction or decree ofany court or governmental instrumentality or (c) any material agreement to whichthe Company or any of its Subsidiaries is a party or by which it is bound or towhich it is subject.

SECTION 6.05. Title to Assets. Each of the Company and its---------------

Subsidiaries has good and indefeasible title to all of its material assets,subject to no Liens, except those permitted hereunder. All of such assets,have been and are being maintained by the appropriate Person in good workingcondition in accordance with industry standards, subject to force majeure andordinary wear and tear excepted.

SECTION 6.06. Litigation. Except as described in the Prospectus or----------

as set forth on schedule 6.13, no proceedings against or affecting the Company-------------

or any Subsidiary are pending or, to the knowledge of the Company, threatenedbefore any court or governmental agency or department which involve a reasonablematerial risk of having a Material Adverse Effect.

SECTION 6.07. Financial Statements, Projections and Information-------------------------------------------------

Memorandum. (a) The Company has furnished to each Bank its audited consolidated----------balance sheet, income statement and statement of cash flow for itself and itsconsolidated Subsidiaries as of December 31, 1994 (the "Financials"). The

----------Financials have been prepared in conformity with GAAP consistently applied(except as otherwise disclosed in such financial statements) throughout theperiods involved and present fairly, in all material respects, the consolidatedfinancial condition of the Company and its consolidated Subsidiaries as ofDecember 31, 1994 and the results of their operations for the period then ended.

(b) No Material Adverse Effect has occurred since the date of theFinancials.

(c) The projections with respect to the Company's income and cashdistributions, balance sheet and statement of cash flows contained in theInformation Memorandum, copies of which have been furnished to each Bank priorto the date hereof, were prepared in good faith on the basis of the assumptionsstated in the Information Memorandum, which assumptions were believed by theCompany to be reasonable in all material respects at the time made, it beingrecognized by the Banks and the Agent that (w) such projections relate tofuture events and are not to be viewed as facts or assurances, (x) actualresults during the period or periods covered by any such projections ar subjectto many economic and competitive

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uncertainties and contingencies that are beyond the control of the Company,(y) there can be no assurances that such projections and the related financialmodel will be realized and (z) actual results may vary materially from theprojected results.

(d) Taken as a whole, as of the date hereof, the representations andwarranties of the Company and the assertions of fact by the Company contained inthis Agreement, the Information Memorandum and the Prospectus and any othercertificate or document provided by the Company to the Banks and the Agent afterthe date of the Prospectus do not contain any untrue statement of a materialfact or omit to state a material fact necessary to make the statements made insuch documents not misleading.

SECTION 6.08. Default. (a) Neither the Company nor any Subsidiary is-------

in default under the provisions of any instrument evidencing any Debt or of anyagreement relating thereto, or in default in any respect under any order, writ,injunction or decree of any court, or in default in any respect under or inviolation of any order, injunction or decree of any governmentalinstrumentality, which defaults or violations would reasonably be expected tohave a Material Adverse Effect.

(b) Other than the Indenture, neither the Company nor any Subsidiaryis a party to any material agreement evidencing any Debt of such Person with anoutstanding principal amount in excess of $2,500,000 on the Execution Date.

SECTION 6.09. Investment Company Act. Neither the Company nor any----------------------

Subsidiary is, or is directly or indirectly controlled by or acting on behalf ofany Person which is, and "investment company," as such term is defined in theInvestment Company Act of 1940.

SECTION 6.10. Public Utility Holding Company Act. Neither the----------------------------------

Company nor any Subsidiary is a non-exempt "holding company" or subject toregulation as such, or, to the knowledge of the Company's officers, an"affiliate" of a "holding company" or a "subsidiary company" of a "holdingcompany," within the meaning of the Public Utility Holding Company Act of 1935.

SECTION 6.11. ERISA. No material accumulated funding deficiency (as-----

defined in Section 412 of the Code or Section 302 of ERISA), whether or notwaived, exists or is expected to be incurred with respect to any Plan(s). Noliability to PBGC (other than required premium payments) has been or is expectedby the Company to be incurred with respect to any Plan(s) by the Company or anyERISA Affiliate which would reasonably be expected to have a Material AdverseEffect. Neither the Company nor any ERISA Affiliate has incurred any withdrawalliability under Title IV of ERISA with respect to any Multiemployer Plans whichwould reasonably be expected to have a Material Adverse Effect.

SECTION 6.12. Tax Returns and Payments. Each of the Company and its------------------------

Subsidiaries has filed all federal income tax returns, state tax returns andother material tax returns, statements and reports (or obtained extensions withrespect thereto) which, are required to be filed and have paid or deposited ormade adequate provision in accordance with GAAP for the payment of all taxes(including estimated

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other Loan Document to violate Regulation U, Regulation X, or any otherregulation of the Board.

SECTION 6.15. Franchises and Other Rights. The Company and each of---------------------------

its Subsidiaries have all franchises, permits, licenses and other authority(collectively, the "Operating Rights") as are necessary to enable them to carry

----------------on their respective businesses as now being conducted, except to the extent thatthe failure to do so would not reasonably be expected to have a Material AdverseEffect.

SECTION 6.16. Subsidiaries. BCF Finance Corporation is the only------------

Subsidiary of the Company as of the Execution Date.

SECTION 6.17. Solvency. As of the Effective Date, the Company--------

warrants and represents that with respect to itself and each of its



Subsidiaries:

(i) the present fair salable value of its respective assets is notless than its probable liability on its Debts, and the sum of its Debts isnot greater than all of its property, at a fair valuation;

(ii) it is able to pay its respective Debts as they mature and hasnot incurred any debts beyond its ability to pay such Debts as they mature(taking into account the timing and amounts of cash to be received by itfrom any source and the amounts to be payable on or in respect of itsDebts); and

(iii) it has sufficient capital with which to conduct its respectivebusinesses (whether currently being conducted or proposed to be conducted).

SECTION 6.18. Material Contracts. As of the Execution Date, the------------------

Purchase Agreements and Processing Agreements between Borden and the Companyreferred to in the Prospectus (a) have been duly executed and delivered by, andconstitute the legal, valid and binding obligation of, each party thereto,enforceable against such party in accordance with its terms, (b) are in fullforce and effect and (c) have not been amended or modified in any materialrespect.

ARTICLE VII

AFFIRMATIVE COVENANTS

The Company covenants and agrees for itself, that on and after thedate hereof and for so long as this Agreement is in effect and until theCommitments and each Letter of Credit have terminated, and the Obligations(other than indemnities not yet due) are paid in full:

SECTION 7.01. Information Covenants. The Company will furnish or---------------------

cause to be furnished the following information to each Bank and the Agent:

(a) As soon as available, and in any event within 45 days after theclose of each of the first three quarterly accounting periods in each fiscalyear of the

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Company, the consolidated balance sheet of the Company and its consolidatedSubsidiaries as of the end of such quarterly period and the related consolidatedstatements of income and retained earnings for such quarterly period andstatement of cash flows for the elapsed portion of the fiscal year ended withthe last day of such quarterly period, setting forth, in each case, comparativeconsolidated figures for the related periods in the prior fiscal year, all ofwhich shall be certified by the chief financial officer or chief executiveofficer of the Company as fairly presenting in all material repects thefinancial position of the Company and its consolidated Subsidiaries as of theend of such period and the results of their operation for the period then endedin accordance with GAAP, subject to changes resulting from normal year-end auditadjustments and the inclusion of abbreviated footnotes.

(b) As soon as available, and in any event within 90 days after theclose of each fiscal year of the Company, the consolidated balance sheet of theCompany and its consolidated Subsidiaries as at the end of such fiscal year andthe related consolidated statements of income and retained earinings andstatement of cash flows for such fiscal year, setting forth, in each case,comparative figures for the preceding fiscal year and certified by PriceWaterhouse LLP or other independent certified public accountants of recognizednational standing.

(c) Promptly after any Responsible Officer of the Company or any ofits Subsidiaries obtains knowledge thereof, notice of

(i) any event or condition which constitutes a Default or anEvent of Default,

(ii) any condition or event which, in the opinion of managementof the Company, would reasonably be expected to have a Material AdverseEffect, or

(iii) any condition or event with respect to which the Companyhas determined to issue a Current Report on Form 8-K

a notice of such event or condition will be delivered to each Bank specifyingthe nature and period of existence thereof and specifying the notice given or



action taken by such Person and the nature of any such claimed default, event orcondition and, in the case of an Event of Default or Default, what action hasbeen taken, is being taken or is proposed to be taken with respect thereto.

(d) At the time of the delivery of the financial statements providedfor in Sections 7.01(a) and (b), a certficate of the chief financial officer,

---------------- ---treasurer or the controller of the Company to the effect that no Default orEvent of Default exists or, if any Default or Event of Default does exist,specifying the nature and extent thereof and the action that is being taken orthat is proposed to be taken with respect thereto, which certificate shall setforth (i) the name of any Subsidiary formed or acquired after the delivery ofthe last certificate required hereunder and (ii) the calculations required (ifany, in the case of Section 8.11 and Section 8.12) to establish whether the

------------ ------------Company was in compliance with the provisions of Section 8.08, Section 8.09,

---------------------------Section 8.11 and Section 8.12 as at the end of such fiscal period or year, as---------------- ------------the case may be.

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(e) Upon request by the Agent, such environmental reports, studiesand audits regarding the Company or its Subsidiaries as are in existence.

(f) Promptly upon transmission therof, copies of any filings andregistrations with, and reports to, the SEC other than reports deliveredpursuant to Section 16 of the Securities and Exchange Act of 1934, which will bedelivered only upon request by the Agent.

(g) From time to time and with reasonable promptness, such otherinformation or documents as the Agent or any Bank through the Agent mayreasonably request, including, without limitation, notice of any Persons whichhave become Subsidiaries.

SECTION 7.02. Books, Records and Inspections. The Company will------------------------------

maintain, and will permit, or cause to be permitted at such Bank's or Banks'expense, any Person designated by any Bank or the Banks in writing upon oneBusiness Day's notice and without materially disrupting the operations of theCompany or any of its Subsidiaries to visit and inspect any of the properties ofthe Company and its Subsidiaries, to examine the books and financial records ofthe Company and its Subsidiaries and make copies thereof or extracts therefromand to discuss the affairs, finances and accounts of any such Persons with theofficers, employees and agents of the Company and its Subsidiaries and withtheir independent public accountants, all at such reasonable times and asoften as the Agent or such Bank may reasonably request.

SECTION 7.03. Insurance and Maintenance of Properties. (a) Each of---------------------------------------

the Company and its Subsidiaries will keep adequately insured by financiallysound and reputable insurers all of its property of a character, and in amountsand against such risks, usually insured by similar Persons engaged in the sameor similar businesses, including, without limitation, insurance against fire,casualty and any other hazards normally insured against. Each of the Company andits Subsidiaries will at all times maintain insurance against its liability forinjury to Persons or property, which insurance shall be by financially sound andreputable insurers and in such amounts and form as are customary forcorporations of established reputation engaged in the same or a similar businessand owning and operating similar properties.

(b) Subject to force majeure an ordinary wear and tear, each of theCompany and its Subsidiaries will cause all of its material properties used oruseful in the conduct of its business to be maintained and kept in goodcondition, repair and working order and supplied with all necessary equipmentand will cause to be made all necessary repairs, renewals and replacementsthereof, such that all of same will be maintained according to standards as arecustomary with entities of similar size to the Company in the same or similarlines of business.

SECTION 7.04. Payment of Taxes. Each of the Company and its----------------

Subsidiaries will pay and discharge all taxes, assessments and governmentalcharges or levies imposed upon it or upon its income or profits, or upon anyproperties

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belonging to it, prior to the date on which penalties attach therto, except forsuch amounts that are being contested in good faith and by appropriateproceedings and against which the Company or such Subsidiary maintainsappropriate reserves in accordance with GAAP.

SECTION 7.05. Corporate Existence. Subject to Section 8.02, the------------------- ------------

Company will do all things necessary to preserve and keep in full force andeffect the corporate or partnership existence of the Company, and, except to theextent the failure to do so would not reasonably be expected to have a MaterialAdverse Effect, to preserve the existence of the Company's Subsidiaries, and tokeep in full force and effect the rights and franchises of the Company and itsSubsidiaries; provided that the Company may permit the occurrence of theConversion Date.

SECTION 7.06. Compliance with Statutes. Each of the Company and its------------------------

Subsidiaries will comply with all applicable material statutes, regulations andorders of, and all applicable restrictions imposed by, all governmental bodies,domestic or foreign, in respect of the conduct of its business and the ownershipof its property, except to the extent the failure to do so would not reasonablybe expected to have a Material Adverse Effect.

SECTION 7.07. ERISA. As soon as possible and, in any event, within ten-----

days after any Responsible Officer of the Company or any of its Subsidiariesknows or has reason to know any of the following items is true and is reasonablyexpected to have a Material Adverse Effect, such Person will deliver or cause tobe delivered to each of the Banks a certificate of the Responsible Officer ofthe Company setting forth details as to such occurrence and such action, if any,which such Person or its ERISA Affiliate is required or proposes to take,together with any notices required or proposed to be given to or filed with orby such Person or ERISA Affiliate with respect thereto: that a Reportable Eventhas occurred or that an application may be or has been made to the Secretary ofthe Treasury for a waiver or modification of the minimum funding standard; thata Multiemployer Plan has been or may be terminated, reorganized, partitioned ordeclared insolvent under Title IV of ERISA; that any required contribution to aPlan or Multiemployer Plan has not been or may not be timely made; thatproceedings may be or have been instituted under Section 4069(a) of ERISA toimpose liability on the Company or an ERISA Affiliate or under Section 4042 ofERISA to terminate a Plan or appoint a trustee to administer a Plan; that theCompany or any ERISA Affiliate has incurred or may incur any liability(including any contingent or secondary liability) on account of the termiantionof or withdrawal from a Plan or a Multiemployer Plan; and that the Company orany ERISA Affiliate may be required to provide security to a Plan under Section401(a)(29) of the Code; or any other condition(s) exist(s) or may occur withrespect to one or more Plans and/or Multiemployer Plans.

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ARTICLE VIII

NEGATIVE COVENANTS

The Company covenants and agrees, that on and after the date hereofand for so long as this Agreement is in effect and until the Commitments andeach Letter of Credit have terminated, and the Obligations (other thanindemnities not yet due) are paid in full:

SECTION 8.01. Change in Business. The Company will not, and will not------------------

permit any of its Subsidiaries to, engage in any business not related, ancillaryor complimentary to the business conducted by the Company and/or any of itsAffiliates on the Execution Date.

SECTION 8.02. Consolidation, Merger or Sale of Assets. The Company---------------------------------------

shall not consolidate with or merge with or into, or sell, convey, transfer orlease all or substantially all its assets to, another Person unless suchtransaction does not constitute a Change of Control and (a) the resulting,surviving or transferee Person or lessee (if other than the Company) shall be aPerson organized and existing under the laws of the United States or any Statethereof or the District of Columbia and such entity shall assume by theexecution of such notes, credit agreement and other documentation as issatisfactory to the Agent and the Banks all of the Obligations, (b) immediatelyafter giving effect to such transaction, no Default shall have happened and becontinuing (including, without limitation, any breach of Section 8.09), and on a

------------pro forma basis giving effect to such transaction there has not been a breach of



Section 8.08,(c) immediately after giving effect to such transaction, the------------resulting, surviving or transferee Person has a Consolidated Net Worth which isnot less than the Consolidated Net Worth of the Company immediately prior tosuch transaction and (d) the Company shall have delivered to the Agent anOfficer's Certificate and an opinion of counsel, each stating that suchconsolidation, merger, sale, conveyance, transfer or lease and such additionalloan documentation evidencing same comply with this Agreement.

SECTION 8.03. Liens. The Company shall not, and shall not permit any-----

Subsidiary to directly or indirectly, create, incur, assume or otherwise causeor suffer to exist or become effective any Lien securing Debt of any kind (otherthan Permitted Liens) upon any of their respective property or assets, now ownedor hereafter acquired, or any income or profits therefrom, unless the Companymakes or causes to be made effective provision whereby payment of theObligations will be secured by such Lien in form satisfactory to the Agent andthe Majority Banks equally and ratably for the benefit of the Banks with (orprior to) such Debt for so long as such Debt shall be secured; provided,however, (a) subject to Section 8.02(i), in the event of any sale, transfer or

------------other disposition by the Company or any Subsidiary of Accounts Receivable or ofany Subsidiary substantially all the assets of which are Accounts Receivable,which sale, transfer or other disposition constitutes a "sale" under GAAP (as ineffect at the time thereof), neither such sale, transfer or other dispositionnor any recourse provided by the Company or any Subsidiary in connectiontherewith shall, in any event, constitute Debt or a Lien and (ii) all NetAvailable Cash from any such sale shall be applied as a mandatory repayment ofthe Loans and the Total

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Commitment shall be reduced by the amount of such repayment and (b) that neitherthe satisfaction and discharge of any Debt pursuant to any indenture or otherinstrument governing such Debt, nor the defeasance of any Debt pursuant to anyindenture or other instrument governing such Debt, shall be deemed the creation,incurrence, assumption or existence of any Lien securing Debt.

SECTION 8.04 Limitation on Debt. (a) The Company shall not, and shall------------------

not permit any of its Subsidiaries to, directly or indirectly, issue or permitto exist any Debt.

(b) Notwithstanding the foregoing, the Company and its Subsidiariesmay issue or permit to exist the following Debt provided that after givingeffect to same there shall not be in existence a Default or Event of Default:

(i) (A) commercial paper of the Company having a maturity of 12months or less in an aggregate principal amount not to exceed $50,000,000outstanding at any time provided that the amount available at any timeunder the Total Commitment shall be decreased on on a dollar-for-dollarbasis by an amount equal to the aggregate outstanding principal amount ofany such commercial paper Debt at such time and (B) Debt issued pursuant tothe Indenture or any Refinancing Agreement;

(ii) Debt issued to and held by the Company or a Wholly OwnedSubsidiary; provided, however, that any subsequent issuance or transfer ofany Capital Stock that results in any such Wholly Owned Subsidiary ceasingto be a Wholly Owned Subsidiary or any transfer of such Debt (other thanto the Company or a Wholly Owned Subsidiary) shall be deemed, in each case,to constitute the issuance of such Debt by the issuer thereof;

(iii) The Obligations, and Debt issued in exchange for, or theproceeds of which are used to Refinance either (x) the Obligations or (y)any Debt so issued or the proceeds of which are so used,; provided that (i)the principal amount of the Debt so issued shall not exceed the principalamount of the Debt so Refinanced and (ii) the Debt so issued (i) shall havea Stated Maturity no earlier than the Stated Maturity of the Debt soRefinanced and (ii) shall have an Average Life no less than the remainingAverage Life of the Debt so Refinanced;

(iv) Debt (other than Debt described in clause (i), (ii) or(iii) above) outstanding on the Effective Date or Debt issued in exchangefor, or the proceeds of which are used to Refinance, any Debt permitted bythis clause (iv); provided that the principal amount of the Debt soRefinanced and the Debt so issued (A) shall have a Stated Maturity noearlier than the Stated Maturity of the Debt so Refinanced and (B) shallhave an Average Life no less than the remaining Average Life of the Debt soRefinanced; and



(v) Debt in an aggregate principal amount which, together withall

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other Debt of the Company then outstanding (other than Debt permitted byclauses (i) through (iv) above) does not exceed $30,000,000.

SECTION 8.05. Investments. The Company will not and will not permit-----------

any Subsidiary to, directly or indirectly, make or own any Investment in anyPerson, except:

(a) The Company and its Subsidiaries may make and own PermittedInvestments;

(b) The Company and its Subsidiaries may continue to own Investmentsowned by them on the date hereof as set forth on Schedule 8.05;

-------------

(c) The Company and its Subsidiaries may make and own Investments (i)arising out of loans and advances in the ordinary course of business; provided,however, the aggregate outstanding amount of all such loans and advances shallnot exceed $1,000,000 at any time outstanding, (ii) arising out of advances madein the ordinary course of business to contract or perform services for theCompany or any of its Subsidiaries, (iii) constituting accounts receivablearising in the ordinary course of business and payable within 60 days, (iv)arising out of deposits with any bank, (v) acquired by reason of the exercise ofcustomary creditors' rights upon default or pursuant to the bankruptcy,insolvency or reorganization of a debtor, or (vi) de minimis Investments eachyear in connection with the operations of their businesses;

(d) The Company and its Subsidiaries may endorse negotiableinstruments for collection in the ordinary course of business; and

(e) Subject to the limitations of Section 8.04, and provided that------------

there is not then in existence a Default or an Event of Default, the Company mayacquire (i) new Subsidiaries or substantially all of the assets of any entity(A) engaged generally in the same or related industries as the Company and itsSubsidiaries, and (B) not engaged in the same or related industry as the Companyand its Subsidiaries, provided, that the acquisition of assets or Capital Stockof the entities described in this Clause (B) shall have a total consideration,not in excess of 10% of the Company's Consolidated Net Tangible Assets and (ii)an interest in any entity which shall not constitute a Subsidiary (including,without limitation, the Company) after acquisition of such interest, providedthat, the acquisition of assets of Capital Stock of such entities shall have atotal consideration, not in excess of 5% of the Company's Consolidated NetTangible Assets.

SECTION 8.06. Restricted Payments. (a) The Company shall not, and-------------------

shall not permit any of its Subsidiaries, directly or indirectly, to: (i)declare or pay any dividend or make any distribution on or in respect of itsCapital Stock, including any payment in connection with any merger orconsolidation involving the Company (except dividends or distributions payablesolely in its Capital Stock (other than Disqualified Capital Stock) or payableto the Company or a Subsidiary), (ii) purchase, redeem or otherwise acquire orretire for value any Capital Stock of the Company or of any direct or indirectparent of the Company, (iii) purchase, repurchase, redeem, defease or otherwiseacquire or retire for value, prior to scheduled maturity,

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scheduled repayment or scheduled sinking fund payment, any SubordinatedObligations (other than the purchase, repurchase or other acquisition ofSubordinated Obligations purchased in anticipation of satisfying a sinking fundobligation, principal installment or final maturity, in each case due within oneyear of the date of acquisition) or (iv) make any Investment in any Affiliate ofthe Company other than a Subsidiary or a Person which will become a Subsidiaryas a result of any such Investment (any such dividend, distribution, purchase,redemption, repurchase, defeasance, other acquisition, retirement or Investmentbeing herein referred to as a "Restricted Payment"), unless, at the time of suchRestricted Payment:

(A) no Default or Event of Default shall have occurred and becontinuing or would occur as a consequence thereof;



(B) the Consolidated EBITDA Coverage Ratio exceeds 3.5 to 1;

(C) Total Debt does not exceed 60% of Consolidated Net TangibleAssets on a pro forma basis as of the end of the most recently completedfiscal quarter ending at least 45 days prior to the date on which suchRestricted Payment is made; and

(D) such Restricted Payment (the amount of any such payment, ifother than cash, to be determined by the Board of Directors, whosedetermination shall be conclusive and evidenced by a resolution in anOfficer's Certificate from the Company delivered to the Agent), togetherwith the aggregate of all other Restricted Payments (other than anyRestricted Payments permitted by the provisions of clauses (i),(ii) or(iii) of Section 8.06(b)) made by the Company its Subsidiaries in the

---------------fiscal quarter during which such Restricted Payment is made shall notexceed an amount equal to Available Cash of the Company for the immediatelypreceding fiscal quarter.

(b) The provisions of this Section shall not prohibit:

(i) Any purchase, redemption, repurchase, defeasance, otheracquisition or retirement (a "purchase or redemption") of Capital Stock orSubordinated Obligations of the Company made by exchange for, or out of theproceeds of the substantially concurrent sale (other than to a Subsidiary)of, Capital Stock of the Company (other than Disqualified Capital Stock);provided, however, that (A) such purchase or redemption shall be excludedin the calculation of the amount of Restricted Payments and (B) the NetCash Proceeds from such sale (to the extent so used) shall be excluded inthe calculation of the amount of Available Cash in clause Section

-------8.06(a)(D);----------

(ii) Any purchase or redemption of Subordinated Obligations ofthe Company made by exchange of, or out of the proceeds of thesubstantially concurrent sale (other than to a Subsidiary) of, Debt of theCompany; provided, however, that such Debt shall be subordinated to theNotes to at least the same extent as the Subordinated Obligations soexchanged, purchased or redeemed, shall have a Stated Maturity later thanthe earlier of the Stated Maturity of the

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Notes and the Stated Maturity of such Subordinated Obligations and shallhave an Average Life greater than the lesser of the Average Life of theLoans and the Average Life of such Subordinated Obligations; provided,further, however, that (A) such purchase or redemption shall be excluded inthe calculation of the amount of Restricted Payments and (B) the Net CashProceeds from such sale (to the extent so used) shall be excluded in thecalculation of the amount of Available Cash in Section 8.06(a)(D);

------------------

(iii) Any purchase or redemption of Subordinated Obligationsfrom Net Available Cash to the extent permitted under Section 8.11;provided, however, that (A) such purchase or redemption shall be excludedin the calculation of the amount of Restricted Payments and (B) the NetAvailable Cash from such sale (to the extent so used) shall be excludedfrom the definition of Available Cash in Section 8.06(a)(D);or

------------------

(iv) Dividends paid within 60 days after the date of declarationthereof if at such date of declaration such dividend would have compliedwith this provision; provided, however, that at the time of payment of suchdividend, no further Default shall have occurred and be continuing (orwould result therefrom); provided further, however, that such dividendshall be included (when paid, but not when declared) in the calculation ofthe amount of Restricted Payments.

(c) Not later than five Business Days after the declaration of anyRestricted Payment, but no later than three Business Days before making anyRestricted Payment the Company shall deliver to the Agent an Officers'Certificate of the Company stating that such Restricted Payment is permitted andsetting forth the basis upon which the calculations required by this Section

-------8.06 were computed, which calculations may be based upon the Company's latest----available financial statements.

SECTION 8.07. Change in Accounting; Fiscal Year. The Company will



---------------------------------not and will not permit any Subsidiary to, change its method of accountingexcept for immaterial changes in methods, changes permitted by GAAP in which theCompany's auditors concur and changes required by GAAP. The Company shall advisethe Agent in writing promptly upon making any such change to the extent same isnot disclosed in the financial statements required under Section 7.01 hereof.

------------

SECTION 8.08. Consolidated EBITDA Coverage Ratio. The Company will------------------- --------------

not permit the Consolidated EBITDA Coverage Ratio to be less than 3.5:1.0.

SECTION 8.09. Total Debt to Consolidated Net Tangible Assets Ratio.----------------------------------------------------

The Company will not permit the ratio of Total Debt to Consolidated NetTangible Assets to be greater than 60%.

SECTION 8.10. Transactions with Affiliates. The Company shall not,----------------------------

and shall not permit any Subsidiary to, conduct any business or enter into anytransaction or series of similar transactions (including the purchase, sale,lease or exchange of any property or the rendering of any service) with anyAffiliate of the Company other than (a) a Wholly Owned Subsidiary or (b) anemployee stock

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ownership plan, unless the terms of such business, transaction or series oftransactions are fair and reasonable to the Company. All such business,transactions or series of transactions that are approved by the Board ofDirectors (including by a majority of the Independent Committee of the Board ofDirectors) shall be deemed fair and reasonable to the Company. This Section,however, will not prohibit any management compensation arrangements consistentwith industry practice, and all such business, transactions or series oftransactions that have been completed or with respect to which agreements havebeen entered into prior to the date of this Agreement shall be deemed fair andreasonable to the Company.

SECTION 8.11. Limitation on Sales of Assets and Subsidiary Stock. The--------------------------------------------------

Company shall not, and shall not permit any of its Subsidiaries to, make anyAsset Disposition unless (a) the Company or such Subsidiary receivesconsideration at the time of such Asset Disposition at least equal to the fairmarket value, as determined in good faith by the Board of Directors, or theboard of directors of the relevant Subsidiary (including as to the value of allnon-cash consideration), of the shares and assets subject to such AssetDisposition and at least 80% of the consideration thereof received by theCompany or such Subsidiary is in the form of cash or cash equivalents orconsists of assets in which the Company or such Subsidiary, as the case may be,would have been able to invest pursuant to the election set forth in clause(b)(ii) below, and (b) an amount equal to 100% of the Net Available Cash fromsuch Asset Disposition is applied by the Company (or such Subsidiary, as thecase may be) (i) first, to the extent the Company elects (or is required by theterms of any Pari Passu Debt), to prepay, repay or purchase Pari Passu Debt orDebt of a Wholly Owned Subsidiary or such Subsidiary elects (or is required bythe terms of any Pari Passu Debt), to prepay, repay or purchase Pari Passu Debtor Debt of a Wholly Owned Subsidiary or such Subsidiary elects or is required bythe terms of any Pari Passu Debt) to prepay, repay or purchase Debt or PariPassu Debt (in each case other than Debt owed to the Company or an Affiliate ofthe Company) within 60 days from the later of the date of such Asset Dispositionor the receipt of such Net Available Cash and in the case of any prepaymentunder this clause (b)(i) the Total Commitment shall be reduced and the PariPassu Debt shall be prepaid on the same date in an amount equal to thatproportion that each such Debt bears to the total of the outstanding principalamount of the Pari Passu Debt plus the Total Commitment; (ii) second, to theextent of the balance of such Net Available Cash after any application inaccordance with clause (i), at the election of the Company or such Subsidiary,as the case may be, to acquire assets to replace its assets that were thesubject of such Asset Disposition or to acquire assets (or to make improvementsto existing assets) that (as determined by the Board of Directors or the boardof directors of such Subsidiary, as the case may be) will be used in thebusiness of the Company and its Subsidiaries existing on the date of originalissuance of the Notes or in business reasonably related thereto, in each case bythe later of (x) the date that is 180 days from the date of such AssetDisposition or (y) the date of the receipt of such Net Available Cash (iii)third, to the extent of any balance of such Net Available Cash after applicationand in accordance with clauses (i) and (ii), to make an offer pursuant to andsubject to the conditions contained in this Agreement and the Indenture, to theholders of the Securities and the Notes (and to holders of other Pari Passu Debt



designated by the Company) to purchase the Securities and the Notes (and suchother Pari Passu Debt) at a purchase price of 100% of the principal amountthereof (without premium) plus accrued and unpaid interest (or in respect ofsuch other Pari Passu Debt such lesser price, if any, as may be provided for bythe terms of such other Pari

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Passu Debt) and in the case of this clause (b)(iii) the Total Commitment shallbe reduced and the Securities (or other Pari Passu Debt) shall be prepaid on thesame day in an amount equal to the proportion that each such Debt bears to thetotal of the outstanding principal balance of the Securities (or outstandingprincipal balance of the other Pari Passu Debt) plus the Total Commitment, and(iv) fourth, to the extent of the balance of such Net Available Cash afterapplication in accordance with clauses (i), (ii) and (iii), to any applicationnot prohibited by the Agreement; provided, however, that in connection with anyprepayment, repayment or purchase of Debt pursuant to clause (i) or (iii) above,the Company or such Subsidiary shall retire such Debt and shall cause therelated loan commitment (if any, including, without limitation, the TotalCommitment) to be permanently reduced in an amount equal to the principal amountso prepaid, repaid or purchased.

Nothwithstanding the foregoing provisions of this paragraph, theCompany and its Subsidiaries shall not be required to apply any Net AvailableCash (other than Net Available Cash from an Asset Disposition consisting of asale and leaseback transaction that the Company has elected to treat as an AssetDisposition pursuant to clause (b) of Section 8.13) in accordance with this

------------paragraph except to the extent that the aggregate Net Available Cash from allAsset Dispositions which are not applied in accordance with this paragraphexceeds $10,000,000. Pending application of Net Available Cash pursuant to thiscovenant, such Net Available Cash shall be invested in Permitted Investments.

SECTION 8.12. Limitation on Debt and Preferred Stock of Subsidiaries.------------------------------------------------------

The Company shall not permit any Subsidiary to issue or permit to exist,directly or indirectly, any Debt or Preferred Stock except:

(a) Debt or Preferred Stock issued to and held by the Company or aWholly Owned Subsidiary; provided, however, that (i) any subsequent issuance ortransfer of any Capital Stock that results in any such Wholly Owned Subsidiaryceasing to be a Wholly Owned Subsidiary or (ii) any subsequent transfer of suchDebt or Preferred Stock (other than to the Company or a Wholly Owned Subsidiary)shall be deemed, in each case, to constitute the issuance of such Debt orPreferred Stock by the issuer thereof;

(b) Debt or Preferred Stock of a Subsidiary issued and outstanding onor prior to the date on which such Subsidiary was acquired by the Company (otherthan Debt or Preferred Stock issued as consideration in, or to provide all orany portion of the funds or credit support utilized to consummate, thetransaction or series of transactions pursuant to which such Subsidiary became aSubsidiary or was acquired by the Company);

(c) Any other Debt or Preferred Stock (other than any described inclause (a) or (b)) issued and outstanding on the Execution Date; and

(d) Debt or Preferred Stock issued in exchange for, or the proceedsof which are used to Refinance, Debt or Preferred Stock referred to in theforegoing clause (b) or (c); provided, however, the principal amount orliquidation value of such Debt or Preferred Stock so issued shall not exceed theprincipal amount or the

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liquidation value of the Debt or Preferred Stock so Refinanced and (ii) the Debtor Preferred Stock so issued (A) shall have a Stated Maturity no earlier thanthe Stated Maturity of the Debt or Preferred Stock being exchanged or Refinancedand (B) shall have an Average Life no less than the remaining Average Life ofthe Debt or Preferred Stock being Refinanced.

SECTION 8.13. Limitation on Sale and Leaseback Transactions. The---------------------------------------------

Company shall not, and shall not permit any Subsidiary to, enter into anyarrangement with any Person providing for the leasing by the Company or anySubsidiary of any real or tangible personal property (except for leases for aterm of not more than one year (including renewal rights) or between the Companyand a Subsidiary or between Subsidiaries), which property has been or is to besold or transferred by the Company or Subsidiary to such Person in contemplationof such leasing, unless (a) the Company or such Subsidiary would be entitled to



create a Lien on such property securing Debt in an amount equal to theAttributable Debt with respect to such arrangement without equally and ratablysecuring the Notes and the Obligations pursuant to Section 8.03 or (b) the

------------Company or such Subsidiary shall have received consideration from sucharrangement at least equal to the fair market value of the property subjectthereto (which shall be determined in good faith by the Board of Directors andevidenced by a resolution of the Board of Directors) and elects to treat theassets subject to such arrangement as an Asset Disposition subject to Section

-------8.11.----

ARTICLE IX

EVENTS OF DEFAULT AND REMEDIES

SECTION 9.01. Events of Default and Remedies. If any of the following------------------------------

events ("Events of Default") shall occur and be continuing:-----------------

(a) (x) any installment of principal on any Note shall not be paid onthe date on which such payment is due or (y) any interest on any Note or UnpaidDrawing, any Fee or any other amount due under any Loan Document shall not bepaid on the date on which such payment is due and any such failure referred toin this clause (y) shall continue for five or more Business Days; or

(b) any representation or warranty made or, for purposes of Article--------

VI, deemed made by the Company or in any of the Loan Documents or other--document, certificate or financial statement delivered in connection with thisAgreement or any other Loan Document shall prove to have been incorrect in anymaterial respect when made or deemed made or reaffirmed, as the case may be; or

(c) the Company (i) shall fail to perform or observe any duty orcovenant contained in Article VIII of this Agreement, other than those in

------------Section 8.07, or (ii) shall fail to perform or observe any duty or covenant------------contained in Article VII or in Section 8.07 or any other material duty or

------------covenant contained elsewhere in this Agreement and said failure shall continuefor a period of thirty (30) days after written notice thereof has been given tothe Company by the Agent or by the Agent upon request of any Bank; or

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(d) the Company or any Subsidiary fails to make (whether as primaryobligor or as guarantor or other surety) any principal payment of or interest orpremium, if any, on any Debt (other than the Notes) with an aggregate principalamount in excess of $20,000,000 outstanding ("Threshold Debt") beyond any period

--------------of grace provided with respect thereto, or there shall occur any other eventwhich causes, or permits the holder or holders to cause, such obligations tobecome due prior to any stated maturity, provided that any such event shallconstitute an Event of Default hereunder only upon the expiration of anyapplicable grace period in the instrument governing such Threshold Debt; or

(e) an involuntary proceeding shall be commenced or an involuntarypetition shall be filed in a court of competent jurisdiction seeking (i) reliefin respect of the Company or any Significant Subsidiary, or of a substantialpart of the property or assets of the Company or any such Subsidiary, underTitle 11 of the United States Code, as now or hereafter in effect, or anysuccessor thereto (the "Bankruptcy Code"), or any other federal or state

---------------bankruptcy, insolvency, receivership or similar law, (ii) the appointment of areceiver, trustee, custodian, sequestrator, conservator or similar official forthe Company or any such Subsidiary or (iii) the winding-up or liquidation of theCompany or any such Subsidiary; and such proceeding or petition shall continueundismissed for 60 days or an order or decree approving or ordering any of theforegoing shall be entered; or

(f) the Company or any Significant Subsidiary shall (i) voluntarilycommence any proceeding or file any petition seeking relief under the BankruptcyCode or any other federal or state bankruptcy, insolvency, receivership orsimilar law, (ii) consent to the institution of, or fail to contest in a timelyand appropriate manner, any proceeding or the filing of any petition describedin clause (e) above, (iii) apply for or consent to the appointment of a



receiver, trustee, custodian, sequestrator, conservator or similar official forthe Company or any such Subsidiary or for a substantial part of the property orassets of the Company or any Subsidiary, (iv) file an answer admitting thematerial allegations of a petition filed against it in any such proceeding, (v)make a general assignment for the benefit of creditors, (vi) become unable,admit in writing its inability or fail generally to pay its debts as they becomedue or (vii) take any action for the purpose of effecting any of the foregoing;or

(g) any Plan shall incur an "accumulated funding deficiency" (asdefined in Section 412 of the Code or Section 302 of ERISA), whether or notwaived, or a waiver of the minimum funding standard or extension of anyamortization period is sought or granted under Section 412 of the Code withrespect to a Plan; any proceeding shall have occurred or is reasonably likely tooccur by the PBGC under Section 4069(a) of ERISA to impose liability on theCompany or an ERISA Affiliate; any Plan shall have an Unfunded CurrentLiability; any required contribution to a Plan or Multiemployer Plan shall nothave been timely made; or the Company or any ERISA Affiliate has incurred or isreasonably likely to incur a liability to or on account of a Plan orMultiemployer Plan under Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA,and there shall result (individually or collectively) from any such

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event or events a liability which would reasonably be expected to have aMaterial Adverse Effect; or

(h) any judgement or decree for the payment of money in excess of$20,000,000 (to the extent not covered by insurance) shall be rendered againstthe Company or any Subsidiary, and there is a period of 60 days following suchjudgment during which such judgment or decree is not discharged, waived or theexecution thereof stayed and such judgment or decree is not satisfied,discharged, waived or the execution stayed within 10 days after the noticespecified below;

then, and in any such event, and at any time thereafter, if any Event of Defaultshall then be continuing, the Agent may, and upon the written request of theMajority Banks shall, by written notice to the Company (a "Notice of Default")

-----------------take any or all of the following actions, without prejudice to the rights of theAgent, any Bank or other holder of any of the Obligations to enforce its claimsagainst the Company (provided that, if an Event of Default specified in Section

-------9.01(e) or Section 9.01(f) shall occur, the results which would occur upon the------- ---------------giving of a Notice of Default as specified in clauses (i), (ii) and (iii) below,shall occur automatically without the giving of any Notice of Default): (i)declare the Total Commitment terminated, whereupon the Commitments of the Banksshall forthwith terminate immediately and any Commitment Fee shall forthwithbecome due and payable without any other notice of any kind; (ii) declare theprincipal of and any accrued and unpaid interest in respect of all Loans, andall Obligations owing hereunder, to be, whereupon the same shall become,forthwith due and payable without presentment, demand, notice of demand or ofdishonor and non-payment, protest, notice of protest, notice of intent toaccelerate,declaration or notice of acceleration or any other notice of anykind, all of which are hereby waived by the Company; (iii) terminate any Letterof Credit which may be terminated in accordance with its terms (whether by thegiving of written notice to the beneficiary or otherwise); and (iv) direct theCompany to pay, and the Company agrees that upon receipt of such notice (or uponthe occurrence of an Event of Default specified in Section 9.01(e) or Section

--------------- -------9.01(f)), it will pay to the Agent, to the extent permitted by law, such-------additional amount of cash as is equal to the aggregate Stated Amount of allLetters of Credit then outstanding hereby pledged and to be held in an interestbearing account with the Agent as security for the Obligations.

SECTION 9.02. Other Remedies. Upon the occurrence and during the--------------

continuance of any Event of Default, the Agent, acting at the request of theMajority Banks, may proceed to protect and enforce its and the Banks' rights,either by suit in equity or by action at law or both; or may proceed to enforcethe payment of all amounts owing to the Agent and the Banks under the LoanDocuments and any accrued and unpaid interest thereon in the manner set forthherein or therein; it being intended that no remedy conferred herein or in anyof the other Loan Documents is to be exclusive of any other remedy, and each andevery remedy contained herein or in any other Loan Document shall be cumulativeand shall be in addition to every other remedy given hereunder and under theother Loan Documents now or hereafter existing at law or in equity or by statuteor otherwise.



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SECTION 9.03. Obligation Non Recourse as to General Partner.---------------------------------------------

Notwithstanding anything contained in this Agreement or any of the other LoanDocuments to the contrary, the Agent and the Banks acknowledge and agree thatpayment of the Obligations shall not be enforced against the General Partner orany of its assets except to the extent of its general partnership interest inthe Company, nor shall the General Partner have any liability whatsoeverhereunder other than to the extent of the general partnership interest in theCompany in connection with this Agreement and the transactions contemplatedhereby. The foregoing provision is not intended to release or discharge any ofthe Obligations.

Notwithstanding the foregoing provisions to the contrary the GeneralPartner and its successors and assigns shall be and remain fully liable to theAgent and the Banks, and this Section 9.03 shall not be construed so as to limit

------------remedies for intentional or wilfull misconduct of the General Partner.

ARTICLE X

THE AGENT

SECTION 10.01. Authorization and Action. Each Bank hereby------------------------

irrevocably appoints and authorizes the Agent to act on its behalf and toexercise such powers under this Agreement and the other Loan Documents as arespecifically delegated to or required of the Agent by the terms hereof,together with such powers as are reasonably incidental thereto. The Agent mayperform any of its duties hereunder by or through its agents and employees. Theduties of the Agent shall be mechanical and administrative in nature; the Agentshall not have by reason of this Agreement or any other Loan Documents afiduciary relationship in respect of any Bank; and nothing in this Agreement orany other Loan Document, expressed or implied, is intended to, or shall be soconstrued as to, impose upon the Agent any obligations in respect of thisAgreement or any other Loan Document except as expressly set forth herein ortherein. As to any matters not expressly provided for by this Agreement, theNotes or the other Loan Documents (including enforcement or collection of theNotes), the Agent shall not be required to exercise any discretion or take anyaction, but shall be required to act or to refrain form acting (and shall befully protected in so acting or refraining from acting) upon the instructionsof the Majority Banks, and such instructions shall be binding upon all Banksand all holders of Notes and the Obligations; provided, however, that the Agentshall not be required to take any action which exposes the Agent to personalliability or which is contrary to this Agreement or applicable law.

SECTION 10.02. Agent's Reliance. (a) neither the agent nor any of----------------

its directors, officers, agents or employees shall be liable for any actiontaken or omitted to be taken by it or them under or in connection with thisAgreement, the Notes or any of the other Loan Documents (i) with the consent orat the request of the Majority Banks or (ii) in the absence of its or their owngross negligence or willful misconduct (it being the express intention of theparties hereto that the Agent and its directors, officers, agents and employeesshall have no liability for actions and omissions under this Section resultingfrom their sole ordinary or contributory ordinary negligence).

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(b) WITHOUT LIMITATION OF THE GENERALITY OF THE FOREGOING, THE AGENT:(I) MAY TREAT THE PAYEE OF EACH NOTE AND THE OBLIGATIONS AS THE HOLDER THEREOFUNTIL THE AGENT RECEIVES WRITTEN NOTICE OF THE ASSIGNMENT OR TRANSFER THEREOFSIGNED BY SUCH PAYEE AND IN FORM SATISFACTORY TO THE AGENT; (II) MAY CONSULTWITH LEGAL COUNSEL (INCLUDING COUNSEL FOR THE COMPANY), INDEPENDENT PUBLICACCOUNTANTS AND OTHER EXPERTS SELECTED BY IT AND SHALL NOT BE LIABLE FOR ANYACTION TAKEN OR OMITTED TO BE TAKEN IN GOOD FAITH BY IT IN ACCORDANCE WITH THEADVICE OF SUCH COUNSEL, ACCOUNTANTS OR EXPERTS; (III) MAKES NO WARRANTY ORREPRESENTATION TO ANY BANK AND SHALL NOT BE RESPONSIBLE TO ANY BANK FOR ANYSTATEMENTS, WARRANTIES OR REPRESENTATIONS MADE IN OR IN CONNECTION WITH THISAGREEMENT, ANY NOTE OR ANY OTHER LOAN DOCUMENT; (IV) EXCEPT AS OTHERWISEEXPRESSLY PROVIDED HEREIN, SHALL NOT HAVE ANY DUTY TO ASCERTAIN OR TO INQUIRE ASTO THE PERFORMANCE OR OBSERVANCE OF ANY OF THE TERMS, CONVENANTS OR CONDITIONSOF THIS AGREEMENT, ANY NOTE OR ANY OTHER LOAN DOCUMENT OR TO INSPECT THEPROPERTY (INCLUDING THE BOOKS AND RECORDS) OF THE COMPANY; (V) SHALL NOT BERESPONSIBLE TO ANY BANK FOR THE DUE EXECUTION, LEGALITY, VALIDITY,ENFORCEABILITY, COLLECTIBILITY, GENUINENESS, SUFFICIENCY OR VALUE OF THISAGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT OR ANY OTHER INSTRUMENT OR DOCUMENT



FURNISHED PURSUANT HERETO OR THERETO; (VI) SHALL NOT BE RESPONSIBLE TO ANY BANKFOR THE PERFECTION OR PRIORITY OF ANY LIEN SECURING THE OBLIGATIONS; AND (VII)SHALL INCUR NO LIABILITY UNDER OR IN RESPECT OF THIS AGREEMENT, ANY NOTE OR ANYOTHER LOAN DOCUMENT BY ACTING UPON ANY NOTICE, CONSENT, CERTIFICATE OR OTHERINSTRUMENT OR WRITING (WHICH MAY BE BY TELEGRAM, TELECOPIER, CABLE OR TELEX)REASONABLY BELIEVED BY IT TO BE GENUINE AND SIGNED OR SENT BY THE PROPER PARTYOR PARTIES.

SECTION 10.03. Agent and Affiliates; Credit Suisse (in its capacity----------------------------------------------------

as a Bank) and Affiliates. Without limiting the right of any other Bank to-------------------------engage in any business transactions with the Company or any of its Affiliates,with respect to their Commitments, the Loans made by them and the Notes issuedto them, Credit Suisse and each other Bank who may become the Agent shall havethe same rights and powers under this Agreement and its Notes as any other Bankand may exercise the same as though it was not the Agent; and the term "Bank" or"Banks" shall, unless otherwise expressly indicated, include Credit Suisse andany such other Bank, in their individual capacities. Credit Suisse, each otherPerson who becomes the Agent and their respective Affiliates may be engaged in,or may hereafter engage in, one or more loan, letter of credit, the "Other

-----Financings") with the Company, any Subsidiary of the Company or any of their----------respective Affiliates, or may act as trustee on behalf of, or depositary for, orotherwise engage in other business transactions with the Company, any Subsidiaryof the Company or any of their respective Affiliates (all Other Financings andother such business transactions being collectively, the "Other Activities")

----------------with no responsibility to account therefor to the Banks. Without limiting therights and remedies of the Banks specifically set forth herein, no other Bank byvirtue of being a Bank hereunder shall have any interest in (a) any OtherActivities, (b) any present or future guaranty by or for the account of theCompany not contemplated or included herein, (c) any present or future offsetexercised by the Agent in respect of any such Other Activities, (d) any presentor future property

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taken as security for any such Other Activities or (e) any property now orhereafter in the possession or control of the Agent which may be or becomesecurity for the Obligations of the Company, any Subsidiary of the Company orany of their respective Affiliates hereunder and under the Notes by reason ofthe general description of indebtedness secured, or of property contained inany other agreements, documents or instruments related to such Other Activities;provided, however, that if any payment in respect of such guaranties or suchproperty or the proceeds thereof shall be applied to reduction of theObligations then each Bank shall be entitled to share in such applicationaccording to its pro rata portion of such Obligations.

SECTION 10.04. Bank Credit Decision. Each Bank acknowledges and--------------------

agrees that it has, independently and without reliance upon the Agent or anyother Bank and based on the financial statements referred to in Section 6.07 and

------------such other documents and information as it has deemed appropriate, made its owncredit analysis and decision to enter into this Agreement. Each Bank alsoacknowledges and agrees that it will, independently and without reliance uponthe Agent or any other Bank and based on such documents and information as itshall deem appropriate at the time, continue to make its own credit decisions intaking or not taking action under this Agreement and the other Loan Documents.

SECTION 10.05. AGENT'S INDEMNITY. (A) THE AGENT SHALL NOT BE-----------------

REQUIRED TO TAKE ANY ACTION HEREUNDER OR TO PROSECUTE OR DEFEND ANY SUIT INRESPECT OF THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT UNLESSINDEMNIFIED TO THE AGENT'S REASONABLE SATISFACTION BY THE BANKS AGAINST LOSS,COST, LIABILITY AND EXPENSE. IF ANY INDEMNITY FURNISHED TO THE AGENT SHALLBECOME IMPAIRED, IT MAY CALL FOR ADDITIONAL INDEMNITY AND CEASE TO DO THE ACTSINDEMNIFIED AGAINST UNTIL SUCH ADDITIONAL INDEMNITY IS GIVEN. IN ADDITION,THE BANKS AGREE TO INDEMNIFY THE AGENT (TO THE EXTENT NOT REIMBURSED BY THECOMPANY), RATABLY ACCORDING TO THE RESPECTIVE AGGREGATE PRINCIPAL AMOUNTS OF THENOTES THEN HELD BY EACH OF THEM (OR IF NO NOTES ARE AT THE TIME OUTSTANDING,RATABLY ACCORDING TO THE RESPECTIVE AMOUNTS OF THEIR COMMITMENTS, OR IF NOCOMMITMENTS ARE OUTSTANDING, THE RESPECTIVE AMOUNTS OF THE COMMITMENTSIMMEDIATELY PRIOR TO THE TIME THE COMMITMENTS CEASED TO BE OUTSTANDING), FROMAND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,ACTIONS, JUDGEMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND ORNATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE



AGENT IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY ACTIONTAKEN OR OMITTED BY THE AGENT UNDER THIS AGREEMENT, THE NOTES AND THE OTHER LOANDOCUMENTS (INCLUDING ANY ACTION TAKEN OR OMITTED UNDER ARTICLE II, ARTICLE III,

---------- -----------OR ARTICLE IV OF THIS AGREEMENT). WITHOUT LIMITATION OF THE FOREGOING, EACH

----------BANK AGREES TO REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE OFANY OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE COUNSEL FEES) INCURRED BY THEAGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, ADMINISTRATION, ORENFORCEMENT OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER,THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS TO THE EXTENT THAT THEAGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY THE COMPANY. THE PROVISIONS OFTHIS SECTION SHALL SURVIVE

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the termination of this Agreement, the payment of the Obligations and/or theassignment of any of the Notes.

(b) Not withstanding the foregoing, no Bank shall be liable underthis Section to the Agent for any portion of such liabilities, obligations,losses damages, penalties, actions, judgments, suits, costs, expenses ordisbursements due to the Agent resulting from the Agent's gross negligence orwillful misconduct.

SECTION 10.06. Successor Agent. The Agent may resign at any time by---------------

giving five days prior written notice thereof to the Banks and the Company andmay be removed as Agent under this Agreement, the Notes and the other LoanDocuments at any time with or without cause by the Majority Banks. Upon anysuch resignation or removal, the Majority Banks shall have the right toappoint a successor Agent, subject to the approval of the Company. If nosuccessor Agent shall have been so appointed by the Majority Banks, and shallhave accepted such appointment, within 30 calendar days after the retiringAgent's giving of notice of resignation or the Majority Banks' removal of theretiring Agent, then the retiring Agent may, subject to the approval of theCompany, on behalf of the Banks, appoint a successor Agent, which shall be acommercial bank organized under the laws of the United States of America or ofany state thereof and having a combined capital and surplus of at least$500,000,000. Upon the acceptance of any appointment as Agent hereunder andunder the Notes and the other Loan Documents by a successor Agent, suchsuccessor Agent shall thereupon succeed to, and become vested with, all therights, powers, privileges and duties of the retiring Agent, and the retiringAgent shall be discharged from its duties and obligations under this Agreement,the Notes and the other Loan Documents. After any retiring Agent's resignationor removal as Agent hereunder and under the Notes and the other Loan Documents,the provisions of this Article X shall inure to its benefits as to any actions

---------taken or omitted to be taken by it while it was Agent under this Agreement, theNotes and the other Loan Documents.

SECTION 10.07. Notice of Default. The Agent shall not be deemed to-----------------

have knowledge or notice of the occurrence of any Default or Event of Defaulthereunder unless the Agent shall have received notice from a Bank or theCompany referring to this Agreement, describing such Default or Event of Defaultand stating that such notice is a "notice of default." If the Agent receivessuch notice, the Agent shall give notice thereof to the Banks; provided,however, if such notice is received from a Bank, the Agent also shall givenotice thereof to the Company. The Agent shall be entitled to take action orrefrain from taking action with respect to such Default or Event of Default asprovided in Section 10.01 and Section 10.02.

------------- -------------

ARTICLE XI

MISCELLANEOUS

SECTION 11.01. Amendments. No amendment or waiver of any provision----------

of this Agreement, any Note or any other Loan Document, nor consent to anydeparture by the Company herefrom or therefrom, shall in any event be effectiveunless the same shall be in writing and signed by the Company, as to amendments,

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and by the Majority Banks in all cases, and then, in any case, such waiver or



consent shall be effective only in the specific instance and for the specificpurpose for which given; provided, however, that no amendment, waiver or consentshall, unless in writing and signed by 100% of the Banks, do any of thefollowing: (a) change the definition of "Majority Banks," "Total Commitment" or"Percentage Participation,", (b) reduce or increase the amount or alter theterms of the Commitment of any Bank, other than as set forth in Section 4.03(d)

---------------or subject any Bank to any additional obligations, (c) reduce the principal of,or rate or amount of interest applicable to, any Loan or the reimbursementobligations of the Company under the Letters of Credit other than as provided inthis Agreement, or the Up Front Fee, the Commitment Fee or any Letter of CreditFees, (d) postpone any date fixed for any payment of principal of, or intereston, the Notes or the reimbursement obligations of the Company under any Letterof Credit, (e) change this Section or (f) change the aggregate unpaid principalamount of the Notes, or the number of Banks, which shall be required for theBanks or any of them to take any action hereunder; and provided that noamendment, waiver or consent shall, unless in writing and signed by the Agent inaddition to the Banks required above to take such action, affect the rights orduties of the Agent under this Agreement, any Note or any other Loan Document.

SECTION 11.02. Notices. The Agent, any Bank or the holder of any of-------

the Obligations, giving consent or notice or making any request of the Companyprovided for hereunder, shall notify each Bank and the Agent thereof. In theevent that the holder of any Note or any of the Obligations (including any Bank)shall transfer such Note or Obligations, it shall promptly so advise the Agentwhich shall be entitled to assume conclusively that no transfer of any Note orany of the Obligations has been made by any holder (including any Bank) unlessand until the Agent receives written notice to the contrary. Except withrespect to telephone notifications specifically permitted pursuant to ARTICLE II

----------and ARTICLE III, all notices, consents, requests, approvals, demands and other

-----------communications provided for herein shall be in writing (including telecopycommunications) and mailed, telecopied, sent by overnight courier or delivered:

(a) If to the Company or any of its Subsidiaries, to them at:BCP Management, Inc.180 East Broad StreetColumbus, Ohio 43215

Attention: Secretary

(b) If to the Agent, to it at:12 East 49th Street39th FloorNew York, New York 10017

Attention: Syndications/Agency

(c) If to any Bank, as specified on the signature page for such Bankhereto or, in the case of any Person who becomes a Bank after the date hereof,as specified on the Assignment and Acceptance executed by such Person or in theAdministrative Questionnaire delivered by such Person or, in the case of anyparty

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hereto, such other address or telecopy number as such party may hereafterspecify for such purpose by notice to the other parties.

All communications shall, when mailed, telecopied or delivered, be effective (x)72 hours after mailing by certified mail, return receipt requested to any partyat its address specified above, on the signature page hereof or on the signaturepage of such Assignment and Acceptance (or other address designated by suchparty in a communication to the other parties hereto), (y) when telecopied toany party to the telecopy number set forth above, on the signature page hereofor on the signature page of such Assignment and Acceptance (or other telecopynumber designated by such party in a communication to the other parties hereto)and such telecopy is confirmed, or (z) when delivered personally to any party atits address specified above, on the signature page hereof or on the signaturepage of such Assignment and Acceptance (or other address designated by suchparty in a Communication to the other parties hereto); provided, thatcommunications to the Agent pursuant to Article II, Article III or Article XI

---------- ----------- ----------shall not be effective until received by the Agent.

SECTION 11.03. No Waiver; Remedies. No failure on the part of any



-------------------Bank or the Agent to exercise and no delay in exercising, any right hereunder,under any Note or under any other Loan Document shall operate as a waiverthereof; nor shall any single or partial exercise of any such right, or anyabandonment or discontinuance of any steps to enforce such right, preclude anyother or further exercise thereof or the exercise of any other right. No noticeto or demand on the Company in any case shall entitle the Company to any otheror further notice or demand in similar or other circumstances. The remediesherein provided are cumulative and not exclusive of any remedies provided bylaw.

SECTION 11.04. Costs, Expenses and Taxes. The Company agrees to pay-------------------------

on demand: (a) all reasonable out-of-pocket costs and expenses of the Agent inconnection with the preparation, execution and delivery of this Agreement, theNotes, the other Loan Documents and the other documents to be deliveredhereunder, including the reasonable fees and out-of-pocket expenses of counselfor the Agent, including Andrews & Kurth L.L.P., with respect thereto and withrespect to advising the Agent as to its rights and responsibilities under thisAgreement, the Notes and the other Loan Documents, and any modification,extension, amendment, supplement or waiver of any of the terms of this Agreementor any other Loan Document, (b) all reasonable out-of-pocket costs and expensesof the Agent in connection with the syndication of the credit evidenced by thisAgreement and the other Loan Documents, (c) all reasonable costs and expenses ofeach of the Agent, the Banks and any other holder of an interest in the Notes,and the Obligations of the Company hereunder and under the Loan Documents,including reasonable legal fees (including the allocated cost of in-housecounsel) and expenses, in connection with a default or the enforcement of thisAgreement, the Notes and the other Loan Documents. In addition, the Companyshall pay any and all stamp and similar taxes payable or determined to bepayable in connection with the execution and delivery of this Agreement, theNotes, the other Loan Documents and the other documents to be deliveredhereunder. Without prejudice to the survival of any other obligations of theCompany hereunder and under the Notes, the obligations of the Company under this

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Section shall survive the termination of this Agreement and the payment of theObligations or the assignment of the Notes.

SECTION 11.05. Indemnity. (a) The Company agrees to indemnify the---------

Agent, the Banks, the Issuing Bank and each Affiliate thereof and theirrespective directors, officers, employees and agents from, and hold each of themharmless against, any and all losses, liabilities, claims or damages (includingreasonable legal fees and expenses) to which any of them may become subject,insofar as such losses, liabilities, claims or damages arise out of or resultfrom any investigation, litigation or other proceeding (including any threatenedinvestigation or proceeding) including, without limitation, any of sameresulting from or arising out of any actual or proposed use by the Company ofthe proceeds of any extension of credit by any Bank hereunder or any of theother Loan Documents, and the Company shall reimburse the Agent, each Bank andeach Affiliate thereof and their respective directors, officers, employees andagents, upon demand for any expenses (including legal fees) reasonably incurredin connection with any such investigation or proceeding; but excluding any suchlosses, liabilities, claims, damages, fees or expenses incurred by reason of thegross negligence or willful misconduct of the Person to be indemnified.

(B) Without limiting any provision of this Agreement, it is theexpress intention of the parties hereto that each Person to be indemnifiedhereunder or thereunder shall be indemnified and held harmless against any andall losses, liabilities, claims or damages covered by subsection (a) above andarising out of or resulting from the ordinary sole or contributory negligence ofsuch Person. Without prejudice to the survival of any other obligations of theCompany hereunder and under the other Loan Documents, the obligations of theCompany under this Section shall survive the termination of this Agreement andthe other Loan Documents and the payment of the Obligations or the assignment ofthe Notes.

SECTION 11.06. Right of Setoff. If any Event of Default shall have---------------

occurred and be continuing, each Bank is hereby authorized at any time and fromtime to time, to the fullest extent permitted by law, to set off and apply anyand all deposits (time or demand, provisional or final) at any time held andother indebtedness at any time owing by such Bank, or any branch, subsidiary orAffiliate of such Bank, to or for the credit or the account of the Companyagainst any and all the Obligations, irrespective of whether or not such Bank orthe Agent shall have made any demand under this Agreement, such Note or theObligations and although the Obligations may be unmatured. Each Bank agreespromptly to notify the Company after any such setoff and application made by



such Bank, but the failure to give such notice shall not affect the validity ofsuch setoff and application. The rights of each Bank under this Section are inaddition to other rights and remedies (including other rights of setoff) whichsuch Bank may have.

SECTION 11.07 Governing Law. This Agreement, all Notes, the other-------------

Loan Documents and all other documents executed in connection herewith andtherewith, shall be deemed to be contracts and agreements executed by theCompany,

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the Agent and the Banks under the law of the State of New York and for allpurposes shall be construed in accordance with, and governed by, the law of saidstate. Without limitation of the foregoing, nothing in this Agreement, or in theNotes or in any other Loan Document shall be deemed to constitute a waiver ofany rights which any Bank may have under applicable federal legislation relatingto the amount of interest which such Bank may contract for, take, receive orcharge in respect of any Loans or other Obligations to such Bank hereunder andunder the other Loan Documents, including any right to take, receive, reserveand charge interest at the rate allowed by the law of the state where such Bankis located.

SECTION 11.08. Interest. Each provision in this Agreement and each--------

other Loan Document is expressly limited so that in no event whatsoever shallthe amount paid, or otherwise agreed to be paid, to the Agent or any Bank, orcharged, contracted for, reserved, taken or received by the Agent or any Bank,for the use, forbearance or detention of the money to be loaned under thisAgreement or any Loan Document or otherwise (including any sums paid as requiredby any covenant or obligation contained herein or in any other Loan Documentwhich is for the use, forbearance or detention of such money), exceed thatamount of money which would cause the effective rate of interest to exceed theHighest Lawful Rate, and all amounts owed under this Agreement and each otherLoan Document shall be held to be subject to reduction to the effect that suchamounts so paid or agreed to be paid, charged, contracted for, reserved, takenor received which are for the use, forbearance or detention of money under thisAgreement or such Loan Document shall in no event exceed that amount of moneywhich would cause the effective rate of interest to exceed the Highest LawfulRate. Anything in any Note or any other Loan Document to the contrarynotwithstanding, the Company shall not be required to pay unearned interest onany Note and under the Loan Documents at a rate in excess of the Highest LawfulRate, and if the effective rate of interest which would otherwise be payableunder such Note, such Obligations and such Loan Documents would exceed theHighest Lawful Rate, or if the holder of such Note shall receive any unearnedinterest or shall receive monies that are deemed to constitute interest whichwould increase the effective rate of interest payable by the Company under suchNote and the Loan Documents to a rate in excess of the Highest Lawful Rate, then(a) the amount of interest which would otherwise be payable shall be reduced tothe amount allowed under applicable law and (b) any unearned interest paid orany interest paid in excess of the Highest Lawful Rate shall in the firstinstance be credited on the principal of the Obligations (or if all suchObligations shall have been paid in full, refunded to the Company). It isfurther agreed that, without limitation of the foregoing, all calculations ofthe rate of interest contracted for, reserved, taken, charged or received by anyBank under the Notes and under this Agreement and the other Loan Documents heldby it are made for the purpose of determining whether such rate exceeds theHighest Lawful Rate applicable to such Bank (such Highest Lawful Rate being suchBank's "Maximum Permissible Rate"), and shall be made, to the extent permitted

------------------------by usury laws applicable to such Bank (now or hereafter enacted), by amortizing,prorating and spreading in equal parts during the period of the full stated termof the Loans evidenced by said Notes and the other Obligations all interest atany time contracted for, charged or received by such Bank in connectiontherewith. If at any time and from time to time (y) the amount of interestpayable to any Bank on any date shall be computed at such Bank's MaximumPermissible Rate

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pursuant to this Section and (z) in respect of any subsequent interestcomputation period the amount of interest otherwise payable to such Bank wouldbe less than the amount of interest payable to such Bank computed at such Bank'sMaximum Permissible Rate, then the amount of interest payable to such Bank inrespect of such subsequent interest computation period shall continue to be



computed at such Bank's Maximum Permissible Rate until the total amount ofinterest payable to such Bank shall equal the total amount of interest whichwould have been payable to such Bank if the total amount of interest had beencomputed without giving effect to this Section.

SECTION 11.09. Binding Effect. This Agreement shall become effective--------------

when it shall have been executed by the Company and the Agent and when the Agentshall have been notified by each Bank that such Bank has executed it andthereafter shall be binding upon and inure to the benefit of the Company, theAgent and each Bank and their respective successors and permitted assigns.

SECTION 11.10. Successors and Assigns; Participations. (a) All--------------------------------------

covenants, promises and agreements by or on behalf of the Company, the Agent orthe Banks that are contained in this Agreement shall bind and inure to thebenefit of their respective permitted successors and assigns. Other than as setforth in Section 8.02, the Company may not assign or transfer any of its rights

------------or obligations hereunder without the written consent of all the Banks.

(b) Each Bank may, without the consent of the Company, sellparticipations to one or more banks in all or a portion of its rights andobligations under this Agreement and the other Loan Documents (including all ora portion of its Commitment, the Loans and the Notes and participations inLetters of Credit held by it); provided, however, that (i) the selling Bank'sobligations under this Agreement shall remain unchanged, (ii) such Bank shallremain solely responsible to the other parties hereto for the performance ofsuch obligations, (iii) the participating banks or other entities shall beentitled to the cost protection provisions contained in Article II, Article III

---------- -----------and Section 11.04; provided, however, the costs to which a participant shall be

-------------entitled to obtain pursuant to Articles II and III shall be determined by

----------- ---reference to such participant's selling Bank and shall be recoverable solelyfrom such selling Bank (without increasing the Company's obligation to reimbursesuch Bank thereunder) and (iv) the Company, the Agent and the other Banks shallcontinue to deal solely and directly with the selling Bank in connection withsuch Bank's rights and obligations under this Agreement and the other LoanDocuments; provided, however, the selling Bank may grant a participant rightswith respect to amendments, modifications or waivers only with respect to theamount of principal or the rate of interest payable on, or the dates fixed forany payment of principal of or fees with respect to interest on, the Loans. Noparticipant shall be a third party beneficiary of this Agreement and shall notbe entitled to enforce any rights provided to its selling Bank against theCompany under this Agreement.

(c) A Bank may assign to any other Bank or Banks or to any Affiliateof a Bank and, with the prior written consent of the Agent and the Company(which consent shall not be unreasonably withheld), a Bank may assign to one ormore other Eligible Assignees all or a portion of (but if a portion of, not lessthan $5,000,000 of)

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its interests, rights, and obligations under this Agreement and the other LoanDocuments (including all or a portion of its Commitment and the same portion ofthe Loans at the time owing to it and the Note held by it, including itsparticipation in the Letters of Credit); provided, however, that (i) each suchassignment shall be in a minimum principal amount of not less than $5,000,000(unless such assignment shall be to another Bank) and shall be of a constant,and not a varying, percentage of all the assigning Bank's Commitment, rights andobligations under this Agreement and (ii) the parties to each such assignmentshall execute and deliver to the Agent, for its acceptance and recording in theRegister (as defined below), an Assignment and Acceptance substantially in theform of Exhibit 11.10 hereto (an "Assignment and Acceptance"), any Note subject

------------- -------------------------to such assignment and, in the case of the Eligible Assignee, an AdministrativeQuestionnaire. Upon such execution, delivery, acceptance and recording, fromand after the effective date specified in each Assignment and Acceptance, whicheffective date shall be at least five Business Days after the execution thereofunless otherwise agreed to by the assigning Bank, the Eligible Assigneethereunder and the Agent (x) the Eligible Assignee thereunder shall be a partyhereto and to the other Loan Documents and, to the extent provided in suchAssignment and Acceptance, have the rights and obligations of a Bank hereunderand under the other Loan Documents and (y) the assignor Bank thereunder shall,to the extent provided in such Assignment and Acceptance, be released from itsobligations under this Agreement and the other Loan Documents (and, in the caseof an Assignment and Acceptance covering all of the remaining portion of anassigning Bank's rights and obligations under this Agreement and the other LoanDocuments such Bank shall cease to be a party hereto).

(d) By executing and delivering an Assignment and Acceptance, theBank assignor thereunder and the Eligible Assignee confirm to and agree witheach other and the other parties hereto as follows: (i) other than therepresentation and warranty that it is the legal and beneficial owner of theinterest being assigned thereby free and clear of any adverse claim known tosuch Bank assignor, such Bank assignor makes no representation or warranty andassumes no responsibility with respect to any statements, warranties orrepresentations made in or in connection with this Agreement or the execution,legality, validity, enforceability, genuineness, sufficiency or value of thisAgreement, the other Loan Documents or any other instrument or documentfurnished pursuant hereto or thereto; (ii) such Bank assignor makes norepresentation or warranty and assumes no responsibility with respect to thefinancial condition of the Company or the performance of observance of itsrespective obligations under this Agreement or any other instrument or documentfurnished pursuant hereto or thereto; (iii) such Eligible Assignee confirms thatit has received a copy of this Agreement together with copies of the most recentfinancial statements delivered pursuant to Section 6.07 or Section 7.01 and such

------------ ------------other documents and information as it has deemed appropriate to make its owncredit analysis and decision to enter into such Assignment and Acceptance; (iv)such Eligible Assignee will, independently and without reliance upon the Agent,such Bank assignor or any other Bank and based on such documents and informationas it shall deem appropriate at the time, continue to make its own creditdecisions in taking or not taking action under this Agreement and the other LoanDocuments; (v) such Eligible Assignee appoints and authorizes the Agent to takesuch action on behalf of such Eligible Assignee and to the exercise such powersunder this Agreement

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and the other Loan Documents as are delegated to the Agent by the terms hereof,together with such powers as are reasonably incidental thereto; (vi) suchEligible Assignee agrees that it will perform in accordance with its terms allof the obligations which by the terms of this Agreement and the other LoanDocuments are required to be performed by it as a Bank and (vii) such EligibleAssignee confirms that it is an Eligible Assignee confirms that it is anEligible Assignee as defined herein.

(e) The Agent shall maintain at its office a copy of each Assignmentand Acceptance delivered to it and a register for the recordation of the namesand addresses of the Banks and the Commitment of, and principal amount of theLoans and other Obligations owing to, each Bank from time to time (the"Register"). The entries in the Register shall be conclusive, in the absence of



--------manifest error, and the Company, the Agent and the Banks may treat each Personwhose name is recorded in the Register as a Bank hereunder for all purposes ofthis Agreement and the other Loan Documents. The Register shall be availablefor inspection by the Company, any Bank or the Agent at any reasonable time andfrom time to time upon reasonable prior notice.

(f) Upon its receipt of an Assignment and Acceptance executed by anassigning Bank and an Eligible Assignee together with the Note subject to suchassignment, a service fee of $3,500 payable by the assigning Bank to the Agentand upon giving any required written consent to such assignment, the Agentshall, if such Assignment and Acceptance has been completed and is substantiallyin form of Exhibit 11.10 hereto, (i) accept such Assignment and Acceptance, (ii)

-------------record the information contained therein in the Register and (iii) give promptnotice thereof to the Banks and the Company. Within five Business Days afterreceipt of such notice, the Company shall execute and deliver to the Agent inexchange for the surrendered Note, a new Note to the order of such EligibleAssignee in an amount respectively equal to their portion of the Commitment ofthe assigning Bank assumed by it pursuant to such Assignment and Acceptance and,if the assigning Bank has retained any of its Commitment hereunder, a new Noteto the order of the assigning Bank in an equal amount to the Commitment (whichmust be in an amount not less than $5,000,000) retained by it hereunder. Suchnew Notes shall be in an aggregate principal amount equal to the aggregateprincipal amount of such surrendered Note, shall be dated the effective date ofsuch Assignment and Acceptance and shall otherwise be in substantially the formof Exhibit 2.05, as applicable, hereto. Any cancelled Note shall be returned to

------------the Company.

(g) Notwithstanding any other provision herein, any Bank may, inconnection with any assignment or participation or proposed assignment orparticipation pursuant to this Section disclose to the assignee or participantor proposed assignee or participant, any information relating to the Companyfurnished to such Bank by or on behalf of the Company, however to the provisionsof Section 11.11.

-------------

(h) Anything in this Section to the contrary notwithstanding, anyBank may at any time, without the consent of the Company or the Agent, assignand pledge all or any portion of its Commitment and the Loans owing to it anyFederal Reserve Bank (and its transferees) as collateral security pursuant toRegulation A

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and any Operating Circular issued by such Federal Reserve Bank. No suchassignment shall release the assigning Bank from its obligations hereunder.

(i) All transfers of any interest in any Note hereunder shall be incompliance with all federal and state securities laws, if applicable.Notwithstanding the foregoing sentence, however, the parties to this Agreementdo not intend that any transfer under this Section be construed as a "purchase"or "sale" of a "security" within the meaning of any applicable federal or statesecurities laws.

SECTION 11.11. Confidentiality. Each Bank agrees to exercise its---------------

best efforts to keep any information delivered or made available by theCompany to it (including any information obtained pursuant to Section 7.01)

------------which is clearly indicated to be confidential information, confidential fromanyone other than Persons employed or retained by such Bank who are or areexpected to become engaged in evaluating, approving, structuring oradministering the Loans or the Letters of Credit; provided that nothing hereinshall prevent any Bank from disclosing such information (a) to any of suchBank's Affiliates or any other Bank, (b) pursuant to subpoena or upon the orderof any court or administrative agency, (c) upon the request or demand of anyregulatory agency or authority having jurisdiction over such Bank, (d) which hasbeen publicly disclosed, (e) to the extent reasonably required in connection



with any litigation to which either Agent, any Bank, the Company or theirrespective Affiliates may be a party, (f) upon the occurrence and continuationof an Event of Default, to the extent reasonably required in connection with theexercise of any remedy hereunder, (g) to such Bank's legal counsel andindependent auditors to the extent such Persons are involved in evaluating,approving, structuring or administering the Loans, and to the extent of suchactivity, and (h) to any actual or proposed participant or assignee of all orpart of its rights hereunder which has agreed in writing to be bound by theprovisions of this Section. Each Bank will promptly notify the Company of anyinformation that it is required or requested to deliver pursuant to clause (b),(c) or (e) of this Section, prior to any disclosure, if reasonably practicable,provided further that the Company may, at its sole expense, move to quash orremove any subpoena or otherwise contest any demand for such documents arisingin items (b), (c) and/or (e) of this Section.

SECTION 11.12. Pro Rata Treatment. (a) Except as otherwise------------------

specifically permitted hereunder, each payment or prepayment of principal, ifpermitted under this Agreement, and each payment of interest with respect to aBorrowing shall be made pro rata among the Banks in accordance with therespective principal amounts of the Loans extended by each Bank with respect tosuch Borrowing.

(b) Each Bank agrees that if it shall, through the exercise of aright of banker's lien, setoff or counterclaim against the Company (pursuant toSection 11.06 or otherwise), including a secured claim under Section 506 of the-------------Bankruptcy Code or other security or interest arising from, or in lieu of, suchsecured claim, received by such Bank under any applicable bankruptcy, insolvencyor other similar law or otherwise, obtain payment (voluntary or involuntary) inrespect of the Notes, Loans, Unpaid Drawings and other Obligations held by it(other than pursuant to Section 2.11, Section 2.13 and Section 3.05) as a result

------------ ------------ ------------of which the unpaid principal portion

-74-

of the Notes and the Obligations held by it shall be proportionately less thanthe unpaid principal portion of the Notes and Obligations held by any otherBank, it shall be deemed to have simultaneously purchased from such other Bank aparticipation in the Notes and Obligations held by such other Bank, so that theaggregate unpaid principal amount of the Notes, Obligations and participationsin Notes held by each Bank shall be in the same proportion to the aggregateunpaid principal amount of the Notes and Obligations then outstanding as theprincipal amount of the Notes and other Obligations held by it prior to suchexercise of banker's lien, setoff or counterclaim was to the principal amount ofall Notes and other Obligations outstanding prior to such exercise of banker'slien, setoff or counterclaim; provided, however, that if any such purchase orpurchases or adjustments shall be made pursuant to this Section and the paymentgiving rise thereto shall thereafter be recovered, such purchase or purchases oradjustments shall be rescinded to the extent of such recovery and the purchaseprice or prices or adjustments restored without interest. The Company expresslyconsents to the foregoing arrangements and agrees that any Person holding such aparticipation in the Notes and the Obligations deemed to have been so purchasedmay exercise any and all rights of banker's lien, setoff or counterclaim withrespect to any and all moneys owing by the Company to such Person as fully as ifsuch Person had made a Loan directly to the Company in the amount of suchparticipation.

SECTION 11.13. Independence of Covenants. All covenants contained in-------------------------

this Agreement and in the other Loan Documents shall be given independent effectso that if a particular action or condition is not permitted by any of suchcovenants, the fact that such action or condition would be permitted by anexception to, or otherwise be within the limitations of, another covenant, shallnot avoid the occurrence of a Default or an Event of Default if such action istaken or condition exists.

SECTION 11.14. Separability. Should any clause, sentence, paragraph------------

or Section of this Agreement be judicially declared to be invalid, unenforceableor void, such decision will not have the effect of invalidating or voiding theremainder of this Agreement, and the parties hereto agree that the part or partsof this Agreement so held to be invalid, unenforceable or void will be deemed tohave been stricken herefrom and the remainder will have the same force andeffectiveness as if such part or parts had never been included herein.

SECTION 11.15. Execution in Counterparts. This Agreement may be



-------------------------executed in any number of counterparts and by different parties hereto inseparate counterparts, each of which when so executed shall be deemed to be anoriginal and all of which taken together shall constitute on and the sameagreement.

SECTION 11.16. Interpretation. (a) In this Agreement, unless a clear--------------

contrary intention appears:

(i) the singular number includes the plural number and viceversa;

(ii) reference to any gender includes each other gender;

-75-

(iii) the words "herein," "hereof" and "hereunder" and otherwords of similar import refer to this Agreement as a whole and not to anyparticular Article, Section or other subdivision;

(iv) reference to any Person includes such Person's successorsand assigns but, if applicable, only if such successors and assigns arepermitted by this Agreement, and reference to a Person in a particularcapacity excludes such Person in any other capacity or individually,provided that nothing in this clause (iv) is intended to authorize anyassignment not otherwise permitted by this Agreement;

(v) except as expressly provided to the contrary herein,reference to any agreement, document or instrument (including thisAgreement) means such agreement, document or instrument as amended,supplemented or modified and in effect from time to time in accordance withthe terms thereof and, if applicable, the terms hereof, and reference toany Note or other note includes any note issued pursuant hereto inextension or renewal thereof and in substitution or replacement therefor;

(vi) unless the context indicates otherwise, reference to anyArticle, Section, Schedule or Exhibit means such Article or Section hereofor such Schedule or Exhibit hereto;

(vii) the words "including" (and with correlative meaning"include") means including, without limiting the generality of anydescription preceding such term; and

(viii) reference to any law, rule or regulation means such asamended, modified, codified or reenacted, in whole or in part, and ineffect from time to time.

(b) The Article and Section headings herein and the Table of Contentsare for convenience only and shall not affect the construction hereof.

(c) No provision of this Agreement shall be interpreted or construedagainst any Person solely because that Person or its legal representativedrafted such provision.

SECTION 11.17. SUBMISSION TO JURISDICTION. (a) ANY LEGAL ACTION OR--------------------------

PROCEEDING WITH RESPECT TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BEBROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THESOUTHERN DISTRICT OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,THE COMPANY HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITSPROPERTY, UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID

-------------COURTS WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. THE COMPANY FURTHERIRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY

-76-

OR THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OFCOPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITSADDRESS PROVIDED IN SECTION 11.02, SUCH SERVICE TO BECOME EFFECTIVE THIRTY DAYS

-------------AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANYBANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGALPROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.

(b) THE COMPANY HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY



NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS ORPROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THECOURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES ANDAGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION ORPROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

SECTION 11.18. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT------------------------------

(INCLUDING THE SCHEDULES AND EXHIBITS HERETO), THE NOTES AND THE OTHER LOANDOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THESUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OFPRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARENO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECTMATTER OF THIS AGREEMENT.

SECTION 11.19. WAIVER OF JURY TRAIL. EACH OF THE COMPANY, THE AGENT--------------------

AND THE BANKS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRAIL BY JURY IN ANYACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OROTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE LOANS ORTHE ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION,PERFORMANCE OR ENFORCEMENT THEREOF.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement tobe executed by their respective officers thereunto duly authorized as of thedate first above written.

THE COMPANY:

BORDEN CHEMICALS ANDPLASTICS OPERATING LIMITEDPARTNERSHIP

By BCP Management, Inc.

By: /s/ David A. Kelly--------------------------------

Name: David A. KellyTitle: Director, Treasurer and Principal

Financial Officer

AGENT:

CREDIT SUISSE,as Agent for the Banks

By:_______________________________Name: Heather RiekenbergTitle: Associate

By:_______________________________Name: Ira LubinskyTitle: Associate

ISSUING BANK:

CREDIT SUISSE,as Issuing Bank

By:_______________________________Name: J. Hamilton CrawfordTitle: Associate

By:_______________________________Name: Michael MastTitle: Member of Senior Management

IN WITNESS WHEREOF, the parties hereto have caused this Agreement tobe executed by their respective officers thereunto duly authorized as of thedate first above written.



THE COMPANY:


By BCP Management, Inc.

By: ____________________________________Name:Title:

AGENT:

CREDIT SUISSE,as Agent for the Banks

By: /s/Heather Riekenberg------------------------------------

Name: Heather RiekenbergTitle: Associate

By: /s/Ira Lubinsky------------------------------------

Name: Ira LubinskyTitle: Associate

ISSUING BANK:

CREDIT SUISSE,as Issuing Bank

By: /s/J. Hamilton Crawford------------------------------------

Name: J. Hamilton CrawfordTitle: Associate

By: /s/Michael Mast------------------------------------

Name: Michael MastTitle: Member of Senior Management

Bank----

CREDIT SUISSE

Commitment:----------$16,000,000

By: /s/J. Hamilton Crawford------------------------------------

Name: J. Hamilton CrawfordTitle: AssociateAddress: 12 E. 49th Street

New York, New York 10017

By: /s/Michael Mast------------------------------------

Name: Michael MastTitle: Member of Senior ManagementAddress: 12 E. 49th Street


Telecopy No.: (212) 238-5439

Domestic Lending Office



-----------------------

Credit Suisse12 E. 49th StreetNew York, New York 10017

Eurodollar Lending Office-------------------------

Credit Suisse12 E. 49th StreetNew York, New York 10017

Bank----

THE CHASE MANHATTAN BANK, N.A.

Commitment:----------$14,000,000

By: /s/Ruth I. Dreessen------------------------------------

Name: Ruth I. DreessenTitle: Vice President

Address: 1 Chase Manhattan Plaza -4th Floor


Telecopy No.: (212) 552-1246

Domestic Lending Office-----------------------

The Chase Manhattan Bank, N.A.1 Chase Manhattan PlazaNew York, New York 10081


The Chase Manhattan Bank, N.A.1 Chase Manhattan PlazaNew York, New York 10081

Bank----

THE HUNTINGTON NATIONAL BANK

Commitment:----------$14,000,000

By: /s/ Robert H. Friend----------------------------

Name: Robert H. FriendTitle: Vice President

Address: Huntington National BankThe Huntington Center - HCO810Columbus, Ohio 43287

Telecopy No: (614) 480-3066




Hunting National BankThe Huntington Center - HC0810Columbus, Ohio 43287


Huntington National BankThe Huntington Center - HC0810Columbus, Ohio 43287

Bank----

WACHOVIA BANK OF GEORGIA, N.A.

Commitment:----------$14,000,000 By: [SIGNATURE ILLEGIBLE]

---------------------Name: [SIGNATURE ILLEGIBLE]Title: Sen. Vice President

Corporate Services

Address: 191 Peachtree St. N.E.Atlanta, Georgia 30303

Telecopy No.: (404) 332-6898


Wachovia Bank of Georgia, N.A.191 Peachtree St. N.E.Atlanta, Georgia 30303


Wachovia Bank of Georgia, N.A.191 Peachtree St. N.E.Atlanta, Georgia 30303

Bank----

NATIONSBANK, N.A. (CAROLINAS)

Commitment:----------$14,000,000

By: /s/ Scott Jackson-------------------------------

Name: Scott JacksonTitle: Vice President

Address: 767 Fifth Avenue, 5th FloorNew York, New York 10153-0083

Telecopy No.: (212) 751-6909


NationsBank, N.A.101 North Tryon Street, 15th FloorCharlotte, North Carolina 28255


NationsBank, N.A.101 North Tryon Street, 15th FloorCharlotte, North Carolina 28255



Bank----

BANK ONE, COLUMBUS, NA

Commitment:----------$14,000,000

By: /s/ James B. Waddell------------------------------

Name: James B. WaddellTitle: Vice President

Address: 100 East Broad StreetColumbus, Ohio 43271-0209

Telecopy No.: (614) 248-5518


Bank One, Columbus, NA100 East Broad StreetColumbus, Ohio 43271-0209


Bank One, Columbus, NA100 East Broad StreetColumbus, Ohio 43271-0209

Bank----

CREDITLYONNAIS

Commitment:----------$14,000,000


Credit Lyonnais New York Branch1301 Avenue of the AmericasNew York, New York 10019

Telecopy No.: (212) 459-3179

By: /s/ Mark Campellone------------------------------------

Name: Mark CampelloneTitle:


Credit Lyonnais Cayman Island Branch1301 Avenue of the AmericasNew York, New York 10019

By: /s/ Mark Campellone------------------------------------

Name: Mark CampelloneTitle:

EXHIBIT 1.01A



CREDIT SUISSEAdministrative Details Form For: Borden Chemicals and Plastic LP

<TABLE><CAPTION>========================================================================================================================================================================<S> <C>Lending Institutions: ______________________________________________________Address: ______________________________________________________

______________________________________________________Telephone: ___________________ Telex No:____________________Telefax: ___________________ Answerback:____________________CONTACTS - Credit Incomes: ______________________________________________________

Address: ___________________ Telephone:______________________________________ Telefax:___________________

CONTACTS - Admin/Operations: ______________________________________________________Address: ___________________ Telephone:___________________

___________________ Telefax:___________________

Domestic Lending Eurodollar LendingPAYMENT INSTRUCTIONS: Fees & InterestBank Name: ___________________ ___________________Bank Address: ___________________ ___________________

___________________ ___________________ABA#/Acct.#: ___________________ ___________________Name on Acct.: ___________________ ___________________Further credit to: ___________________ ___________________Acct. Name/No.: ___________________ ___________________

PAYMENT INSTRUCTIONS: PrincipalBank Name: ___________________ ___________________Bank Address: ___________________ ___________________

___________________ ___________________ABA#/Acct.#: ___________________ ___________________Name on Acct.: ___________________ ___________________Further credit to: ___________________ ___________________Acct. Name/No.: ___________________ ___________________</TABLE>

PLEASE NOTE: CREDIT SUISSE ADMINISTRATIVE DETAILS

For payments of principal, fees, or interest to Credit Suisse, please credit ouraccount at the Federal Reserve Bank of New York.

ABA# 0260-0917-9, for further credit to Credit Suisse Account No. 904996-02,Attn: Loans Dept., Reference:

Borden Chemicals and Plastic LP PLEASE MAKE ALL PAYMENTS NO LATER THAN----------------------------------------

11:00 A.M. NY TIME.

Primary Acct Administrator

CREDIT SUISSE NEW YORK Julia Kingsbury

12 E. 49th Street Tel: 212-238-5063

New York, NY 10017 Fax: 212-238-5073

EXHIBIT 2.03

FORMOF

NOTICE OF BORROWING

Credit Suisse, as Agentfor the Banks that are parties to theCredit Agreement referred to below12 East 49th Street, 44th FloorNew York, New York 10017

Attention:____________ [Date]

Dear Sirs:

Reference is made to the Credit Agreement dated as of _______________,1995 (the "Credit Agreement"), among Borden Chemicals and Plastics Operating



----------------Limited Partnership (the "Company"), the banks party thereto and Credit Suisse,

-------as agent for such banks. Capitalized terms used herein and not otherwise definedherein shall have the meanings assigned to such terms in the Credit Agreement.

The Company, hereby requests a Borrowing under the Credit Agreementand in that connection sets forth below the information relating to suchBorrowing (the "Proposed Borrowing") as required by Section 2.03 of the Credit

------------------Agreement:

(a) Aggregate Principal Amount of Proposed Borrowing/1/ $_______________-

(b) Borrowing Date of Proposed Borrowing/2/ ________________-

(c) Type of Loans to comprise the Proposed Borrowing/3/ ________________-

(d) Interest Period and last day thereof/4/ ________________-

___________/1/ Except with respect to any Proposed Borrowing of the entire Unutilized-

Commitment, not less than $5,000,000 and, if greater, in integral multiplesof $1,000,000.

/2/ Must be a Business Day.-

/3/ Base Rate Loans or Eurodollar Rate Loans.-

/4/ Applicable only to a proposed Borrowing to be comprised of Eurodollar Rate-

Loans, which shall have a duration of one, two, three or six months, orsuch longer period as the Agent in its reasonable discretion may determineis available at the relevant time, and which shall end not later than theMaturity Date; subject, however, to the limitations contained in Section2.09 of the Credit Agreement.

By each of the delivery of this Notice of Borrowing and theacceptance of any or all of the Loans made by the Banks in response to thisNotice of Borrowing, the Company shall be deemed to have represented andwarranted that the conditions to lending specified in Article V of the CreditAgreement have been satisfied with respect to the Proposed Borrowing.

Very truly yours,


By: BCP Management, Inc.

By:_______________________Name:Title:

-2-

EXHIBIT 2.05

FORMOF

REVOLVING CREDIT NOTE

$________________ Dated: _____________, 1995

FOR VALUE RECEIVED, the undersigned, Borden Chemicals and PlasticsOperating Limited Partnership, a Delaware limited partnership (the "Company")

-------



whose sole general partner is BCP Management Inc., HEREBY PROMISES TO PAY to theorder of (the "Bank") on or before the Maturity Date (as hereinafter defined)

----the lesser of (i) the amount of the Bank's Commitment and (ii) the aggregateamount of the Loans made by the Bank to the Company and outstanding on theMaturity Date. The principal amount of each Loan made by the Bank to the Companypursuant to the Credit Agreement (as hereinafter defined) shall be due andpayable on the dates and in the amounts as are specified in the CreditAgreement.

The Company promises to pay interest on the unpaid principal amount ofeach Loan from the date of such Loan until such principal amount is paid infull, at such interest rates, and payable at such dates and times, as arespecified in the Credit Agreement dated as of _____________, 1995 (as the samemay from time to time be amended, modified or supplemented, the "Credit

------Agreement," the terms defined therein and not otherwise defined herein being---------used herein as therein defined), among the Company, the Bank and certain otherbanks that are parties thereto, Credit Suisse, as Agent for the Bank and suchother banks.

Both principal and interest are payable in same day funds in lawfulmoney of the United States of America to Credit Suisse, as Agent, at 12 East49th Street, New York, New York 10017, or at such other place as the Agent shalldesignate in writing to the Company. The amount of each Loan made by the Bank tothe Company and the borrowing date, the rate of interest applicable thereto andall payments made on account of principal and interest hereof, may be recordedby the Bank and, prior to any transfer hereof, endorsed on the grid attachedhereto which is part of this Promissory Note; provided, however, that thefailure of the Bank to make such notation or any error therein shall not in anymanner affect the obligation of the Company to repay such Loan in accordancewith the terms of this Promissory Note and the Credit Agreement.

This Promissory Note may be held by the Bank for the account of itsDomestic Lending Office or its Eurodollar Lending Office and may be transferredfrom one to the other from time to time as the Bank may determine.

This Promissory Note is one of the Notes referred to in, and isentitled to the benefits of, the Credit Agreement. The Credit Agreement, amongother things,

(i) provides for the making of the Loans by the Bank to the Company from time totime, the indebtedness of the Company resulting from each such Loan beingevidenced by this Promissory Note and (ii) contains provisions for accelerationof the maturity hereof upon the happening of certain stated events, also forprepayments on account of principal hereof prior to the maturity hereof upon theterms and conditions therein specified, and to the effect that no provision ofthe Credit Agreement or this Promissory Note shall require the payment or permitthe collection of interest in excess of the Highest Lawful Rate.

The Company and any and all endorsers, guarantors and suretiesseverally waive grace, demand, presentment for payment, notice of dishonor ordefault or intent to accelerate, protest and notice of protest and diligence incollecting and bringing of suit against any party hereto, and agree to allrenewals, extensions or partial payments hereon and to any release orsubstitution of security herefor, in whole or in part, with or without notice,before or after maturity.

This Promissory Note shall be governed by, and construed andinterpreted in accordance with, the law of the State of New York.

BORDEN CHEMICALS AND PLASTICSOPERATING LIMITEDPARTNERSHIP


By:_______________________Name:_____________________Title:____________________

-2-

LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST<TABLE>



<CAPTION>_________________________________________________________________________________________________

End ofBorrowing Interest Rate of Amount of Amount of

Date or Amount Period Interest Principal Interest UnpaidConversion and Type of Applicable Applicable Paid or Paid or Principal Notation

Date Loan to Loan to Loan Prepaid Prepaid Balance Made By=================================================================================================<S> <C> <C> <C> <C> <C> <C> <C>_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________</TABLE>

-3-

EXHIBIT 2.14

FORMOF

SWING LOAN PARTICIPATION CERTIFICATE______________, 199_

(Name of Bank)----------------________________________________

Dear Ladies and Gentlemen:

Pursuant to subsection 2.14(b)(i) of that certain Credit Agreement dated asof _______, 1995 (as the same may be amended, modified or restated from time totime, the "Credit Agreement"), among Borden Chemicals and Plastics OperatingLimited Partnership, a Delaware limited partnership, (as defined in the CreditAgreement), the several financial institutions from time to time party thereto(the "Banks"), Credit Suisse, letter of credit issuing bank, Credit Suisse, asAgent (the "Agent") for the Banks therein named, the undersigned herebyacknowledges receipt from you on the date hereof of ___________________ DOLLARS($___________) as payment for a participating interest in the following SwingLoan(s):

Date(s) of Swing Loan(s): _________________, 199_

Principal Amount of Swing Loan(s): $_____________

Capitalized terms used herein without definition have the meaning assignedto them in the Credit Agreement.



Very truly yours,

CREDIT SUISSE,as Swing Loan Bank

By:__________________________Name:Title:

EXHIBIT 3.02

FORMOF

LETTER OF CREDIT REQUEST

______________, 19_

Credit Suisse12 East 49th Street, 44th FloorNew York, New York 10017

Attention:__________

Gentlemen:

Reference is made to the Credit Agreement dated as of _______________,1995 (the "Credit Agreement"), among Borden Chemicals and Plastics Operating

----------------Limited Partnerships (the "Company"), the banks thereto and Credit Suisse, as

-------agent for such banks. Capitalized terms which are used but not defined hereinshall have the respective meanings assigned to such terms in the CreditAgreement.

The Company hereby requests the issuance of a Letter of Credit underthe Credit Agreement, and in that connection sets forth below the informationrelating to such Letter of Credit ("Proposed Letter of Credit") as required by

-------------------------Section 3.02 of the Credit Agreement. The Proposed Letter of Credit must beissued:

(a) on or before _________, 19__/1/

(b) for the benefit of ______________

(c) in the amount of $_______________

(d) having an expiry date of _______, 19__/2/

(e) subject to the conditions set forth in the Application attachedhereto

0R

The Company hereby refers to Letter of Credit Number __________ (the"Expiring Letter of Credit") which has an existing expiry date of ___________.-------------------------

The Company hereby requests that [the expiry date of the Expiring Letter ofCredit be extended to _________/2/]

The Company hereby certifies that after giving effect to the [issuanceof the Proposed Letter of Credit] or [the extension of the Expiring Letter ofCredit] (a) the aggregate Letter of Credit Outstanding will not exceed theLetter of Credit

_______________________________

/1/ Which must be not less than two Business Days after notice is given to theIssuing Bank.

/2/ Which shall not be later than the earlier of (i) a date which is one yearafter the date of issuance or (ii) the Maturity Date.

Limit and (b) the sum of the aggregate outstanding Loans plus the Letter ofCredit Outstanding will not exceed the Total Commitment. The Company herebyfurther certifies that on the date hereof all applicable conditions to the[issuance of the Proposed Letter of Credit] [extension of the Expiring Letter of



Credit] set forth in Article V of the Credit Agreement have been satisfied andthat the [Proposed Letter of Credit][the Expiring Letter of Credit as extended]complies with the terms of the Credit Agreement, and upon the [issuance of theProposed Letter of Credit] [extension of the Expiring Letter of Credit], theCompany will be deemed to have recertified the foregoing on such issuance dateor extension date, as the case may be.

Sincerely,



By:_______________________Name:Title:

S&A DRAFT4/28/95

MAY __, 1995

To Credit Suisse, as Agent, and each of the BanksUnder the Credit Agreement referred to below

c/o Credit Suisse, as Agent12 East 49th Street39th FloorNew York, New York 10017

Re: Borden Chemicals and PlasticsOperating Limited Partnership-----------------------------

Ladies and Gentlemen:

I am Vice President, General Counsel and Secretary of BCP Management,Inc. (the "General Partner") and have acted as counsel to Borden Chemicals andPlastics Operating Limited Partnership (the "Company"), and to the GeneralPartner, the Company's sole general partner, in connection with the preparation,execution and delivery of that certain Credit Agreement dated as of May __, 1995(the "Credit Agreement") among the Company, the institutions from time to timeparty thereto as Banks (collectively, the "Banks"), and Credit Suisse, as agentfor the Banks (in such capacity, the "Agent"). This opinion is being deliveredpursuant to Section 5.01(e) of the Credit Agreement. Terms defined in the CreditAgreement and not otherwise defined herein are used herein with the meanings asso defined.

In connection with the opinions expressed herein, I have reviewed thefollowing documents:

(i) The Credit Agreement executed by each of the parties thereto;

(ii) The Notes; and

(iii) (x) The Certificate of Incorporation and By-Laws of the GeneralPartner,

(y) the Certificate of Limited Partnership and Amended andRestated Agreement of Limited Partnership of the Company, and

(z) certificates of governmental officials as to(1) the due organization, valid existence and good standing ofeach of the Company and the General Partner under the laws of theState of Delaware,(2) the due qualification or registration of the Company as aforeign limited partnership in the State of Illinois and theState of Louisiana, and(3) the due qualification as a foreign corporation and goodstanding of the General Partner in the State of Illinois and theState of Louisiana.

The Credit Agreement and the Notes are hereinafter referred to as the"Loan Documents".

In addition, I have examined originals or copies, certified orotherwise identified to my satisfaction, of such corporate records, agreements,



documents or instruments and other instruments, as applicable, and ofcertificates or comparable documents or instruments of public officials andother instruments and documents and have made such inquiries of such officersand representatives and such examination of law as I have deemed relevant andnecessary to form and basis for the opinions hereinafter set forth.

In my examination of the Loan Documents I have assumed theauthenticity of all such documents submitted to us as originals, the conformityto authentic originals of all such documents submitted to me as copies and thegenuineness of all signatures (other than the signatures of the representativesof the General Partner). As to all questions of fact material to the opinionsspecified herein that have not been independently established, I have reliedupon the representations and warranties of the Company contained in the CreditAgreement.

In rendering the opinions expressed below, I have assumed, without anyindependent investigation or verification of any kind, that each party to theLoan Documents (other than the Company and the General Partner) has been dulyorganized and is validly existing and in good standing under its jurisdiction ofincorporation and has full power and authority to execute and deliver the LoanDocuments and perform the obligations set forth therein, and that the execution,delivery, and performance of the Loan Documents by such other parties have beenduly authorized by all requisite corporate and other action on the part of such

2

other parties and such documents have been duly executed and delivered by suchother parties.

Based upon the foregoing assumptions and examination of documents andupon such investigation as I have deemed necessary, and subject to thequalifications set forth in subparagraphs (a) through (f) below, I am of theopinion that:

1. The Company (i) is a limited partnership duly organized, validlyexisting and in good standing under the laws of the State of Delaware and (ii)has the partnership power to own its property and carry on its business as nowconducted. The General Partner (i) is a corporation duly organized, validlyexisting and in good standing under the laws of the State of Delaware and (ii)has the corporate power to own its property and carry on its business as nowconducted.

2. The Company is duly qualified or authorized as a foreign limitedpartnership in the State of Illinois and the State of Louisiana.

3. The General Partner is duly qualified as a foreign corporation todo business and is in good standing in the State of Illinois and the State ofLouisiana.

4. The execution, delivery and performance by the Company of eachLoan Document are within the Company's partnership powers and have been dulyauthorized by all necessary corporate action on the part of the General Partner.The execution and delivery by the General Partner, as general partner of theCompany, of each Loan Document are within the General Partner's corporate powersand have been duly authorized by all necessary corporate action on the part ofthe General Partner.

My opinions are expressly qualified as follows:

(a) My opinions expressed above are limited to the GeneralCorporation Law of the State of Delaware, the Delaware Revised UniformLimited Partnership Act, and the federal law of the United States, and I donot express any opinion herein concerning any other law.

(b) I express no opinion as to the effect of the compliance ornoncompliance of the Agent, any of the Banks or the Issuing Bank with anystate or federal laws or regulations applicable to any such party becauseof such party's legal or regulatory status, the nature of such party'sbusiness or the authority of any party to conduct business in anyjurisdiction.

3

(c) I express no opinion at to the effect (if any) of the law of anyjurisdiction (except the State of New York) in which any Bank is locatedwhich limits the rate of interest that such Bank may charge or collect.

(d) Insofar as the opinions expressed in paragraphs 2 and 3 relatedto matters governed by the law of the State of Illinois or the State of



Louisiana, I have not made an independent examination of such law, but haverelied exclusively upon the certificates referred to clauses (iii)(z)(2)and (iii)(z)(3) above.

(e) I express no opinion with respect to any federal or statesecurities laws.

(f) My opinions speak as of the date hereof and I assume noobligation to supplement the foregoing opinions if any applicable lawschange after the date hereof or if I become aware of any facts which mightchange such opinions after the date hereof.

This opinion is furnished to you by me as counsel to the Company andthe General Partner and is solely for your benefit and may not be quoted by youwithout my prior written consent. Sidley & Austin may rely upon this opinion inrendering their opinion to you of even date herewith, but this opinion may notbe furnished to, relied on or quoted by any other Person without my priorwritten consent.

Very truly yours,

Lawrence L. Dieker

4

S&A DRAFT4/28/95

May __, 1995





We have acted as special New York counsel to Borden Chemicals andPlastics Operating Limited Partnership (the "Company"), and to BCP Management,Inc. (the "General Partner"), the Company's sole general partner, in connectionwith the preparation, execution and delivery of that certain Credit Agreementdated as of May __, 1995 (the "Credit Agreement") among the Company, theinstitutions from time to time party thereto as Banks (collectively, the"Banks"), and Credit Suisse, as agent for the Banks (in such capacity, the"Agent"). This opinion is being delivered pursuant to Section 5.01(e) of theCredit Agreement. Terms defined in the Credit Agreement and not otherwisedefined herein are used herein with the meanings as so defined.

In connection with the opinions expressed herein, we have reviewed thefollowing documents:


(ii) The Notes; and

(iii) The opinion of Lawrence L. Dieker, Vice President, GeneralCounsel and Secretary of the General Partner.


In addition, we have examined originals or copies, certified orotherwise identified to our satisfaction, of such corporate records, agreements,documents or instruments and other instruments, as applicable, and ofcertificates or comparable documents or instruments of public officials andother instruments and documents and have made such inquiries of such officersand representatives and such examination of law as we have deemed relevantand necessary to form the basis for the opinions hereinafter set forth.

In our examination of the Loan Documents we have assumed theauthenticity of all such documents submitted to us as originals, the conformity



to authentic originals of all such documents submitted to us as copies and thegenuineness of all signatures (other than the signatures of the representativesof the General Partner). As to all questions of fact material to the opinionsspecified herein that have not been independently established, we have reliedupon the representations and warranties of the Company contained in the CreditAgreement.

In rendering the opinions expressed below, we have assumed, withoutany independent investigation or verification of any kind, that each party tothe Loan Documents (other than the Company and the General Partner) has beenduly organized and is validly existing and in good standing under itsjurisdiction of incorporation and has full power and authority to execute anddeliver the Loan Documents and perform the obligations set forth therein, andthat the execution, delivery, and performance of the Loan Documents by suchother parties have been duly authorized by all requisite corporate and otheraction on the part of such other parties and such documents have been dulyexecuted and delivered by such other parties.

To the extent that our opinion expressed below involve conclusions asto the matters set forth in the opinion referred to above of Lawrence L. Dieker,we have relied upon and assumed without independent investigation thecorrectness of such opinion, and our opinion is subject to the assumptions,qualifications and limitations set forth in such opinion.

Based upon the foregoing assumptions and examination of documents andupon such investigation as we have deemed necessary, and subject to thequalifications set forth in subparagraphs (a) through (f) below, we are of theopinion that each Loan Document has been executed and delivered by the Companyand constitutes the legal, valid, and binding obligation of the

2

Company, enforceable against the Company in accordance with its terms.

Our opinions are expressly qualified as follows:

(a) Our opinions are subject to the effect of applicable bankruptcy,insolvency, reorganization, fraudulent conveyance and other laws affectingthe enforcement of creditors' rights generally and to the effect of generalequitable principles (whether considered in a proceeding in equity or atlaw). In applying such principles, a court, among other things, might notallow a creditor to accelerate maturity of a debt upon the occurrence of adefault deemed immaterial or for non-credit reasons or might decline toorder a debtor to perform covenants. Such principles applied by a courtmight include a requirement that a creditor act with reasonableness and ingood faith. Furthermore, a court may refuse to enforce a covenant or anyprovision providing for indemnification if and to the extent that it deemssuch covenant or indemnification provision to be violative of applicablepublic policy.

(b) Our opinions expressed above are limited to the law of the Stateof New York and the federal law of the United States, and we do not expressany opinion herein concerning any other law.

(c) We express no opinion as to the effect of the compliance ornoncompliance of the Agent, any of the Banks or the Issuing Bank with anystate or federal laws or regulations applicable to any such party becauseof such party's legal or regulatory status, the nature of such party'sbusiness or the authority of any party to conduct business in anyjurisdiction.

(d) We express no opinion at to the effect (if any) of thelaw of any jurisdiction (except the State of New York) in which any Bank islocated which limits the rate of interest that such Bank may charge orcollect.

(e) We express no opinion with respect to any federal or statesecurities laws.

(f) Our opinions speak as of the date hereof and we assume noobligation to supplement the foregoing opinions if any applicable lawschange after the date hereof or if we become aware of any facts which mightchange such opinions after the date hereof.

3

This opinion is furnished to you by us as counsel to the Company andthe General Partner and is solely for your benefit and may not be quoted by youwithout our prior written consent. This opinion may not be furnished to, reliedon or quoted by any other Person without our prior written consent.



Very truly yours,

4

Schedule 6.13-------------

1. The Company acquired a facility in Geismar, Louisiana ("Geismar facility")and a facility in Illiopolis, Illinois (Illiopolis facility") from Borden,Inc. ("Borden") in 1987 ("1987 Transaction"). In connection with the 1987Transaction, Borden, the Company and Borden Chemicals and Plastics LimitedPartnership ("Holding Company") entered into an Environmental IndemnityAgreement. Under the Environmental Indemnity Agreement, subject to certainconditions, Borden has agreed to indemnify the Company and the HoldingCompany in respect of environmental liabilities arising from facts orcircumstances that existed and requirements in effect prior to November 30,1987 ("Transfer Date"). The Company is responsible for environmentalliabilities arising from facts or circumstances that existed andrequirements in effect on or after the Transfer Date. With respect tocertain environmental liabilities that may arise from facts orcircumstances that existed and requirements in effect bother prior to andafter the Transfer Date, Borden and the Company will share liabilities onan equitable basis considering all of the facts and circumstancesincluding, but not limited to, the relative contribution of each to thematter and the amount of time each has operated the asset in question (tothe extent relevant). No claims can be made under the EnvironmentalIndemnity Agreement after November 30, 2002, and no claim can, with certainexceptions, be made with respect to the first $0.5 million of liabilitieswhich Borden would otherwise be responsible for thereunder in any year, butsuch excluded amounts shall not exceed $3.5 million in the aggregate.Excluded amounts under the Environmental Indemnity Agreement haveaggregated approximately $2.2 million through December 31, 1994.

In 1985 the Louisiana Department of Environmental Quality ("LDEQ") andBorden entered into a Settlement Agreement that called for theimplementation of a long term groundwater and soil remediation program atthe Geismar facility. Borden and the Company have implemented theSettlement Agreement, and have worked in cooperation with the LDEQ toremediate the groundwater and soil contamination. The Company believes thatit already has sufficiently identified the extent of the groundwater plume.Nevertheless, the Company may drill and test some additional groundwaterwells for the purpose of addressing issues raised by the LDEQ concerningwhether the extent of the groundwater contamination has been identified.Borden has paid substantially all the costs to date of the SettlementAgreement. It is unknown how long the remediation program will continue orwhether the LDEQ will require the Company to incur costs to take furtherremedial measures in response to data generated by the potentialadditional groundwater wells. If the LDEQ requires the Company to takefurther remedial measures, the Company anticipates that a portion of suchcosts would be covered by the Environmental Indemnity Agreement. The extentto which any such costs for further remedial measures required by LDEQ willbe covered by the Environmental Indemnity Agreement will depend, in largepart, on whether such remedial measures respond to facts or circumstancesthat existed and requirements in effect prior to the Transfer Date.

2. On October 27, 1994, the Department of Justice ("DOJ"), at the request ofthe United States Environmental Protection Agency ("USEPA"), filed andenforcement proceeding against the Company, the Holding Company and BCPManagement, Inc. ("BCPM") in federal district court in Louisiana ("Geismarenforcement proceeding"). The complaint seeks civil penalties for allegedviolations of the Resource Conservation and Recovery Act ("RCRA"), theComprehensive Environmental Response, Compensation and Liability Act("CERCLA") and the Clean Air Act at the Geismar facility, as well ascorrective action at that facility.

The federal government's primary allegations for which it seeks penaltiesinclude claims that: (i) the Company's export to South Africa of apartially depleted mercuric chloride catalyst for recycling violated RCRA;(ii) the Company should have applied for a RCRA permit for operation of itsvalorization of chlorinated residuals ("VCR") unit and related tanks beforeAugust 1991; and (iii) the Company should have applied for a RCRA permitfor the north trench sump at the Geismar facility because such sumpallegedly contains hazardous waste. The government's allegation includeother claims that are related to these and other alleged RCRA violations,as well as claims of alleged violations of immediate release reporting



requirements under CERCLA and requirements governing particulate matteremissions under the Clear Air Act.

In May 1994, the Company filed a Complaint for Declaratory Judgment infederal district court in Louisiana seeking a determination that: (i) thepartially depleted mercuric chloride catalyst was not a hazardous wastewhen it was exported for recycling; (ii) the materials entering the VCRunit and related tanks are not hazardous waste; and (iii) the north trenchsump does not require a RCRA permit.

If the Company is unsuccessful in prosecuting its Declaratory JudgmentAction, or in defending itself against the Geismar enforcement proceeding,it could be subject to three types of costs: (i) penalties; (ii) correctiveaction; and (iii) costs needed to obtain a RCRA permit. Although themaximum statutory penalties that would apply in a successful enforcementaction by the DOJ would be in excess of $150 million, the Company believesthat, assuming the Company is unsuccessful and based on informationcurrently available to it and an analysis of relevant case law andadministrative decisions, the more likely amount of any liability for civicpenalties would not exceed several million dollars.

If the company is unsuccessful in either the Declaratory Judgment Action orthe Geismar enforcement proceeding, it may also be subject to correctiveaction. The federal government also can require corrective action for afacility subject to RCRA permit requirements. Corrective action couldrequire the Company to conduct investigatory and remedial activities at theGeismar facility concurrently with the groundwater monitoring and remedialprogram that the Company is currently conducting under the SettlementAgreement with LDEQ. The DOJ has advised the Company that it intends toseek facility-wide corrective action to address potential contamination atthe Geismar complex.

2

The EPA has indicated that it intends to evaluate the adequacy of theexisting groundwater remediation project performed under the SettlementAgreement with LDEQ, and to determine the potential for other areas ofcontamination on or near the Geismar facility. The cost of any correctiveaction could be material, depending on the scope of such corrective action.

If the Company is unsuccessful in either proceeding concerning itschallenge to the applicability of the RCRA permit requirements to the VCRunit related tanks, or the north trench sump, it will have to incuradditional permitting costs. The Company estimates that its costs tocomplete the permitting process for the VCR unit and related tanks would beapproximately $1.0 million. The Company believes that the costs foramending its pending RCRA permit application to include the north trenchsump would not be material.

If the United States is successful in requiring the Company to performcorrective action at the Geismar facility, the Company anticipates that atleast a portion of such corrective action costs would be covered by theEnvironmental Indemnity Agreement. The extent to which any penalties orpermit costs that the Company may incur as a result of the Geismarenforcement action will be subject to the Environmental Indemnity Agreementwill depend, in large part, on whether such penalties or costs areattributable to facts or circumstances that existed and requirements ineffect prior to November 30, 1987.

3. In February 1993, an EPA Administrative Law Judge held that the Illiopolisfacility had violated CERCLA and the Emergency Planning and CommunityRight-to-Know Act ("EPCRA") by failing to report certain valve releases,which occurred between February 1987 and July 1989, that the Companybelieves are exempt from CERCLA and EPCRA reporting. The Company's petitionfor reconsideration was denied, a penalty hearing will be scheduled, andfurther appeals are possible. The proposed penalty in EPA's administrativecomplaint initiating this proceeding in 1991 was $1.0 million.

4. During the early 1990s, the Company shipped partially depleted mercuricchloride catalyst to the facility of Thor Chemicals S.A. (PTY) Limited("Thor") in Cato Ridge, South Africa for recovery of mercury. In 1993 theLDEQ determined that the partially depleted catalyst was not a hazardouswaste, although LDEQ reversed this position in 1994. The Company disagrees



with this reversal.

The Company believes that Thor's operations have included the production ofmercuric chloride catalyst and the recovery of mercury from partiallydepleted catalyst. Recovery of mercury at Thor's facility was discontinuedin March 1994 when the Department of Health in South Africa refused torenew a temporary license that had been granted to Thor. At such time,there were approximately 2,600 drums of partially depleted catalyst at thefacility which had been shipped by the Company to Thor.

3

In February 1995, Thor and three of its management personnel were tried bySouth Africa for the common law crime of culpable homicide and a number ofalleged violations of the Machinery Occupational Safety Act of 1983("MOSA"), because of the deaths of two Thor employees. The prosecutionalleged that the deaths were the result of mercury poisoning. In exchangefor a plea by Thor that it had violated provisions of MOSA, the prosecutiondropped the homicide charges against Thor and all the charges againstThor's management personnel. The court has sentenced Thor to a fine ofR13,500.00, which is equivalent to approximately $3,800. The Company isaware that relatives of two deceased Thor employees, and a Thor employeeallegedly suffering from mercury poisoning, have filed suit in the UnitedKingdom against Thor's parent company for negligence.

On March 24, 1995, the President of South Africa appointed a Commission ofInquiry and published the following terms of reference for the Commission:(i) to investigate the history and background of the acquisition of mercurycatalyst stockpiled by Thor as well as additional mercury-containing sludgeon the premises and to report on the further utilization or disposalthereof; (ii) to recommend the best practical environmental option toaddress the problem of mercury-containing catalyst and/or waste currentlyon Thor's premises; and (iii) to report the results of the Commission'sinquiry to the President of the Republic of South Africa. In addition, theMinister of Water Affairs and Forestry has instructed his department'sregional office to investigate alleged water pollution at and near the Thorfacility. The Government of South Africa has not made any allegations orasserted any claims against the Company.

The contract between the Company and Thor provides that title to, risk ofloss, and all other incidents of ownership of the partially depletedcatalyst would pass from the Company to Thor when the catalyst reachedSouth Africa. The Company does not believe that it is liable for disposingof the approximately 2,600 drums of partially depleted catalyst remainingat the Thor facility. Nonetheless, in the event that the Company should berequired to dispose of the approximately 2,600 drums at the facilityshipped by the Company, the Company estimates that such cost would not bein excess of $4 million.

With regard to the environmental condition of the Thor facility, theCompany has not been notified by the Government of South Africa that theCompany would be liable for any contamination or other conditions at thefacility, although it is impossible to determine what, if any, allegationsany party may make in connection with the Thor facility in the future.

5. In connection with its environmental due diligence investigation of thefacility in Addis, Louisiana that the Company plans to acquire("Acquisition") from Occidental Chemical Corporation ("Oxychem"), somecontamination has been identified at that facility. Oxychem has agreed toindemnify the Company for environmental liabilities arising from

4

the manufacture, generation, treatment, storage, handling, processing,disposal, discharge, loss, leak, escape or spillage of any product, wasteor substance generated or handled by Oxychem prior to the closing of theAcquisition, any condition resulting therefrom relating to acts, omissionsor operations of Oxychem prior to such date, and any duty, obligation orresponsibility imposed on Oxychem prior to such date under environmentallaws in effect prior to such date to address such condition. However,except with regard to claims arising from Oxychem's disposal of waste atsites other than the Addis Facility, Oxychem has no indemnificationobligation if the claim for indemnification is the result of a change inapplicable law after the closing of the Acquisition. Oxychem's obligationto indemnify the Company for environmental liabilities is subject tocertain limits.



5

Schedule 8.05-------------

EXHIBIT 11.10

FORMOF

ASSIGNMENT AND ACCEPTANCE

DATED______,19__

Reference is made to the Credit Agreement dated as of_____________,1995 (the "Credit Agreement"), among Borden Chemicals and Plastics Operating

----------------Limited Partnership (the "Company"), the banks party thereto and Credit Suisse,as agent for such banks. Capitalized terms used herein and not otherwise definedshall have the meanings assigned to such terms in the Credit Agreement.

____________________ (the "Assignor") and __________________ (the--------

"Assignee") agree as follows:--------

1. (a) The Assignor hereby sells and assigns to the Assignee(without recourse to the Assignor), and the Assignee hereby purchases andassumes from the Assignor, a __% interest (the "Percentage Interest") in and to

-------------------all the Assignor's rights and obligations under the Credit Agreement as of theAssignment Date (as defined below), including, without limitation, (i) thePercentage Interest in the Commitment of the Assignor on the Assignment Date,(ii) the Percentage Interest in all reimbursement obligations (net ofparticipations therein purchased by other Banks pursuant to the CreditAgreement) in respect of the Letters of Credit either issued by the Assignor orin which the Assignor has purchased participations pursuant to the CreditAgreement, (iii) the Percentage Interest in the Loans owing to the Assignoroutstanding on the Assignment Date, (iv) the Percentage Interest in all unpaidinterest with respect to such Loans and all Commitment Fees and Letter of CreditFees due to Assignor in its capacity as a bank accrued to the Assignment Dateand (v) the Percentage Interest in the Note held by the Assignor.

(b) In furtherance of the foregoing (i) to the extent the Assignor isthe issuer of the Letters of Credit, the Assignee hereby purchases aparticipation, in the proportion of the Percentage Interest, in allreimbursement obligations (net of participations therein purchased by otherBanks pursuant to the Credit Agreement) in respect of the Letters of Credit uponthe terms and conditions set forth in the Credit Agreement, with the same effectas if the Assignee had been a Bank, and had purchased such participation, on thedate each Letter of Credit was issued and (ii) to the extent the Assignor is notthe issuer of the Letters of Credit and has purchased participations inreimbursement obligations in respect of the Letters of Credit issued by theIssuing Bank, the Assignee hereby purchases a portion of such participations(net of portions thereof purchased by other Banks pursuant to the CreditAgreement), in the proportion of the Percentage Interest, upon the terms andconditions set forth in the Credit Agreement, with the same effect as if theAssignee had been a Bank, and had directly purchased participations equal tosuch portions, on the date Letter of Credit was issued.

2. The Assignor (a) shall deliver to the Agent a schedule in theform of Schedule 1 hereto with all blanks appropriately completed (b) makes no

representation or warranty and assumes no responsibility with respect to anystatements, warranties or representations made in or in connection with theCredit Agreement or the execution, legality, validity, enforceability,genuineness, sufficiency or value of the Credit Agreement, any other LoanDocument or any instrument or document furnished pursuant thereto, other thanthat it is the legal and beneficial owner of the interest being assigned by ithereunder and that such interest is free and clear of any adverse claim known tothe Assignor; (c) makes no representation or warranty and assumes noresponsibility with respect to the financial condition of the Company or theperformance or observance by any Loan Party of any of its obligations under theLoan Documents or any other instrument or document furnished pursuant thereto;and (d) attaches the Note issued to Assignor and requests that the Agentexchange such Note for a new Note executed by the Company and payable to theAssignee in a principal amount equal to $___________ [and a New Note executed by



the Company and payable to the Assignor in a principal amount equal to$____________].

3. The Assignee (i) represents and warrants that it is legallyauthorized to enter into this Assignment and Acceptance; (ii) confirms that ithas received a copy of the Credit Agreement, together with copies of the mostrecent financial statements delivered pursuant to Section 7.01 thereof and suchother documents and information as it has deemed appropriate to make its owncredit analysis and decision to enter into this Assignment and Acceptance; (iii)agrees that it will, independently and without reliance upon the Agent, theAssignor or any other Bank and based on such documents and information as itshall deem appropriate at the time, continue to make its own credit decisionsin taking or not taking action under the Credit Agreement; (iv) confirms that itis an Eligible Assignee; (v) appoints and authorizes the Agent to take suchaction as agent on its behalf and to exercise such powers under the CreditAgreement as are delegated to the Agent by the terms thereof, together with suchpowers as are reasonably incidental thereto; (vi) agrees that it will perform inaccordance with their terms all the obligations which by the terms of the CreditAgreement are required to be performed by it as a Bank; (vii) agrees that itwill comply with Section 11.11 of the Credit Agreement with respect toinformation complying with that provision furnished to it by the Company or theAssignor with respect to any Loan Party; (viii) confirms that it has delivered acompleted Administrative Questionnaire to the Agent[; and (ix) attaches theforms prescribed by the Internal Revenue Service of the United States certifyingas to the Assignee's exemption from United States withholding taxes with respectto all payments to be made to the Assignee under the Credit Agreement or suchother documents as are necessary to indicate that all such payments are subjectto such tax at a rate reduced by an applicable tax treaty]./1/

4. The effective date for this Assignment and Acceptance shall be______________(the "Assignment Date")./2/ Following the execution of this

---------------Assignment

______________________

1/ If the Assignee is organized under the laws of a jurisdiction outside theUnited States.

2/ See Section 11.11(c) of the Credit Agreement. Such date shall be at leastfive Business Days after the execution of this Assignment and Acceptance anddelivery thereof to the Agent unless otherwise agreed to by the Assignor,the Assignee and the Agent.

-2-

and Acceptance, it will be delivered to the Agent for acceptance and recordingby the Agent pursuant to Section 11.10 of the Credit Agreement.

5. Upon such acceptance and recording, form amd after the AssignmentDate, (i) the Assignee shall be a party to the Credit Agreement and, to theextent provided in this Assignment and Acceptance, have the rights andobligations of a Bank thereunder and (ii) the Assignor shall, to the extentprovided in this Assignment and Acceptance, relinquish its rights and bereleased from its obligations under the Credit Agreement.

6. Notwithstanding anything to the contrary contained in the CreditAgreement, the Company shall not be required to reimburse the Agent, theAssignor or the Assignee for any costs and expenses (including attorney's fees)incurred by such Person in connection with this Assignment and Acceptance.

7. Upon such acceptance and recording, from and after the AssignmentDate, the Agent shall make all payments in respect of the interest assignedhereby (including payments of principal, interest, fees and other amounts) tothe Assignee. The Assignor and the Assignee shall make all appropriateadjustments in payments for periods prior to the Assignment Date by the Agent orwith respect to the making of this assignment directly between themselves.

-3-

8. This Assignment and Acceptance shall be governed by, andconstrued in accordance with, the law of the State of New York.



[NAME OF ASSIGNOR],

By:________________________________Name:Title:

[NAME OF ASSIGNEE],

By:________________________________Name:Title:

Consented and Agreed to asof the date first above written.

CREDIT SUISSE,as Agent

By:________________________________Name:Title:

/3/

________________________________3/ Consent of the Company is required if the Assignee is not a Bank or an

Affiliate of a Bank.

-4-

SCHEDULE 1TO

ASSIGNMENT AND ACCEPTANCE

(i) Percentage Interest assigned: ____________%

(ii) Assignee's Commitment (without giving effect $____________to assignments that have not yet become effective):

(iii) Aggregate outstanding principal amount of Loans $____________assigned (unreduced by any assignments thereof whichhave not yet become effective):

(iv) Amount of reimbursement obligations (net of $____________participations therein purchased by other Bankspursuant to the Credit Agreement) in respect of theLetters of Credit issued by the Assignor:/1/

(v) Amount of participations in reimbursement $____________obligations in respect of the Letters of Creditissued by a Bank other than Assignor purchased bythe Assignor (net of portions thereof purchased byother Banks pursuant to the Credit Agreement):/2/

[NAME OF ASSIGNOR], as Assignor

By:________________________________Name:Title:

Dated:_____________________________

[NAME OF ASSIGNEE], as Assignee

By:________________________________Name:Title:

Lending Office:

Accepted this ____ dayof _______________________, 1995



CREDIT SUISSE, as Agent

By:________________________________Name:Title:

________________________

/1/ If the Assignor is Credit Suisse, clause (iv) should be included and clause(v) omitted.

/2/ If the Assignor is not Credit Suisse, clause (v) should be included andclause (iv) omitted.


$14,000,000 Dated: May 2, 1995


-------whose sole general partner is BCP Management Inc., HEREBY PROMISES TO PAY to theorder of Bank One, Columbus, NA (the "Bank") on or before the Maturity Date (as

----hereinafter defined) the lesser of (i) the amount of the Bank's Commitment and(ii) the aggregate amount of the Loans made by the Bank to the Company andoutstanding on the Maturity Date. The principal amount of each Loan made by theBank to the Company pursuant to the Credit Agreement (as hereinafter defined)shall be due and payable on the dates and in the amounts as are specified in theCredit Agreement.

The Company promises to pay interest on the unpaid principal amount ofeach Loan from the date of such Loan until such principal amount is paid infull, at such interest rates, and payable at such dates and times, as arespecified in the Credit Agreement dated as of May 2, 1995 (as the same may fromtime to time be amended, modified or supplemented, the "Credit Agreement," the

----------------terms defined therein and not otherwise defined herein being used herein astherein defined), among the Company, the Bank and certain other banks that areparties thereto, Credit Suisse, as Agent for the Bank and such other banks.

Both principal and interest are payable in same day finds in lawfulmoney of the United States of America to Credit Suisse, as Agent, at 12 East49th Street, New York, New York 10017, or at such other place as the Agentshall designate in writing to the Company. The amount of each Loan made by theBank to the Company and the borrowing date, the rate of interest applicablethereto and all payments made on account of principal and interest hereof, maybe recorded by the Bank and, prior to any transfer hereof, endorsed on the gridattached hereto which is part of this Promissory Note; provided, however, thatthe failure of the Bank to make such notation or any error therein shall not inany manner affect the obligation of the Company to repay such Loan in accordancewith the terms of this Promissory Note and the Credit Agreement.


This Promissory Note is one of the Notes referred to in, and isentitled to the benefits of, the Credit Agreement. The Credit Agreement, amongother things, (i) provides for the making of the Loans by the Bank to theCompany from time to time, the indebtedness of the Company resulting from eachsuch Loan being evidenced by this Promissory Note and (ii) contains provisionsfor acceleration of the maturity hereof upon the happening of certain statedevents, also for prepayments on

account of principal hereof prior to the maturity hereof the terms andconditions therein specified, and to the effect that no provision of the CreditAgreement or this Promissory Note shall require the payment or permit thecollection of interest in excess of the Highest Lawful Rate.

The Company and any and all endorsers, guarantors and suretiesseverally waive grace, demand, presentment for payment, notice of dishonor ordefault or intent to accelerate, protest and notice of protest and diligence incollecting and bringing of suit against any party hereto, and agree to all



renewals, extensions or partial payments hereon and to any release orsubstitution of security herefor, in whole or in part, with or without notice,before or after maturity.




By: /s/ David A. Kelly--------------------------------------

Name: David A. Kelly------------------------------------

Title: Director Treasurer and Principal-----------------------------------

Financial Officer

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LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST

<TABLE><CAPTION>_____________________________________________________________________________________________________________________________

End ofBorrowing Interest Rate of Amount of Amount ofDate or Amount Period Interest Principal Interest Unpaid

Conversion and Type of Applicable Applicable Paid or Paid or Principal NotationDate Loan to Loan to Loan Prepaid Prepaid Balance Made By

<S> <C> <C> <C> <C> <C> <C> <C>=============================================================================================================================

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________</TABLE>

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$14,000,000 Dated: May 2, 1995


-------whose sole general partner is BCP Management Inc., HEREBY PROMISES TO PAY to theorder of The Huntington National Bank (the "Bank") on or before the Maturity

----Date (as hereinafter defined) the lesser of (i) the amount of the Bank'sCommitment and (ii) the aggregate amount of the Loans made by the Bank to theCompany and outstanding on the Maturity Date. The principal amount of each Loanmade by the Bank to the Company pursuant to the Credit Agreement (as hereinafterdefined) shall be due and payable on the dates and in the amounts as arespecified in the Credit Agreement.



Both principal and interest are payable in same day funds in lawfulmoney of the United States of America to Credit Suisse, as Agent, at 12 East49th Street, New York, New York 10017, or at such other place as the Agentshall designate in writing to the Company. The amount of each Loan made by theBank to the Company and the borrowing date, the rate of interest applicablethereto and all payments made on account of principal and interest hereof, maybe recorded by the Bank and, prior to any transfer hereof, endorsed on the gridattached hereto which is part of this Promissory Note; provided, however, thatthe failure of the Bank to make such notation or any error therein shall not inany manner affect the obligation of the Company to repay such Loan in accordancewith the terms of this Promissory Note and the Credit Agreement.



account of principal hereof prior to the maturity hereof upon the terms andconditions therein specified, and to the effect that no provision of the CreditAgreement or this Promissory Note shall require the payment or permit thecollection of interest in excess of the Highest Lawful Rate.





By: /s/ David A. Kelly--------------------------------------



Name: David A. Kelly------------------------------------

Title: Director, Treasurer and Principal-----------------------------------

Financial Officer

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$16,000,000 Dated: May 2, 1995


-------whose sole general partner is BCP Management Inc. , HEREBY PROMISES TO PAY tothe order of Credit Suisse, (the "Bank") on or before the Maturity Date (as

----hereinafter defined) the lesser of (i) the amount of the Bank's Commitment and(ii) the aggregate amount of the Loans made by the Bank to the Company andoutstanding on the Maturity Date. The principal amount of each Loan made by theBank to the Company pursuant to the Credit Agreement (as hereinafter defined)shall be due and payable on the dates and in the amounts as are specified in the



Credit Agreement.


-----------------terms defined therein and not otherwise defined herein being used herein astherein defined), among the Company, the Bank and certain other banks that areparties thereto, Credit Suisse, as Agent for the Bank and such other banks.


The Promissory Note may be held by the Bank for the account of itsDomestic Lending Office or its Eurodollar Lending Office and may be transferredfrom one to the other from time to time as the Bank may determine.







By: /s/ David A. Kelly---------------------------

Name: DAVID A. KELLY-------------------------

Title: Director, Treasurer and------------------------

Principal Financial-------------------Officer-------

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<TABLE><CAPTION>-----------------------------------------------------------------------------------------------------------------------------



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$14,000,000 Dated: May 2, 1995


-------whose sole general partner is BCP Management Inc. , HEREBY PROMISES TO PAY tothe order of NationsBank, N.A. (the "Bank") on or before the Maturity Date (as














By: /s/ David A. Kelly---------------------------

Name: DAVID A. KELLY-------------------------

Title: Director, Treasurer and------------------------

Principal Financial-------------------Officer-------

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<TABLE><CAPTION>------------------------------------------------------------------------------------------------------------------------------



<S> <C> <C> <C> <C> <C> <C> <C>=============================================================================================================================

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$14,000,000 Dated: May 2, 1995


-------whose sole general partner is BCP Management Inc., HEREBY PROMISES TO PAY to theorder of Credit Lyonnais (the "Bank") on or before the Maturity Date (as





This Promissory Note may be held by the Bank for the account of its



Domestic Lending Office or its Eurodollar Lending Office and may be transferredfrom one to the other from time to time as the Bank may determine.







By: /s/ David A. Kelly----------------------------

Name: DAVID A. KELLY--------------------------

Title: Director, Treasurer and-------------------------

Principal Financial-----------------------Officer-------

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<TABLE><CAPTION>________________________________________________________________________________________________________


Conversion and Type of Applicable Applicable Paid or Paid to Principal NotationDate Loan to Loan to Loan Prepaid Prepaid Balance Made By

========================================================================================================<S> <C> <C> <C> <C> <C> <C> <C>________________________________________________________________________________________________________

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$14,000,000 Dated:May 2,1995


-------whose sole general partner is BCP Management Inc. , HEREBY PROMISES TO PAY tothe order of The Chase Manhattan Bank, (the "Bank") on or before the Maturity

----Date (as hereinafter defined) the lesser of (i) the amount of the Bank'sCommitment and (ii) the aggregate amount of the Loans made by the Bank to theCompany and outstanding on the Maturity Date. The principal amount of each Loanmade by the Bank to the Company pursuant to the Credit Agreement (as hereinafterdefined)shall be due and payable on the dates and in the amounts as arespecified in the Credit Agreement.

The Company promises to pay interest on the unpaid principal amount ofeach Loan from the date of such Loan until such principal amount is paid infull, at such interest rates, and able at such dates and times, as are specifiedin the Credit Agreement dated as of May 2, 1995 (as the same may from time totime be amended, modified or supplemented, the "Credit Agreement," the terms

----------------defined therein and not otherwise defined herein being used herein as thereindefined), among the Company, the Bank and certain other banks that are partiesthereto, Credit Suisse, as Agent for the Bank and such other banks .

Both principal and interest are payable in same day funds in lawfulmoney of the United States of America to Credit Suisse, as Agent, at 12 East49th Street, New York, New York 10017 or at such other place as the Agent shalldesignate in writing to the Company. The amount of each Loan made by the Bank tothe Company and the borrowing date, the rate of interest applicable thereto andall payments made on account of principal and interest hereof, may be recordedby the Bank and, prior to any transfer hereof, endorsed on the grid attachedhereto which is part of this Promissory Note; provided, however, that thefailure of the Bank to make such notation or any error therein shall not in anymanner affect the obligation of the Company to repay such Loan in accordancewith the terms of this Promissory Note and the Credit Agreement.










By: /s/ David A. Kelly--------------------------

Name: David A. Kelly------------------------

Title: Director, Treasurer and-----------------------Principal Financial Officer---------------------------

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LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST<TABLE><CAPTION>_______________________________________________________________________________________________________



=======================================================================================================<S> <C> <C> <C> <C> <C> <C> <C>_______________________________________________________________________________________________________

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$14,000,000 Dated: May 2, 1995


-------whose sole general partner is BCP Management Inc., HEREBY PROMISES TO PAY to theorder of Wachovia Bank of Georgia, N.A. (the "Bank") on or before the Maturity

----Date (as hereinafter defined) the lesser of (i) the amount of the Bank'sCommitment and (ii) the aggregate amount of the Loans made by the Bank to theCompany and outstanding on the Maturity Date. The principal amount of each Loanmade by the Bank to the Company pursuant to the Credit Agreement (as hereinafterdefined) shall be due and payable on the dates and in the amounts as arespecified in the Credit Agreement.


----------------terms defined therein and not otherwise defined herein being used herein astherein defined), among the Company, the Bank and certain other banks that areparties thereto, Credit Suisse, as Agent for the Bank and such other bank.










By: BCP Management, In.

By: /s/ David A. Kelly-------------------------------

Name: David A. Kelly-----------------------------

Title: Director, Treasurer and-----------------------Principal Financial-------------------Officer-------

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LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST<TABLE><CAPTION>_______________________________________________________________________________________________________



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OFFICER'S CERTIFICATE

I, Lawrence L. Dieker, Vice President, General Counsel and Secretaryof BCP Management, Inc., a Delaware corporation and the sole general partner(the "General Partner") of Borden Chemicals and Plastics Operating LimitedPartnership, a Delaware limited partnership (the "Company"), in connection withthe execution and delivery of the Credit Agreement (the "Credit Agreement", theterms defined therein being used herein as therein defined) dated as of May 2,



1995 among the Company, the banks and other financial institutions listed on thesignature pages under the caption "Banks" and Credit Suisse, ("Credit Suisse"),individually as a Bank and as agent for the other Banks (in such capacitytogether with any other Person who becomes the Agent, the "Agent"), which CreditAgreement provides for loans for the benefit of the Company not to exceed$100,000,000 in aggregate unpaid principal amount DO HEREBY CERTIFY AS FOLLOWSon behalf of the General Partner:

1. Attached hereto as Exhibit A is true and complete copy of thecertificate of incorporation, as amended and in effect, of the General Partner.

2. Attached hereto as Exhibit B is a true and complete copy of thebylaws, as amended and in effect, of the General Partner.

3. Attached hereto as Exhibit C is a true and correct copy of theAmended and Restated Agreement of Limited Partnership of the Company.

4. Attached hereto as Exhibit D is a true and correct copy ofresolutions duly adopted by the Board of Directors of the General Partner. Suchresolutions have not been amended, modified or revoked and are in full force andeffect on the date hereof.

5. The persons named below are duly elected officers of the Company,now hold the offices set forth opposite their respective names and the signatureopposite the name and title of each of them is his or her true and correctsignature:

Name Office Signature---- ------ ---------

David A. Kelly Director, Treasurer /s/ David A. Kelly-------------------- ------------------------

and Principal FinancialOfficer

Lawrence L. Dieker Vice President, General /s/ Lawrence A Dieker-------------------- Counsel and Secretary ------------------------

6. The representations and warranties made by the Company in any loanDocument are true and correct in all material respects and no dissolution orliquidation proceedings with respect to the Company have been commenced.

7. There exists on the date hereof no Event of Default.

8. The closing under the Asset Transfer Agreement dated as of August12, 1994 between Occidental Chemical Corporation and the Company, as amended,has occurred substantially as described in the Prospectus.

9. The closing under the Underwriting Agreement dated April 21, 1995between the Company, BCPM, BLP Finance Corporation and CS First BostonCorporation has occurred and the Securities have been issued as described in theProspectus.

10. The Wachovia Credit Agreement has been terminated.

IN WITNESS WHEREOF, I have signed this certificate as of the 2nd day---

of May , 1995.------

/s/ Lawrence L. Dieker---------------------Secretary

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EXHIBIT AState of Delaware

PAGE 1Office of the Secretary of State

--------------------------------

I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBYCERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OFINCORPORATION OF "BCP MANAGEMENT, INC.", FILED IN THIS OFFICE ON THE SIXTH DAYOF AUGUST, A.D. 1987, AT 10 O'CLOCK A.M.



[SEAL] /s/ Edward J. Freel------------------------------------Edward J. Freel, Secretary of State

AUTHENTICATION:7474495

2134202 8100 DATE:04-17-95

950083756

CERTIFICATE OF INCORPORATIONOF

BCP MANAGEMENT, INC.

FIRST: The name of the Corporation is BCP Management, Inc.

SECOND: The address of the Corporation's registered office in theState of Delaware is Corporation Trust Center, 1209 Orange Street, in the Cityof Wilmington, County of New Castle. The name of the Corporation's registeredagent at such address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful actor activity for which corporations may be organized under the GeneralCorporation Law of Delaware.

FOURTH: The total number of shares of all classes of stock which theCorporation shall have authority to issue is 10,000 shares of common stock witha par value of one dollar ($1.00) per share.

FIFTH: The name and mailing address of the incorporator of theCorporation are as follows:

Name Address---- -------

Steven Sutherland One First National PlazaSuite 4200Chicago, Illinois 60603

SIXTH: The name and mailing address of the person who is to serve asdirector until the first annual meeting of stockholders or until his successoris elected and qualified is as follows:


Lawrence O. Doza c/o Borden, Inc.277 Park AvenueNew York, New York 10172

SEVENTH: In furtherance and not in limitation of the powers conferredby statute, the Board of Directors is expressly authorized to make, alter orrepeal the By-Laws of the Corporation, subject to any specific limitation onsuch power provided by any By-Laws adopted by the stockholders.

EIGHTH: Elections of directors need not be by written ballot unlessthe By-Laws of the Corporation so provide.

NINTH: The Corporation is to have perpetual existence.

TENTH: The Corporation reserves the right to amend, alter, change orrepeal any provision contained in this Certificate of Incorporation, in themanner now or hereafter prescribed by statute, and all rights conferred upon thestockholders herein are granted subject to this reservation.

ELEVENTH: A. A director of the Corporation shall not be personallyliable to the Corporation or its stockholders for monetary damages for breach offiduciary duty as a director, except for liability (i) for any breach of thedirector's duty of loyalty to the Corporation or its stockholders, (ii) for actsor omissions not in good faith or which involve intentional misconduct or aknowing violation of law, (iii) under Section 174 of the General Corporation Lawof the State of Delaware, or (iv) for any transaction from which the directorderived an improper personal benefit. If the General Corporation Law of the



State of Delaware is amended to authorize corporate action further eliminatingor limiting the personal liability of directors, then the liability of adirector of the Corporation shall be eliminated or limited to the fullest extentpermitted by the General Corporation Law of the State of Delaware, as soamended. Any repeal or modification of this Section A by the stockholders of theCorporation shall not adversely affect any right or protection of a director ofthe Corporation existing at the time of such repeal or modification.

B. (1) Each person who was or is made a party or is threatened tobe made a party to or is involved in any action, suit or proceeding, whethercivil, criminal, administrative or investigative (hereinafter a "proceeding"),by reason of the fact that he or she or a person of whom he or she is the legalrepresentative is or was a director, officer or employee of the Corporation oris or was serving at the request of the Corporation as a director, officer,employee or agent of another corporation or of a partnership, joint venture,trust or other enterprise, including service with respect to employee benefitplans, whether the basis of such proceeding is alleged action in an officialcapacity as a director, officer, employee or agent or in any other capacitywhile serving as a director, officer, employee or agent, shall be indemnifiedand held harmless by the Corporation to the fullest extent authorized by theGeneral Corporation Law of the State of Delaware as the same exists or mayhereafter be amended (but, in the case of any such amendment, only to the extentthat such amendment permits the Corporation to provide broader indemnificationrights than said law permitted the Corporation to provide prior to suchamendment), against all expense, liability and loss (including attorneys' fees,judgments, fines, ERISA excise taxes or penalties and

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amounts paid or to be paid in settlement) reasonably incurred or suffered bysuch person in connection therewith and such indemnification shall continue asto a person who has ceased to be a director, officer, employee or agent andshall inure to the benefit of his or her heirs, executors and administrators;provided, however, that except as provided in paragraph (2) of this Section B-------- -------with respect to proceedings seeking to enforce rights to indemnification, theCorporation shall indemnify any such person seeking indemnification inconnection with a proceeding (or part thereof) initiated by such person only ifsuch proceeding (or part thereof) was authorized by the Board of Directors ofthe Corporation. The right to indemnification conferred in this Section B shallbe a contract right and shall include the right to be paid by the Corporationthe expenses incurred in defending any such proceeding in advance of its finaldisposition; provided, however, that if the General Corporation Law of the State

-------- -------of Delaware requires, the payment of such expenses incurred by a director orofficer in his or her capacity as a director or officer (and not in any othercapacity in which service was or is rendered by such person while a director orofficer, including, without limitation, service to an employee benefit plan) inadvance of the final disposition of & proceeding, shall be made only upondelivery to the Corporation of an undertaking by or on behalf of such directoror officer, to repay all amounts so advanced if it shall ultimately bedetermined that such director or officer is not entitled to be indemnified underthis Section B or otherwise.

(2) If a claim under paragraph (1) of this Section B is not paid infull by the Corporation within thirty days after a written claim has beenreceived by the Corporation, the claimant may at any time thereafter bring suitagainst the Corporation to recover the unpaid amount of the claim and, ifsuccessful in whole or in part, the claimant shall be entitled to be paid alsothe expense of prosecuting such claim. It shall be a defense to any such action(other than an action brought to enforce a claim for expenses incurred indefending any proceeding in advance of its final disposition where the requiredundertaking, if any is required, has been tendered to the Corporation) that theclaimant has not met the standards of conduct which make it permissible underthe General Corporation Law of the State of Delaware for the Corporation toindemnify the claimant for the amount claimed, but the burden of proving suchdefense shall be on the Corporation. Neither the failure of the Corporation(including its Board of Directors, independent legal counsel or stockholders) tohave made a determination prior to the commencement of such action thatindemnification of the claimant is proper in the circumstances because he or shehas met the applicable standard of conduct set forth in the General CorporationLaw of the State of Delaware, nor an actual determination by the Corporation(including its Board of

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Directors, independent legal counsel or stockholders) that the claimant has notmet such applicable standard of conduct, shall be a defense to the action orcreate a presumption that the claimant has not met the applicable standard



of conduct.

(3) The right to indemnification and the payment of expenses incurredin defending a proceeding in advance of its final disposition conferred in thisSection B shall not be exclusive of any other right which any person may haveor hereafter acquire under any statute, provision of the Certificate ofincorporation, By-Law, agreement, vote of stockholders or disinteresteddirectors or otherwise.

(4) The Corporation may maintain insurance, at its expense, toprotect itself and any director, officer, employee or agent of the Corporationor another Corporation, partnership, joint venture, trust or other enterpriseagainst any expense, liability or loss, whether or not the Corporation wouldhave the power to indemnify such person against such expense, liability or lossunder the General Corporation Law of the State of Delaware.

(5) The Corporation may, to the extent authorized from time to timeby the Board of Directors, grant rights to indemnification, and rights to bepaid by the Corporation the expenses incurred in defending any proceeding inadvance of its final disposition, to any agent of the Corporation to the fullestextent of the provisions of this Section B with respect to the indemnificationand advancement of expenses of directors, officers and employees of theCorporation.

THE UNDERSIGNED, being the incorporator hereinbefore named, for thepurpose of forming a corporation pursuant to the General Corporation Law ofthe State of Delaware, makes this Certificate, hereby declaring and certifyingthat the facts herein stated are true, and accordingly has hereunto set his handthis 5th day of August, 1987.

---

/s/ Steven Sutherland-----------------------------Steven Sutherland

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BYLAWS------

OF--

BCP MANAGEMENT, INC.--------------------

ARTICLE I---------

Stockholders' Meetings----------------------

Section 1. Annual Meeting. The annual meeting of stockholders for--------------

the election of directors and the transaction of such other business as mayproperly come before it shall be held on the first Monday of April of each year,or such other date, and at such time and place, within or without the State ofDelaware, as shall be determined by resolution of the Board of Directors. If theday fixed for the annual meeting is a legal holiday, such meeting shall be heldon the next succeeding business day.

Section 2. Special Meeting. Special meetings of stockholders may be---------------

called by the Board of Directors or the Chairman of the Board of Directors andshall be called by the Chairman of the Board of Directors or the Secretary atthe request in writing, stating the purpose or purposes thereof, of holders ofat least a majority of the shares of capital stock of the Corporation issued andoutstanding and entitled to vote. Special meetings of stockholders may be heldat such places, within or without the State of Delaware, as may be specified inthe call of any meeting.

Section 3. Notice of Meetings and Adjourned Meetings. Written notice-----------------------------------------

of every meeting of stockholders stating the place, date, time and purposesthereof, shall, except when otherwise required by the laws of Delaware, bemailed at least ten but not more than sixty days prior to the meeting to eachstockholder of record entitled to vote thereat. Any meeting at which a quorum ofstockholders is present, in person or by proxy, may adjourn from time to timewithout notice other than announcement at such meeting until its business iscompleted. At the adjourned meeting the Corporation may transact any business



which might have been transacted at the original meeting. If the adjournment isfor more than thirty days, or if after the adjournment a new record date isfixed for the adjourned meeting, a notice of the adjourned meeting shall begiven to each stockholder of record entitled to vote at the meeting.

Section 4. Quorum. The holders of a majority of the shares of------

capital stock issued and outstanding and entitled to vote, present in person orby proxy, shall, except as otherwise provided by law, constitute a quorum for

the transaction of business at all meetings of stockholders. If at any meeting aquorum is not present, the chairman of the meeting or the holders of themajority of the shares of stock present or represented may adjourn the meetingfrom time to time until a quorum is present. At the adjourned meeting theCorporation may transact any business that might have been transacted at theoriginal meeting. If the adjournment is for more than thirty days, or if afterthe adjournment a new record date is fixed for the adjourned meeting, a noticeof the adjourned meeting shall be given to each stockholder of record entitledto vote at the meeting. The stockholders present or represented at a duly calledor held meeting at which a quorum is present may continue to transact businessuntil final adjournment notwithstanding the withdrawal of enough stockholders toleave less than a quorum.

Section 5. Voting. Except as provided in the Certificate of------

Incorporation of the Corporation, each holder of capital stock entitled to voteat a stockholders' meeting shall, as to all matters in respect of which suchcapital stock has voting rights, be entitled to one vote in person or by writtenproxy for each share of capital stock owned of record by him, but no proxy shallbe voted or acted upon after three years from its date unless the proxy providesfor a longer period. No vote upon any matter need be by ballot unless demandedby the holders of at least ten per cent of the shares represented and entitledto vote at the meeting. All elections shall be decided by a plurality of thevotes cast and all other questions or matters shall be decided by a majority ofthe votes cast, unless otherwise required by the laws of Delaware, theCertificate of Incorporation or these bylaws.

Section 6. Consent of Stockholders in Lieu of Meeting. Any action------------------------------------------

required to be taken or which may be taken at any annual or special meeting ofstockholders of the Corporation may be taken without a meeting, without priornotice and without a vote, if a consent in writing, setting forth the action sotaken, shall be signed by the holders of outstanding stock having not less thanthe minimum number of votes that would be necessary to authorize or take suchaction at a meeting at which all shares entitled to vote thereon were presentand voted. Prompt notice of the taking of the corporate action without a meetingby less than unanimous written consent shall be given to those stockholders whohave not consented in writing.

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ARTICLE II----------

Directors---------

Section 1. Number, Election and Term of Office of Directors. The------------------------------------------------

number of directors shall be fixed from time to time resolution of the Board ofDirectors. Each director shall hold office until his successor is elected andqualified or until his earlier resignation or removal. Directors need not bestockholders.

Section 2. Resignation or Removal. Any director may resign by giving----------------------

written notice to the Board of Directors or the Chairman of the Board ofDirectors, any such resignation shall take effect at the time of receipt of



notice thereof or at any later time specified therein, and, unless expresslyrequired, acceptance of such resignation shall not be necessary to make iteffective. Except as otherwise required by the Certificate of Incorporation, anydirector may be removed, with or without cause, by the affirmative vote orconsent of the holders of a majority of the shares of capital stock issued andoutstanding and entitled to vote.

Section 3. Vacancies. Except as otherwise required by the---------

Certificate of Incorporation, any vacancy occurring in the Board of Directorsand any directorship to be filled by reason of an increase in the number ofdirectors may be filled by a majority of the directors then in office, althoughless than a quorum, or by the stockholders. A director elected to fill a vacancyshall hold office until his successor is elected and qualified or until hisearlier resignation or removal. Except as otherwise required by the Certificateof Incorporation, when one or more directors shall resign from the Board ofDirectors, effective at a future date, a majority of the directors then inoffice, including those who have so resigned, shall have the power to fill suchvacancy or vacancies, the vote thereon to take effect when such resignation orresignations shall become effective, and each director so chosen shall holdoffice as provided in this Section for the filling of other vacancies.

Section 4. Place of Meetings. Meetings of the Board of Directors may-----------------

be held at such places, within or without the State of Delaware, as the Board ofDirectors may from time to time determine or as may be specified in the call ofany meetings.

Section 5. Regular Meetings. A regular annual meeting of the Board----------------

of Directors shall be held without call or notice immediately after and at thesame general place as the annual meeting of stockholders, or at such other timeor place as determined by the stockholders at such meeting, for

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the purpose of organizing the Board of Directors, electing officers andtransacting any other business that may properly come before the meeting.Additional regular meetings of the Board of Directors may be held without callor notice at such place and at such time as shall be fixed by resolution of theBoard of Directors.

Section 6. Special Meetings. Special meetings of the Board of----------------

Directors may be called by the Chairman of the Board of Directors or at least amajority of the directors then in office. Notice of special meetings eithershall be mailed by the Secretary to each director at least three days before themeeting or shall be given personally or telegraphed or telecopied to eachdirector by the Secretary at least twenty-four hours before this meeting. Suchnotice shall set forth the date, time and place of such meeting but need not,unless otherwise required by law, state the purpose of the meeting.

Section 7. Quorum and Voting. A majority of the entire Board of-----------------

Directors shall constitute a quorum for the transaction of business at anymeeting of the Board of Directors. The act of the majority of the directorspresent at a meeting at which a quorum is present shall be the act of theBoard of Directors unless otherwise provided by the laws of Delaware, theCertificate of Incorporation or these bylaws. A majority of the directorspresent at any meeting at which a quorum is present may adjourn the meeting toany other date, time or place without further notice other than announcement atthe meeting. If at any meeting a quorum is not present, a majority of thedirectors present may adjourn the meeting to any other date, time or placewithout notice other than announcement at the meeting until a quorum is present.

Section 8. Compensation. The directors shall be paid their------------

reasonable expenses, if any, of attendance at each meeting of the Board ofDirectors and may be paid a fixed sum for attendance at each meeting of theBoard of Directors or a stated salary as director. No such payment shallpreclude any director from serving the Corporation in any other capacity andreceiving compensation therefor.

Section 9. Telephonic Meetings. Members of the Board of Directors-------------------

may participate in a meeting of the Board of Directors, by means of conferencetelephone or other similar communications equipment by means of which allpersons participating in the meeting can hear each other, and participation in ameeting pursuant to this Section shall constitute presence in person at suchmeeting.



Section 10. Independent Committee. So long as the Corporation is a---------------------

general partner of Borden Chemicals and

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Plastics Limited Partnership ("the Partnership"), the Board of Directors shallfrom time to time by resolution designate an Independent Committee to consist ofthree members of the Board of Directors, each of which shall not be an officerof the Corporation or of any corporate stockholder of the Corporation which ownsa majority of the capital stock of the Corporation. The Independent Committeeshall examine and resolve any matter required to be submitted to such Committeeby the Agreement of Limited Partnership of the Partnership and any mattersubmitted to such Committee by a vote of the majority of the entire Board ofDirectors. The Board of Directors shall have the power at any time to change themembership of such Committee and to fill vacancies in such Committee, subject tothe requirements in the first sentence of this Section 10. The IndependentCommittee may make rules for the conduct of its business and may appoint suchcommittees and assistants as it shall from time to time deem necessary.

ARTICLE III-----------

Officers--------

Section 1. Number, Qualification, Election and Term of Office. The--------------------------------------------------

officers of the Corporation shall be a Chairman of the Board, a President, aSecretary, a Treasurer, and such other officers, including one or moreVice-Presidents (who may be designated by different classes) and one or moreAssistant Secretaries and Assistant Treasurers, as the Board of Directors mayfrom time to time deem advisable. Each officer of the Corporation shall beelected by the Board of Directors and shall hold office until his successorshall have been elected and qualified, or until his earlier resignation orremoval.

Section 2. Removal and Vacancies. All officers shall serve at the---------------------

pleasure of the Board of Directors. Any officer may be removed by the Board ofDirectors at any time with or without cause. A vacancy in any office shall befilled by the Board of Directors.

Section 3. The Chairman of the Board. The Chairman of the Board of-------------------------

Directors shall be the chief executive officer of the Corporation and shallpreside at all meetings of stockholders and at all meetings of the Board ofDirectors. He shall have general and active supervision over the propertybusiness and affairs of the Corporation. The Chairman of the Board may sign,execute and deliver in the name of the Corporation powers of attorney,contracts, bonds and other obligations, and shall have such further duties asare incident to the office of the Chairman of the Board of

-5-

Directors or prescribed by law or as shall from time to time be designated bythe Board of Directors.

Section 4. The President. The President shall, subject to the-------------

direction and control of the Chairman of the Board of Directors, be the chiefoperating officer of the Corporation and have such duties and powers as shallfrom time to time be designated by the Board of Directors or by the Chairman ofthe Board of Directors.

Section 5. The Vice-Presidents. In the absence of the President or-------------------

in the event of his inability or refusal to act, the Vice-President, if any (or,if there be more than one, the Vice-Presidents in the order designated by theChairman of the Board of Directors, subject to revision by the Board ofDirectors, and, absent such designation or revision, in the order of their firstelection to that office), shall perform the duties and discharge theresponsibilities of the President. They shall have such other duties and powersas shall from time to time be designated by the Board of Directors or by theChairman of the Board of Directors.

Section 6. The Secretary and Assistant Secretaries. The Secretary,



---------------------------------------or in the event of his absence or inability or refusal to act, the AssistantSecretary, if any (or, if there be more than one, the Assistant Secretaries inthe order designated by the Chairman of the Board of Directors, subject torevision by the Board of Directors, and, absence such designation or revision,in order of their first election to that office), shall be the keeper of thecorporate seal and records (except those kept by the Treasurer), and shall givenotice of, attend and record minutes of meetings of stockholders and directors.The Secretary or any Assistant Secretary shall have authority to affix thecorporate seal to any instrument requiring it, and when so affixed, thecorporate seal may be attested by the signature of the Secretary or anyAssistant Secretary. The Secretary and any Assistant Secretaries shall have suchother duties as may be prescribed by the Board of Directors or by the Chairmanof the Board of Directors.

Section 7. The Treasurer and Assistant Treasurers. The Treasurer,--------------------------------------

or, in the event of his absence or inability or refusal to act, the AssistantTreasurer, if any (or, if there be more than one, the Assistant Treasurers inthe order designated by the Chairman of the Board of Directors, subject torevision by the Board of Directors, and, absent such designation or revision, inthe order of their first election to that office), shall be responsible for (i)the custody and safekeeping of all of the funds of the Corporation, (ii) thereceipt and deposit of all moneys paid to the Corporation, (iii) where necessaryor appropriate, the endorsement for

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collection on behalf of the Corporation of all checks, drafts, notes, and otherobligations payable to the Corporation, (iv) the disbursement of funds of theCorporation under such rules as the Board of Directors may from time to timeadopt, (v) keeping full and accurate records of all receipts and disbursements,and (vi) the performance of such further duties as are incident, to the officeof Treasurer or as may from time to time be prescribed by the Board of Directorsor by the Chairman of the Board of Directors.

Section 8. Other Officers. Any other officers elected pursuant to--------------

Section 1 of this Article III shall have such duties as are prescribed by theBoard of Directors.

ARTICLE IV----------

Stock Certificates and Transfer Books-------------------------------------

Section 1. Certificate. Every stockholder shall be entitled to have-----------

a certificate, in such form as the Board of Directors shall from time to timeapprove, signed by or in the name of the Corporation by the Chairman of theBoard of Directors, the President or any Vice-President and by the Treasurer, anAssistant Treasurer, the Secretary or an Assistant Secretary, certifying thenumber of shares owned by him.

Section 2. Facsimile Signatures. Where a certificate is--------------------

countersigned (a) by a transfer agent other than the Corporation or itsemployee, or (b) by a registrar other than the Corporation or its employee, anyother signature on the certificate may be a facsimile. In case any officer,transfer agent or registrar who has signed or whose facsimile signature has beenplaced upon a certificate shall have ceased to be such officer, transfer agentor registrar before such certificate is issued, it may be issued by theCorporation with the same effect as if he were such officer, transfer agent orregistrar at the date of issue.

Section 3. Record Ownership. A record of the name and address of the----------------

holder of each certificate, the number of shares represented thereby, and thedate of issue, thereof, shall be made on the Corporation's books. TheCorporation shall be entitled to treat the holder of record of any share orshares of stock as the holder in fact thereof, and accordingly, shall not bebound to recognize any equitable or other claim to or interest in any share onthe part of any other person whether or not it shall have express or othernotice thereof, except as required by the laws of the State of Delaware.

Section 4. Lost Certificates. Any person claiming a stock



-----------------certificate in lieu of one Lost, stolen, mutilated or destroyed shall give theCorporation an affidavit as to his ownership of the certificate and of the factsas to its loss, theft, mutilation or destruction. He shall also, if required bythe Board of Directors, give the Corporation a bond, in such form and amountas may be approved by the Board of Directors, sufficient to indemnify theCorporation against any claim that may be made against it on account of thealleged loss or theft of the certificate or the issuance of a new certificate.

Section 5. Transfer Agent or Registrar. The Corporation may maintain---------------------------

one or more transfer offices or agencies, each in charge of a transfer agentdesignated by the Board of Directors, where the shares of stock of theCorporation shall be transferable. The Corporation may also maintain one or moreregistry offices, each in charge of a registrar designated by the Board ofDirectors, wherein such shares of stock shall be registered.

Section 6. Transfer of Stock. Transfer of shares shall, except as-----------------

provided in Section 4 of this Article IV, be made on the books of theCorporation only by direction of the person named in the certificate or hisattorney, lawfully constituted in writing, and only upon the surrender forcancellation of the certificate therefor, duly endorsed or accompanied by awritten assignment of the shares evidenced thereby.

Section 7. Fixing Date for Determination of Stockholders of Record.-------------------------------------------------------

(a) In order that the Corporation may determine the stockholders entitled tonotice of or to Vote at any meeting of stockholders or any adjournment thereof,or entitled to receive payment of any dividend or other distribution orallotment of any rights, or entitled to exercise any rights in respect of anychange, conversion or exchange of capital stock or for the purpose of any otherlawful action, the Board of Directors may fix, in advance, a record date, whichshall not be more than sixty nor less than ten days before the date of suchmeeting, nor more than sixty days prior to any other action.

(b) If no record date is fixed:

(1) The record date for determining stockholders entitled to noticeof or to vote at a meeting of stockholders shall be at the close ofbusiness on the day next preceding the day on which notice is given, or, ifnotice is waived, at the close of business on the day next preceding theday on which the meeting is held.

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(2) The record date for determining stockholders entitled to expressconsent to corporate action in writing without a meeting, when no prioraction by the Board of Directors is necessary, shall be the day on whichthe first written consent is expressed.

(3) The record date for determining stockholders for any otherpurpose shall be at the close of business on the day on which the Board ofDirectors adopts the resolution relating thereto.

(c) A determination of stockholders of record entitled to notice ofor to vote at a meeting of stockholders shall apply to any adjournment ofthe meeting; provided, however, that the Board of Directors may fix a new

-------- -------record date for the adjourned meeting.

ARTICLE V---------

General Provisions------------------

Section 1. Offices. The registered office of the Corporation in-------

Delaware shall be in the City of Wilmington, County of New Castle. TheCorporation may have such other offices as the Board of Directors may from timeto time determine. The books of the Corporation may be kept outside the State ofDelaware.

Section 2. Seal. The corporation's seal shall have inscribed thereon----

the name of the Corporation, the year of its organization and the words"corporate seal - Delaware."

Section 3. Fiscal Year. The fiscal year of the Corporation shall be



-----------fixed by resolution of the Board of Directors.

Section 4. Inspection of Books. Subject to laws of the State of-------------------

Delaware, the directors shall determine from time to time whether, and, ifallowed, when and under what conditions and regulations the accounts and booksof the Corporation (except such as may by statute be specifically open toinspection), or any of them, shall be open to the inspection of thestockholders, and the stockholders' rights in this respect are and shall berestricted and limited accordingly.

Section 5. Reliance on Records. Each director and officer shall in-------------------

the performance of his duties be fully protected in relying in good faith uponthe books of account or reports made to the Corporation by any of its officials,

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or by an independent certified public accountant, or by an appraiser selectedwith reasonable care by the Board of Directors, or in relying in good faith uponother records of the Corporation.

Section 6. Waiver of Notice. Whenever any notice is required to be----------------

given, a waiver thereof in writing, signed by the person or persons entitled tothe notice, whether before or after the time stated therein, shall be deemedequivalent thereto.

Section 7. Indemnification. (a) Each person who was or is made a---------------

party or is threatened to be made a party to or is involved in any action, suitor proceeding, whether civil, criminal, administrative or investigative(hereinafter a "proceeding"), by reason of the fact that he or she or a personof whom he or she is the legal representative is or was a director, officer oremployee of the Corporation or is or was serving at the request of theCorporation as a director, officer, employee or agent of another corporation orof a partnership, joint venture, trust or other enterprise, including servicewith respect to employee benefit plans, whether the basis of such proceeding isalleged action in an official capacity as a director, officer, employee or agentor in any other capacity while serving as a director, officer, employee oragent, shall be indemnified and held harmless by the Corporation to the fullestextent authorized by the General Corporation Law of the State of Delaware as thesame exists or may hereafter be amended (but, in the case of any such amendment,only to the extent that such amendment permits the Corporation to providebroader indemnification rights than said law permitted the Corporation toprovide prior to such amendment), against all expense, liability and loss(including attorneys' fees, judgments, fines, ERISA excise taxes or penaltiesand amounts paid or to be paid in settlement) reasonably incurred or suffered bysuch person in connection therewith and such indemnification shall continue asto a person who has ceased to be a director, officer, employee or agent andshall inure to the benefit of his or her heirs, executors and administrators;provided, however, that except as provided in paragraph (b) of this Section 7-----------------with respect to proceedings seeking to enforce rights to indemnification, theCorporation shall indemnify any such person seeking indemnification inconnection with a proceeding (or part thereof) initiated by such person only ifsuch proceeding (or part thereof) was authorized by the Board of Directors ofthe Corporation. The right to indemnification conferred in this Section 7 shallbe a contrast right and shall include the right to be paid by the Corporationthe expenses incurred in defending any such proceeding in advance of its finaldisposition; provided, however, that if the General Corporation Law of the State

-----------------of Delaware requires, the payment of such expenses incurred by a director ofoffi-

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cer in his or her capacity as a director or officer (and not in any othercapacity in which service was or is rendered by such person while a director orofficer, including, without limitation, service to an employee benefit plan) inadvance of the final disposition of a proceeding, shall be made only upondelivery to the Corporation of an undertaking by or on behalf of such directoror officer, to repay all amounts so advanced if it shall ultimately bedetermined that such director or officer is not entitled to be indemnified underthis Section 7 or otherwise.

(b) If a claim under paragraph (a) of this Section is not paid infull by the Corporation within thirty days after a written claim has been



received by the Corporation, the claimant may at any time thereafter bring suitagainst the Corporation to recover the unpaid amount of the claim and, ifsuccessful in whole or in part, the claimant shall be entitled to be paid alsothe expense of prosecuting such claim. It shall be a defense to any such action(other than an action brought to enforce a claim for expenses incurred indefending any proceeding in advance of its final disposition where the requiredundertaking, if any is required, has been tendered to the Corporation) that theclaimant has not met the standards of conduct which make it permissible underthe General Corporation Law of the State of Delaware for the Corporation toindemnify the claimant for the amount claimed, but the burden of proving suchdefense shall be on the Corporation. Neither the failure of the Corporation(including its Board of Directors, independent legal counsel or stockholders) tohave made a determination prior to the commencement of such action thatindemnification of the claimant is proper in the circumstances because he or shehas met the applicable standard of conduct set forth in the General CorporationLaw of the State of Delaware, nor an actual determination by the Corporation(including its Board of Directors, independent legal counsel or stockholders)that the claimant has not met such applicable standard of conduct, shall be adefense to the action or create a presumption that the claimant has not met theapplicable standard of conduct.

(c) The right to indemnification and the payment of expenses incurredin defending a proceeding in advance of its final disposition conferred in thisSection 7 shall not be exclusive of any other right which any person may have orhereafter acquire under any statute, provision of the Certificate ofIncorporation, By-law, agreement, vote of stockholders or disinteresteddirectors or otherwise.

(d) The Corporation may maintain insurance, at its expense, toprotect itself and any director, officer, employee or agent of the Corporationor another corporation, partnership, joint venture, trust or other enterpriseagainst any expense, liability or loss, whether or not the Corporation

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would have the power to indemnify such person against such expense, liability orloss under the General Corporation Law of the State of Delaware.

(e) The Corporation may, to the extent authorized from time to timeby the Board of Directors, grant rights to indemnification, and rights to bepaid by the Corporation the expenses incurred in defending any proceeding inadvance of its final disposition, to any agent of the Corporation to the fullestextent of the provisions of this Section 7 with respect to the indemnificationand advancement of expenses of directors, officers and employees of theCorporation.

Section 8. Amendments to Bylaws. These bylaws may be amended, altered--------------------

or repealed by the stockholders or by the Board of Directors.

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EXHIBIT C

AMENDED AND RESTATED

AGREEMENT OF

LIMITED PARTNERSHIP OF

BORDEN CHEMICALS AND PLASTICS OPERATINGLIMITED PARTNERSHIP

A DELAWARE LIMITED PARTNERSHIP

TABLE OF CONTENTS

<TABLE><CAPTION>

Page----

<S> <C> <C>ARTICLE I ORGANIZATIONAL MATTERS.................................... 1

1.1 Formation and Continuation................................ 11.2 Name...................................................... 11.3 Registered Office; Principal Office....................... 2



1.4 Power of Attorney......................................... 21.5 Term...................................................... 4

ARTICLE II DEFINITIONS............................................... 4

ARTICLE III PURPOSE................................................... 11

3.1 Purpose and Business...................................... 113.2 Powers.................................................... 12

ARTICLE IV CAPITAL CONTRIBUTIONS..................................... 13

4.1 Initial Contributions..................................... 134.2 Return of Initial Contributions........................... 134.3 Contributions by General Partner, Organizational Limited

Partner and Investor Partnership........................ 144.4 No Preemptive Rights...................................... 144.5 Capital Accounts.......................................... 154.6 Interest.................................................. 184.7 No Withdrawal............................................. 184.8 Loans from Partners....................................... 18

ARTICLE V ALLOCATIONS AND DISTRIBUTIONS............................. 18

5.1 Allocations for Tax Purposes.............................. 185.2 Allocations for Capital Account Purposes.................. 205.3 Requirement of Distributions.............................. 21

ARTICLE VI MANAGEMENT AND OPERATION OF BUSINESS...................... 22

6.1 Management................................................ 226.2 Certificate of Limited Partnership........................ 236.3 Restrictions on General Partner's Authority............... 246.4 Reimbursement of the General Partner...................... 256.5 Outside Activities........................................ 26

</TABLE>-1-

<TABLE><CAPTION>

Page----

<S> <C> <C>6.6 Loans to and from the General Partner; Contracts with

Affiliates.............................................. 27

6.7 Indemnification........................................... 286.8 Liability of Indemnitees.................................. 296.9 Resolution of Conflicts of Interest....................... 306.10 Other Matters Concerning the General Partner.............. 316.11 Title to Partnership Assets............................... 326.12 Limitations Regarding Certain Actions..................... 326.13 Reliance by Third Parties................................. 32

ARTICLE VII RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER............. 33

7.1 Limitation of Liability................................... 337.2 Management of Business.................................... 337.3 Return of Capital......................................... 337.4 Rights of the Limited Partner Relating to the Partnership. 33

ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS.................... 34

8.1 Records and Accounting.................................... 348.2 Fiscal Year............................................... 358.3 Reports................................................... 35

ARTICLE IX TAX MATTERS............................................... 35

9.1 Preparation of Tax Returns................................ 359.2 Tax Elections............................................. 359.3 Tax Controversies......................................... 369.4 Organizational Expenses................................... 369.5 Withholding............................................... 36

ARTICLE X TRANSFER OF INTERESTS..................................... 36

10.1 Transfer.................................................. 36



10.2 Transfer of General Partner's Partnership Interest........ 3710.3 Transfer of Interest of Limited Partner................... 37

ARTICLE XI ADMISSION OF PARTNERS..................................... 37

11.1 Admission of Substituted Limited Partner.................. 37</TABLE>

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<TABLE><CAPTION>

Page----

<S> <C> <C>11.2 Admission of Successor General Partner................... 3711.3 Amendment of Agreement and Certificate of Limited

Partnership............................................ 37

ARTICLE XII WITHDRAWAL OR REMOVAL OF THE GENERAL PARTNER............. 38

12.1 Withdrawal or Removal of General Partner................. 3812.2 Interest of Departing Partner and Successor.............. 3812.3 Reimbursement of Departing Partner....................... 38

ARTICLE XIII DISSOLUTION AND LIQUIDATION.............................. 38

13.1 Dissolution.............................................. 3813.2 Continuation of the Business of the Partnership after

Dissolution............................................ 4013.3 Liquidation.............................................. 4113.4 Distributions in Kind.................................... 4213.5 Cancellation of Certificate of Limited Partnership....... 4213.6 Reasonable Time for Winding Up........................... 4213.7 Return of Capital........................................ 4313.8 No Capital Account Restoration........................... 4313.9 Waiver of Partition...................................... 43

ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT....................... 43

14.1 Amendment to Be Adopted Solely by General Partner........ 4314.2 Amendment Procedures..................................... 4414.3 Prohibited Amendments.................................... 44

ARTICLE XV GENERAL PROVISIONS....................................... 45

15.1 Addresses and Notices.................................... 4515.2 Titles and Captions...................................... 4515.3 Pronouns and Plurals..................................... 4515.4 Further Action........................................... 4515.5 Binding Effect........................................... 4515.6 Integration.............................................. 4515.7 Creditors................................................ 4515.8 Waiver................................................... 4515.9 Counterparts............................................. 46

</TABLE>-iii-

15.10 Applicable Law........................................... 4615.11 Invalidity of Provisions................................. 46

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AMENDED AND RESTATED

AGREEMENT OF

LIMITED PARTNERSHIP OF BORDEN

CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP

THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP dated as ofNovember 30, 1987 is entered into by and among BCP Management, Inc., a Delawarecorporation as the General Partner, Borden, Inc., a New Jersey corporation asthe Organizational Limited Partner, and Borden Chemicals and Plastics LimitedPartnership, a Delaware limited partnership (the "Limited Partner" or "InvestorPartnership"), together with any other Persons who become Partners, as provided



herein. In consideration of the covenants, conditions and agreements containedherein, the parties hereto hereby agree as follows:

ARTICLE I

ORGANIZATIONAL MATTERS

1.1 Formation and Continuation. The General Partner and the--------------------------

Organizational Limited Partner have previously formed the Partnership as alimited partnership pursuant to the provisions of the Delaware Act and herebyamend and restate the original Agreement of Limited Partnership in its entirety.Subject to the provisions of this Agreement, the General Partner and theOrganizational Limited Partner hereby continue the Partnership as a limitedpartnership pursuant to the provisions of the Delaware Act. Except as expresslyprovided herein to the contrary, the rights and obligations of the Partners andthe administration and termination of the Partnership shall be governed by theDelaware Act. The Partnership Interest of each Partner shall be personalproperty for all purposes.

1.2 Name. The name of the Partnership shall be "Borden Chemicals----

and Plastics Operating Limited Partnership." The Partnership's business may beconducted under any other name or names deemed advisable by the General Partner,including the name of the General Partner or any Affiliate thereof. The words"Limited Partnership," "L.P.," "Ltd." or similar words or letters shall beincluded in the Partnership's name where necessary for the purposes of complyingwith the laws of any jurisdiction that so requires. The General Partner in itssole discretion may change the name of the Partnership at any time and from timeto time and shall notify the Limited Partner of such change. Notwithstanding

the foregoing, unless otherwise permitted by the Organizational Limited Partner,in the event that neither BCP Management, Inc. nor a Subsidiary of Borden is thegeneral partner of the Partnership, the Partnership shall change its name to aname not including "Borden" and shall cease using the name "Borden" or othernames or symbols associated therewith.

1.3 Registered Office; Principal Office. The address of the-----------------------------------

registered office of the Partnership in the State of Delaware shall be locatedat The Corporation Trust Center, 1209 Orange Street, New Castle County,Wilmington, Delaware 19801, and the registered agent for service of processon the Partnership in the State of Delaware at such registered office shall beThe Corporation Trust Company. The principal office of the Partnership shall beHighway 73, Geismar, Louisiana 70734, or such other place as the General Partnermay from time to time designate by notice to the Limited Partner. ThePartnership may maintain offices at such other place or places within or outsidethe State of Delaware as the General Partner deems advisable.

1.4 Power of Attorney. (a) The Limited Partner hereby constitutes-----------------

and appoints each of the General Partner and the Liquidator severally (and anysuccessor to either thereof by merger, transfer, assignment, election orotherwise) and each of their authorized officers and attorneys-in-fact, withfull power of substitution, as its true and lawful agent and attorney-in-fact,with full power and authority in its name, place and stead, to:

(i) execute, swear to, acknowledge, deliver, file and record in theappropriate public offices (A) all certificates, documents and otherinstruments (including without limitation this Agreement and theCertificate of Limited Partnership and all amendments or restatementsthereof) that the General Partner or the Liquidator deems reasonable andappropriate or necessary to form, qualify, or continue the existence orqualification of, the Partnership as a limited partnership (or apartnership in which limited partners have limited liability) in the Stateof Delaware and in all other jurisdictions in which the Partnership mayconduct business or own property; (B) all instruments that the GeneralPartner or the Liquidator deems appropriate or necessary to reflect anyamendment, change, modification or restatement of this Agreement inaccordance with its terms; (C) all conveyances and other instruments ordocuments that the General Partner or the Liquidator deems appropriate ornecessary to reflect the dissolution and liquidation of the Partnershippursuant to the

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terms of this Agreement, including a certificate of cancellation; and (D)



all instruments relating to the admission, withdrawal or substitution ofany Partner pursuant to Articles X, XI or XII or the Capital Contributionof any Partner;

(ii) sign, execute, swear to and acknowledge all ballots, consents,approvals, waivers, certificates and other instruments appropriate ornecessary, in the sole discretion of the General Partner or the Liquidator,to make, evidence, give, confirm or ratify any vote, consent, approval,agreement or other action which is made or given by the Partners hereunderor is consistent with the terms of this Agreement or appropriate ornecessary, in the sole discretion of the General Partner or the Liquidator,to effectuate the terms or intent of this Agreement; provided, that when

--------the consent or approval of the Limited Partner is required by any otherprovision of this Agreement, the General Partner or the Liquidator mayexercise the power of attorney made in this subsection (ii) only after thenecessary consent or approval of the Limited Partner.

Nothing herein contained shall be construed as authorizing the General Partnerto amend this Agreement except in accordance with Article XIV or as may beotherwise expressly provided for in this Agreement.

(b) The foregoing power of attorney is hereby declared to beirrevocable and a power coupled with an interest, and it shall survive and notbe affected by the subsequent death, incompetency, disability, incapacity,dissolution, bankruptcy or termination of the Limited Partner, the transfer ofall or any portion of the Limited Partner's Partnership Interest and shallextend to the Limited Partner's heirs, successors, assigns and personalrepresentatives. The Limited Partner hereby agrees to be bound by anyrepresentation made by the General Partner or the Liquidator, acting in goodfaith pursuant to such power of attorney; and the Limited Partner hereby waivesany and all defenses which may be available to contest, negate or disaffirm theaction of the General Partner or the Liquidator, taken in good faith under suchpower of attorney. The Limited Partner shall execute and deliver to the GeneralPartner or the Liquidator, within 15 days after receipt of the General Partner'sor the Liquidator's request therefor, such further designation, powers ofattorney and other instruments as the General Partner or the Liquidator deemsnecessary to effectuate this Agreement and the purposes of the Partnership.

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1.5 Term. The Partnership commenced upon the filing of the----

Certificate of Limited Partnership in accordance with the Delaware Act and shallcontinue in existence until the close of Partnership business on December 31,2082, or until the earlier termination of the Partnership in accordance with theprovisions of Article XIII.

ARTICLE II

DEFINITIONS

The following definitions shall be for all purposes, unless otherwiseclearly indicated to the contrary, applied to the terms used in this Agreement.

"Acquired Facilities" shall mean the interest in the manufacturing and-------------------

production facilities located at Geismar, Louisiana and Illiopolis, Illinoiswhich were transferred to the Partnership by Borden, the General Partner and theInvestor Partnership, as such facilities may be maintained or improved from timeto time, subject to the provisions of Article VI hereof.

"Adjusted Property" means any property the Carrying Value of which has-----------------

been adjusted pursuant to Section 4.5(d)(i) or (d)(ii).

"Affiliate" means any Person that directly or indirectly controls, is---------

controlled by, or is under common control with, the Person in question;

provided, that neither the Partnership nor the Investor Partnership shall be--------deemed an Affiliate of Borden or the General Partner. As used in the definitionof "Affiliate" the term "control" means the procession, directly or indirectly,of the power to direct or cause the direction of the management and policies ofa Person, whether through ownership of voting securities, by contract orotherwise.

"Agreed Value" of any Contributed Property means the fair market value



------------of such property or other consideration at the time of contribution asdetermined by the General Partner using such reasonable method of valuation asit may adopt; provided, that the Agreed Value of any property deemed contributed

--------to the Partnership for federal income tax purposes upon termination andreconstitution thereof pursuant to Section 708 of the Code shall be determinedin accordance with Section 4.5(c) hereof. Subject to Section 4.5(c), the GeneralPartner shall, in its discretion, use such method as it deems reasonable andappropriate to allocate the aggregate Agreed Value of Contributed Propertiestransferred to the Partnership in a single or integrated transaction among each

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separate property on a basis proportional to their fair market values.

"Agreement" means this Amended and Restated Agreement of Limited---------

Partnership, as it may be amended, supplemented or restated from time to time.

"Available Cash," with respect to any quarter within any calendar--------------

year, means (i) the sum of (a) the cash receipts of the Partnership during suchquarter from all sources and (b) any reduction in reserves established in priorquarters, less (ii) the sum of (aa) all cash disbursements of the Partnershipduring such quarter, including, without limitation, disbursements for operatingexpenses, taxes, debt service (including payments of principal, premium andinterest) and capital items (but excluding all cash distributions to Partners),(bb) any reserves established in such quarter in such amounts as the GeneralPartner shall deem to be necessary in the reasonable discretion of the GeneralPartner or appropriate in its reasonable discretion to provide for the properconduct of the business of the Partnership (including reserves for futurecapital expenditures), and (cc) any other reserves in such amounts as arenecessary in the reasonable discretion of the General Partner because thedistribution of such amounts would be prohibited by applicable law or by anyloan agreement, security agreement, mortgage, debt instrument or other agreementor obligation to which the Partnership is a party (including, withoutlimitation, the Note Agreement) or by which it is bound or its assets aresubject. Notwithstanding the foregoing, "Available Cash" shall not include anycash receipts or reductions in reserves or take into account any disbursementsmade or reserves established after commencement of the dissolution andliquidation of the Partnership.

"Book-Tax Disparities" means the differences between a Partner's--------------------

Capital Account balance as maintained pursuant to Section 4.5, and such balancehad such Capital Account been maintained strictly in accordance with taxaccounting principles (such disparities reflecting the differences between theCarrying Value of either Contributed Properties or Adjusted Properties, asadjusted from time to time, and the adjusted basis thereof for federal incometax purposes).

"Borden" means Borden, Inc., a New Jersey corporation.------

"Borden Delaware" means Borden Delaware Holdings, Inc., a Delaware---------------

Corporation.

"Business Day" means Monday through Friday of each week, except that a------------

legal holiday recognized as such by the

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government of the United States or the states of Delaware, Louisiana, Illinoisor New York shall not be regarded as a Business Day.

"calendar quarter" or "quarter" means any calendar quarter or, at the---------------- -------

election of the General Partner, (i) any period commencing on January 1 andcomprised of not less than 12 nor more than 13 weeks, as determined by theGeneral Partner (ii) any period commencing on the day next following any periodreferred to in clause (i) and comprised of approximately 13 weeks, as determinedby the General Partner (iii) any period commencing on the day next following anyperiod referred to in clause (ii) and comprised of approximately 13 weeks, asdetermined by the General Partner and (iv) any period commencing on the day nextfollowing any period referred to in clause (iii) and ending on the nextfollowing December 31.



"Capital Account" means the capital account maintained for a Partner---------------

pursuant to Section 4.5.

"Capital Contribution" means any cash, cash equivalents or the Net--------------------

Agreed Value of Contributed Property which a Partner contributes to thePartnership pursuant to Section 4.1, 4.2, 4.3 or 12.2(c).

"Carrying Value" means (a) with respect to a Contributed Property, the--------------

Agreed Value of such property reduced (but not below zero) by all depreciation,amortization and cost recovery deductions charged to the Partners' CapitalAccounts, and (b) with respect to any other Partnership property, the adjustedbasis of such property for federal income tax purposes, all as of the time ofdetermination. The Carrying Value of any property shall be adjusted from time totime in accordance with Sections 4.5(d)(i) and 4.5(d)(ii), and to reflectchanges, additions or other adjustments to the Carrying Value for dispositionsand acquisitions of Partnership properties, as deemed appropriate by the GeneralPartner.

"Certificate" means a certificate issued by the Partnership evidencing-----------

ownership of one or more Partnership Interests.

"Certificate of Limited Partnership" means the Certificate of Limited----------------------------------

Partnership filed with the Secretary of State of the State of Delaware asreferenced in Section 6.2, as such Certificate may be amended and/or restatedfrom time to time.

"Chemical Products" shall mean (i) methanol, ammonia, formaldehyde,-----------------

urea, acetylene, acetylene-based vinyl chloride monomer, ethylene-based vinylchloride monomer,

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urea-formaldehyde concentrate, acetic acid, general purpose and specialtypurpose polyvinyl chloride resins and industrial gases produced in connectionwith the production of the foregoing, (ii) any other basic chemical productsapproved from time to time by Special Approval of the General Partner, and (iii)any chemical or other by-products of the products set forth in or referred to inclause (i) or clause (ii) above.

"Code" means the Internal Revenue Code of 1986, as amended and in----

effect from time to time, as interpreted by the applicable regulationsthereunder. Any reference herein to a specific section or sections of the Codeshall be deemed to include a reference to any corresponding provision of futurelaw.

"Commencement Date" means November 30, 1987.-----------------

"Common Unit" has the meaning set forth in the Investor Partnership-----------

Agreement.

"Contributed Property" means each property or other consideration, in--------------------

such form as may be permitted by the Delaware Act, but excluding cash and cashequivalents, contributed to the Partnership (or deemed contributed to thePartnership on termination and reconstitution thereof pursuant to Section 708 ofthe Code). Once the Carrying Value of a Contributed Property is adjustedpursuant to Section 4.5(d)(i), such property shall no longer constitute aContributed Property for purposes of Section 5.1, but shall be deemed anAdjusted Property for such purposes.

"Contributing Partner" means each Partner contributing (or deemed to--------------------

have contributed on termination and reconstitution of the Partnership pursuantto Section 708 of the Code or otherwise) a Contributed Property.

"Conveyance Agreement" means the Conveyance and Transfer Agreement--------------------

dated as of the Commencement Date among Borden, Borden Delaware, the GeneralPartner, the Partnership and the Investor Partnership.



"Delaware Act" means the Delaware Revised Uniform Limited Partnership------------

Act, 6 Del. C. (S) 17-101, et seq., as it may be amended from time to time, and--- - -------

any successor to such statute.

"Departing Partner" means a former General Partner, as of the-----------------

effective date of any withdrawal or removal of such former General Partnerpursuant to Section 12.1.

"Exchange Act" means the Securities Exchange Act of 1934, as amended,------------

and any successor to such statute.

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"General Partner" means BCP Management, Inc., a Delaware corporation,---------------

or any of its successors in its capacity as general partner of the Partnership.

"Indemnitiee" means the General Partner, any Departing Partner, any-----------

Person who is or was an Affiliate of the General Partner or any DepartingPartner, any Person who is or was an officer, director, employee, partner,agent or trustee of the General Partner or any Departing Partner or any suchAffiliate, or any Person who is or was serving at the request of the GeneralPartner or any Departing Partner or any such Affiliate as a director, officer,employee, agent or trustee of another Person.

"Independent Committee" means a comittee of the Board of Directors of---------------------

the General Partner composed of all directors who are neither officers,employees, or directors of Borden or any of its Affiliates, other than theGeneral Partner, nor officers or employees of the General Partner.

"Intercompany Agreement" means the Intercompany Agreement dated as of----------------------

the Commencement Date among Borden, the Partnership, the Investor Partnershipand the General Partner.

"Investor Partnership" means Borden Chemicals and Plastics Limited--------------------

Partnership, a Delaware limited partnership.

"Investor Partnership Agreement" means the Amended and Restated------------------------------

Agreement of Limited Patnership of the Investor Partnership, dated as of theCommencement Date, as it may be amended, supplemented or restated from time totime.

"License Agreements" means, collectively, the Use of Name and------------------

Trademark License Agreement and the Patent and Know-How Agreement, in each caseamong Borden, the Partnership and the Investor Partnership and dated as of theCommencement Date.

"Limited Partner" means any Person who is a limited partner of the---------------

Partnership other than the Organizational Limited Partner (i.e., the Investor----

Partnership and each Substituted Limited Partner) and shown as a Limited Partneron the books and records of the Partnership.

"Liquidator" means the General Partner or the Person (other than the----------

General Partner) approved pursuant to Section 13.3 who performs the functionsdescribed therein.

"Minimum Gain" has the meaning as set forth in Section 5.2(d).------------

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"NASDAQ" means the National Association of Securities Dealers------

Automated Quotation System.



"Net Agreed Value" means (a) in the case of any Contributed Property,----------------

the Agreed Value of such property reduced by any liabilities either assumed bythe Partnership upon such contribution or to which such property is subject whencontributed and (b) in the case of any property distributed to a Partner by thePartnership, the Partnership's Carrying Value of such property at the time suchproperty is distributed, reduced by any indebtedness either assumed by suchPartner upon such distribution or to which such property is subject at the timeof distribution, in either case, as determined under Section 752 of the Code.

"Note Agreement" means the Note Agreement dated November 20, 1987--------------

regarding the issuance by the Partnership of the Notes.

"Notes" means the $150,000,000 aggregate principal amount 10.70% and-----

11.10% Senior Notes of the Partnership.

"Operative Agreements" means, collectively, (a) the Purchase--------------------

Agreements, (b) the Distribution Support Agreement (as defined in the InvestorPartnership Agreement), (c) the License Agreements, (d) the IntercompanyAgreement, (e) the Environmental Indemnity Agreement dated as of theCommencement Date among Borden, the Investor Partnership and the Partnership and(f) the Lease Agreement dated as of the Commencement Date, between Borden andthe Partnership.

"Opinion of Counsel" means a written opinion of counsel (who may be------------------

regular counsel to the Partnership or the General Partner) acceptable to theGeneral Partner.

"Organizational Limited Partner" means Borden in its capacity as the------------------------------

organizational limited partner pursuant to this Agreement.

"Outstanding" means the Partnership Interests of the Limited Partner-----------

issued by the Partnership and shown on the Partnership's books and records to beoutstanding.

"Partner" means a General Partner or a Limited Partner.-------

"Partnership" means the limited partnership formed and continued-----------

pursuant to this Agreement and any successor thereto.

"Partnership Interest" means the interest of a Partner in the--------------------

Partnership.

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"Partnership Year" means the fiscal year of the Partnership, which----------------

shall be the calendar year.

"Percentage Interest" means (a) as to the General Partner, 1.0101%,-------------------

and (b) as to the Limited Partner, 98.9899%

"Person" means an individual or a corporation, partnership, trust,------

unincorporated organization, association or other entity.

"Preference Unit" has the meaning set forth in the Investor---------------

Partnership Agreement.

"Purchase Agreements" means collectively, the PVC Purchase Agreement,------------------

the Ammonia Purchase Agreement, the Urea Purchase Agreement, the MethanolPurchase Agreement, the Formaldehyde Processing Agreement and the Urea-Formaldehyde Processing Agreement, in each case between Borden and thePartnership and dated as of the Commencement Date.

"Recapture Income" means any gain recognized by the Partnership------------------



(computed without regard to any adjustment required by Sections 734 or 743 ofthe Code) upon the disposition of any property or asset of the Partnership,which gain is characterized as ordinary income because it represents therecapture of deductions previously taken with respect to such property or asset.

"Recaptured Credits" means any credits previously taken against------------------

federal income tax liability which are required under the Code to be recapturedupon the disposition of any property by the Partnership prior to the end of suchproperty's useful life used in determining the amount of the credit relatingthereto.

"Registration Statement" means the Registration Statement on Form S-1----------------------

(Registration No. 33-17057), as it has been or as it may be amended orsupplemented from time to time, filed by the Investor Partnership with theSecurities and Exchange Commission under the Securities Act to register theoffering and sale of the Depositary Preference Units (as defined in the InvestorPartnership Agreement) of the Investor Partnership in the Initial Offering (asso defined).

"Residual Gain" or "Residual Loss" shall mean any net gain or net------------- -------------

loss. As the case may be, of the Partnership recognized for federal income taxpurposes resulting from a sale, exchange or other disposition of a ContributedProperty or Adjusted Property, to the extent such net gain or net loss, is notallocated pursuant to Section 5.1(f) or 5.1(g) to eliminate Book-TaxDisparities.

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"Securities Act" means the Securities Act of 1933, as amended, and any--------------

successor to such statute.

"Service Agreement" means the Service Agreement between Borden and the-----------------

Partnership and dated as of the Commencement Date.

"Special Approval" means approval by a majority of the members of the----------------

Board of Directors of the General Partner that includes approval by a majorityof the members of the Independent Committee.

"Subsidiary" means, with respect to any Person, any corporation or----------

other entity of which a majority of the voting power of the voting equitysecurities or equity interest is owned, directly or indirectly, by such Person.

"Substituted Limited Partner" means a Person who is admitted as a---------------------------

Limited Partner to the Partnership pursuant to Section 11.1 in place of and withall the rights of a Limited Partner and who is shown as a Limited Partner on thebooks and records of the Partnership.

"Unitholder" means any limited partner in the Investor Partnership or----------

any assignee of a Unit.

"Unit" has the meaning set forth in the Investor Partnership----

Agreement.

"Unrealized Gain" attributable to a Partnership property means, as of---------------

any date, the excess, if any, of the fair market value of such property (asdetermined under Section 4.5(d)) as of such date over the Carrying Value of suchproperty as of such date (prior to any adjustment to be made pursuant to Section4.5(d) as of such date).

"Unrealized Loss" attributable to a Partnership property means, as of---------------

any date, the excess, if any , of the Carrying Value of such property as of suchdate (prior to any adjustment to be made pursuant to Section 4.5(d) as of suchdate) over the fair market value of such property (as determined under Section4.5(d) as of such date).

ARTICLE III



PURPOSE

3.1 Purpose and Business. The purpose and nature of the business to--------------------

be conducted by the Partnership shall be (i) to engage in the manufacture andproduction of the Chemical Products at the Acquired Facilities and sell orotherwise distribute such Chemical Products and, in

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connection therewith, to operate, maintain and improve the Acquired Facilities,(ii) to conduct any other business that may be lawfully conducted by a limitedpartnership organized pursuant to the Delaware Act, and (iii) to do anythingnecessary or incidental to the foregoing; provided, that without Special

--------Approval of the General Partner, the Partnership shall not (a) expand the annualcapacity of the Acquired Facilities for the production of formaldehyde to anycapacity in excess of an aggregate of 385,000,000 pounds per year, (b) expandthe definition of Chemical Products, as permitted by the definition thereof, or(c) engage in any other business as contemplated by clause (ii) above. TheGeneral Partner has no duty to the Partnership or the Limited Partner to proposeor approve, and in its sole discretion may decline to propose or approve, any ofthe matters referred to in clause (a), (b) or (c) of the proviso to theforegoing sentence.

3.2 Powers. The Partnership shall be empowered to do any and all------

acts and things necessary, appropriate, proper, advisable, incidental to , orconvenient for the furtherance and accomplishment of the purposes and businessdescribed herein and for the protection and benefit of the Partnership,including, without limitation, the following:

(a) To borrow money and issue evidences of indebtedness, and tosecure the same by mortgages, deeds of trust, security interests, pledges,or other liens on all or any part of the assets and properties of thePartnership;

(b) To secure and maintain insurance against liability or other losswith respect to the activities and assets of the Partnership (including,without limitation, insurance against liabilities under Section 6.7);

(c) To employ or retain such Persons as may be necessary orappropriate for the conduct of the Partnership's business, includingpermanent, temporary, or part-time employees and independent attorneys,accountants, consultants, and contractors;

(d) To acquire, own, hold a leasehold interest in, maintain, use,lease, sublease, manage, operate, sell, exchange, transfer, or otherwisedeal in assets and property as may be necessary or convenient for thepurposes and business of the Partnership;

(e) To incur expenses and to enter into, guarantee, perform, andcarry out contracts or commitments of any kind, to assume obligations, and

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to execute, deliver, acknowledge, and file documents in furtherance of thepurposes and business of the Partnership;

(f) To pay, collect, compromise, arbitrate, litigate, or otherwiseadjust, contest, or settle any and all claims or demands of or against thePartnership;

(g) To invest in interest-bearing and non-interest bearing accountsand short term investments, including, without limitation, obligations offederal, state, and local governments and their agencies, mutual funds(including money market funds), commercial paper, time deposits, letters ofcredit, and certificates of deposit of commercial banks, savings banks, orsavings and loan associations; and

(h) To engage in any kind of activity and to enter into and performobligations of any kind necessary to or in connection with, or incidentalto, the accomplishment of the purposes and business of the Partnership, solong as such activities and obligations may be lawfully engaged in orperformed by a limited partnership under the Delaware Act.

ARTICLE IV



CAPITAL CONTRIBUTIONS

4.1 Initial Contributions. In order to form the Partnership under---------------------

the Delaware Act, the General Partner has made an initial contribution to thecapital of the Partnership of $10 and has accepted a contribution to the capitalof the Partnership in the amount of $990 from the Organizational Limited Partnerfor an interest in the Partnership, and the Organizational Limited Partner hasbeen admitted to the Partnership as a limited partner of the Partnership.

4.2 Return of Initial Contributions. As of the Commencement Date and-------------------------------

after giving effect to the transactions contemplated by Section 4.3 hereof andthe admission to the Partnership of the Investor Partnership as the LimitedPartner in accordance with this Agreement, the interest in the Partnership ofthe Organizational Limited Partner shall be terminated, the $10 contributed bythe General Partner and the $990 contributed by the Organizational LimitedPartner as an initial contribution shall be refunded, and the OrganizationalLimited Partner shall withdraw as a limited partner. Ninety-nine percent of anyinterest or other profit

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which may have resulted from the investment or other use of such initialcontribution shall be allocated and distributed to the Organizational LimitedPartner and the balance thereof shall be allocated and distributed to theGeneral Partner.

4.3 Contributions by General Partner, Organizational Limited Partner----------------------------------------------------------------

and Investor Partnership. Pursuant to the Conveyance Agreement, on the------------------------Commencement Date, (i) the General Partner shall contribute, transfer, convey,assign and deliver or cause to be contributed, transferred, conveyed, assignedand delivered, to the Partnership the property and other consideration describedin the Conveyance Agreement as being so contributed, transferred, conveyed,assigned and delivered, as and to the extent provided in the ConveyanceAgreement, in exchange for a Partnership Interest as a general partner in thePartnership representing a 1.0101% Percentage Interest and the payment anddistribution of 1.0101% of the net proceeds from the issuance and sale of theNotes; (ii) the Investor Partnership shall contribute, transfer, convey, assignand deliver, or cause to be contributed, transferred, conveyed, assigned anddelivered, to the Partnership the property and other consideration described inthe Conveyance Agreement as being so contributed, transferred, conveyed,assigned and delivered, as and to the extent provided in the ConveyanceAgreement, in exchange for a Partnership Interest as a limited partner in thePartnership representing a .9899% Percentage Interest and the payment anddistribution of .9899% of the net proceeds from the issuance and sale of theNotes; and (iii) the Organizational Limited Partner shall contribute, sell,transfer, convey, assign and deliver or cause to be contributed, sold,transferred, conveyed, assigned and delivered, to the Partnership the propertyand other consideration described in the Conveyance Agreement as being socontributed, as and to the extent provided in the Conveyance Agreement, inexchange for a Partnership Interest as a limited partner in the Partnershiprepresenting a 98.0000% Percentage Interest and the payment and distribution of98.0000% of the net proceeds from the issuance and sale of the Notes. Asprovided for in the Conveyance Agreement, the Organizational Limited Partnershall, immediately after the contribution, sale, transfer, conveyance,assignment and delivery referred to in clause (iii) above, contribute, sell,transfer, convey, assign and deliver all of the Partnership Interest(representing a 98.0000% Percentage Interest as a limited partner) received inexchange therefor to the Investor Partnership in exchange for 28,125,000Preference Units and 8,625,000 Common Units representing a 99% partnershipinterest in the Investor Partnership, and the Investor Partnership shall beadmitted to the Partnership as a Limited Partner. The Limited Partner, with theconsent of the General Partner, may, but shall not be obligated to, makeadditional Capital Contributions to the Partnership. Upon

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any such Capital Contribution by the Limited Partner, the General Partner shallbe obligated to make an additional Capital Contribution to the Partnership suchthat the General Partner shall at all times have at least a 1% interest in eachitem of Partnership gain, loss, deduction and credit.

4.4 No Preemptive Rights. No Person shall have any preemptive,--------------------

preferential or other similar right with respect to (a) additional Capital



Contributions; (b) issuance or sale of any class or series of PartnershipInterests, whether unissued, held in treasury or hereafter created; (c) issuanceof any obligations, evidences of indebtedness or other securities of thePartnership convertible into or exchangeable for, or carrying or accompanied byany rights to receive, purchase or subscribe to, any unissued PartnershipInterests held in treasury; (d) issuance of any right of subscription to orright to receive, or any warrant or option for the purchase of, any of theforegoing securities; or (e) issuance or sale of any other securities that maybe issued or sold by the Partnership.

4.5 Capital Accounts. (a) The Partnership shall maintain for each----------------

Partner a separate Capital Account in accordance with the rules of TreasuryRegulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by(i) the amount of all Capital Contributions made by such Partner to thePartnership pursuant to this Agreement and (ii) all items of Partnership incomeand gain (including income and gain exempt from tax) computed in accordance withSection 4.5(b) and allocated to such Partner pursuant to Article V and decreasedby (x) the amount of cash or Net Agreed Value of all actual and deemeddistributions of cash or property made to such Partner pursuant to thisAgreement and (y) all items of Partnership deduction and loss allocated to suchPartner pursuant to Article V.

(b) For purposes of computing the amount of any item of income, gain,deduction or loss to be reflected in the Partners' Capital Accounts, thedetermination, recognition and classification of any such item shall be the sameas its determination, recognition and classification for federal income taxpurposes (including any method of depreciation, cost recovery or amortizationused for that purpose), provided, that:

--------

(i) Solely for purposes of this Section 4.5, the partnership shall betreated as owning directly its proportionate share (as determined by theGeneral Partner) of all property owned by any partnership which thePartnership controls.

(ii) Except as otherwise provided in Treasury RegulationSection 1.704-:(b)(2)(iv)(m), the

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computation of all items of income, gain, loss and deduction shall be madewithout regard to any election under Section 754 of the Code which may bemade by the Partnership and, as to those items described in Section-------------------------------------------------------------------705(a)(1)(B) or 705(a)(2)(B) of the Code, without regard to the fact thatsuch items are not includible in gross income or are neither currentlydeductible nor capitalized for federal income tax purposes.

(iii) Any income, gain or loss attributable to the taxabledisposition of any Partnership property shall be determined as if theadjusted basis of such property as of such date of disposition were equalin amount to the Partnership's Carrying Value with respect to such propertyas of such date.

(iv) In accordance with the requirements of Section 704(b) of theCode, any deductions for depreciation, cost recovery or amortizationattributable to any Contributed Property shall be determined as if theadjusted basis of such property on the date it was acquired by thePartnership were equal to the Agreed Value of such property. Upon anadjustment pursuant to Section 4.5(d)(i) to the Carrying Value of anyPartnership property subject to depreciation, cost recovery oramortization, any further deductions for such depreciation, cost recoveryor amortization attributable to such property shall be determined (A) as ifthe adjusted basis of such property were equal to the Carrying Value ofsuch property immediately following such adjustment and (B) using a rate ofdepreciation, cost recovery or amortization derived under the same methodand useful life (or, if applicable, the remaining useful life) as isapplied for federal income tax purposes; provided, that if the asset has a

--------zero adjusted basis for federal income tax purposes, depreciation, costrecovery or amortization deductions shall be determined using anyreasonable method which the General Partner may adopt.

(v) If the Partnership's adjusted basis in a depreciable or costrecovery property is reduced for federal income tax purposes pursuant toSection 48(q)(l) or 48(q)(3) of the Code, the amount of such reductionshall, solely for purposes hereof, be deemed to be an additionaldepreciation or cost recovery deduction in the year such property is placed



in service and shall be allocated among the Partners pursuant to

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Section 5.2. Any restoration of such basis pursuant to Section 48(q)(2) ofthe Code shall, to the extent possible, be allocated in the same manner tothe Partners to whom such deemed deduction was allocated.

(c) A transferee of a Partnership Interest shall succeed to thatportion of the Capital Account of the transferor relating to such PartnershipInterest transferred; provided, that if the transfer causes a termination of the

--------Partnership under Section 708(b)(1)(3) of the Code, the Partnership's propertiesshall be deemed to have been distributed in liquidation of the Partnership tothe Partners and recontributed by such Partners in reconstitution of thePartnership. In such event, the Carrying Values of the Partnership propertiesshall be adjusted immediately prior to such deemed distribution pursuant toSection 4.5(d)(ii) and such Carrying Values shall then constitute the AgreedValues of such properties. The Capital Accounts of such reconstitutedPartnership shall be maintained in accordance with the principles of thisSection 4.5.

(d)(i) Consistent with the provisions of Treasury Regulation Section1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership Interests forcash or Contributed Property, the Capital Accounts of all Partners and theCarrying Value of each Partnership property immediately prior to such issuanceshall be adjusted upward or downward to reflect any Unrealized Gain orUnrealized Loss attributable to such Partnership property, as if such UnrealizedGain or Unrealized Loss had been recognized on an actual sale of each suchproperty immediately prior to such issuance and had been allocated to thePartners at such time pursuant to Section 5.2. In determining Unrealized Gain orUnrealized Loss for purposes of this Section 4.5(d)(i), the aggregate fairmarket value of all Partnership properties as of any date shall be deemed to beequal to the sum of (a) all Partnership liabilities, plus (b) 101.02% of theproduct resulting from multiplying (x) the total number of Percentage Interestsof Limited Partners immediately before the issuance of such additionalPartnership Interests by (y) the price at which the additional PartnershipInterests are purchased from the Partnership as of such date, provided, that in

--------the event any Partnership Interests then Outstanding or such additionalPartnership interests to be issued are of a different class or type from anyother Partnership Interests of Limited Partners such aggregate fair market valueshall be determined by the General Partner in its reasonable discretion. TheGeneral Partner shall allocate such aggregate value among the assets of thePartnership (in whatever manner it deems reasonable) to arrive at a fair marketvalue for individual properties.

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(ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed distribution to aPartner of any Partnership property (other than cash or cash equivalents), theCapital Accounts of all Partners and the Carrying Value of each Partnershipproperty shall, immediately prior to any such distribution be adjusted upward ordownward to reflect any Unrealized Gain or Unrealized Loss attributable to suchPartnership property, as if such Unrealized Gain or Unrealized Loss had beenrecognized in a sale of such property immediately prior to such distribution foran amount equal to its fair market value, and had been allocated to thePartners, at such time, pursuant to Section 5.2. In determining Unrealized Gainor Unrealized Loss for purposes of this Section 4.5(d)(ii), the fair marketvalue of such Partnership property shall be determined by the General Partnerusing such method of valuation as it deems reasonable; provided, that in the

--------case of a liquidation distribution pursuant to Section 13.4, such fair marketvalue shall be determined in the manner provided in Section 13.4.

4.6 Interest. No interest shall be paid by the Partnership on--------

Capital Contributions or on balances in Partners' Capital Accounts.

4.7 No Withdrawal. No Partner shall be entitled to withdraw any part-------------

of its Capital Contribution or its Capital Account or to receive anydistribution from the Partnership, except as provided in Sections 4.2 and 4.3and Articles V, XII and XIII.

4.8 Loans from Partners. Loans by a Partner to the Partnership shall-------------------

not be considered Capital Contributions. If either Partner shall advance funds



to the Partnership in excess of the amounts required hereunder to be contributedby it to the capital of the Partnership, the making of such excess advancesshall not result in any increase in the amount of the Capital Account of suchPartner. The amount of any such excess advances shall be a debt of thePartnership to such Partner and shall be payable or collectible only out of thePartnership assets in accordance with the terms and conditions upon which suchadvances are made.

ARTICLE V

ALLOCATIONS AND DISTRIBUTIONS

5.1 Allocations for Tax Purposes. (a) Except as otherwise provided----------------------------

in this Section 5.1, for federal income tax purposes, each item of income, gain,loss, deduction and

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credit shall be allocated between the Partners in the same manner as itscorrelative item of "book" income, gain, loss, deduction or credit has beenallocated pursuant to Section 5.2.

(b) Any Recapture Income or Recaptured Credits resulting from thesale or other taxable disposition of any Partnership asset shall be allocated,to the extent possible, after taking into account other required allocations ofgain pursuant to this Section 5.1 (other than Section 5.1(a)), among thePartners or their successors in interest in the same proportions that thedeductions or credits directly or indirectly giving rise to such RecaptureIncome or Recaptured Credits were allocated.

(c) All items of income, gain, loss, deduction and credit recognizedby the Partnership for federal income tax purposes and allocated to the Partnersin accordance with the provisions hereof and any basis allocation made by thePartnership shall be determined without regard to any election under Section 754of the Code made by the Partnership; provided, that such allocations, once made,

--------shall be adjusted as necessary or appropriate to take into account, thoseadjustments permitted or required by Section 734 and 743 of the Code.

(d) Each item of Partnership income, gain, loss, and deductionattributable to a transferred Partnership Interest shall, for federal income taxpurposes, be determined on an annual basis and prorated on a monthly basis andshall be allocated to the Partners based on the number of days such PartnershipInterest was owned during the Partnership Year to which such items areattributable. The General Partner may revise, alter or otherwise modify suchmethods of allocation as it determines necessary, to the extent permitted orrequired by Section 706 of the Code and the regulations or rulings promulgatedthereunder.

(e) For the proper administration of the Partnership and for thepreservation of uniformity of the Units, the General Partner shall have solediscretion to (i) adopt such conventions as it deems appropriate in determiningthe amount of depreciation, amortization and cost recovery deductions; (ii) makespecial allocations for federal income tax purposes of income (including grossincome) or deductions; and (iii) amend the provisions of this Agreement asappropriate (x) to reflect the proposal or promulgation of Treasury Regulationsunder Section 704(c) of the Code, or (y) otherwise to preserve or achieveuniformity of Units. The General Partner may adopt such conventions, make suchallocations and make such amendments to this Agreement as provided in thisSection 5.1(e) only if such conventions, allocations, or amendments would nothave a material adverse effect on the

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Partners or the Partnership and if such allocations are consistent with theprinciples of Section 704 of the Code.

(f)(i) In the case of any Contributed Property, for federal incometax purposes, items of income, gain, loss, depreciation and cost recoverydeductions attributable thereto shall be allocated among the Partners in amanner consistent with the principles of Section 704(c) of the Code to take intoaccount any variation between the Agreed Value of such property and its adjustedbasis at the time of contribution in attempting to eliminate Book-TaxDisparities.

(ii) Except as otherwise provided in Section 5.1(h), any item ofResidual Gain or Residual Loss attributable to any Contributed Property shallbe allocated among the Partners in accordance with Section 5.2.



(g)(i) In the case of any Adjusted Property, for federal income taxpurposes, items of income, gain, loss, depreciation and cost recovery deductionsattributable thereto shall (x) first, be allocated among the Partners in amanner consistent with the principles of Section 704(c) of the Code to take intoaccount any Unrealized Gain or Unrealized Loss attributable to such property andthe allocations thereof pursuant to Section 4.5(d)(i) in attempting toelimination Book-Tax Disparities, and (y) second, if such property wasoriginally Contributed Property, be allocated among the Partners in a mannerconsistent with Section 5.1(f)(i).

(2) Except as otherwise provided in Section 5.1(h), items of ResidualGain or Residual Loss attributable to any Adjusted Property shall be allocatedamong the Partners in accordance with Section 5.2.

(h) Subject to Sections 5.1(f)(i) and (g)(i), any item of income,gain, loss or deduction otherwise allocable to the Limited Partners whichconstitutes the tax corollary of an item of "book" income, gain, loss ordeduction that has been allocated to the General Partner pursuant to Section5.2(b), shall be allocated to the General Partner in the same manner and to thesame extent as provided in this Section 5.2(b).

5.2 Allocations for Capital Account Purposes. (a) For purposes of----------------------------------------

maintaining the Capital Accounts of the Partners and in determining the rightsof the Partners between themselves, except as otherwise provided in this Section5.2, each item of income, gain, loss, deduction or credit (computed inaccordance with Section 4.5(b)) shall be allocated to the Partners in accordancewith their respective Percentage Interests.

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(b) If the allocation of any item of loss or deduction to the LimitedPartner would cause the Capital Account of the Limited Partner to have a deficitbalance in excess of the Limited Partner's share of any then existing MinimumGain, such item of loss or deduction to the extent of such excess shall insteadbe allocated to the General Partner and the General Partner shall as soonthereafter as practicable be allocated a like amount of income or gain otherwiseallocable to the Limited Partner.

(c) If any Partner unexpectedly receives any adjustments, allocationsor distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall, subjectto Section 5.2(d), be specially allocated to such Partner in an amount andmanner sufficient to eliminate any deficit in its Capital Account created bysuch adjustments, allocations or distributions as quickly as possible. ThisSection 5.2(c) is intended to constitute a "qualified income offset" within themeaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3).

(d) If there is a net decrease in Partnership Minimum Gain during aPartnership Year, all Partners with a deficit Capital Account balance at the endof such year, computed as described in Treasury Regulation Section1.704-1(b)(4)(iv)(e), shall be allocated, before any other allocation ofPartnership items for such Partnership Year is made under Section 704(b) of theCode, items of income and gain for such year (and, if necessary, subsequentyears) in the amount and in the proportions sufficient to eliminate suchdeficits as quickly as possible. For purposes of this Section 5.2(d), "MinimumGain" shall be determined in accordance with Treasury Regulation Section1.704-1(b)(4)(iv). This Section 5.2(d) is intended to constitute a "minimumgain chargeback" within the meaning of Treasury Regulation Section1.704-1(b)(4)(iv)(e).

(e) Notwithstanding any other provision of this Section 5.2, in theevent that the Internal Revenue Service is successful in asserting an adjustmentto the taxable income of the General Partner and, as a result of any suchadjustment, the Partnership is entitled to a deduction for federal income taxpurposes with respect to any portion of such adjustment, such deduction shall beallocated to the General Partner.

5.3 Requirement of Distributions. Within 45 days following the end of----------------------------

each calendar quarter (or following the period from the Commencement Date toDecember 31, 1987) an amount equal to 100% of Available Cash with respect tosuch quarter (or period) shall be distributed by the Partnership to the Partnersin accordance with their Percentage

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Interests. The foregoing shall not (i) modify in any respect the provisions of



Section 4.2 regarding the distribution of any interest or other profit on theinitial contributions referred to therein or the provisions of Section 4.3regarding the payment and distribution of the net proceeds from the issuance andsale of the Notes, or (ii) require any distribution of cash if and to the extentsuch distribution would be prohibited by applicable law or by any loanagreement, security agreement, mortgage, debt instrument or other agreement orobligation to which the Partnership is a party (including, without limitation,the Note Agreement) or by which it is bound or its assets are subject.

ARTICLE VI

MANAGEMENT AND OPERATION OF BUSINESS

6.1 Management. (a) The General Partner shall conduct, direct and----------

exercise full control over all activities of the Partnership. Except asotherwise expressly provided in this Agreement, all management powers over thebusiness and affairs of the Partnership shall be exclusively vested in theGeneral Partner, and the Limited Partner shall have no right of control ormanagement power over the business and affairs of the Partnership. In additionto the powers now or hereafter granted a general partner of a limitedpartnership under applicable law or which are granted to the General Partnerunder applicable law or which are granted to the General Partner under any otherprovision of this Agreement, the General Partner, subject to Section 6.3, shallhave full power and authority to do all things deemed necessary or desirable byit to conduct the business of the Partnership, to exercise all powers set forthin Section 3.2 and to effectuate the purposes set forth in Section 3.1,including, without limitation, (i) the making of any expenditures, the borrowingof money, the guaranteeing of indebtedness and other liabilities, the issuanceof evidences of indebtedness, and the incurring of any obligations it deemsnecessary for the conduct of the activities of the Partnership; (ii) theacquisition, disposition, mortgage, pledge, encumbrance, hypothecation orexchange of any assets of the Partnership or the merger or other combination ofthe Partnership with or into another entity (all of the foregoing subject to anyprior approval which may be required by Section 6.3); (iii) the use of theassets of the Partnership (including without limitation, cash on hand) for anypurpose and on any terms it sees fit, including, without limitation, thefinancing of the conduct of the operations of the Partnership, the lending offunds to other Persons and the repayment of obligations of the Partnership; (iv)the negotiation, execution and performance of contracts, conveyances and otherinstruments that it considers useful or necessary to the conduct of Partnershipoperations or the

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implementation of its powers under this Agreement, on such terms and conditionsdeemed desirable in its sole discretion including, without limitation, in thecase of any mortgage against property of the Partnership in Louisiana, aconfession of judgment, waiver of appraisal and other usual Louisiana securityclauses; (v) the distribution of Partnership cash; (vi) the selection anddismissal of employees (including, without limitation, employees having titlessuch as "president," "vice-president," "secretary" and "treasurer") and agents,outside attorneys, accountants, consultants and contractors and thedetermination of their compensation and other terms of employment or hiring;(vii) the maintenance of such insurance for the benefit of the Partnership andthe Partners as it deems necessary or appropriate; (viii) the formation of, oracquisition of an interest in, and the contribution of property to, any furtherlimited or general partnerships, joint ventures or other relationships that itdeems desirable; (ix) the control of any matters affecting the rights andobligations of the Partnership, including the conduct of litigation and theincurring of legal expense and the settlement of claims and litigation; and (x)the lending or borrowing of money (including but not limited to the issuance ofthe Notes), the assumption or guarantee of or other contracting for indebtednessand other liabilities, the issuance of evidences of indebtedness and thesecuring of same by mortgage, deed of trust or other lien or encumbrance, thebringing and defending of actions at law or in equity and the indemnification ofany Person against liabilities and contingencies to the extent permitted by law.

(b) Each of the Partners (and each other Person who may acquire aPartnership Interest) hereby approves the execution, delivery and performance by

--------------------------------------the parties thereto of the Purchase Agreements, the Intercompany Agreement, the----------------------Conveyance Agreement, the License Agreements, the Service Agreement, the NoteAgreement and the payment and distribution to the Investor Partnership, GeneralPartner and the Organizational Limited Partner of the net proceeds of theissuance and sale of the Notes by the Partnership, as provided herein, and the

-------other agreements described in the Registration Statement and agrees that the--------------------------------------------------------



General Partner is authorized to execute, deliver and perform the-----------------------------------------------------------------above-mentioned agreements and transactions and such other agreements described-------------------------------------------------------------------------------in the Registration Statement on behalf of the Partnership without any further------------------------------------------------------------------------------act, approval or vote of the Partners (or such other Persons), notwithstanding-------------------------------------any other provision of this Agreement, the Delaware Act or any applicable law,rule or regulation. None of the execution, delivery or performance by theGeneral Partner, the Partnership, the Investor Partnership or any Affiliate ofthe foregoing of any agreement authorized or permitted under this Agreementshall constitute a breach by the General Partner of

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any duty that the General Partner may owe the Partnership or the Limited Partnerunder this Agreement or of any duty stated or implied by law or equity.

6.2 Certificate of Limited Partnership. The General Partner has filed----------------------------------

the Certificate of Limited Partnership with the Secretary of State of the Stateof Delaware as required by the Delaware Act and shall use all reasonable effortsto cause to be filed such other certificates or documents as may be determinedby the General Partner in its sole discretion to be reasonable and necessary orappropriate for the formation, continuation, qualification and operation of alimited partnership (or a partnership in which the limited partners have limitedliability) in the State of Delaware or any other state in which the Partnershipmay elect to do business or own property. To the extent that the General Partnerin its sole discretion determines such action to be reasonable and necessary orappropriate, the General Partner shall file amendments to and restatements ofthe Certificate of Limited Partnership and do all the things to maintain thePartnership as a limited partnership (or a partnership in which the limitedpartners have limited liability) under the laws of the State of Delaware or anyother state in which the Partnership may elect to do business or own property.Subject to the terms of Section 7.4(a), the General Partner shall not berequired, before or after filing, to deliver or mail a copy of the Certificateof Limited Partnership or any amendment thereto to the Limited Partner.

6.3 Restrictions on General Partner's Authority. (a) The General-------------------------------------------

Partner may not, without the written approval of the specific act by theLimited Partner or by other written instrument executed and delivered by theLimited Partner subsequent to the date of this Agreement, do any of thefollowing:

(i) any act in contravention of this Agreement;

(ii) any act that would make it impossible to carry on the ordinarybusiness of the Partnership, except as otherwise provided in thisAgreement;

(iii) possess Partnership property, or assign any rights in specificPartnership property, for other than a Partnership purpose;

(iv) admit a person as a Partner, except as otherwise provided in thisAgreement;

(v) amend this Agreement in any manner, except as otherwise provided inthis Agreement; or

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(vi) transfer its interest as General Partner of the Partnership, exceptas otherwise provided in Section 10.2.

(b) Except as provided in Article XIII, the General Partner may notsell, exchange or otherwise dispose of all or substantially all of thePartnership's assets in a single transaction or a series of related transactions(including by way of merger or other combination with any other Person) withoutthe approval of the Limited Partner; provided, that this provision shall not

--------preclude or limit the mortgage, pledge, hypothecation or grant of a securityinterest in all or substantially all of the Partnership's assets and shall notapply to any forced sale of any or all of the Partnership's assets pursuant tothe foreclosure of, or other realization upon, any such encumbrance.

6.4 Reimbursement of the General-Partner. (a) Except as provided in------------------------------------



this Section 6.4 and elsewhere in this Agreement or the Investor PartnershipAgreement, the General Partner shall not be compensated for its services asgeneral partner of the Partnership.

(b) The General Partner shall be reimbursed on a monthly basis, orsuch other basis as the General Partner may determine in its sole discretion,for (i) all direct and indirect expenses it incurs or payments it makes onbehalf of the Partnership (including amounts paid to any Person to performservices to or for the Partnership) and (ii) for the General Partner's and thatportion of its Affiliates' legal, accounting, investor communications,utilities, telephone, secretarial, travel, entertainment, bookkeeping,reporting, data processing, office rent and other office expenses (includingoverhead charges), salaries, fees and other compensation and benefit expenses ofemployees, officers and directors, other administrative or overhead expenses andall other expenses necessary or appropriate to the conduct of the Partnership'sbusiness and allocable to the Partnership or otherwise incurred by the GeneralPartner in operating the Partnership's business (including, without limitation,expenses allocated to the General Partner by its Affiliates). The GeneralPartner shall determine the fees and expenses that are allocable to thePartnership in any reasonable manner determined by the General Partner in itssole discretion. Such reimbursements shall be in addition to any reimbursementto the General Partner as a result of indemnification pursuant to Section 6.7.

(c) The General Partner in its sole discretion and without theapproval of the Limited Partner may propose and adopt on behalf of thePartnership employee benefit plans (including, without limitation, plansinvolving the issuance of Units), for the benefit of employees of the General

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Partner, the Partnership or any Affiliate of any of them in respect of servicesperformed, directly or indirectly, for the benefit of the Partnership; provided,

--------that no such plan may provide for the issuance of Partnership Interests in thePartnership.

6.5 Outside Activities. (a) After the Commencement Date, the General------------------

Partner shall not, for so long as it is the general partner of the Partnership,enter into or conduct any business nor incur any debts or liabilities except inconnection with or incidental to (i) its performance of the activities requiredor authorized by this Agreement or the Investor Partnership Agreement ordescribed in or contemplated by the Registration Statement and (ii) theacquisition, ownership or disposition of its partnership interests in thePartnership and the Investor Partnership.

(b) Except as provided in the Intercompany Agreement, or described inthe Registration Statement or provided in subsection (a) above, no Indemniteeshall be expressly or implicitly restricted or proscribed pursuant to thisAgreement, the Investor Partnership Agreement or by the partnership relationshipestablished hereby or thereby from engaging in other activities for profit,whether in the businesses engaged in by the Partnership or the InvestorPartnership or anticipated to be engaged in by the Partnership or anticipated tobe engaged in by the Partnership, the Investor Partnership or otherwise,including without limitation, those businesses described in or contemplated bythe Registration Statement. Without limitation of and subject to the foregoing(but subject to the limitations set forth in the Registration Statement and theIntercompany Agreement), each Indemnitee shall have the right to engage in thechemicals or plastics business and any other business of every type anddescription and to engage in and possess an interest in other business venturesof any and every type and description, independently or with others, includingbusiness interests and activities in direct competition with the Partnership orthe Investor Partnership and none of the same shall breach any duty to thePartnership or any Partner. Neither the Partnership, the Investor Partnershipnor any other Person shall have any rights by virtue of this Agreement, theInvestor Partnership Agreement or the partnership relationship establishedhereby or thereby in any business ventures of any Indemnitee, and, except as setforth in the Registration Statement, such Indemnitees shall have no obligationto offer any interest in any such business ventures to the Partnership, theInvestor Partnership or any Partner or any such other Person.

(c) Without limitation of subsections (a) and (b), andnotwithstanding anything to the contrary in this Agreement, the competitiveactivities of certain Indemnitees and the restrictions on the Partnership'sactivities

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contained in the Intercompany Agreement or described in the Registration



Statement under the caption "Conflicts of Interest and Fiduciary Responsibility"are hereby approved by the Limited Partner.

6.6 Loans to and from the General Partner; Contracts with------------------------------------- --------------

Affiliates. (a) The General Partner, the Limited Partner or any Affiliate of----------either may lend to the Partnership funds needed or desired by the Partnershipfor such periods of time as the General Partner may determine; provided, that

--------the General Partner, the Limited Partner or any such Affiliate may not chargethe Partnership interest at a rate greater than the rate that would be chargedthe Partnership (without reference to the General Partner's financial abilitiesor guaranties) by unrelated lenders on comparable loans. The Partnership shallreimburse the General Partner, the Limited Partner or any Affiliate of either,as the case may be, for any costs (other than any additional interest costs)incurred by it in connection with the borrowing of funds obtained by the GeneralPartner, the Limited Partner or such Affiliate and loaned to the Partnership.The Partnership may not lend funds to the General Partner or any Affiliate ofthe General Partner.

(b) The General Partner may itself, or may enter into an agreementwith any of its Affiliates to, render services for the Partnership. Any servicerendered to the Partnership by the General Partner or any such Affiliate shallbe on terms that are fair and reasonable to the Partnership; provided, that the

--------requirements of this Section 6.6(b) shall be deemed satisfied as to anytransaction approved by Special Approval. The provisions of Section 6.4 shallapply to the rendering of services described in this Section 6.6(b).

(c) The Partnership may transfer assets to joint ventures, otherpartnerships, corporations or other business entities in which it is or therebybecomes a participant upon such terms and subject to such conditions consistentwith applicable law as the General Partner deems appropriate.

(d) Neither the General Partner nor any Affiliate thereof shall sell,transfer or convey any property to, or purchase any property from, thePartnership, directly or indirectly, except pursuant to transactions that arefair and reasonable to the Partnership; provided, that the requirements of this

--------Section 6.6(d) shall be deemed to be satisfied as to (i) the transactionseffected pursuant to Section 4.2 and Section 4.3 hereof, the ConveyanceAgreement and any other transactions described in the Registration Statement or(ii) any transaction approved by Special Approval.

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(e) Without limitation of subsections (a) through (d) above, andnotwithstanding anything to the contrary in this Agreement, the existence ofconflicts of interest described in the Registration Statement under the caption"Conflicts of Interest and Fiduciary Responsibility" are hereby approved by theLimited Partner.

6.7 Indemnification. (a) To the fullest extent permitted by law, each---------------

Indemnitee shall be indemnified and held harmless by the Partnership from andagainst any and all losses, claims, damages, liabilities, joint or several,expenses (including legal fees and expenses), judgments, fines, settlements andother amounts arising from any and all claims, demands, actions, suits orproceedings, whether civil, criminal, administrative or investigative, in whichany Indemnitee may be involved, or is threatened to be involved, as a party orotherwise, by reason of its status as (x) the General Partner, a DepartingPartner or an Affiliate thereof, (y) an officer, director, employee, partner,agent or trustee of the General Partner, any Departing Partner or an Affiliatethereof of (z) a Person serving at the request of the Partnership in anotherentity in a similar capacity, if the Indemnitee acted in good faith and in amanner which such Indemnitee acted in good faith and in a manner which suchIndemnitee in good faith believed to be in, or not opposed to, the bestinterests of the Partnership, and, with respect to any criminal proceeding, hadno reasonable cause to believe its conduct was unlawful. The termination of anysuch action, suit or proceeding by judgment, order, settlement, conviction orupon a plea of nolo contendere, or its equivalent, shall not, of itself, create

---- ----------a presumption that the Indemnitee acted in a manner contrary to that specifiedabove. Any indemnification pursuant to this Section 6.7 shall be made only outof the assets of the Partnership.

(b) To the fullest extent permitted by law, expenses (including legalfees and expenses) incurred by an Indemnitee in defending any claim, demand,action, suit or proceeding shall, from time to time, be advanced by the



Partnership prior to the final disposition of such claim, demand, action, suitor proceeding upon receipt by the Partnership of an undertaking by or on behalfof the Indemnitee to repay such amount if it shall be determined that theIndemnitee is not entitled to be indemnified as authorized in this Section 6.7.

(c) The indemnification provided by this Section 6.7 shall be inaddition to any other rights to which an Indemnitee may be entitled under anyagreement, pursuant to any vote of the Partners, as a matter of law orotherwise, either as to actions in the Indemnitee's capacity as (i) the GeneralPartner, a Departing Partner or an Affiliate thereof, (ii) as an officer,director, employee, partner, agent or trustee of the General Partner, anyDeparting Partner or an

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Affiliate thereof or (iii) a Person serving at the request of the Partnership ina similar capacity with respect to another entity, and shall continue as to anIndemnitee who has ceased to serve in any such capacity and shall inure to thebenefit of the heirs, successors, assigns and administrators of the Indemnitee.

(d) The Partnership may purchase and maintain insurance, on behalf ofthe General Partner and such other Persons as the General Partner shalldetermine, against any liability that may be asserted against any liability thatmay be asserted against or expense that may be incurred by such Person inconnection with the Partnership's activities, regardless of whether thePartnership would have the power to indemnify such Person against such liabilityunder the provisions of this Agreement.

(e) For purposes of this Section 6.7, the Partnership shall be deemedto have requested an Indemnitee to serve as fiduciary of an employee benefitplan whenever the performance by it of its duties to the Partnership alsoimposes duties on, or otherwise involves services by, it to the plan orparticipants or beneficiaries of the plan; excise taxes assessed on anIndemnitee with respect to an employee benefit plan pursuant to applicable lawshall be deemed "fines" within the meaning of Section 6.7(a); and action takenor omitted by it with respect to an employee benefit plan in the performance ofits duties for a purpose reasonably believed by it to be in the interest of theparticipants and beneficiaries of the plan shall be deemed to be for a purposewhich is in, or not opposed to, the best interests of the Partnership.

(f) In no event may an Indemnitee subject the Limited Partner topersonal liability by reason of the indemnification provisions set forth in thisAgreement.

(g) An Indemnitee shall not be denied indemnification in whole or inpart under this Section 6.7 because the Indemnitee had an interest in thetransaction with respect to which the indemnification applies if the transactionwas otherwise permitted by the terms of this Agreement.

(h) The provisions of this Section 6.7 are for the benefit of theIndemnitees, their heirs, successors, assigns and administrators and shall notbe deemed to create any rights for the benefit of any other persons.

6.8 Liability of Indemnitees. (a) No Indemnitee shall be liable to------------------------

the Partnership, the Limited Partner or any Persons who have acquired interestsin the Partnership (whether as a Limited Partner or otherwise) or Units, for

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losses sustained or liabilities incurred as a result of any act or omission ifsuch Indemnitee acted in good faith.

(b) The General Partner may exercise any of the powers granted to itby this Agreement and perform any of the duties imposed upon it hereunder eitherdirectly or by or through its agents, and the General Partner shall not beresponsible for any misconduct or negligence on the part of any such agentappointed by the General Partner in good faith.

6.9 Resolution of Conflicts of Interest. (a) Unless otherwise-----------------------------------

expressly provided in this Agreement or the Investor Partnership Agreement,whenever a potential conflict of interest exists or arises between the GeneralPartner or any of its Affiliates, on the one hand, and the Partnership or theLimited Partner, on the other hand, any resolution or course of action inrespect of such conflict of interest shall be permitted and deemed approved bythe Limited Partner and shall not constitute a breach of this Agreement, of theInvestor Partnership Agreement, or any other agreement contemplated herein ortherein, or of any duty stated or implied by law or equity, if the resolution or



course of action is or, by operation of this Agreement, is deemed to be fair andreasonable to the Partnership. The General Partner shall be authorized but notrequired in connection with its resolution of such conflict of interest to seekSpecial Approval of a resolution of such conflict or course of action. Anyconflict of interest and any resolution of such conflict of interest shall bedeemed fair and reasonable to the Partnership upon Special Approval of suchconflict of interest or resolution. The General Partner may also adopt aresolution or course of action that has not received Special Approval. Any suchresolution or course of action in respect of any conflict of interest shall notconstitute a breach of this Agreement, of the Investor Partnership Agreement, ofany other agreement contemplated herein or therein, or of any duty stated orimplied by law or equity, if such resolution or course of action is fair andreasonable to the Partnership. The General Partner shall be authorized inconnection with its resolution of any such conflict of interest to consider (i)the relative interests of any party to such conflict, agreement, transaction orsituation and the benefits and burdens relating to such interest; and (ii) suchadditional factors as the General Partner deems relevant, reasonable orappropriate under the circumstances. However, nothing contained in thisAgreement shall require the General Partner to consider the interests of anyPerson other than the Partnership.

(b) Whenever this Agreement or any other agreement contemplatedhereby provides that the General Partner or any of its Affiliates is permittedor required to make a decision

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(i) in its "discretion" or under a grant of similar authority or latitude, theGeneral Partner or such Affiliate shall be entitled to consider only suchinterests and factors as it desires and shall have no duty or obligation to giveany consideration to any interest of or factors affecting the Limited Partner,the Partnership, or any Unitholder, or (ii) in its "good faith" or under anotherexpress standard, the General Partner or such Affiliate shall act under suchexpress standard and shall not be subject to any other or different standardsimposed by this Agreement, any other agreement contemplated hereby or applicablelaw. In addition, any actions taken by the General Partner consistent with thestandard of "reasonable discretion" set forth in the definition of AvailableCash will be deemed not to breach any duty of the General Partner to thePartnership or the Limited Partner. During the Support Period (as defined in theInvestor Partnership Agreement) the General Partner shall have no duty to sellor otherwise dispose of any asset of the Partnership, other than in the ordinarycourse of business. No borrowing by the Partnership or the approval thereof bythe General Partner shall be deemed to constitute a breach of duty of theGeneral Partner to the Partnership, or the Limited Partner by reason of the factthat the purpose or effect of such borrowing is directly or indirectly to avoid(i) subordination of Common Units by reason of the provisions of Section 5.4 or5.5 of the Investor Partnership Agreement or (ii) the obligation of Borden orany of its Affiliates to purchase APUs (as defined in the Investor PartnershipAgreement) in accordance with the Distribution Support Agreement (as sodefined), or to permit the redemption of APUs.

(c) Whenever a particular transaction, arrangement or resolution of aconflict of interest is required hereunder to be "fair and reasonable" to anyPerson, the fairness and reasonableness of such transaction, arrangement orresolution shall be considered on the whole in the context of all similar orrelated transactions, and in the context of all transactions, relationships andarrangements between or among the relevant Persons or their respectiveAffiliates.

6.10 Other Matters Concerning the General Partner. (a) The General--------------------------------------------

Partner may rely and shall be protected in acting or refraining from action uponany resolution, certificate, statement, instrument, opinion, report, notice,request, consent, order, bond, debenture, or other paper or document believed byit to be genuine and to have been signed or presented by the proper party orparties.

(b) The General Partner may consult with legal counsel, accountants,appraisers, management consultants, investment bankers, and other consultantsand advisers selected by it, and any act taken or omitted to be taken in

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reliance upon the opinion (including an Opinion of Counsel) of such Persons asto matters which the General Partner believes to be within such Person'sprofessional or expert competence shall be conclusively presumed to have beendone or omitted in good faith and in accordance with such opinion.

(c) The General Partner shall have the right, in respect of any of



its powers or obligations hereunder, to act through any of its duly authorizedofficers and a duly appointed attorney or attorneys-in-fact. Each such attorneyshall, to the extent provided by the General Partner in the power of attorney,have full power and authority to do and perform all and every act and duty whichis permitted or required to be done by the General Partner hereunder.

6.11 Title to Partnership Assets. Title to Partnership assets,---------------------------

whether real, personal or mixed and whether tangible or intangible, shall bedeemed to be owned by the Partnership as an entity, and no Partner or assignee,individually or collectively, shall have any ownership interest in suchPartnership assets or any portion thereof. Title to any or all of thePartnership assets may be held in the name of the Partnership, the GeneralPartner or one or more nominees, as the General Partner may determine. TheGeneral Partner hereby declares and warrants that any Partnership assets forwhich legal title is held in the name of the General Partner shall be held bythe General Partner for the use and benefit of the Partnership in accordancewith the provisions of this Agreement. All Partnership assets shall be recordedas the property of the Partnership on its books and records, irrespective of thename in which legal title to such Partnership assets is held.

6.12 Limitations Regarding Certain Actions. In addition to any other-------------------------------------

provision of this Agreement requiring Special Approval, the General Partner willnot cause or permit the Partnership to take any of the following actions withoutSpecial Approval: (a) the making of any material capital expenditure(individually or, with respect to related capital expenditures, as a group), (b)the material curtailment of the operations of the Partnership, (c) the materialexpansion of the capacity of any of the plants constituting part of the AcquiredFacilities, or (d) the amendment of or entry into by the Partnership of anyagreement between the Partnership and Borden (except that the Partnership may,

--------------------without Special Approval, enter into the agreements specifically referred to in-------------------------------------------------------------------------------Section 6.1(b)).-----------

6.13 Reliance by Third Parties. Notwithstanding anything to the-------------------------

contrary in this Agreement, any Person dealing with the Partnership shall beentitled to assume that the General Partner has full power and authority toencumber, sell or otherwise use in any manner any and all assets of the

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Partnership and to enter into any contracts on behalf of the Partnership, andsuch Person shall be entitled to deal with the General Partner as if it were thePartnership's sole party in interest, both legally and beneficially. The LimitedPartner hereby waives any and all defenses or other remedies which may beavailable against such Person to contest, negate or disaffirm any action of theGeneral Partner in connection with any such dealing. In no event shall anyPerson dealing with the General Partner or its representatives be obligated toascertain that the terms of this Agreement have been complied with or to inquireinto the necessity or expedience of any act or action of the General Partner orits representatives. Each and every certificate, document or other instrumentexecuted on behalf of the Partnership, the General Partner or itsrepresentatives shall be conclusive evidence in favor of any and every Personrelying thereon or claiming thereunder that (a) at the time of the execution anddelivery of such certificate, document or instrument this Agreement was in fullforce and effect, (b) the Person executing and delivering such certificate,document or instrument was duly authorized and empowered to do so for and onbehalf of the Partnership and (c) such certificate, document or instrument wasduly executed and delivered in accordance with the terms and provisions of thisAgreement and is binding upon the Partnership.

ARTICLE VII

RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER

7.1 Limitation of Liability. The Limited Partner and the-----------------------

Organizational Limited Partner shall have no liability under this Agreementexcept as provided in this Agreement or the Delaware Act.

7.2 Management of Business. The Limited Partner (in its capacity as----------------------

such) shall not take part in the operation, management or control (within themeaning of the Delaware Act) of the Partnership's business, transact anybusiness in the Partnership's name or have the power to sign documents for orotherwise bind the Partnership.



7.3 Return of Capital. The Limited Partner shall not be entitled to-----------------

the withdrawal or return of its Capital Contribution, except to the extent ofdistributions made pursuant to this Agreement or upon termination of thePartnership as provided herein.

7.4 Rights of the Limited Partner Relating to the Partnership. (a)---------------------------------------------------------

In addition to other rights provided by this Agreement or by applicable law, andexcept as limited by Section 7.4(b), the Limited Partner shall have the right,for

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a purpose reasonably related to such Limited Partner's interest as a limitedpartner in the Partnership, upon reasonable demand and at such Limited Partner'sown expense:

(i) to obtain true and full information regarding the status of thebusiness and financial condition of the Partnership;

(ii) promptly after becoming available, to obtain a copy of thePartnership's federal, state and local income tax returns for each year;

(iii) to have furnished to it, upon notification to the GeneralPartner, a current list of the name and last known business, residence ormailing address of each Partner;

(iv) to have furnished to it, upon notification to the GeneralPartner, a copy of this Agreement and the Certificate of LimitedPartnership and all amendments thereto, together with executed copies ofall powers of attorney pursuant to which this Agreement, the Certificate ofLimited Partnership and all amendments thereto have been executed;

(v) to obtain true and full information regarding the amount of cashand a description and statement of the Agreed Value of any other propertyor services contributed by each Partner and which each Partner has agreedto contribute in the future and the date on which each become a Partner;and

(vi) to obtain such other information regarding the affairs of thePartnership as is just and reasonable.

(b) Notwithstanding any other provision of this Section 7.4, theGeneral Partner may keep confidential from the Limited Partner for such periodof time as the General Partner deems reasonable, any information that theGeneral Partner reasonably believes to be in the nature of trade secrets orother information the disclosure of which the General Partner in good faithbelieves is not in the best interests of the Partnership or could damage thePartnership or its business or which the Partnership is required by law or byagreements with third parties to keep confidential.

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ARTICLE VIII

BOOKS, RECORDS, ACCOUNTING AND REPORTS

8.1 Records and Accounting. The General Partner shall keep or cause----------------------

to be kept at the principal office of the Partnership appropriate books andrecords with respect to the Partnership's business including, withoutlimitation, all books and records necessary to provide to the Limited Partnerany information, lists and copies of documents required to be provided pursuantto Section 7.4(a). The books of the Partnership shall be maintained on anaccrual basis in accordance with generally accepted accounting principles.

8.2 Fiscal Year. The fiscal year of the Partnership shall be the-----------

calendar year.

8.3 Reports. (a) As soon as practicable, but in no event later-------

than 90 days after the close of each Partnership Year, the General Partner shallcause to be mailed to the Limited Partner as of a date selected by the GeneralPartner in its sole discretion, an annual report containing financial statementsof the Partnership for such Partnership Year, presented in accordance withgenerally accepted accounting principles, including a balance sheet and



statements of operations, Partners' equity and changes in financial position,such statements to be audited by a firm of independent public accountantsselected by the General Partner.

(b) As soon as practicable, but in no event later than 60 days afterthe close of each calendar quarter except the last calendar quarter of eachyear, the General Partner shall cause to be mailed to the Limited Partner, as ofa date selected by the General Partner in its sole discretion, a reportcontaining unaudited financial statements of the Partnership.

ARTICLE IX

TAX MATTERS

9.1 Preparation of Tax Returns. The General Partner shall arrange--------------------------

for the preparation and timely filing of all returns of Partnership income,gains, deductions, losses and other items required of the Partnership forfederal and state income tax purposes and shall use all reasonable efforts tofurnish to the Limited Partner, within 75 days of the close of each taxableyear, the tax information reasonably required for federal and state income taxreporting purposes. The classification, realization and recognition of income,gain, losses and deductions and other

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items shall be on the accrual method of accounting for federal income taxpurposes. The taxable year of the Partnership shall be the calendar year.

9.2 Tax Elections. Except as otherwise provided herein, the General-------------

Partner shall, in its sole discretion, determine whether to make any availableelection pursuant to the Code, provided, that the General Partner shall make the

--------election under Section 754 of the Code in accordance with applicable regulationsthereunder. The General Partner shall have the right to seek to revoke any suchelection (including, without limitation, the election under Section 754 of theCode) upon the General Partner's determination that such revocation is in thebest interests of the Limited Partner.

9.3 Tax Controversies. Subject to the provisions hereof, the General-----------------

Partner is designated the Tax Matters Partner (as defined in Section 6231 of theCode), and is authorized and required to represent the Partnership (at thePartnership's expense) in connection with all examinations of Partnership'saffairs by tax authorities, including resulting administrative and judicialproceedings, and to expend Partnership funds for professional services and costsassociated therewith. Each Partner agrees to cooperate with the General Partnerand to do or refrain from doing any or all things reasonably required by theGeneral Partner to conduct such proceedings.

9.4 Organizational Expenses. The Partnership shall elect to deduct-----------------------

expenses, if any, incurred by it in organizing the Partnership ratably over a60-month period as provided in Section 709 of the Code.

9.5 Withholding. Notwithstanding any other provision of this-----------

Agreement, the General Partner is authorized to take any action that itdetermines to be necessary or appropriate to cause the Partnership to complywith any withholding requirements established under the Code or any otherfederal, state or local law including, without limitation, pursuant to Section1441, 1442, 1445 and 1446 of the Code. To the extent that the Partnership isrequired to withhold and pay over to any taxing authority any amount resultingfrom the allocation or distribution of income to the Limited Partner. The amountso withheld shall be treated as a distribution of cash in the amount of suchwithholding to such Partner.

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ARTICLE X

TRANSFER OF INTERESTS

10.1 Transfer. (a) The term "transfer," when used in this Article X--------

with respect to a Partnership Interest, shall be deemed to refer to atransaction by which a Partner assigns its Partnership Interest to anotherPerson and includes a sale, assignment, gift, pledge, encumbrance,hypothecation, mortgage, exchange or any other disposition by law or otherwise.



(b) No Partnership Interest shall be transferred, in whole or inpart, except in accordance with the terms and conditions set forth in thisArticle X. Any transfer or purported transfer of a Partnership Interest not madein accordance with this Article X shall be null and void.

10.2 Transfer of General Partner's Partnership Interest. The General--------------------------------------------------

Partner may not transfer all or any part of its Partnership Interest as theGeneral Partner; provided, that if the General Partner transfers its partnership

--------interest as general partner in the Investor Partnership to any Person (inaccordance with the provisions of the Investor Partnership Agreement), theGeneral Partner shall also transfer its Partnership Interest as the GeneralPartner to such Person. The Limited Partner hereby approves of any suchtransfer.

10.3 Transfer of Interest of Limited Partner. The Limited Partner may---------------------------------------

not transfer all or any part of its Partnership Interests except that asuccessor of the Limited Partner may become a Substituted Limited Partner asprovided in Article XI.

ARTICLE XI

ADMISSION OF PARTNERS

11.1 Admission of Substituted Limited Partner. Any successor to the----------------------------------------

Partnership Interest of the Limited Partner shall be admitted to the Partnershipas a Limited Partner upon (a) furnishing to the General Partner (1) acceptancein form satisfactory to the General Partner of all the terms and conditions ofthis Agreement and (ii) such other documents or instruments as may be requiredin order to effect its admission as a Limited Partner, and (b) obtaining theconsent of the General Partner, which consent may be withheld or granted in thesole discretion of the General Partner. The transferee shall be admitted to thePartnership as a Limited Partner immediately prior to the transfer.

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11.2 Admission of Successor General Partner. A successor General--------------------------------------

Partner approved pursuant to Section 12.1 or the transferee of or successor tothe Partnership Interest of the General Partner pursuant to Section 10.2admitted to the Partnership as the General Partner, effective immediately priorto the transfer of the Partnership Interest of the General Partner pursuant toSection 10.2 or the withdrawal or removal of the General Partner pursuant toSection 12.1 and such successor General Partner shall continue the business ofthe Partnership without dissolution.

11.3 Amendment of Agreement and Certificate of Limited Partnership.-------------------------------------------------------------

To cause the admission to the Partnership of any successor General Partner, theGeneral Partner shall take all steps necessary and appropriate to prepare assoon as practical an amendment of this Agreement and, if required by law, shallprepare and file an amendment to the Certificate of Limited Partnership and mayfor this purpose exercise the power of attorney granted pursuant to Section 1.4.

ARTICLE XII

WITHDRAWAL OR REMOVAL OF THE GENERAL PARTNER

12.1 Withdrawal or Removal of General Partner. The General partner----------------------------------------

shall automatically withdraw from the Partnership or be removed as GeneralPartner if, and only if, it withdraws from, or is removed as the generalpartner of, the Investor Partnership. Such withdrawal or removal shall becomeeffective at the same time as is its withdrawal or removal as general partner ofthe Investor Partnership shall become effective. The Partners agree that theapproval of a successor general partner of the Investor Partnership shallconstitute approval by each Partner of such successor as the successor GeneralPartner of the Partnership. If no successor General Partner is approved, thePartnership shall be dissolved pursuant to Section 13.1.

12.2 Interest of Departing Partner and Successor. The Partnership-------------------------------------------

Interest of a Departing Partner departing as a result of withdrawal or removalpursuant to Section 13.1 of the Investor Partnership Agreement shall bepurchased by the successor to the Departing Partner. Such purchase shall be acondition to the admission of the successor to the Partnership as General



Partner. The purchase price for such Partnership Interest shall be paid in cashand shall be equal to the fair market value of the Departing Partner'sPartnership Interest, determined as of the effective date of its departure inthe manner specified in the Investor Partnership Agreement.

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12.3 Reimbursement of Departing Partner. The Partnership shall----------------------------------

reimburse a Departing Partner for all employee related liabilities, including,without limitation, reasonable severance liabilities incurred in connection withthe termination of employees employed by such Departing Partner for the benefitof the Partnership.

ARTICLE XIII

DISSOLUTION AND LIQUIDATION

13.1 Dissolution. The Partnership shall not be dissolved by the-----------

admission of a Substituted Limited Partner or by the admission of a successorGeneral Partner in accordance with the terms of this Agreement. Upon the removalor withdrawal of the General Partner, any successor General Partner shallcontinue the business of the Partnership. The Partnership shall dissolve, andits affairs shall be wound up, upon:

(a) the expiration of its term as provided in Section 1.5;

(b) the withdrawal or removal of the General Partner, or any otherevent that results in its ceasing to be the General Partner (other than byreason of a transfer of the General Partner's Partnership Interest inaccordance with Section 10.2 or withdrawal or removal following approval bythe Limited Partner of a successor pursuant to Section 12.1);

(c) an election to dissolve the Partnership by the General Partnerthat is approved by the Limited Partner;

(d) the bankruptcy or the dissolution of the General Partner;

(e) the sale of all or substantially all of the assets and propertiesof the Partnership; or

(f) the dissolution of the Investor Partnership;

provided, that the Partnership shall not be dissolved upon an event described in--------Section 13.1(b) if, within 90 days after such event, all Partners agree inwriting to continue the business of the Partnership and to the appointment,effective as of the date of such event, of a successor General Partner orGeneral Partners.

For purposes of this Section 13.1, bankruptcy of the General Partnershall be deemed to have occurred when (a) it commences a voluntary proceedingseeking liquidation,

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reorganization or other relief under any bankruptcy, insolvency or other similarlaw now or hereafter in effect, (v) it is adjudged a bankrupt or insolvent, orhas entered against it a final and nonappealable order for relief under anybankruptcy, insolvency or similar law now or hereafter in effect, (w) itexecutes and delivers a general assignment for the benefit of its creditors, (x)it files an answer or other pleading admitting or failing to contest thematerial allegations of a petition filed against it in any proceeding of thenature described in clause (u) above, (y) it seeks, consents to or acquiesces inthe appointment of a trustee, receiver or liquidator for it or for all or anysubstantial part of its properties, or (z)(1) any proceeding of the naturedescribed in clause (u) above has not been dismissed within 120 days after thecommencement thereof, (2) the appointment without its consent or acquiescence ofa trustee, receiver or liquidator appointed pursuant to clause (y) above has notbeen vacated or stayed within 90 days of such appointment, or (3) suchappointment is not vacated within 90 days after the expiration of any such stay.

13.2 Continuation of the Business of the Partnership after-----------------------------------------------------

Dissolution. Upon (i) dissolution of the Partnership in accordance with Section-----------13.1(b) and a failure of all Partners to agree to continue the business of thePartnership and appoint a successor General Partner as provided in Section 13.1



then within an additional 90 days, or (ii) dissolution of the Partnership inaccordance with Section 13.1(d) then within 180 days, the Limited Partner mayelect to reconstitute the Partnership and continue its business on the sameterms and conditions set forth in this Agreement by forming a new limitedpartnership on terms identical to those set forth in this Agreement and havingas a general partner a Person approved by the Limited Partner. In addition, upondissolution of the Partnership in accordance with Section 13.1(f), if theInvestor Partnership is reconstituted pursuant to Section 14.2 of the InvestorPartnership Agreement, the reconstituted entity may, within 180 days after suchevent of dissolution, as the Limited Partner, elect to reconstitute thePartnership in accordance with the foregoing sentence. Upon any such election bythe Limited Partner, all Partners shall be bound thereby and shall be deemed tohave approved thereof. Unless such an election is made within the applicabletime period set forth above, the Partnership shall conduct only activitiesnecessary to wind up its affairs. If such an election is so made afterdissolution, then:

(a) the reconstituted Partnership shall continue until the end of theterm set forth in Section 1.5 unless earlier dissolved in accordance withthis Article XIII;

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(b) if the successor general partner is not the former GeneralPartner, then the interest of the former General Partner shall be purchasedby the successor general partner in the manner described in Section 12.2and

(c) all necessary steps shall be taken to cancel this Agreement andthe Certificate of Limited Partnership and to enter into a new partnershipagreement and certificate of limited partnership, and the successor generalpartner may for this purpose exercise the powers of attorney granted theGeneral Partner pursuant to Section 1.4.

13.3 Liquidation. Upon dissolution of the Partnership, unless the-----------

Partnership is continued under an election to reconstitute and continue thePartnership pursuant to Section 13.2, the General Partner, or in the event theGeneral Partner has been dissolved or removed, become bankrupt as defined inSection 13.1 or withdrawn from the Partnership, a liquidator or liquidatingcommittee approved by the Limited Partner, shall be the Liquidator. TheLiquidator (if other than the General Partner) shall be entitled to receive suchcompensation for its services as may be approved by the Limited Partner. TheLiquidator shall agree not to resign at any time without 15 days' prior writtennotice and (if other than the General Partner) may be removed at any time, withor without cause, by notice of removal approved by the Limited Partner. Upondissolution, removal or resignation of the Liquidator, a successor andsubstitute Liquidator (who shall have and succeed to all rights, powers andduties of the original Liquidator) shall within 30 days thereafter be approvedby the Limited Partner. The right to approve a successor or substituteLiquidator in the manner provided herein shall be deemed to refer also to anysuch successor or substitute Liquidator approved in the manner herein provided.Except as expressly provided in this Article XIII, the Liquidator approved inthe manner provided herein shall have and may exercise, without furtherauthorization or consent of any of the parties hereto, all of the powersconferred upon the General Partner under the terms of this Agreement (butsubject to all of the applicable limitations, contractual and otherwise, uponthe exercise of such powers, other than the limitation on sale set forth inSection 6.3(b)) to the extent necessary or desirable in the good faith judgmentof the Liquidator to carry out the duties and functions of the Liquidatorhereunder for and during such period of time as shall be reasonably required inthe good faith judgment of the Liquidator to complete the winding up andliquidation of the Partnership as provided for herein. The Liquidator shallliquidate the assets of the Partnership, and apply and distribute the proceedsof such liquidation in

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the following order of priority, unless otherwise required by mandatoryprovisions of applicable law:

(a) the payment to creditors of the Partnership, including Partnerswho are creditors, in the order of priority provided by law; and thecreation of a reserve of cash or other assets of the Partnership forcontingent liabilities in an amount, if any, determined by the Liquidatorto be appropriate for such purposes;

(b) to the Partners in accordance with the positive balances in theirrespective Capital Accounts after taking into account adjustments to such



Capital Accounts pursuant to Section 5.2 until such balances are reduced tozero; provided, that the General Partner shall contribute to the

--------Partnership cash in an amount sufficient to restore to zero any negativebalance in its Capital Account by the end of the taxable year ofliquidation or 90 days after the date of liquidation, whichever is later;and

(c) finally, to the Partners in accordance with their respectivePercentage Interests.

13.4 Distributions in Kind. Notwithstanding the provisions of--------------------

Section 13.3 which require the liquidation of the assets of the Partnership, butsubject to the order of priorities set forth therein, if upon dissolution of thePartnership the Liquidator determines that an immediate sale of part or all ofthe Partnership's assets would be impractical or would cause undue loss to thePartners, the Liquidator may, in its absolute discretion, defer for a reasonabletime the liquidation of any assets except those necessary to satisfy liabilitiesof the Partnership (including those to Partners) and/or distribute to thePartners, in lieu of cash, as tenants in common or as owners in indivision andin accordance with the provisions of Section 13.3, undivided interests in suchPartnership assets as the Liquidator deems not suitable for liquidation. Anysuch distributions in kind shall be made only if, in the good faith judgement ofthe Liquidator, such distributions in kind are in the best interest of theLimited Partner, and shall be subject to such conditions relating to thedisposition and management of such properties as the Liquidator deems reasonableand equitable and to any agreements governing the operation of such propertiesat such time. The Liquidator shall determine the fair market value of anyproperty distributed in kind using such reasonable method of valuation as it mayadopt.

13.5 Cancellation of Certificate of Limited Partnership. Upon the--------------------------------------------------

completion of the distribution of

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partnership cash and property as provided in Sections 13.3 and 13.4, thePartnership shall be terminated, and the Certificate of Limited Partnership andall qualifications of the Partnership as a foreign limited partnership injurisdictions other than the State of Delaware shall be cancelled and such otheractions as may be necessary to terminate the Partnership shall be taken.

13.6 Reasonable Time for Winding Up. A reasonable time shall be------------------------------

allowed for the orderly winding up of the business and affairs of thePartnership and the liquidation of its assets pursuant to the Section 13.3 inorder to minimize any losses otherwise attendant upon such winding up and theprovisions of this Agreement shall remain in effect between the Partners duringthe period of liquidation.

13.7 Return of Capital. The General Partner shall not be personally-----------------

liable for the return of the Capital Contributions of the Limited Partner, orany portion thereof, it being expressly understood that any such return shall bemade solely from the Partnership assets.

13.8 No Capital Account Restoration. Except as provided in Section------------------------------

13.3(b), no Partner shall have any obligation to restore any negative balance inits Capital Account upon liquidation of the Partnership.

13.9 Waiver of Partition. Each Partner hereby agrees that there-------------------

shall not be a partition of the Partnership property distributed in kind for aperiod of 15 years following such distribution.

ARTICLE XIV

AMENDMENT OF PARTNERSHIP AGREEMENT

14.1 Amendment to Be Adopted Solely by General Partner. The Limited-------------------------------------------------

Partner agrees that the General Partner (pursuant to its power of attorney fromthe Limited Partner), without the approval of the Limited Partner, may amend anyprovision of this Agreement, and execute, swear to, acknowledge, deliver, fileand record whatever documents may be required in connection therewith, toreflect:



(a) a change in the name of the Partnership or the location of theprincipal place of business of the Partnership;

(b) the admission, substitution, withdrawal or removal of Partners inaccordance with this Agreement;

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(c) a change that in the sole discretion of the General Partner isreasonable and necessary or appropriate to qualify or continue thequalification of the Partnership as a limited partnership or a partnershipin which the limited partners have limited liability under the laws of anystate or that is necessary or advisable in the opinion of the GeneralPartner to ensure that the Partnership will not be taxable as a corporationor an association taxable as a corporation for federal income tax purposes;

(d) a change (i) that in the sole discretion of the General Partnerdoes not adversely affect the Limited Partner in any material respect, (ii)that is necessary or desirable to satisfy any requirements, conditions orguidelines contained in any opinion, directive, order, ruling or regulationof any federal or state agency or judicial authority or contained in anyfederal or state statute, or that is necessary or desirable to facilitatethe trading of the Depositary Units (as defined in the Investor PartnershipAgreement) or comply with any rule, regulation, guideline or requirementof any securities exchange on which Depositary Units (as so defined) are orwill be listed for trading, compliance with any of which the GeneralPartner deems to be in the best interests of the Partnership and theLimited Partner or (iii) that is required to effect the intent of theprovisions of this Agreement or is otherwise contemplated by thisAgreement;

(e) an amendment that is necessary, in the Opinion of Counsel, toprevent the Partnership or the General Partner or its directors or officersfrom in any manner being subjected to the provisions of the InvestmentCompany Act of 1940, as amended, the Investment Advisers Act of 1940, asamended, or "plan asset" regulations adopted under the Employee RetirementIncome Security Act of 1974, as amended, whether or not substantiallysimilar to plan asset regulations currently applied or proposed by theUnited States Department of Labor;

(f) any amendment expressly permitted in this agreement to be madeby the General Partner acting alone;

(g) any amendment to this Agreement that is necessary to conform thisAgreement to any amend-

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ments made in the Investor Partnership Agreement; or

(h) any other amendments similar to the foregoing.

14.2 Amendment Procedures. Except as provided in Section 14.1, all--------------------

amendments to this Agreement shall be made in accordance with the followingrequirements. Amendments to this Agreement may be proposed by the GeneralPartner or by the Limited Partner. Subject to Section 14.1, any proposedamendment shall be effective only upon the approval of the General Partner andthe Limited Partner.

14.3 Prohibited Amendments. Notwithstanding any other provision of---------------------

this Agreement, no amendment to this Agreement shall be made if such amendmentwould have a material adverse effect on the business, financial condition,results of operations, properties or assets of the Partnership or on the abilityof the Partnership to perform its obligations under this Agreement, theOperative Agreements or the Notes.

ARTICLE XV

GENERAL PROVISIONS

15.1 Addresses and Notices. Any notice, demand, request or report---------------------

required or permitted to be given or made to the Partnership, the GeneralPartner or the Limited Partner under this Agreement shall be in writing andshall be deemed given if received by it at the principal office of the



Partnership designated pursuant to Section 1.3.

15.2 Titles and Captions. All article or section titles or captions-------------------

in this Agreement are for convenience only. They shall not be deemed part ofthis Agreement and in no way define, limit, extend or describe the scope orintent of any provisions hereof. Except as specifically provided otherwise,references to "Articles" and "Sections" are to Articles and Sections of thisAgreement.

15.3 Pronouns and Plurals. Whenever the context may require, any--------------------

pronoun used in this Agreement shall include the corresponding masculine,feminine or neuter forms, and the singular form of nouns, pronouns and verbsshall include the plural and vice versa.

15.4 Further Action. The parties shall execute and deliver all--------------

documents, provided all information and take or refrain from taking action asmay be necessary or appropriate to achieve the purposes of this Agreement.

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15.5 Binding Effect. This Agreement shall be binding upon and inure--------------

to the benefit of the parties hereto and their heirs, executors, administrators,successors, legal representatives and permitted assigns.

15.6 Integration. This Agreement constitutes the entire agreement-----------

among the parties hereto pertaining to the subject matter hereof and supersedesall prior agreement and understandings pertaining thereto.

15.7 Creditors. None of the provisions of this Agreement shall be---------

for the benefit of, or shall be enforceable by, any creditor of the Partnership.

15.8 Waiver. No failure by any party to insist upon the strict------

performance of any covenant, duty, agreement or condition of this Agreement orto exercise any right or remedy consequent upon a breach thereof shallconstitute waiver of any such breach or any other covenant, duty, agreement orcondition.

15.9 Counterparts. This Agreement may be executed in counterparts,------------

all of which together shall constitute one agreement binding on all the partieshereto, notwithstanding that all such parties are not signatories to theoriginal or the same counterpart.

15.10 Applicable Law. This Agreement shall be construed in--------------

accordance with and governed by the laws of the State of Delaware, withoutregard to the principles of conflicts of law.

15.11 Invalidity of Provisions. If any provision of this Agreement------------------------

is or becomes invalid, illegal or unenforceable in any respect, the validity,legality and enforceability of the remaining provisions contained herein shallnot be affected thereby.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement onthe dates and at the places set forth below and in the presence of the witnesseswhose signatures appear opposite the signatures of the parties hereto.

Date: November 30, 1987 GENERAL PARTNER

Place: New York, New York BCP MANAGEMENT, INC.------------------

Witnesses: By: /s/ David A. Kelly---------------------------

/s/ SIGNATURE ILLEGIBLE Name: David A. Kelly--------------------------- Title: Treasurer



/s/ SIGNATURE ILLEGIBLE---------------------------

Date: November 30, 1987 ORGAINZATIONAL LIMITED PARTNER:

Place: New York, New York BORDEN, INC.------------------

By: /s/ SIGNATURE ILLEGIBLEWitensses: ---------------------------

Name: Lawrence O. Doza/s/ Carolyn O'Leary Title: Sr. Vice President &---------------------------

Chief FinancialOfficer

/s/ SIGNATURE ILLEGIBLE---------------------------

Date: November 30, 1987 LIMITED PARTNER:

Place: New York, New York BORDEN CHEMICALS AND PLASTICS------------------

LIMITED PARTNERSHIP,

Witnesses:

/s/ Carolyn O'Leary By: BCP Management, Inc.---------------------------

(General Partner)/s/ SIGNATURE ILLEGIBLE---------------------------

By: /s/ SIGNATURE ILLEGIBLE---------------------------Name: David A. KellyTitle: Treasurer

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STATE OF New York

COUNTY OF New York

On this 30th day of November, 1987, before me, the undersigned NotaryPublic for the State and County aforesaid, and in the presence of theundersigned competent witnesses, personally came and appeared David A. Kelly whodeclared and acknowledged unto me, that he is the Treasurer of BCP Management,Inc., a Delaware corporation, that as such duly authorized officer, by and withthe authority of the Board of Directors of said corporation, he signed theforegoing instrument as the free act and deed of said corporation, for and onbehalf of said corporation and for the objects and purposes therein set forth.

THUS DONE AND PASSED at New York, New York, on the date first abovewritten in the presence of me, Notary, and the following competent witnesses,who have signed in the presence of the appearer and me, Notary.

WITNESSES: BCP MANAGEMENT, INC.

/s/ Carolyn O'Leary By: [SIGNATURE ILLEGIBLE]------------------------ ------------------------

[SIGNATURE ILLEGIBLE]------------------------

Margaret M. Keane-----------------

NOTARY PUBLIC

County of New York, State of New York

My commission expires:

May 12, 1988

STATE OF New York



COUNTY OF New York

On this 30th day of November, 1987, before me, the undersigned NotaryPublic for the State and County aforesaid, and in the presence of theundersigned and competent witnesses, personally came and appeared Lawrence U.Doza ,who declared and acknowledged unto me, that he is the Senior VP and ChiefFinancial Officer of Borden, Inc., a New Jersey corporation, that as such dulyauthorized officer, by and with the authority of the Board of Directors of saidcorporation, he signed the foregoing instrument as the free act and deed of saidcorporation, for and on behalf of said corporation and for the objects andpurposes therein set forth.

THUS DONE AND PASSES at New York, New York, on the date first abovewritten in the presence of me, Notary, and the following competent witnesses,who have signed in the presence of the appearer and me, Notary.

WITNESSES: BORDEN, INC.




NOTARY PUBLIC

County of New York, State of New York.


May 12, 1988

STATE OF New York

COUNTY OF New York

On this 30th day of November, 1987, before me, the undersigned NotaryPublic for the State and County aforesaid, and in the presence of theundersigned competent witnesses, personally came and appeared David A. Kelly,who declared and acknowledged unto me, that he is the Treasurer of BCPManagement, Inc., a Delaware corporation and the general partner of BordenChemicals and Plastics Limited Partnership, a Delaware limited partnership, thatas such duly authorized officer, by and with the authority of the Board ofDirectors of said corporation, he signed the foregoing instrument as the freeact and deed of said corporation as the general partner of said limitedpartnership, for and on behalf of said limited partnership and for the objectsand purposes therein set forth.

THUS DONE AND PASSED at New York, New York, on the date first abovewritten in the presence of me, Notary, and the following competent witnesses,who have signed in the presence of the appearer and me, Notary.

WITNESSES: BORDEN CHEMICALS AND PLASTICSLIMITED PARTNERSHIP

By: BCP Management, Inc.(General Partner)




NOTARY PUBLIC

County of New York, State of New York




May 12, 1988

Exhibit D

BCP MANAGEMENT, INC.MINUTES OF SPECIAL MEETING OF BOARD OF DIRECTORS

MARCH 29, 1995

A special meeting of the Board of Directors was held by telephoneconference call on March 29, 1995, beginning at 10:00 a.m., pursuant to noticeduly given.

Mr. Saggese, the Chairman of the Board, called the meeting to order.The following directors participated:

J. M. SaggeseD. M. GalbreathE. H. JenningsD. A. KellyG. W. KochJ. V. StapletonR. B. Wiles

Mr. M. M. Mahmood, of Sidley & Austin, also participated at Mr.Saggese's invitation.

The minutes of the meeting of the Board held on January 24, 1995, wereapproved.

Mr. Saggese then advised the Board that he was recommending that theOperating Partnership should not proceed with the previously approved publicoffering of Units, but instead should (i) proceed with the previously approvedpublic offering of $200 million of Notes for purposes of prepayng the existing$150 million of Notes and the paying of related

premiums, financing a portion of the purchase price for the Addis PVC plantacquisition from Occidental Chemical Corporation, and other purposes, and (ii)implement a revolving credit facility for up to $100 million to finance thebalance of the purchase price for the Addis PVC plant, and for other purposes.

Mr. Saggese then explained that his recommendation was primarily basedon the current trading price of the Units and prevailing interest rates, whichmade the Unit offering less attractive and the Notes offering and creditfacility more attractive and the Notes offering and credit facility moreattractive. He also noted that his recommendation will eliminate the dilution ofearnings that would have resulted from the Unit offering. Thereupon, upon motionduly made and seconded, and after a full discussion, the following resolutionwas unanimously passed:

WHEREAS, this Board of Directors of BCP Management, Inc. (the"Corporation") had previously approved, for and on behalf of theCorporation, on its own behalf and, in its capacity as general partner ofBorden Chemicals and Plastics Limited Partnership ("BCP") and BordenChemicals and Plastics Operating Limited Partnership ("BCOP"), for and onbehalf of BCP and BCOP: (i) the acquisition ("Acquisition") by BCOP of theAddis PVC resins facility from Occidental Chemical Corporation; (ii) theregistration and public offering ("Units Offering") by BCP of up to5,000,000 Units for purposes of financing all or a portion of the purchaseprice for the Acquisition and other purposes; and (iii) the registrationand public offering ("Notes Offering") by BCOP of up to $225 million ofNotes for purposes of prepaying the existing $150 million of Notes ("OldNotes") of BCOP and paying of related premiums, financing a portion of thepurchase price for the Acquisition and other purposes; and

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WHEREAS, based on the trading price of the Units, prevailing interestrates and other factors, it is desirable and in the best interests of BCPand BCOP that in order to (i) finance the purchase price for theAcquisition and the prepayment of the Old Notes and payment of the relatedpremiums and expenses and (ii) obtain a larger working line of credit forBCOP relative to BCOP's existing $20 million working capital facility (the



"Existing Facility"), BCOP should effect the Notes Offering for up to $225million of Notes and implement a revolving credit facility for up to $100million;

NOW, THEREFORE, BE IT RESOLVED, that the Notes Offering by BCOP of upto $225 million of Notes previously authorized and approved by this Boardof Directors be and hereby is further approved, confirmed and ratified bythe Corporation on its own behalf and, in its capacity as general partnerof BCP and BCOP, for and on behalf of BCP and BCOP; and

FURTHER RESOLVED, that, without limiting the scope of any previousauthorization provided by this Board of Directors with respect to the NotesOffering, the President, the Chief Financial Officer and the Treasurer ofthe Corporation, or any of them, be and hereby are authorized to determineand establish for and on behalf of the Corporation on its own behalf and inits capacity as general partner of BCP and BCOP, for and on behalf of BCPand BCOP, (a) the aggregate principal amount of the Notes, which shall notexceed $225 million, (b) the maturity date or dates of the Notes, (c) theoffering price by the underwriters of the Notes to the public, (d) thepurchase price to be paid to BCOP by the underwriters, (e) the interest tobe borne by the Notes, (f) the terms and provisions of any redemptionprovisions, (g) the other terms and restrictive covenants relating to theNotes and (h) any terms or conditions required or appropriate to becomplied with by BCP, BCOP or the Corporation; and

FURTHER RESOLVED, that the implementation by BCOP of a new revolvingcredit facility ("Revolving Credit Facility") of up to $100 million and theincurrence by BCOP of up to $100,000,000 of additional indebtedness by BCOPunder the Revolving Credit Facility for purposes of financing a portion ofthe purchase price of the Acquisition and related expenses and for capitalexpenditures, working capital and other partnership purposes, be and herebyis authorized and approved by

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the Corporation, in its capacity as general partner of BCOP, for and onbehalf of BCOP, and that the President, the Chief Financial Officer and theTreasurer of the Corporation, or any of them, be and hereby are authorizedto determine and establish, for and on behalf of the Corporation in itscapacity as general partner of BCOP, for and on behalf of BCOP, the amount(not to exceed $100 million outstanding principal amount) and terms(including in respect of maturity date, principal amortization, interestrates and restrictions on BCOP) of such additional indebtedness to beincurred by BCOP and to enter into such agreements (including, withoutlimitation, an agreement for retention of CS First Boston Corporation asarranger, an agreement for retention of Credit Suisse as administrativeagent and a Revolving Credit Agreement) as they may determine to benecessary or appropriate in order to implement the foregoing, suchdetermination to be conclusively evidenced by the establishment in writingof such amounts and terms and the execution and delivery of suchagreements; and

FURTHER RESOLVED, that, unless subsequently authorized by the Board ofDirectors of the Corporation, BCP shall not proceed with the Units Offeringand the President or any Vice President of the Corporation be and hereby isauthorized (but not required), for and on behalf of the Corporation, inits capacity as general partner of BCP, for and on behalf of BCP, toapply at any time to the Securities and Exchange Commission for withdrawalof the registration statement with respect to the Units Offering; and

FURTHER RESOLVED, that in the event that BCOP obtains the RevolvingCredit Facility, the President or any Vice President of the Corporation beand hereby is authorized (but not required to), for and on behalf of theCorporation, in its capacity as general partner of BCOP, for and on behalfof BCOP, to terminate the Existing Facility; and

FURTHER RESOLVED, that the BCOP shall (i) apply the net proceeds fromthe Notes Offering to prepayment of the Old Notes and payment of relatedpremiums and expenses and payment of a portion of the purchase price of theAcquisition and related expenses and (ii) use cash on hand, borrowings ofup to $75 million under the Revolving Credit Facility or a combinationthereof to pay the remaining portion of the purchase price for theAcquisition and to pay for transaction costs relating

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to the Acquisition, the Notes Offering, the Units Offering and theRevolving Credit Facility and that the President, Vice President orTreasurer of the Corporation, or any of them, be and hereby are authorized,



for and on behalf of the Corporation in its capacity as general partner ofBCOP, for and on behalf of BCOP, to determine and establish the amount ofcash on hand, borrowings under the Revolving Credit Facility or acombination thereof to be used for such purposes; and

FURTHER RESOLVED, that in the event that the closing of the NotesOffering and the Acquisition occurs prior to the implementation by BCOP ofthe Revolving Credit Facility, and net proceeds from the Notes Offeringremaining after prepayment of the Old Notes and payment of related premiumsand expenses be applied towards the purchase price of the Acquisition andany remaining purchase price and transaction costs be financed by means ofcash on hand, borrowings under the Existing Facility or a combinationthereof and the President, Vice President or Treasurer of the Corporation,or any of them, be and hereby are authorized, for and on behalf of theCorporation in its capacity as general partner of BCOP, for and on behalfof BCOP, to (i) determine and establish the amount of cash on hand,borrowings under the Existing Facility or a combination thereof, used forsuch purposes and (ii) borrow such amounts under the Revolving CreditFacility, when established, that they deem appropriate to replenish all orany portion of the cash on hand or repay borrowings under the ExistingFacility;

FURTHER RESOLVED, that the officers of the Corporation, for and onbehalf of the Corporation, on its own behalf and, in its capacity asgeneral partner of BCP or BCOP, on behalf of BCP or BCOP, be and hereby isauthorized to take such additional actions, including, without limitation,the execution and delivery of such agreements, documents and otherinstruments, the obtaining of such consents or waivers, the retention ofsuch legal counsel, financial advisors, accountants and other specialistsand the incurrence and payment of all such expenses, fees and taxes(including fees for legal counsel, accountants and financial advisors,underwriting fees, filing fees, printing and distribution costs), as theyin their discretion shall determine to be advisable, appropriate ornecessary in order to carry out the purposes and intent of the foregoingresolutions (such determination to be conclusively evidenced by the takingof such

-5-

actions) and that all actions by the officers of the Corporation sotaken or heretofore taken in connection with any of the actionsauthorized in any of the foregoing resolutions and the transactionscontemplated by the foregoing resolutions, are hereby authorized,approved and ratified.

There being no further business, Mr. Saggess adjourned the meeting.

Lawrence L. DiekerSecretary

[SIDLEY & AUSTIN LETTERHEAD]

May 2, 1995





We have acted as special New York Counsel to Borden Chemicals andPlastics Operating Limited Partnership (the "Company"), and to BCP Management,Inc. (the "General Partner"), the Company's sole general partner, in connectionwith the preparation, execution and delivery of that certain Credit Agreementdated as of May 2, 1995 (the "Credit Agreement") among the Company, theinstitutions from time to time party thereto as Banks (collectively, the"Banks"), and Credit Suisse, as agent for the Banks (in such capacity, the"Agent"). This opinion is being delivered pursuant to Section 5.01(e) of the



Credit Agreement. Terms defined in the Credit Agreement and not otherwisedefined herein are used herein with the meanings as so defined.

In connection with the opinion expressed herein, we have reviewed thefollowing documents:


(ii) The Notes; and

(iii) The opinion of Lawrence L. Dieker, Vice President, GeneralCounsel and Secretary of the General Partner.


In addition, we have examined originals or copies, certified orotherwise identified to our satisfaction, of such corporate records, agreements,documents or instruments and other instruments, as applicable, and ofcertificates or comparable documents or instruments of public officials andother instruments and documents and have made such inquiries of such officersand representatives and such examination of law as we have deemed relevant andnecessary to form the basis for the opinion hereinafter set forth.

In our examination of the Loan Documents we have assumed theauthenticity of all such documents submitted to us as originals, the conformityto authentic originals of all such documents submitted to us as copies and thegenuineness of all signatures (other than the signatures of the representativesof the General Partner). As to all questions of fact material to the opinionsspecified herein that have not been independently established, we have reliedupon the representations and warranties of the Company contained in the CreditAgreement.

In rendering the opinion expressed below, we have assumed, without anyindependent investigation or verification of any kind, that each party to theLoan Documents (other than the Company) has been duly organized and is validlyexisting and in good standing under its jurisdiction of incorporation and hasfull power and authority to execute and deliver the Loan Documents and performthe obligations set forth therein, and that the execution, delivery, andperformance of the Loan Documents by such other parties have been dulyauthorized by all requisite corporate and other action on the part of such otherparties and such documents have been duly executed and delivered by such otherparties.

To the extent that our opinion expressed below involves conclusions asto the matters set forth in the opinion referred to above of Lawrence L. Dieker,we have relied upon and assumed without independent investigation thecorrectness of such opinion, and our opinion is subject to the assumptions,qualifications and limitations set forth in such opinion.

Based upon the foregoing assumptions and examination of documents andupon such investigation as we have deemed necessary, and subject to thequalifications set forth 'in subparagraphs (a) through (f) below, we are of theopinion that each Loan Document has been executed and delivered by the Companyand constitutes the legal, valid, and binding obligation of the Company,enforceable against the Company in accordance with its terms.

2

Our opinion is expressly qualified as follows:

(a) Our opinion is subject to the effect of applicable bankruptcy,insolvency, reorganization, fraudulent conveyance and other laws affectingthe enforcement of creditors' rights generally and to the effect of generalequitable principles (whether considered in a proceeding in equity or atlaw). In applying such principles, a court, among other things, might notallow a creditor to accelerate maturity of a debt upon the occurrence of adefault deemed immaterial or for non-credit reasons or might decline toorder a debtor to perform covenants. Such principles applied by a courtmight include a requirement that a creditor act with reasonableness and ingood faith. Furthermore, a court may refuse to enforce a covenant or anyprovision providing for indemnification if and to the extent that it deemssuch covenant or indemnification provision to be violative of applicablepublic policy.

(b) Our opinion expressed above is limited to the law of the State ofNew York and the federal law of the United States, and we do not express



any opinion herein concerning any other law.

(c) We express no opinion as to the effect of the compliance ornoncompliance of the Agent, any of the Banks or the Issuing Bank with anystate or federal laws or regulations applicable to any such party becauseof such party's legal or regulatory status, the nature of such party'sbusiness or the authority of any party to conduct business in anyjurisdiction.

(d) We express no opinion as to the effect (if any) of the law of anyjurisdiction (except the State of New York) in which any Bank is locatedwhich limits the rate of interest that such Bank may charge or collect.

(e) We express no opinion with respect to any federal or statesecurities laws.

(f) Our opinion speaks as of the date hereof and we assume noobligation to supplement the foregoing opinion if any applicable lawschange after the date hereof or if we become aware of any facts which mightchange such opinion after the date hereof.

This opinion is furnished to you by us as counsel to the Company andthe General Partner and is solely for your benefit and may not be quoted by youwithout our prior written

3

consent. This opinion may not be furnished to, relied on or quoted by any otherPerson without our prior written consent.

Very truly yours,

/s/ Sidley & Austin

4

[LETTERHEAD OF BORDEN CHEMICAL AND PLASTICS]

May 2, 1995

LAWRENCE L. DIEKERVICE PRESIDENT, GENERAL COUNSEL AND SECRETARYBCP MANAGEMENT, INC.





I am Vice President, General Counsel and Secretary of BCP Management,Inc. (the "General Partner") and have acted as counsel to Borden Chemicals andPlastics Operating Limited Partnership (the "Company"), and to the GeneralPartner, the Company's sole general partner, in connection with the preparation,execution and delivery of that certain Credit Agreement dated as of May 2, 1995(the "Credit Agreement") among the Company, the institutions from time to timeparty thereto as Banks (collectively, the "Banks"), and Credit Suisse, as agentfor the Banks (in such capacity, the "Agent"). This opinion is being deliveredpursuant to Section 5.01(e) of the Credit Agreement. Terms defined in the CreditAgreement and not otherwise defined herein are used herein with the meanings asso defined.

In connection with the opinions expressed herein, I have reviewed thefollowing documents:


(ii) The Notes; and



(iii) (x) The Certificate of Incorporation and By-Laws of the GeneralPartner,

(y) the Certificate of Limited Partnership and Amended andRestated Agreement of Limited Partnership of the Company, and

(z) certificates of governmental officials as to(1) the due organization, valid existence and good standing ofeach of the Company and the General Partner under the laws of theState of Delaware,(2) the due qualification or registration of the Company as aforeign limited partnership in the State of Illinois and theState of Louisiana, and(3) the due qualification as a foreign corporation and goodstanding of the General Partner in the State of Illinois and theState of Louisiana.


In addition, I have examined originals or copies, certified orotherwise identified to my satisfaction, of such corporate records, agreements,documents or instruments and other instruments, as applicable, and ofcertificates or comparable documents or instruments of public officials andother instruments and documents and have made such inquiries of such officersand representatives and such examination of law as I have deemed relevant andnecessary to form the basis for the opinions hereinafter set forth.

In my examination of the Loan Documents I have assumed theauthenticity of all such documents submitted to us as originals, the conformityto authentic originals of all such documents submitted to me as copies and thegenuineness of all signatures (other than the signatures of the representativesof the General Partner). As to all questions of fact material to the opinionsspecified herein that have not been independently established, I have reliedupon the representations and warranties of the Company contained in the CreditAgreement.

In rendering the opinions expressed below, I have assumed, without anyindependent investigation or verification of any kind, that each party to theLoan Documents (other than the Company) has been duly organized and is validlyexisting and in good standing under its jurisdiction of incorporation and hasfull power and authority to execute and deliver the Loan Documents and performthe obligations set forth therein, and that the execution, delivery, andperformance of the Loan Documents by such other parties have been dulyauthorized by all requisite corporate and other action on the part of such otherparties and such documents have been duly executed and delivered by such otherparties.

Based upon the foregoing assumptions and examination of documents andupon such investigation as I have deemed necessary,

2

and subject to the qualifications set forth in subparagraphs (a) through (f)below, I am of the opinion that:

1. The Company (i) is a limited partnership duly organized, validlyexisting and in good standing under the laws of the State of Delaware and (ii)has the partnership power to own its property and carry on its business as nowconducted. The General Partner (i) is a corporation duly organized, validlyexisting and in good standing under the laws of the State of Delaware and (ii)has the corporate power to own its property and carry on its business as nowconducted.

2. The Company is duly qualified or authorized as a foreign limitedpartnership in the State of Illinois and the State of Louisiana.

3. The General Partner is duly qualified as a foreign corporation todo business and is in good standing in the State of Illinois and the State ofLouisiana.

4. The execution, delivery and performance by the Company of eachLoan Document are within the Company's partnership powers and have been dulyauthorized by all necessary corporate action on the part of the General Partner.The execution and delivery by the General Partner, as general partner of theCompany, of each Loan Document are within the General Partner's corporate powersand have been duly authorized by all necessary corporate action on the part ofthe General Partner.



My opinions are expressly qualified as follows:

(a) My opinions expressed above are limited to the GeneralCorporation Law of the State of Delaware, the Delaware Revised UniformLimited Partnership Act, and the federal law of the United States, and Ido not express any opinion herein concerning any other law.

(b) I express no opinion as to the effect of the compliance ornoncompliance of the Agent, any of the Banks or the Issuing Bank with anystate or federal laws or regulations applicable to any such party becauseof such party's legal or regulatory status, the nature of such party'sbusiness or the authority of any party to conduct business in anyjurisdiction.

(c) I express no opinion as to the effect (if any) of the law of anyjurisdiction (except the State of New York)

3

in which any Bank is located which limits the rate of interest that suchBank may charge or collect.

(d) Insofar as the opinions expressed in paragraphs 2 and 3 relatedto matters governed by the law of the State of Illinois or the State ofLouisiana, I have not made an independent examination of such law, but haverelied exclusively upon the certificates referred to clauses (iii)(z)(2)and (iii)(z)(3) above.

(e) I express no opinion with respect to any federal or statesecurities laws.

(f) My opinions speak as of the date hereof and I assume noobligation to supplement the foregoing opinions if any applicable lawschange after the date hereof or if I become aware of any facts which mightchange such opinions after the date hereof.

This opinion is furnished to you by me as counsel to the Company andthe General Partner and is solely for your benefit and may not be quoted by youwithout my prior written consent. Sidley & Austin may rely upon this opinion inrendering their opinion to you of even date herewith, but this opinion may notbe furnished to, relied on or quoted by any other Person without my priorwritten consent.

Very truly yours,

/s/Lawrence L. DiekerLawrence L. Dieker

4

STATE OF DELAWARE PAGE 1

OFFICE OF THE SECRETARY OF STATE--------------------------------

I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBYCERTIFY THAT "BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP" ISDULY FORMED UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN GOOD STANDING ANDHAS A LEGAL EXISTENCE NOT HAVING BEEN CANCELLED OR REVOKED SO FAR AS THERECORDS OF THIS OFFICE SHOW AND IS DULY AUTHORIZED TO TRANSACT BUSINESS.

THE FOLLOWING DOCUMENTS HAVE BEEN FILED:

CERTIFICATE OF LIMITED PARTNERSHIP, FILED THE THIRTY-FIRST DAY OF AUGUST,A.D. 1987, AT 10 O'CLOCK A.M.

RESTATED CERTIFICATE, FILED THE TWENTY-FIRST DAY OF OCTOBER, A.D. 1987, AT11:30 O'CLOCK A.M.

CERTIFICATE OF AMENDMENT, REPRESENTED BY "THE CORPORATION TRUST COMPANY"WITHOUT APPOINTMENT, FILED THE EIGHTH DAY OF AUGUST, A.D. 1988, AT 9 O'CLOCKA.M.

RESTATED CERTIFICATE, FILED THE FIFTEENTH DAY OF DECEMBER, A.D. 1988, AT12:45 O'CLOCK P.M.



AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CERTIFICATES ARE THEONLY CERTIFICATES ON RECORD OF THE AFORESAID LIMITED PARTNERSHIP.

/s/Edward J. Freel----------------------------------------Edward J. Freel, Secretary of State

AUTHENTICATION:2136420 8310 7476253

DATE:950085709 04-19-95



AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL TAXES HAVE BEEN PAID TODATE.

/s/Edward J. Freel----------------------------------------

[SEAL APPEARS HERE] Edward J. Freel, Secretary of State


DATE: 04-19-95950085709



I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBYCERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF LIMITEDPARTNERSHIP OF "BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP",FILED IN THIS OFFICE ON THE THIRTY-FIRST DAY OF AUGUST, A.D. 1987, AT 10O'CLOCK A.M.

/s/Edward J. Freel----------------------------------------

[SEAL APPEARS HERE] Edward J. Freel, Secretary of State


DATE:

950085732 04-19-95

CERTIFICATE OF LIMITED PARTNERSHIPOF


THIS Certificate of Limited Partnership of Borden Chemicals andPlastics Operating Limited Partnership, (the "Partnership"), dated as of August28, 1987, has been duly executed and is being filed by the undersigned to form alimited partnership under the Delaware Revised Uniform Limited Partnership Act



(6 Del.C (S) 17-101, et seq.). The undersigned states:----- -- ----

1. Name. The name of the limited partnership formed hereby is Borden----

Chemicals and Plastics Operating Limited Partnership.

2. Registered Office. The address of the registered office of the-----------------

Partnership in the state of Delaware is c/o The Corporation Trust Company,Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,Delaware 19801.

3. Registered Agent. The name and address of the registered agent----------------

for service of process on the Partnership in the State of Delaware is TheCorporation Trust Company, Corporation Trust Center, 1209 Orange Street,Wilmington, Hew Castle County, Delaware 19801.

4. General Partner. The name and the business address of the sole---------------

general partner of the Partnership is: BCP Management, Inc., 277 Park Avenue,New York, New York 10172.

IN WITNESS WHEREOF, the undersigned general partner has duly executedthis Certificate of Limited Partnership as of the day and year first aforesaid.

BCP MANAGEMENT, INC.a Delaware corporation

By: [SIGNATURE ILLEGIBLE]-------------------------------Title: TREASURER

-----------------------



I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBYCERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF"BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP", FILED IN THISOFFICE ON THE TWENTY-FIRST DAY OF OCTOBER, A.D. 1987, AT 11:30 O'CLOCK A.M.

/s/Edward J. Freel----------------------------------------Edward J. Freel, Secretary of State


DATE:950085732 04-19-95

AMENDED AND RESTATED CERTIFICATE OF LIMITED PARTNERSHIPOF


This Amended and Restated Certificate of Limited Partnership of BordenChemicals and Plastics Operating Limited Partnership (the "Partnership"), datedas of October 16, 1987, has been duly executed and is being filed by theundersigned in accordance with the provisions of 6 Del. C. (S) 17-210, to amend

-------and restate the original Certificate of Limited Partnership of the Partnership,which was filed on August 31, 1987, with the Secretary of State of the State of



Delaware, (the "Certificate"), to form a limited partnership under the DelawareRevised Uniform Limited Partnership Act (6 Del. C. (S) 17-101, et seq.).

------- -- ----

The Certificate is hereby amended and restated in its entirety to readas follows:

1. Name. The name of the limited partnership formed and continued----

hereby is Borden Chemicals and Plastics Operating Limited Partnership.


Partnership in the State of Delaware is c/o The Corporation Trust Company,Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,Delaware 19801.


for service of process on the Partnership in the State of Delaware is TheCorporation Trust Company, Corporation Trust Center, 1209 Orange Street,Wilmington, New Castle County, Delaware 19801.


general partner of the Partnership is: BCP Management, Inc., Highway 73,Geismar, Louisiana 70734.

IN WITNESS WHEREOF, the undersigned general partner has duly executedthis Amended and Restated Certificate of Limited Partnership as of the day andyear first aforesaid.

BCP MANAGEMENT, INC.a Delaware corporation

By: [SIGNATURE ILLEGIBLE]-------------------------------Title: VICE PRESIDENT

-----------------------

-2-

STATE OF DELAWAREPAGE 1


I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBYCERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENTOF "BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP", FILED IN THISOFFICE ON THE EIGHTH DAY OF AUGUST, A.D. 1988, AT 9 O'CLOCK A.M.

/s/Edward J. Freel[SEAL] ----------------------------------------

Edward J. Freel, Secretary of State

2136420 8100 AUTHENTICATION: 7476364

950085732 DATE: 04-19-95

CERTIFICATE OF AMENDMENTTO

CERTIFICATE OF LIMITED PARTNERSHIPOF




It is hereby certified that:

First: The name of the limited partnership, hereinafter called the"(Partnership") is Borden Chemicals and Plastics Operating LimitedPartnership.

Second: Pursuant to the provisions of Section 17-202; Title 6, DelawareCode, the Amendment to the Certificate of Limited Partnership effected bythis Certificate of Amendment is: Change the registered agent from TheCorporation Trust Company to The Prentice-Hall Corporation System, Inc.,and change the registered office of the Partnership in Delaware to 229South State Street, City of Dover 19901, County of Kent.

The Undersigned, a general partner of the Partnership, executes thisCertificate of Amendment on May 31, 1988.

------

[SIGNATURE ILLEGIBLE]-----------------------------------BCP Management, Inc.General Partner

STATE OF DELAWAREPAGE 1


I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBYCERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF"BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP", FILED IN THISOFFICE ON THE FIFTEENTH DAY OF DECEMBER, A.D. 1988, AT 12:45 O'CLOCK P.M.

/s/Edward J. Freel[SEAL] ----------------------------------------


2136420 8100 AUTHENTICATION: 7476363

950085732 DATE: 04-19-95

AMENDED AND RESTATEDCERTIFICATE OF LIMITED PARTNERSHIP

OFBORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP

THIS Amended and Restated Certificate of Limited Partnership of BordenChemicals and Plastics Operating Limited Partnership (the "Partnership"), datedas of August 8, 1988, has been duly executed and is being filed by theundersigned in accordance with the provisions of 6 Del.C. (S) 17-210, to amend

------and restate the original Certificate of Limited Partnership of the Partnership,which was filed on August 31, 1987, with the Secretary of State of the State ofDelaware, as heretofore amended (the "Certificate"), to form a limitedpartnership under the Delaware Revised Uniform Limited Partnership Act (6 Del.C.

------(S) 17-101, et seq.).

-- ---

The Certificate is hereby amended and restated in its entirety to readas follows:

1. Name. The name of the limited partnership formed and continued----

hereby is Borden Chemicals and Plastics Operating Limited Partnership.


Partnership in the State of Delaware is c/o The Prentice-Hall CorporationSystems, Inc., 229 South State Street, Dover, Kent County, Delaware 19901.




for service of process on the Partnership in

-1-

the State of Delaware is The Prentice-Hall Corporation Systems, Inc., 229 SouthState Street, Dover, Kent County, Delaware 19901.


general partner of the Partnership is BCP Management, Inc., a Delawarecorporation, Highway 73, Geismar, Louisiana 70734.

IN WITNESS WHEREOF, the undersigned general partner has duly executedthis Amended and Restated Certificate of Limited Partnership as of the day andyear first aforesaid.

GENERAL PARTNER:

BCP Management, Inc.

By: [SIGNATURE ILLEGIBLE]--------------------------------

TITLE: Secretary-----------------------------

-2-

PAGE 1STATE OF DELAWARE


I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBYCERTIFY THAT "BCP MANAGEMENT, INC." IS DULY INCORPORATED UNDER THE LAWS OF THESTATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCENOT HAVING BEEN CANCELLED OR DISSOLVED SO FAR AS THE RECORDS OF THIS OFFICESHOW AND IS DULY AUTHORIZED TO TRANSACT BUSINESS.

THE FOLLOWING DOCUMENTS HAVE BEEN FILED:

CERTIFICATE OF INCORPORATION, FILED THE SIXTH DAY OF AUGUST, A.D. 1987, AT10 O'CLOCK A.M.

CERTIFICATE OF AMENDMENT, FILED THE SECOND DAY OF NOVEMBER, A.D. 1987, AT10 O'CLOCK A.M.

CERTIFICATE OF CHANGE OF REGISTERED AGENT, REPRESENTED BY "THE CORPORATIONTRUST COMPANY" WITHOUT APPOINTMENT, FILED THE TWENTY-FIRST DAY OF JUNE, A.D.1988, AT 9 O'CLOCK A.M.

AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CERTIFICATES ARE THEONLY CERTIFICATES ON RECORD OF THE AFORESAID CORPORATION.

AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL REPORTS HAVE BEEN FILED TODATE.

AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES

/s/Edward J. Freel-----------------------------------

[SEAL] Edward J. Freel, Secretary of State

2134202 8310 AUTHENTICATION: 7474810

950084545 DATE: 04-18-95





HAVE BEEN PAID TO DATE.

/s/Edward J. Freel[SEAL] -----------------------------------


2134202 8310 AUTHENTICATION:7474810

950084545 DATE:04-18-95



I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBYCERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OFINCORPORATION OF "BCP MANAGEMENT, INC.", FILED IN THIS OFFICE ON THE SIXTH DAYOF AUGUST, A.D. 1987, AT 10 O'CLOCK A.M.

/s/Edward J. Freel[SEAL] -----------------------------------


2134202 8100 AUTHENTICATION:7474495

950083756 DATE: 04-17-95

CERTIFICATE OF INCORPORATIONOF


FIRST: The name of the Corporation is BCP Management, Inc.

SECOND: The address of the Corporation's registered office in theState of Delaware is Corporation Trust Center, 1209 Orange Street, in the Cityof Wilmington, County of New Castle. The name of the Corporation's registeredagent at such address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful actor activity for which corporations may be organized under the GeneralCorporation Law of Delaware.

FOURTH: The total number of shares of all classes of stock which theCorporation shall have authority to issue is 10,000 shares of common stock witha par value of one dollar ($1.00) per share.

FIFTH: The name and mailing address of the incorporator of theCorporation are as follows:

<TABLE><CAPTION>


<S> <C>Steven Sutherland One First National Plaza

Suite 4200



Chicago, Illinois 60603</TABLE>

SIXTH: The name and mailing address of the person who is to serve asdirector until the first annual meeting of stockholders or until his successoris elected and qualified is as follows:

<TABLE><CAPTION>


<S> <C>Lawrence O. Doza c/o Borden, Inc.

277 Park AvenueNew York, New York 10172

</TABLE>

SEVENTH: In furtherance and not in limitation of the powers conferredby statute, the Board of Directors is expressly authorized to make, alter orrepeal the By-Laws of the Corporation, subject to any specific limitation onsuch power provided by any By-Laws adopted by the stockholders.

EIGHTH: Elections of directors need not be by written ballot unlessthe By-Laws of the Corporation so provide.

NINTH: The Corporation is to have perpetual existence.

TENTH: The Corporation reserves the right to amend, alter, change orrepeal any provision contained in this Certificate of Incorporation, in themanner now or hereafter prescribed by statute, and all rights conferred upon thestockholders herein are granted subject to this reservation.

ELEVENTH: A. A director of the Corporation shall not be personallyliable to the Corporation or its stockholders for monetary damages forbreach of fiduciary duty as a director, except for liability (i) for any breachof the director's duty of loyalty to the Corporation or its stockholders, (ii)for acts or omissions not in good faith or which involve intentional misconductor a knowing violation of law, (iii) under Section 174 of the GeneralCorporation Law of the State of Delaware, or (iv) for any transaction from whichthe director derived an improper personal benefit. If the General CorporationLaw of the State of Delaware is amended to authorize corporate action furthereliminating or limiting the personal liability of directors, then theliability of a director of the Corporation shall be eliminated or limited tothe fullest extent permitted by the General Corporation Law of the State ofDelaware, as so amended. Any repeal or modification of this Section A by thestockholders of the Corporation shall not adversely affect any right orprotection of a director of the Corporation existing at the time of such repealor modification.

B. (1) Each person who was or is made a party or is threatened to bemade a party to or is involved in any action, suit or proceeding, whether civil,criminal, administrative or investigative (hereinafter a "proceeding"), byreason of the fact that he or she or a person of whom he or she is the legalrepresentative is or was a director, officer or employee of the Corporation oris or was serving at the request of the Corporation as a director, officer,employee or agent of another corporation or of a partnership, joint venture,trust or other enterprise, including service with respect to employee benefitplans, whether the basis of such proceeding is alleged action in an officialcapacity as a director, officer, employee or agent or in any other capacitywhile serving as a director, officer, employee or agent, shall be indemnifiedand held harmless by the Corporation to the fullest extent authorized by theGeneral Corporation Law of the State of Delaware as the same exists or mayhereafter be amended (but, in the case of any such amendment, only to the extentthat such amendment permits the Corporation to provide broader indemnificationrights than said law permitted the Corporation to provide prior to suchamendment), against all expense, liability and loss (including attorneys' fees,judgments, fines, ERISA excise taxes or penalties and

-2-

amounts paid or to be paid in settlement) reasonably incurred or suffered bysuch person in connection therewith and such indemnification shall continue asto a person who has ceased to be a director, officer, employee or agent andshall inure to the benefit of his or her heirs, executors and administrators;provided, however, that except as provided in paragraph (2) of this Section B-------- -------with respect to proceedings seeking to enforce rights to indemnification, theCorporation shall indemnify any such person seeking indemnification in



connection with a proceeding (or part thereof) initiated by such person only ifsuch proceeding (or part thereof) was authorized by the Board of Directors ofthe Corporation. The right to indemnification conferred in this Section B shallbe a contract right and shall include the right to be paid by the Corporationthe expenses incurred in defending any such proceeding in advance of its finaldisposition; provided, however, that if the General Corporation Law of the State

-------- -------of Delaware requires, the payment of such expenses incurred by a director orofficer in his or her capacity as a director or officer (and not in any othercapacity in which service was or is rendered by such person while a director orofficer, including, without limitation, service to an employee benefit plan) inadvance of the final disposition of a proceeding, shall be made only upondelivery to the Corporation of an undertaking by or on behalf of such directoror officer, to repay all amounts so advanced if it shall ultimately bedetermined that such director or officer is not entitled to be indemnified underthis Section B or otherwise.

(2) If a claim under paragraph (1) of this Section B is not paid infull by the Corporation within thirty days after a written claim has beenreceived by the Corporation, the claimant may at any time thereafter bring suitagainst the Corporation to recover the unpaid amount of the Claim and, ifsuccessful in whole or in part, the claimant shall be entitled to be paid alsothe expense of prosecuting such claim. It shall be a defense to any such action(other than an action brought to enforce a claim for expenses incurred indefending any proceeding in advance of its final disposition where the requiredundertaking, if any is required, has been tendered to the Corporation) that theclaimant has not met the standards of conduct which make it permissible underthe General Corporation Law of the State of Delaware for the Corporation toindemnify the claimant for the amount claimed, but the burden of proving suchdefense shall be on the Corporation. Neither the failure of the Corporation(including its Board of Directors, independent legal counsel or stockholders) tohave made a determination prior to the commencement of such action thatindemnification of the claimant is proper in the circumstances because he or shehas met the applicable standard of conduct set forth in the General CorporationLaw of the State of Delaware, nor an actual determination by the Corporation(including its Board of

-3-

Directors, independent legal counsel or stockholders) that the claimant has notmet such applicable standard of conduct, shall be a defense to the action orcreate a presumption that the claimant has not met the applicable standard ofconduct.

(3) The right to indemnification and the payment of expenses incurredin defending a proceeding in advance of its final disposition conferred in thisSection B shall not be exclusive of any other right which any person may have orhereafter acquire under any statute, provision of the Certificate ofIncorporation, By-Law, agreement, vote of stockholders or disinteresteddirectors or otherwise.

(4) The Corporation may maintain insurance, at its expense, toprotect itself and any director, officer, employee or agent of the Corporation,or another corporation, partnership, joint venture, trust or other enterpriseagainst any expense, liability or loss, whether or not the Corporation wouldhave the power to indemnify such person against such expense, liability or lossunder the General Corporation Law of the State of Delaware.

(5) The Corporation may, to the extent authorized from time to timeby the Board of Directors, grant rights to indemnification, and rights to bepaid by the Corporation the expenses incurred in defending any proceeding inadvance of its final disposition, to any agent of the Corporation to the fullestextent of the provisions of this Section B with respect to the indemnificationand advancement of expenses of directors, officers and employees of theCorporation.

THE UNDERSIGNED, being the incorporator hereinbefore named, for thepurpose of forming a corporation pursuant to the General Corporation Law of theState of Delaware, makes this Certificate, herby declaring and certifying thatthe facts herein stated are true, and accordingly has hereunto set his hand this5th day of August, 1987.---

/s/ Steven Sutherland-----------------------------Steven Sutherland

-4-



State of DelawarePAGE 1

OFFICE OF THE SECRETARY OF STATE

--------------------------------

I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBYCERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OFAMENDMENT OF "BCP MANAGEMENT, INC.", FILED IN THIS OFFICE ON THE SECOND DAY OFNOVEMBER, A.D. 1987, AT 10 0' CLOCK A.M.

[SEAL APPEARS HERE] /s/ Edward J. Freel----------------------------------------Edward J. Freel, Secretary of State


DATE:950083756 04-17-95

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

OF


BCP Management, Inc., a corporation organized and existing under andby virtue of the General Corporation Law of the State of Delaware ("theCorporation"), DOES HEREBY CERTIFY:

FIRST: That the directors of the Corporation, by written consent datedOctober 2, 1987, filed with the minutes of the Corporation, adopted a resolutionproposing and declaring advisable the following amendment to the Certificate ofIncorporation of the Corporation and directing that such amendment be submittedto the sole stockholder of the Corporation for its approval in accordance withSection 242 of the General Corporation Law of the State of Delaware;

RESOLVED, that the Board of Directors of the Corporation declares itadvisable that the Certificate of Incorporation of the Corporation beamended by changing Article THIRD thereof so that, as amended, saidArticle shall be and read in its entirety as follows:

THIRD: The purposes of the Corporation are to (i) act as the generalpartner of Borden Chemicals and Plastics Limited Partnership, a DelawareLimited Partnership, and Borden Chemicals and Plastics Operating LimitedPartnership, a Delaware limited partnership, and any successors to such

limited partnerships, (ii) conduct, direct and exercise full control overall activities of such limited partnerships and successors and (iii) doanything necessary or incidental to the foregoing.

RESOLVED FURTHER, that such proposed amendment be submitted to thesole stockholder of the Corporation for its approval.

SECOND: That in lieu of a meeting and vote of the sole stockholder,the sole stockholder has given its written consent to said amendment inaccordance with the provisions of Section 228 of the General Corporation Lawof the State of Delaware.

THIRD: That the aforesaid amendment was duly adopted in accordance



with the applicable provisions of Sections 242 and 228 of the GeneralCorporation Law of the State of Delaware.

IN WITNESS WHEREOF, said BCP Management, Inc. has caused thiscertificate to be signed by A.S. D'Amato, its Chairman of the Board, Presidentand Chief Executive Officer,

-2-

and attested by Lawrence L. Dieker, its Secretary, this 6th day of October,---

1987.

BCP Management, Inc.

By: /s/ A.S. D'Amato-------------------------A. S. D'AmatoChairman of the Board,President and ChiefExecutive Officer

ATTEST:

By: /s/ Lawrence L. Dieker-------------------------Lawrence L. DiekerSecretary

-3-

State of DelawarePAGE 1

OFFICE OF THE SECRETARY OF STATE

________________________________

I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBYCERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF CHANGE OFREGISTERED AGENT OF "BCP MANAGEMENT, INC.", FILED IN THIS OFFICE ON THETWENTY-FIRST DAY OF JUNE, A.D. 1988, AT 9 O'CLOCK A.M.

/s/ Edward J. Freel[SEAL APPEARS HERE] ----------------------------------------



DATE:950083756 04-17-95

CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED OFFICE

AND OF REGISTERED AGENT

It is hereby certified that:

1. The name of the corporation (hereinafter called the"corporation") is

- BCP Management, Inc.

2. The registered office of the corporation within the State ofDelaware is hereby changed to 229 South State Street, City of Dover 19901,



County of Kent.

3. The registered agent of the corporation within the State ofDelaware is hereby changed to The Prentice-Hall Corporation System, Inc.,the business office of which is identical with the registered office of thecorporation as hereby changed.

4. The corporation has authorized the changes hereinbefore setforth by resolution of its Board of Directors.

Signed on June 1, 1988.

[SIGNATURE ILLEGIBLE]-------------------------------------

President

Attest:

/s/ [SIGNATURE ILLEGIBLE]------------------------------

Secretary

UNITED STATES OF AMERICA

STATE OF LOUISIANA

FOX MCKEITHENSECRETARY OF STATE

AS SECRETARY OF STATE, OF THE STATE OF LOUISIANA, I DO HEREBY CERTIFY THAT

BORDEN CHEMICALS AND PLASTICS OPERATINGLIMITED PARTNERSHIP

A partnership whose principal place of business is Wilmington, Delaware,

Filed partnership documents and registered to do business in this State onNovember 19, 1987.

IN TESTIMONY WHEREOF, I HAVE HEREUNTO SETMY HAND AND CAUSED THE SEAL OF MY OFFICETO BE AFFIXED AT THE CITY OF BATON ROUGE ON,

April 25, 1995 [SEAL APPEARS HERE]

/s/ Fox McKeithen

DWI

SECRETARY OF STATE

UNITED STATES OF AMERICA

STATE OF LOUISIANA

FOX MCKEITHENSECRETARY OF STATE

AS SECRETARY OF STATE, OF THE STATE OF LOUISIANA, I DO HEREBY CERTIFY THATBCP MANAGEMENT, INC.

A Delaware corporation domiciled at Wilmington,

Filed charter and qualified to do business in this State on November 19, 1987,



I further certify that the records of this Office indicate the corporation haspaid all fees due the Secretary of State, and so far as the Office of theSecretary of State is concerned is in good standing and is authorized to dobusiness in this State.

I further certify that this Certificate is not intended to reflect the financialcondition of this corporation since this information is not available from therecords of this Office.Qualification Documents: November 19, 1987R. S. 12:308 June 23, 1988R. S. 12:308 October 8, 1991

IN TESTIMONY WHEREOF, I HAVE HEREUNTO SETMY HAND AND CAUSED THE SEAL OF MY OFFICETO BE AFFIXED AT THE CITY OF BATON ROUGE ON,

April 25, 1995 [SEAL APPEARS HERE]

/s/ Fox McKeithen

DWI

SECRETARY OF STATE

File Number S000458-----------

STATE OF ILLINOIS

OFFICE OFTHE SECRETARY OF STATE

TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:

I, George H, Ryan, Secretary of State of the State of Illinois,do hereby certify that

BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, ADELAWARE LIMITED PARTNERSHIP, HAVING COMPLIED WITH THE PROVISIONSOF THE REVISED UNIFORM LIMITED PARTNERSHIP ACT OF THE ILLINOISSTATE STATUTES ON 11/09/1987 IS AUTHORIZED AND EXISTS IN ILLINOISAS A LIMITED PARTNERSHIP.*****************************************

[SEAL APPEARS HERE] IN TESTIMONY WHEREOF, I hereto setmy hand and cause to be affixed the Great Sealof the State of Illinois this 25th

---------------------day of APRIL A.D., 1995.

---------------- ---

/s/ George H. Ryan---------------------------------------------------

Secretary of State

File Number 5486-225-3---------------

STATE OF ILLINOIS

OFFICE OFTHE SECRETARY OF STATE



TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:

I, George H. Ryan, Secretary of State of the State of Illinois,do hereby certify that

BCP MANAGEMENT, INC., INCORPORATED INTHE STATE OF DELAWARE AND LICENSED TO TRANSACT BUSINESS IN THISSTATE ON NOVEMBER 9, 1987, APPEARS TO HAVE COMPLIED WITH ALL THEPROVISIONS OF THE BUSINESS CORPORATION ACT OF THIS STATE RELATINGTO THE FILING OF ANNUAL REPORTS AND PAYMENT OF FRANCHISE TAXES,AND IS AT THIS TIME A FOREIGN CORPORATION IN GOOD STANDING ANDAUTHORIZED TO TRANSACT BUSINESS IN THE STATE OF ILLINOIS**********

[SEAL APPEARS HERE] IN TESTIMONY WHEREOF, I hereto setmy hand and cause to be affixed the Great Seal ofthe State of Illinois this 25TH

-------------------------day of APRIL A.D., 1995.

----------------- --

/s/ George H. Ryan---------------------------------------------------

SECRETARY OF STATE

EXPEDITEDSECRETARY OF STATE

APR 25 1995

EXP. FEES 10.00-------

COPY.CERT. 5.00------

May 1, 1995-

Wachovia Bank and Trust Company, N.A.P.O. Box 3099301 North Main StreetWinston-Salem, North Carolina 27102Attention: National Noteteller

First Wachovia Corporation2 Peachtree Street, N.W.Atlanta, Georgia 30383Attention: Robert Marcus, MC370

Re: $20,000,000 Revolving Lineof Credit Agreement (the "Old Agreement")------------------------------------------


Effective simultaneously with the closing of the $100,000,000 CreditAgreement dated as of May __, 1995 among Borden Chemicals and Plastics OperatingLimited Partnership (the "Borrower"), the banks and other financial institutionslisted on the signature pages thereof under the caption "Banks", and CreditSuisse, individually as a Bank and as agent for the other Banks, the Borrowerhereby terminates and Old Agreement.

By your signature set forth below, you acknowledge and agree to suchtermination and waive the thirty (30) days' written notice requirement set forth



in the Old Agreement.

This letter may be executed in counterparts, each of which when soexecuted and delivered shall be deemed an original, but all such counterpartstogether shall constitute but one and the same instrument.

Very Truly Yours,


By: BCP MANAGEMENT, INC., asGeneral Partner

By:___________________________Name:Title:

Acknowledged and Agreed to:

WACHOVIA BANK AND TRUST COMPANY, N.A.

By: /s/ J. Peter Payton-----------------------------Name: J. Peter PaytonTitle: SUP/GE

Dec 31, 1995 quick coverage calc--------------------------------

568.5 (Assets)( 9.0) finance cost deferred(144.7) Liab+ 40.0 debt(1,655)( 5.677)---------268.000

