<PAGE>

                                                                    EXHIBIT 10.8


                                  GROUND LEASE
                                  ------------


     THIS GROUND LEASE ("Agreement") is entered into effective as of the 28th
day of July, 2000, by and between BORDEN CHEMICAL, INC., a Delaware corporation,
represented herein by its duly authorized officer, whose permanent mailing
address is declared to be 180 East Broad Street, Columbus, Ohio 43215, its
successors and assigns ("Landlord"), and BORDEN CHEMICALS AND PLASTICS OPERATING
LIMITED PARTNERSHIP, a Delaware limited partnership, represented herein by its
duly authorized general partner, BCP Management, Inc., a Delaware corporation,
represented herein by its duly authorized officer, and whose mailing address is
Highways 73 and 30, Geismar, Louisiana 70734 ("Tenant").



                                   ARTICLE 1
                                   ---------

                               LEASE OF PROPERTY
                               -----------------

     Section 1.01.  Premises Leased.  Landlord, in consideration of the rents,
                    ---------------
covenants, agreements, and conditions herein set forth which Tenant hereby
agrees shall be paid, kept, and performed, does hereby lease to Tenant, and
Tenant does hereby rent and lease from Landlord, that certain tract or parcel
of land ("Land") situated in Ascension Parish, Louisiana, as more fully shown on

Exhibit "A" attached to this Agreement, subject to such servitudes, rights-of-
-----------
way, encumbrances and restrictions set forth on Exhibit "B" attached hereto
                                                -----------
("Permitted Exceptions").

     Section 1.02.  Premises Defined.  All of the Land, rights, and interests
                    ----------------
leased to Tenant pursuant to Section 1.01 are herein collectively referred to as
the "Premises".

     Section 1.03.  Habendum.  TO HAVE AND TO HOLD its leasehold estate in the
                    --------
Premises, together with all and singular the rights and privileges belonging
thereto, in quiet enjoyment unto Tenant, its successors and assigns upon the
terms and conditions herein set forth, for the term set forth in Article 2,
subject to termination as herein provided.

     Section 1.04.  Servitudes.  Landlord reserves the right to enter upon the
                    ----------
Premises and to cross the Premises with servitudes, rights-of-ways and/or
easements for drainage, utilities, pipelines, cables, conduits, access or other
purposes required in connection with the operation of its adjacent plants, as
long as the exercise of such right does not interfere with Tenant's use of the
Premises.
<PAGE>

                                   ARTICLE 2
                                   ---------

                                 TERM OF LEASE
                                 -------------

     Section 2.01.  Term.  Unless sooner terminated as herein provided, this
                    ----
Agreement shall be and continue in full force and effect for a term commencing
on the 28th day of July, 2000 (the "Commencement Date"), and ending at midnight,
C.S.T., on the 31st day of December, 2000 ("Term").

     Section 2.02.  Extension of Term.  In the event Landlord fails to exercise
                    -----------------
its option ("Option") to purchase the Improvements in accordance with the
Conveyance and Transfer Agreement dated as of June 27, 2000 between Landlord and
Tenant ("Conveyance"), the Term shall be automatically extended for an
additional period of up to ten (10) years, or until Tenant ceases the operation
of the Improvements for production of methanol for a period of at least twelve
(12) consecutive months, or  advises Landlord that it has permanently ceased
operation of the Improvements for the production of methanol, whichever first
occurs ("Extended Term).



                                   ARTICLE 3
                                   ---------

                                      RENT
                                      ----

     Section 3.01.  Rent.  The rent for this Agreement shall be (i) the
                    ----
consideration set forth in the Conveyance; and (ii) the aggregate funds expended
annually by Tenant to perform Tenant's agreement hereunder to pay all operating
and other expenses incurred by Landlord or Tenant as the owner or operator of
the Premises during the Term.  Landlord and Tenant acknowledge and consent to
the sufficiency of the consideration as equal to the fair rental value of the
Premises.

     Whenever the term "Rent", "Rental", "rent" or "rental" is used in this
Agreement, it shall refer to the consideration for this Agreement described in
this Article 3, and, where applicable, to any and all other consideration, fees,
costs, charges, expenses, additional rent, and any other sums of money to be
paid by Tenant to or on behalf of Landlord hereunder.

     Section 3.02.  Payment of Monies.  All Rental and other sums due and
                    -----------------
payable to Landlord by Tenant hereunder shall be payable to Landlord at the
original or changed address of Landlord as set forth in Section 15.01 or to such
other persons or at such other addresses as Landlord may designate from time to
time in writing to Tenant.  All Rent shall be paid by Tenant in lawful money of
the United States of America without notice or demand, except as otherwise
provided for herein.

     Section 3.03.  Net Lease. This Agreement is a net lease, and shall be
                    ---------
absolutely net to Landlord, free of any charges, assessments, impositions or
deductions of any kind and without abatement, deduction, reduction, diminution
or set off except as expressly set forth herein to the contrary.  Accordingly,
all costs, expenses, and obligations of every kind or nature whatsoever,
relating to the Premises, or any

                                       2
<PAGE>

improvements thereon whether now owned by Tenant or hereafter constructed,
owned, operated, restored, replaced or repaired by Tenant (collectively, the
"Improvements"), which may arise or become due during the Term shall be paid by
Tenant, and Landlord shall be and is hereby indemnified and held harmless by
Tenant from and against payment of any and all such expenses, except as provided
in the Conveyance.



                                   ARTICLE 4
                                   ---------

                           IMPOSITIONS AND UTILITIES
                           -------------------------

     Section 4.01.  Impositions Defined.  The term "Impositions" shall mean all
                    -------------------
taxes, assessments, use and occupancy taxes, water and sewer charges, rates and
rents, charges for public utilities, excises, levies, license and permit fees,
and all other charges by any public authority of any kind and nature whatsoever,
which shall or may during the Term be assessed, levied, charged, confirmed or
imposed by any public authority upon or accrued or which may become a lien on
(i) the Premises, the Improvements, and Tenant's furniture, fixtures, equipment
and other personal property located in, on or at the Premises; (ii) such
franchises, licenses, and permits as may be pertinent to the use of the
Premises; or (iii) any documents to which the Tenant is a party creating or
transferring an interest or estate in the Premises.  Impositions shall not
include any income tax, capital levy, estate, succession, inheritance or
transfer taxes, or similar tax of Landlord; or any income, profits, or revenue
tax, assessment, or charge imposed upon any benefit received by Landlord under
this Agreement by any Governmental Entity (as hereinafter defined).  If at any
time during the Term, the present method of taxation shall be so changed that
the whole or any part of the Impositions now levied, assessed or imposed on the
Land shall be discontinued and in whole or partial substitution therefor, taxes,
assessments, levies, impositions, or charges shall be levied, assessed, and/or
imposed wholly or partially as a capital levy or otherwise on the rents received
from the Land or the rents reserved herein or any part thereof, then such
substitute taxes, assessments, levies, impositions, or charges, to the extent so
levied, assessed, or imposed, shall be deemed to be included within the term
"Impositions".

     Section 4.02.  Tenant's Obligation.  During the Term, Tenant will pay
                    -------------------
before delinquency, all Impositions.  Impositions that are payable by Tenant for
the tax year in which this Agreement commences as well as during the year in
which the Term ends shall be apportioned so that Tenant shall pay its
proportionate share of the Impositions for such periods of time.  Tenant shall
deliver to Landlord evidence of due payment of all Impositions Tenant is
obligated to pay hereunder, promptly after making such payment.

     Section 4.03.  Tax Contest.  Tenant may, in good faith and at its sole cost
                    -----------
and expense by appropriate proceedings, contest the validity or amount of any
Imposition, in which event the payment thereof may be deferred during the
pendency of such contest, if diligently prosecuted, and if such contest or
deferral in payment does not place the Premises in imminent danger of being
seized or forfeited.

                                       3
<PAGE>

     Section 4.04.  Right to Perform Tenant's Obligation as to Impositions.  If
                    ------------------------------------------------------
Tenant shall fail to timely pay any Imposition for which it is responsible
hereunder before such Impositions become delinquent or fails to timely notify
Landlord of its intention to contest the same, or fails to pay contested
Impositions following a final determination of such contest, or places the
Premises in imminent danger of being seized or forfeited, Landlord may, at its
election (but without obligation), pay such Imposition with any interest and
penalties due thereon, and the amount so paid shall be repayable by Tenant, on
demand, together with interest thereon at the prime rate of interest described
as the base rate on corporate loans at large U.S. money center commercial banks
as published by the Wall Street Journal or any successor publication, not to
exceed the maximum contract rate of interest permitted by applicable law
("Landlord's Prime Rate") from the date of such payment until repaid.

     Section 4.05.  Utilities.  Except as otherwise provided for in the
                    ---------
Conveyance, Tenant shall pay and be solely responsible for all deposits and
charges for gas, electricity, water, energy, light, heat, air conditioning,
power, telephone and other communication services, garbage or other trash
removal and disposal, sewerage or effluent removal or disposal, water and all
other utilities and similar services rendered or supplied to, or used or
consumed on the Premises, and all water rents, deposits, sewer service charges,
or other similar charges levied or charged against, or in connection with, the
Premises.



                                   ARTICLE 5
                                   ---------

                          IMPROVEMENTS AND ALTERATIONS
                          ----------------------------

     Section 5.01.  Ownership of the Improvements.  All of the Improvements on
                    -----------------------------
the Land are, shall be and remain the property of Tenant at all times during the
Term or sooner termination of this Agreement.  Upon the expiration or sooner
termination of this Agreement, in the event Landlord has not elected to exercise
its option to purchase the Improvements in accordance with the terms of the
Conveyance, Tenant shall have the obligation to remove the Improvements to slab
level, at its sole cost and expense and in a good and workmanlike manner and in
accordance with applicable laws and regulations, within two (2) years of the
expiration or sooner termination of this Agreement; provided however, that
Tenant's obligation to remove Improvements shall be limited as follows:  (i)
Tenant shall have no obligation to remove slabs or foundations except to ground
level, or roadways, paving or curbs; (ii) Tenant shall have no obligation to
remove the cooling tower located on the Premises, but will remove all asbestos
on such cooling tower; (iii) Tenant shall not be required to remove existing
underground utility lines, consisting of lines for cooling water, fire water and
electrical power; (iv) Tenant shall not be required to remove piperacks,
pipelines or other equipment in continued operation under the terms of easements
or servitudes; and (v) Tenant shall not remove the control room located on the
Premises.  Tenant shall, to the extent required by applicable Law (as defined
below), remove all asbestos from the Premises.  This obligation shall be a
continuing obligation and shall survive the expiration of the Term or the
termination of this Agreement.  The Improvements shall be

                                       4
<PAGE>

maintained free from liens of materialmen, contractors, subcontractors,
laborers, and other mechanic's liens (collectively, the "Mechanic's Liens"). In
the event a Mechanic's Lien is filed against the Premises as a result of the
alteration, maintenance and repair of the Improvements, such Lien will be paid
or bonded over by Tenant within thirty (30) days of notice to Tenant of the
filing of such Lien. Nothing contained herein shall limit or impede Tenant's
right to contest by appropriate legal proceedings any claims arising out of the
construction, repair, or maintenance of improvements or any Mechanic's Liens
filed or asserted against the Premises or the improvements.

     Section 5.02.  Right to Alter the Improvements.  Tenant shall have the
                    --------------------------------
right to construct, add to, alter, change, modify, or reconstruct the
Improvements. Tenant shall fully and completely indemnify Landlord against any
Mechanic's Liens in connection with the making of such alterations and changes,
and shall pay all costs, expenses, and charges thereof.  All alterations and
repairs shall (i) be at the sole cost and expense of Tenant; (ii) be constructed
in a good and workmanlike manner; and (iii) be in compliance with all applicable
Laws.



                                   ARTICLE 6
                                   ---------

                         USE, MAINTENANCE, AND REPAIRS
                         -----------------------------

     Section 6.01.  Use.
                    ---

     (a) Subject to the terms and provisions hereof, Tenant shall have the right
to use and enjoy the Premises for the continued operation of existing methanol
plant located on the Land ("Permitted Use"), in compliance with all applicable
Law.   Tenant may, in good faith and by appropriate proceedings, and at its sole
cost and expense, contest such law, ordinance, rule or regulation applicable to
the Permitted Use, and the failure to strictly abide by such law, ordinance,
rule or regulation during the pendency of such contest, if diligently
prosecuted, shall not constitute a default hereunder; provided, however, that
such contest does not place the Premises in imminent danger of being seized or
forfeited, or create an unreasonable risk of loss to Landlord.

     (b) Tenant shall not use or occupy, nor permit the Premises to be used or
occupied, nor do or permit anything to be done in or on the Premises in a manner
which would constitute a public or private nuisance, or which would violate any
restrictive covenants applicable to the Premises, laws, orders, acts, rules,
regulations, ordinances, or requirements of any governmental authority having
jurisdiction over the Premises, and Tenant shall to the extent permitted by
applicable Law, indemnify and hold harmless Landlord from and against all fines,
penalties, claim or claims for damages of every kind and nature arising out of
any failure to comply with any such restrictive covenants, laws, orders, acts,
rules, regulations, ordinances, or requirements.

     Section 6.02.  Maintenance and Repairs.
                    -----------------------

     (a) At all times during the Term, Tenant shall take good care of the
Premises, promptly make all necessary repairs thereto (which, subject to Section
5.01, shall

                                       5
<PAGE>

include any maintenance, restoration or repair required by any applicable
Governmental Entities (as defined below)).

     (b) Except as provided in the Conveyance, Landlord shall have no obligation
to maintain or repair the Premises during the Term.



                                   ARTICLE 7
                                   ---------

                            INSURANCE AND INDEMNITY
                            -----------------------

     Section 7.01.  Comprehensive General Liability Insurance.  Tenant shall at
                    -----------------------------------------
all times, at its sole cost and expense, procure and maintain comprehensive
general liability and property damage insurance with respect to the Premises.
Such insurance shall be in an amount of not less than $5,000,000 per occurrence,
and may be issued as a combined, single limit (bodily injury and property
damage) policy, covering bodily injury, personal injury, including death and
property damage.

     Section 7.02.  Casualty Insurance.  Tenant shall also procure and maintain
                    ------------------
such casualty insurance as it desires with respect to any Improvements upon the
Premises.  Landlord shall have no responsibility for providing casualty
insurance with respect to the Improvements.

     Section 7.03  Workers' Compensation Insurance. Tenant shall at all times
                   -------------------------------
procure and maintain workers' compensation insurance in compliance with the laws
of the State of Louisiana and employer's liability insurance with a minimum
limit of $500,000.

     Section 7.04.  Policy Form and Insurer.
                    -----------------------

     (a) Notwithstanding anything to the contrary contained herein, Tenant may
self-insure, obtain commercial coverage, or a combination thereof in order to
comply with the insurance required to be maintained under this Section 7.  All
commercially written insurance provided in compliance with the requirements in
this Section and all renewals of such insurance shall be issued by companies
authorized to transact business in the State of Louisiana.  All insurance
policies provided by Tenant shall expressly provide that the policies shall not
be canceled or altered without 30 days' prior written notice to Landlord; and
shall, to the extent obtainable, provide that no act or omission of Landlord or
Tenant which would otherwise result in forfeiture or reduction of the insurance
will affect or limit the obligation of the insurance company to pay the amount
of any loss sustained.

     (b) Original or copies of original policies (together with copies of the
endorsements or certificates of insurance) will be delivered by the Tenant to
the Landlord prior to the Tenant's occupancy of the Premises and from time to
time at least 30 days prior to the expiration of the term of each policy.

                                       6
<PAGE>

     Section 7.05.  Indemnification.  Tenant will indemnify Landlord, its
                    ---------------
agents, shareholders, officers, members, partners, employees, and servants, and
hold them harmless from and against any and all claims, actions, damages,
liability, and expense in connection with loss of life, personal injury, damage
to property, cost, outlay, or expense arising from or out of any occurrence in,
upon, or at the Premises, or the occupancy or use by Tenant of the Premises or
any part thereof, or occasioned wholly or in part by employees, servants,
lessees, or concessionaires of Tenant or any person for whom Tenant is
responsible, unless the same is occasioned by the willful misconduct or gross
negligence of Landlord, its employees, agents and contractors.

     Section 7.06.  Subrogation.  Tenant agrees to release and waive, and hereby
                    -----------
releases and waives, all rights of subrogation against Landlord possessed by its
insurers to the extent it is permitted under its insurance policies.



                                   ARTICLE 8
                                   ---------

                                 CASUALTY LOSS
                                 -------------

     In the event the Premises is wholly or partially damaged or destroyed by
fire, the extended coverage perils, flood, storm, tornado, or other casualty,
Tenant shall give immediate notice to Landlord, and Tenant may but shall not be
obligated, without cost, risk, expense or liability to Landlord, to rebuild,
repair and/or restore the Improvements on the Premises provided, however
Landlord shall never be required to expend any funds in connection therewith
except to the extent such damage was caused in whole or in part by the gross
negligence or willful misconduct of Landlord, its agents, employees or any other
entity acting by or through Landlord in which case Landlord shall pay such
repair and restoration costs.  In the event Tenant elects not to rebuild, repair
or restore the Improvements, Tenant shall notify Landlord of its election within
thirty (30) days following the casualty, and this Agreement shall terminate.
Provided, however, Tenant shall be obligated to remove the Improvements in
accordance with its obligations under Section 5.01 of this Agreement.



                                   ARTICLE 9
                                   ---------

                                  CONDEMNATION
                                  ------------

     Section 9.01.  Total Taking.  If during the Term all or substantially all
                    ------------
of the Premises shall be taken in any condemnation or eminent domain proceeding,
this Agreement shall thereupon terminate.  In such event the obligation to pay
any monies hereunder and the Tenant's right of possession shall terminate on the
date of such taking; provided, however, Tenant shall pay to Landlord any rent or
other amounts due and owing under this Agreement at the time of the taking.

     Section 9.02.  Partial Taking.  If only a part of the Premises be taken in
                    --------------
any condemnation or eminent domain proceeding, Tenant at its own cost, risk,
expense and liability, and without cost, risk, expense or liability to Landlord
shall have the right but

                                       7
<PAGE>

not the obligation to make such repairs and alterations to that part of the
Premises as may be necessary to restore that part of the Premises not taken to a
condition suitable for the uses and purposes for which the Premises are being
utilized by Tenant. If the Premises would, in the Tenant's reasonable business
judgment remain materially unsuitable for Tenant's Permitted Use after proposed
restoration under this Section, Tenant hereto shall have the option to terminate
this Agreement as of the date of ouster by giving written notice of termination
within fifteen (15) days after Tenant has been ousted from possession of such
part, whereupon this Agreement shall be of no further force or effect. Tenant
shall remove the Improvements and restore the Premises in accordance with the
provisions of Section 5.01 of this Agreement.

     Section 9.03.  Condemnation Award.  In the event of a total condemnation of
                    ------------------
the Premises, or a partial taking of the Premises which render the Premises
materially unsuitable for Tenant's Permitted Use ("Taking"), all damages awarded
in connection with the Taking of the Improvements or the Premises ("Award")
shall be allocated by Landlord and Tenant as follows:

     Landlord shall be entitled to recover all damages awarded as compensation
for the diminution in value of its fee title to the Premises.  Tenant shall be
entitled to recovery of all damages awarded as compensation for the diminution
of value of its leasehold interest in the Premises.  Provided, however, Landlord
and Tenant shall have the right to claim such compensation as may be separately
awarded or recoverable by Tenant or Landlord in their own right on account of
any and all damages to their business by reason of the condemnation and for and
on account of any cost or loss which they might be put in removing its
furniture, fixtures, equipment and leasehold improvements.



                                   ARTICLE 10
                                   ----------

                             CONDITION OF PREMISES:
                             ----------------------

     Section 10.01.  Tenant accepts the Premises "as is", in their present state
and without any representation or warranty by Landlord whatever as to the
condition or state of repair of the Premises or the fitness of the same for
Tenant's purposes or for any purpose whatsoever.  Landlord shall not be
responsible for any latent vice or defect or change of condition in the
Premises.

     Section 10.02.  Landlord makes no covenant, representation or warranty as
to the suitability of the Premises for any purpose whatsoever or as to the
physical condition thereof.  Tenant acknowledges that it has inspected the
Premises, observed its physical characteristics and existing conditions and has
had the opportunity to conduct such investigation and study on and of the
Premises as it deems necessary for its intended use and occupancy under this
Agreement, and hereby waives any and all objections to or complaints about
physical characteristics and existing conditions of the Premises.  Tenant
further acknowledges and agrees that the Premises are to be leased to, and
accepted by Tenant in its present condition "AS IS" and with all faults.

                                       8
<PAGE>

     Section 10.03.  For the purposes of this Agreement, the following terms and
conditions shall have the meanings ascribed thereto:

          (a) "Environmental Activity" or "Environmental Activities" means any
     storage, presence, existence, release, threatened release, use, generation,
     abatement, removal, disposal, handling or transportation of any Materials
     of Environmental Concern in, to, on, under, from or about the Premises.

          (b) "Environmental Laws" means any and all applicable Laws (as defined
     below) regulating, relating to or imposing liability or standards of
     conduct concerning protection of the environment or of human health.

          (c) "Governmental Entity" or "Governmental Entities" means any
     domestic government, or agency, or bureau, board, commission, court, police
     jury, department, official, political subdivision, tribunal other
     instrumentality thereof, whether federal state, parish of local.

          (d) "Laws" means collectively, any constitutional provision, statute,
     law (including without limitation common law), code, rule, regulation,
     ordinance, permit, decree, injunction, judgment, order, ruling,
     determination, finding, writ or other legally enforceable requirement of
     any Governmental Entity.

          (e) "Materials of Environmental Concern" means any gasoline or
     petroleum (including crude oil or any fraction thereof) or petroleum
     products, polychlorinated biphenyls, asbestos, pollutants, contaminants,
     radioactivity, and any other substances of any kind, that are regulated
     pursuant to or could give rise to liability under any applicable
     Environmental Law.

     Section 10.04.  Tenant shall, at Tenant's sole cost and expense, comply
with and maintain the Premises in compliance with all applicable Laws.

     Section 10.05.  In the event Landlord discovers any breaches under Section
10 of this Agreement or any violations of applicable Laws by Tenant, Landlord
shall give Tenant written notice of such violation, and Tenant shall have a
reasonable period of time not to exceed forty-five (45) days in which to cure
such violation, unless the violation is of such a nature that it cannot be
reasonably cured within such 45-day period, in which event no default shall
occur as long as Tenant commences to cure the violation within the 45-day
period, and thereafter, in good faith, diligently and with continuity prosecutes
to completion the curing of such violation.  In the event Tenant fails to
commence to cure such violation within the prescribed time period, Landlord
shall be entitled to all rights and remedies listed in Section 11.02 hereof.

     Section 10.06.  Tenant shall promptly notify Landlord as to any liens
threatened or attached against the Premises pursuant to any Laws.  In the event
that such a lien is filed against the Premises, then Tenant shall provide
indemnification reasonably satisfactory to Landlord.

                                       9
<PAGE>

     Section 10.07.  Tenant's Environmental Indemnity.  Tenant agrees to
protect, indemnify, defend, reimburse and hold harmless (i) Landlord; (ii) any
other person who acquires an interest in this Agreement whether by an assignment
of Landlord's interest in this Agreement or otherwise; (iii) any other person
who acquires all or a portion of the Premises at a foreclosure sale or by a
conveyance in lieu of foreclosure or otherwise through the exercise of the
rights and remedies of Landlord under this Agreement; and (iv) the principals,
members, directors, officers, partners, shareholders, employees, successors,
assigns, and invitees of such persons listed in Section 10.07(i) through
10.07(iii) above (any and all of which are referred to in this Section 10.07 as
"Indemnitee") from and against any and all loss, cost, penalty, fine, liability,
damage, or expenses (including without limitation attorney's fees, court costs
and litigation expenses), arising out of or resulting from or in any way
connected with (a) the presence of any Materials of Environmental Concern in,
at, on, under or about the Premises caused by Tenant's use of the Premises after
the date hereof; (b) any Environmental Activity conducted after the date hereof
by Tenant or by any other party for whom Tenant is legally responsible on the
Premises; (c) any violation of any Environmental Laws pertaining to the
condition of the Premises or any Environmental Activity thereon to the extent
caused by Tenant or caused by anyone else duly acting on behalf of Tenant or for
whom Tenant is responsible; or (d) any valid or meritorious claim, demand or
cause of action, brought or served against any Indemnitee which directly or
indirectly relates to, arises from or out of, or is based upon any of the
matters described in this Article 10, which are caused by Tenant's use of the
Premises.  This obligation shall survive the expiration or earlier termination
of this Agreement, the discharge of all other obligations owed by the parties to
each other, and transfer of title to the Premises whether by sale, exchange,
foreclosure, deed in lieu of foreclosure or otherwise.

     Section 10.08.  The provisions of this Section 10 shall be binding upon
Landlord and Tenant and inure to the benefit of Landlord and Tenant, and their
respective heirs, executors, administrators, legal representatives, successors
and assigns.

     Section 10.09.  The provisions of the Section 10 are in addition to and not
in substitution for or in limitation of the covenants and agreements of Tenant
in the separate Environmental Indemnity Agreement between the parties bearing
the same date as the Agreement.  Notwithstanding the foregoing, if the Extended
Term ends on or before December 31, 2003, in the event indemnification is sought
under this Agreement for a matter that is also covered by the Environmental
Indemnity Agreement, the Environmental Indemnity Agreement shall control;
provided, however, that Seller thereunder shall be deemed to be responsible for
indemnification pursuant to Section 1 thereof for matters occurring through the
end of the Term (or Extended Term, whichever shall then be applicable hereunder)
and the "Operating Period" referred to in Section 1 thereof shall be deemed to
be the period from November 30, 1987 through the end of the Term (or Extended
Term, as the case may be).  In addition, for purposes of Section 4 thereof,
Seller's period of ownership of the Leased Premises shall be deemed to include
the period of Tenant's tenancy hereunder.  If the Extended Term extends beyond
December 31, 2003, the provisions of this Article 10 shall apply without

                                       10
<PAGE>

regard to this Section 10.09. For purposes of this Agreement, a matter is "also
covered by the Environmental Indemnity Agreement" if, after considering all the
facts and circumstances with respect to whether a matter has occurred solely
during the Term, there remains a scientific dispute which cannot be resolved
with reasonable certainty.



                                   ARTICLE 11
                                   ----------

                              DEFAULT AND REMEDIES
                              --------------------

     Section 11.01.   Default.  Each of the following shall be deemed an "Event
                      -------
of Default" by Tenant hereunder and a material breach of this Agreement:

     (a)  Whenever Tenant shall fail to pay any rent due by Tenant hereunder on
the date upon which the same is due to be paid and such failure shall continue
for thirty (30) days after Tenant shall have been given written notice thereof
by Landlord of such failure; or

     (b) Whenever Tenant shall fail to keep, perform, or observe any of the
covenants, agreements, terms, or provisions contained in this Agreement that are
to be kept or performed by Tenant other than with respect to payment of any
liquidated sums of money, and Tenant shall fail to commence and take such steps
as are necessary to remedy the same within sixty (60) days after Tenant shall
have been given a written notice specifying the same; provided, however, if the
default is of such a nature that it cannot be cured within the 60-day period,
Tenant shall not be considered in default under this Agreement if it commences
to cure such default within the 60-day period, and thereafter in good faith and
with due diligence proceeds to cure such default.

     Section 11.02.  Remedies.  If any one or more Events of Default occur(s)
                     --------
then Landlord has the right, at its election, to undertake any one or more of
the following non-exclusive actions:

          (a) To give Tenant written notice of Landlord's intention to terminate
     this Agreement on the earliest date permitted by law or this Agreement or
     on any later date specified in such notice, in which case Tenant's right to
     possession of the Premises will cease and this Agreement will be
     terminated, except as to Tenant's liability, as if the date fixed in such
     notice were the end of the Term, without, however, waiving Landlord's right
     to collect all Rent and other payments due or owing for the period up to
     the time Landlord regains possession, as well as any damages and reasonable
     Litigation Expenses;

          (b) Proceed for past due installments of Rent, reserving its right to
     proceed later for the remaining installments as well as any Litigation
     Expenses; and/or

          (c) Without further demand or notice of any kind, to cure any Event of
     Default and to charge Tenant for the cost of effecting such cure, including

                                       11
<PAGE>

     without limitation all Litigation Expenses, provided that Landlord will
     have no obligation to cure any such Event of Default.

     Should Landlord elect to reenter, or should Landlord take possession
pursuant to legal proceedings or pursuant to any notice or remedy provided by
law, Landlord may, from time to time, without terminating this Agreement, relet
the Premises or any part of the Premises in Landlord's name, but for the account
of Tenant, the balance of the Term, and on such other conditions and upon such
other terms (which may include reasonable concessions of free rent and
alteration and repair of the Premises) as Landlord, in its reasonable
discretion, may determine, and Landlord may collect and receive the Rent.
Landlord will in no way be responsible or liable for any failure to relet the
Premises, or any part of the Premises, or for any failure to collect any Rent
due upon such reletting.  No such reentry or taking possession of the Premises
by Landlord will be construed as an election on Landlord's part to terminate
this Agreement unless written notice of such intention is given to Tenant.  No
notice from Landlord under this Section or proceeding under a forcible or
unlawful entry and detainer statute or similar law will constitute an election
by Landlord to terminate this Agreement unless such notice or proceeding
specifically so states.  Landlord reserves the right following any such reentry
or reletting to exercise its right to terminate this Agreement by giving Tenant
such notice, in which event this Agreement will terminate as specified in such
notice.

     Whenever the term "Litigation Expenses" is used in this Section 11.02, it
shall mean any and all costs and expenses incurred by Landlord in connection
with Tenant's default, including without limitation all attorney's fees, court
costs, other reasonable legal fees and litigation costs, accountant's fees,
realtor fees, brokerage commissions and leasing commissions.

     Section 11.03.  Performance of Tenant's Other Obligations.  If Tenant fails
                     -----------------------------------------
to perform or observe any of its covenants, agreements, or obligations hereunder
(other than the payment of sums of money) for a period of sixty (60) days after
notice of such failure (unless the default is of such a nature that it cannot be
cured within such 60-day period, in which event no default shall occur as long
as Tenant commences to cure such default within the 60-day period and
thereafter, in good faith, diligently and with continuity, prosecutes the curing
of the default, then in addition to all other rights provided herein Landlord
shall have the right, but not the obligation, at its sole election (but not as
its exclusive remedy), to perform or observe the covenants, agreements, or
obligations which are asserted to have not been performed or observed, at the
expense of Tenant and to recover all costs or expenses incurred in connection
therewith, together with interest thereon at Landlord's Prime Rate from the date
expended until repaid.  Any performance or observance by Landlord pursuant to
this Section 11.03 shall not constitute a waiver of Tenant's failure to perform
or observe.

                                       12
<PAGE>

                                   ARTICLE 12
                                   ----------

                           ASSIGNMENT AND SUBLETTING
                           -------------------------

     Section 12.01.  Assignment or Subletting by Tenant.  Tenant shall not have
                     ----------------------------------
the right to assign, sublet or transfer any or all of its rights and privileges
under this Agreement, without the prior written consent of Landlord, which shall
not be unreasonably withheld, except that Tenant may assign this Agreement to
any purchaser of Tenant's methanol plant as a going concern.



                                   ARTICLE 13
                                   ----------

            SURRENDER OF DEMISED PREMISES UPON TERMINATION OF LEASE
            -------------------------------------------------------

     Tenant covenants and agrees that, upon the termination of this Agreement by
lapse of time or otherwise, it will, if Landlord has not exercised it Option to
purchase the Improvements, remove the Improvements to the extent and in the
manner required under Section 5.01, above, and will surrender, yield up, and
deliver the Premises to Landlord.



                                   ARTICLE 14
                                   ----------

                                QUIET ENJOYMENT
                                ---------------

     Section 14.01.  Quiet Enjoyment.  Landlord covenants that Tenant, on paying
                     ---------------
the Rent and performing and observing all of the covenants and agreements herein
contained and provided to be performed by Tenant, shall and may peaceably and
quietly have, hold, occupy, use, and enjoy the Premises during the Term and may
exercise all of its rights hereunder; and Landlord agrees to warrant and forever
defend Tenant's right to such occupancy, use, and enjoyment and the title to the
Premises against the claims of any and all persons whomsoever lawfully claiming
the same, or any part thereof subject only to the provisions of this Agreement.



                                   ARTICLE 15
                                   ----------

                                 MISCELLANEOUS
                                 -------------

     Section 15.01.  Notices.  Any notice, request, demand, consent, approval,
                     -------
or other communication required or permitted under this Agreement must be in
writing and will be deemed to have been given when personally delivered, sent by
facsimile with receipt acknowledged, deposited with any nationally recognized
overnight carrier that routinely issues receipts, or deposited in any depository
regularly maintained by the United States Postal Service, postage prepaid,
certified mail, return receipt requested, addressed to the party for whom it is
intended at the addresses set forth below.  Either Landlord or Tenant may add
additional addresses or change its address for purposes of

                                       13
<PAGE>

receipt of any such communication by giving ten (10) days' prior written notice
of such change to the other party in the manner prescribed in this Section.

     To Landlord:  Borden Chemical, Inc.
                   180 East Broad Street
                   Columbus, Ohio 43215
                   Attn:  Edward Huller, Vice President

     To Tenant:    Borden Chemicals and Plastics Operating Limited Partnership
                   Highways 73 and 30
                   Geismar, Louisiana 70734
                   Attn:  M.D. Owens, VP-Manufacturing

     Section 15.02.  Modification and Non-Waiver.  No variations, modifications,
                     ----------------------------
or changes herein or hereof shall be binding upon any party hereto unless set
forth in writing executed by it or by a duly authorized officer or agent.  No
waiver by either party of any breach or default of any term, condition, or
provision hereof, including without limitation the acceptance by Landlord of any
monies at any time or in any manner other than as herein provided, shall be
deemed a waiver of any other or subsequent breaches or defaults of any kind,
character, or description under any circumstance.  No waiver of any breach or
default of any term, condition, or provision hereof shall be implied from any
action of any party, and any such waiver, to be effective, shall be set out in a
written instrument signed by the waiving party.

     Section 15.03.  Governing Law.  This Agreement shall be construed and
                     -------------
enforced in accordance with the laws of the State of Louisiana.

     Section 15.04.  Number and Gender; Captions; References.  Pronouns,
                     ---------------------------------------
wherever used herein, and of whatever gender, shall include natural persons and
corporations and associations of every kind and character, and the singular
shall include the plural wherever and as often as may be appropriate.  Article
and section headings in this Agreement are for convenience of reference and
shall not affect the construction or interpretation of this Agreement.  Whenever
the terms "hereof", "hereby", "herein", or words of similar import are used in
this Agreement they shall be construed as referring to this Agreement in its
entirety rather than to a particular section or provision, unless the context
specifically indicates to the contrary.  Any reference to a particular "Article"
or "Section" shall be construed as referring to the indicated article or section
of this Agreement.

     Section 15.05.  Estoppel Certificate.  Landlord and Tenant shall execute
                     --------------------
and deliver to each other, promptly upon any request therefor by the other
party, a certificate stating:

     (a) whether or not this Agreement is in full force and effect;

     (b) whether or not this Agreement has been modified or amended in any
respect, and submitting copies of such modifications or amendments;

                                       14
<PAGE>

     (c)  whether or not there are any existing defaults hereunder known to the
party executing the certificate, and specifying the nature thereof;

     (d)  whether or not any particular Article, Section, or provision of this
Agreement has been complied with; and

     (e)  such other matters as may be reasonably requested by either party.

     Section 15.06.  Severability.  If any provision of this Agreement or the
                     ------------
application thereof to any person or circumstance shall, at any time or to any
extent, be invalid or unenforceable, and the basis of the bargain between the
parties hereto is not destroyed or rendered ineffective thereby, the remainder
of this Agreement, or the application of such provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby.

     Section 15.07.  Attorneys' Fees.  If litigation is ever instituted by
                     ---------------
either party hereto to enforce, or to seek damages for the breach of, any
provision hereof, the prevailing party therein shall be promptly reimbursed by
the other party for all reasonable attorneys' fees, court costs and related
costs incurred by the prevailing party.

     Section 15.08.  Entireties.  This Agreement and all exhibits attached
                     ----------
hereto constitute the entire agreement of the parties hereto with respect to its
subject matter, and all prior agreements with respect thereto are merged herein.
Any agreements entered into between Landlord and Tenant of even date herewith
are not, however, merged herein.

     Section 15.09.  Successors and Assigns.  This Agreement shall constitute a
                     ----------------------
real right and covenant running with the Premises, and, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.  Whenever a reference is made herein to either party,
such reference shall include the party's successors and assigns, if any.

     Section 15.10.  Survival.  Any terms and provisions of this Agreement
                     --------
pertaining to rights, duties, or liabilities extending beyond the expiration or
termination of this Agreement shall survive the end of the Term.

     Section 15.11.  Relationship of the Parties.  Nothing contained in this
                     ---------------------------
Agreement shall be construed by the parties hereto, or by any third party, as
constituting the parties as principal and agent, partners or joint venturers,
nor shall anything herein render either party liable for the debts or
obligations of any other party, it being understood and agreed that the only
relationship between Landlord and Tenant hereunder is that of landlord and
tenant.

     Section 15.12.  No Waiver.  No failure by either party to insist upon
                     ---------
strict performance of any agreement, covenant, or term of this Agreement or to
exercise any right or remedy granted to such party upon a breach hereof and no
acceptance of any Rent by Landlord during the continuance of any such breach
shall constitute a waiver of

                                       15
<PAGE>

any such breach. No obligation of the Landlord and/or Tenant shall be deemed
waived or modified except by written instrument. If Landlord and/or Tenant shall
waive any particular breach, condition or covenant of this Agreement, such
waiver shall be limited to such breach, covenant or condition and shall not be
construed as a waiver in the future of the same or different breach, covenant or
condition.

     Section 15.13.  No Accord and Satisfaction.  No payment by Tenant, or
                     --------------------------
acceptance by Landlord of an amount which is less than the amount due from
Tenant to Landlord, shall be treated otherwise than as a payment on account.
The acceptance by Landlord of a check for a lesser amount with an endorsement or
statement thereon or upon any letter accompanying such check, that such lesser
amount is payment in full, shall be given no effect, and Landlord may accept
such check without prejudice to any other rights or remedies which Landlord may
have against Tenant.

     Section 15.14.  Waiver of Jury Trial.  Landlord and Tenant waive trial by
                     --------------------
jury in any action, proceeding, or counterclaim brought by either of the parties
to this  Agreement against the other on any matters whatsoever arising out of or
in any way connected with this Agreement, the relationship of the Landlord and
Tenant, Tenant's   use or occupancy of the Premises, or any other claims, and
any emergency statutory or any other statutory remedy.

     Section 15.15.  Recording.  Landlord acknowledges that Tenant may promptly
                     ---------
record and from time to time re-record a short form memorandum of this Agreement
with the Clerk and Recorder of Ascension Parish, at Tenant's sole cost and
expense.

     Section 15.16.  No Construction Against Drafting Party.  Landlord and
                     --------------------------------------
Tenant acknowledge that each of them and their counsel have had an opportunity
to review this Agreement and therefore, in case of any ambiguity, shall be no
construction of the ambiguous provision against either party hereto.

     Section 15.17.  Force Majeure.  If Landlord or Tenant is delayed or
                     -------------
prevented from performing any of their obligations under this Agreement by
reason of strike or labor troubles or any cause whatsoever beyond either party's
control, the period of such delay or such prevention shall be deemed added to
the time herein provided for the performance of any such obligation by Landlord
or Tenant.

     Section 15.18.  Brokerage.  Landlord and Tenant hereby represent and
                     ---------
warrant to the other that there have been no brokers involved on their behalf in
the consummation of this Agreement, and each party hereby indemnifies and agrees
to hold the other harmless from and against any and all claims for brokerage
commissions arising out of any breach of such representation.

     Section 15.19.  Law Between the Parties.  This   Agreement shall constitute
                     -----------------------
the law between the parties, and if any provision of this  Agreement is in
conflict with the provisions of "Title IX - Of Lease" of the Louisiana Civil
Code, Articles 2669 through 2777, inclusive, the provisions of this Agreement
shall control.

                                       16
<PAGE>

     Section 15.20.  Rules of Interpretation.  The following rules shall apply
                     -----------------------
to the construction of this Agreement unless the context requires otherwise:
(a) the singular includes the plural and the plural includes the singular; (b)
words importing any gender include the other genders; (c) references to statutes
are to be construed as including all statutory provisions consolidating,
amending or replacing the statute to which reference is made and all regulations
promulgated pursuant to such statutes; (d) references to "writing" include
printing, photocopy, typing, lithography and other means of reproducing words in
a tangible visible form; (e) the words "including", "includes" and "include"
shall be deemed to be followed by words "without limitation"; (f) references to
the introductory paragraph, preliminary statements, articles, sections (or
subdivision of sections), exhibits, appendices, annexes or schedules are to
those of this Agreement unless otherwise indicated; (g) references to agreements
and other contractual instruments shall be deemed to include all subsequent
amendments and other modifications to such instruments; (h) references to
persons include their respective successors and assigns to the extent successors
or assigns are permitted or not prohibited by the terms of this Agreement; (i)
any accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles; (j) "or" is not
exclusive; (k) provisions apply to successive events and transactions; (l)
references to documents or agreements which have been terminated or released or
which have expired shall be of no force and effect after such termination,
release, or expiration; (m) references to mail shall be deemed to refer to
first-class mail, postage prepaid, unless another type of mail is specified; (n)
all references to time shall be to Baton Rouge, Louisiana time; (o) references
to specific persons, positions, or officers shall include those who or which
succeed to or perform their respective functions, duties, or responsibilities;
and (p) the terms "herein", "hereunder", "hereby", "hereof," and any similar
terms refer to this  Agreement as a whole and not to any particular articles,
section or subdivision hereof.

                                       17
<PAGE>

     This Agreement was executed by Landlord as of the day and year first set
forth above.


Witnesses:                      Landlord:

                                BORDEN CHEMICAL, INC.,
                                a Delaware corporation


______________________________  By:  ___________________________________

______________________________  Its: ___________________________________




                       ___________________________________
                                 Notary Public

                                       18
<PAGE>

                           This Agreement was executed by Tenant as of the day
and year first set forth above.


Witnesses:                   Tenant

                             BORDEN CHEMICALS AND PLASTICS
                             OPERATING LIMITED PARTNERSHIP,
                             a Delaware limited partnership

                             By: BCP MANAGEMENT, INC.,
                                 a Delaware corporation,
                                 its General Partner



______________________________  By:  ___________________________________

______________________________  Its: ___________________________________



                      ___________________________________
                                 Notary Public

                                       19
<PAGE>

                                   Exhibit A

                                Leased Premises
                                ---------------

                                       20
<PAGE>

                                   Exhibit B

            Servitudes, Rights of Way, Encumbrances and Restrictions
            --------------------------------------------------------

          The Reciprocal Servitude Agreement dated as of July 28, 2000 by and
between Landlord and Tenant is hereby incorporated by reference.

                                       21