UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

             [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

     For the fiscal year ended: December 31, 2001   Commission file number: 1-71
                               -----------------                          ------

                                BORDEN CHEMICAL, INC.
                               (Formerly Borden, Inc.)

         New  Jersey                                   13-0511250
     ------------------                       ------------------------
   (State of incorporation)               (I.R.S. Employer Identification No.)

180  East  Broad  St.,  Columbus,  OH  43215            614-225-4000
---------------------------------------------      ---------------------------
(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
      ---------------------            -----------------------------------------

  8  3/8%  Sinking Fund Debentures                     New York Stock Exchange


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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or  for such shorter period that the registrant was
required  to  file  such  reports),  and  (2)  has  been  subject to such filing
requirements  for  the  past  90  days.      Yes    X      No
                                                 ---------      ---------

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of  registrant's  knowledge,  in  any  amendment  to  this  Form  10-K.  [x].

Aggregate market value in thousands of the voting stock held by nonaffiliates of
the  Registrant  based  upon  the  average bid and asked prices of such stock on
March 29, 2002:  $0.

Number  of  shares of common stock, par value $0.01 per share, outstanding as of
the  close  of  business  on  March  29,  2002:  199,114,749

                       DOCUMENTS INCORPORATED BY REFERENCE

     Document                                                       Incorporated
     --------                                                       ------------
      none                                                               none


--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
    The Exhibit Index is Located herein at sequential pages 66  through  68.
                                                           -----       ----
<PAGE>























                              BORDEN CHEMICAL, INC.



INTRODUCTION
------------

This  Annual  Report on Form 10-K includes the Consolidated Financial Statements
of  Borden  Chemical,  Inc.  ("the  Company"), as well as the separate Financial
Statements  of  Borden  Foods  Holdings  Corporation ("Foods").  The Company and
Foods  are  controlled  by  BW  Holdings,  LLC  ("BWHLLC").

Foods'  financial  statements  are  included in Part IV of this Annual Report on
Form  10-K  in accordance with rule 3-10 of Regulation S-X. Foods is a guarantor
of  the  Company's credit facility and all of the Company's outstanding publicly
held  debt.  The  financial  statements  for  Foods  are  prepared on a purchase
accounting  basis.

The  Company's  2001  quarterly filings on Form 10-Q included Combined Financial
Statements,  which were included supplementally to present the Company and Foods
on a combined historical basis. The purpose of the Combined Financial Statements
was  to  present  financial information on a basis consistent with that on which
credit  was  originally  extended to the Company.  In the third quarter of 2001,
Foods sold substantially all of its assets.  As a result, the Combined Financial
Statements  are  no  longer  included.






























































                            BORDEN CHEMICAL, INC.

                                      INDEX



<TABLE>
<CAPTION>
<S>                                                                                                     <C>
PART I
Item 1 - Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4
Item 2 - Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9
Item 3 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9
Item 4 - Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . .  10

PART II
Item 5 - Market for the Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . .  11
Item 6 - Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations . . . .  12
Item 7A- Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . .   23
Item 8 - Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . .  24
     BORDEN CHEMICAL, INC. CONSOLIDATED FINANCIAL STATEMENTS
         Consolidated Statements of Operations, years ended December 31, 2001, 2000 and 1999 . . . . .  24
         Consolidated Balance Sheets, December 31, 2001 and 2000 . . . . . . . . . . . . . . . . . . .  26
         Consolidated Statements of Cash Flows, years ended December 31, 2001, 2000 and 1999 . . . . .  28
         Consolidated Statements of Shareholders' Equity, years ended December 31, 2001, 2000 and 1999  30
         Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . .     32
         Independent Auditors' Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     55
Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. . . . .  56

PART III
Item 10 - Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . .  57
Item 11 - Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  59
Item 12 - Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . .  63
Item 13 - Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . .  65

PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K. . . . . . . . . . . . . . .  66
</TABLE>















































                                     PART I
ITEM  1.   BUSINESS
--------   --------

Current  Description  Summary
-----------------------------

The  Company,  Borden Chemical, Inc. (formerly Borden, Inc.) was incorporated on
April  24,  1899.  After  the  third quarter 2001 sale of the Consumer Adhesives
business  ("Consumer  Adhesives")  to an affiliate, the Company's sole remaining
business  is  the Chemical business.  The Chemical business is engaged primarily
in  manufacturing,  processing,  purchasing and distributing forest products and
industrial  resins,  formaldehyde,  coatings  and other specialty and industrial
chemicals  worldwide.  The  Company's  executive  and administrative offices are
located in Columbus, Ohio. Chemical production facilities are located throughout
the  United  States  and  in  many  foreign  countries.

In  fourth  quarter  2001,  the  Company  merged  with  its subsidiaries, Borden
Chemical  Holdings,  Inc. and Borden Chemical, Inc.,  executed certain financial
transactions  with its parent and changed its name to Borden Chemical, Inc. (the
"Corporate Reorganization") reflecting the fact that the only remaining business
of the Company is the Chemical business. The Corporate Reorganization simplified
the  legal  structure,  strengthened  the capital structure and reduced overhead
costs of the Company. As part of the Corporate Reorganization, certain functions
were  downsized,  eliminated  or  transferred to a separate legal entity, Borden
Capital, Inc. ("Capital"), also owned by the Company's parent. Subsequent to the
Corporate  Reorganization,  Capital  provides certain management, consulting and
board  services for the Company as well as for other entities owned by Kohlberg,
Kravis,  Roberts  &  Co. (KKR) and will charge fees to the Company and the other
entities  for  these  services.

Historical  Perspective
-----------------------

On  March 14, 1995,  affiliates of KKR acquired control of the Company.  In late
1995,  the  Company  began the process of redesigning its operating structure in
order  to  maximize  value for its owners and determined that certain businesses
did  not fit into its long-term strategic plan.  At the end of 1995, the Company
consisted  of  the  following  business segments: Chemical, Food, Other Consumer
Products,  Decorative  Products, Dairy and businesses held for sale.  A group of
centralized  corporate  departments  located  in Columbus, Ohio provided certain
governance  and  other  administrative  services  to all the Company's operating
business units and businesses held for sale. Following is a brief description of
each  of  the Company's business segments and the individual business units that
were  included  in  each  segment  at  the  end  of  1995:

Chemical  -  businesses  included  forest  products  and  industrial  resins,
formaldehyde,  coatings  and  other  specialty  and  industrial chemicals.  This
segment  consisted  of  the  "Chemical"  business  unit.

Food  -  businesses included pasta and pasta sauces, processed cheese, non-dairy
creamer,  sweetened  condensed  milk,  reconstituted  lemon  and  lime  juices,
bouillon,  confections,  dehydrated  soups  and whole milk powder.  This segment
consisted  of  the  "Foods"  business  unit.

Other  Consumer Products - businesses included bakery products, salty snacks and
consumer  adhesives  and  glues.  This  segment consisted of the "Wilhelm Weber,
GmbH"  (bakery  products),  "Wise"  (salty  snacks)  and  "Consumer  Adhesives"
(consumer  adhesives  and  glues)  business  units.

Decorative  Products  -  businesses included residential wallcoverings, flexible
vinyl  films  and  sheeting  heat transfer paper.  This segment consisted of the
"Decorative  Products"  business  unit.

Dairy  -  businesses  included  homogenized  milk,  ice  cream, sherbet, yogurt,
cottage  cheese,  frozen  novelties, low-fat dairy products, milk-based products
for  foodservice  trade  and  fruit  drinks.  This segment consisted of the "BMG
Dairies"  business  unit.

Businesses  held  for sale - businesses included the packaging and plastic films
business  and  various  other  operations.

Acquisition  and  Divestiture  History
--------------------------------------

Since  the  1995 acquisition, KKR and management of the Company has continued to
review  and  realign  its structure and to streamline its operations to maximize
operating  results and value creation.  To this end the Company has made various
acquisitions and divestitures and has also undertaken numerous plant closing and
other  business  realignment  initiatives  primarily  related  to  the  Chemical
business  (discussed  below).  Following  is  a summary by year of the Company's
acquisition  and  divestiture  activity  since  1995:




In  1996,  the  Company  sold  Wise  (a component of the Other Consumer Products
segment)  to  Wise  Holdings  and sold Foods (the entire Foods segment) to Foods
Holdings.  Wise  Holdings  and Foods Holdings are subsidiaries of  BWHLLC.  As a
result  of these sales, Wise and Foods ceased to be legally part of the Company.
However,  management  of the Company continued to exercise significant financial
and managerial control over both Wise Holdings and Foods Holdings.  In addition,
both  Wise  Holdings  and  Foods  Holdings  remained guarantors of the Company's
obligations  under  both its credit facility and public debt.  Also in 1996, the
Company  sold  Wilhelm  Weber,  GmbH (a component of the Other Consumer Products
segment)  and  the packaging and plastic films business (business held for sale)
to  unrelated  third  parties.

In  1997,  the  Company  sold  the  BMG Dairies (the entire Dairy segment) to an
unrelated  third party.  Also that year the Company acquired Melamine Chemicals,
Inc.  (Chemical  segment),  a  major  producer  of melamine crystal, for which a
substantial  amount  of  production  was to be used internally to produce forest
products  and  industrial  resins.

In  1998,  the  Company sold Decorative Products (the entire Decorative Products
segment)  to  an  unrelated  third party.  Also that year the Company acquired a
melamine  resins  and  compounds  business (a component of the Chemical segment)
from  Sun  Coast  Industries,  Inc.

In  1999, the Company acquired Blagden Chemicals, LTD. in the United Kingdom and
Spurlock Industries, Inc. in the U.S. (both Chemical segment).  Blagden produces
formaldehyde,  forest  products  and  industrial  resins.  Spurlock  produces
formaldehyde  and  forest  products  resins.

In  2000,  the  Company  acquired the formaldehyde and certain other assets from
Borden  Chemicals and Plastics Limited Partnership, an affiliate of the Company,
and  East Central Wax, a wax emulsions producer for the forest products business
(both  Chemical segment).  In 2000, the Company also acquired certain assets and
liabilities of a Canadian based business that produces various consumer adhesive
and  glue  products  (included  in  the  Consumer Adhesives segment prior to its
sale).

In  August  2001, options, sold to BWHLLC in 1996, to purchase 74% of the common
shares  of  Consumer  Adhesives  were  exercised.  At  the  same time, a company
controlled  by  BWHLLC  purchased the remaining 26% of Consumer Adhesives common
shares  (collectively  the "Consumer Adhesives Sale").  At December 31, 2001 the
Company  still  held a $110.0 million investment in Consumer Adhesives preferred
stock.  On  March  1,  2002, the Consumer Adhesives preferred stock was redeemed
for  a  $110.0  million  note  receivable from Consumer Adhesives.  On March 12,
2002, the note receivable was sold to the Company's parent for $110.0 million in
cash  plus  accrued interest, which the Company used to pay down its outstanding
affiliated debt.  Consequently, Consumer Adhesives is reported as a discontinued
operation  in  the  Company's  financial  statements  for all periods presented.

Chemical  Realignment  and  Corporate  Reorganization
-----------------------------------------------------

In  addition  to  acquisitions and divestitures discussed above, the Company has
undertaken  numerous  plant  closing  and other business realignment initiatives
primarily  related to the Chemical business.  These initiatives were designed to
improve  the  effectiveness and efficiency of the Chemical business and to focus
the  Company's  resources  on  its  core  strengths.  Such  business realignment
charges  have  consisted  primarily  of  employee  severance,  plant closure and
environmental  remediation  costs  and  asset  write-offs.  The Company has also
recently  completed  a reorganization of its corporate headquarters function and
its  capital  structure.  Following  is  a  brief  overview  by year of business
realignment  activities  since  1995  as  well as the Company's recent Corporate
Reorganization:

In  1997  and  1998,  the Company recorded $18.5 million of business realignment
charges  related  to  the  cost  to  close  a  European  Chemical  plant.

In  1999,  the  Company  recorded  $41.6 million of business realignment charges
related to the closure of Chemical plants in Brazil, Uruguay and the Philippines
and  to  discontinue  a  domestic  Chemical  plant  construction  project.

In  2000,  the  Company  recorded  $38.1 million of business realignment charges
related to the closure of two forest products plants in the U.S., a formaldehyde
and  resins  plant  in  the  U.K.  as a result of the Blagden acquisition, and a
formaldehyde  and  resins  plant  in  Argentina.

In  2001,  the  Company  recorded $126.4 million of business realignment charges
related  primarily  to  the  closures  of  its  melamine  crystal  plant and two
additional forest products plants in the U.S., realignment of its North American
workforce  organization,  reorganization  of  its  corporate headquarters and to
discontinue  a  plant  construction  project.  The largest component of the 2001
charge  is  a  $98.2  million impairment of melamine crystal fixed assets, spare
parts                        and                  goodwill                  that




was the result of the Company's strategic decision late in 2001 to sell or close
this  plant  and  to enter into a long-term contractual arrangement with a major
supplier  for  a  substantial  portion  of the Company's future melamine crystal
needs.

In  2001,  the Company also completed a significant capital restructuring, which
consisted  primarily  of  a  capital contribution of $614.4 million of preferred
stock  held by the Company's parent.  The significant impact of this transaction
was  to  eliminate  future required annual preferred dividend payments of  $73.7
million.  Also as part of the capital restructuring, the Company's parent made a
cash  capital  contribution  and  purchased  certain  financial  assets from the
Company  for cash in amounts that approximated fair value. The cash contribution
and  the  cash received from sale of assets allowed the Company to substantially
repay  its  affiliated  debt  as of December  31,  2001.

In  March  2002, the Company further paid down its affiliated debt with proceeds
received  from  sale,  to  its  parent, of its remaining financial investment in
Consumer  Adhesives.  In  addition,  to  further simplify its capital structure,
during  2002 the Company intends to cancel a $404.8 million note receivable from
its  parent  which  has  been  accounted  for  as  a  reduction  from  equity.

PRODUCTS
The  Company's products include primarily forest products and industrial resins,
formaldehyde,  coatings  and  other  specialty  and  industrial  chemicals.

MARKETING  AND  DISTRIBUTION
Domestic  products  are  sold throughout the United States primarily by in-house
sales  forces  to  industrial  users.  To  the extent practicable, international
distribution  techniques  parallel those used in the United States. However, raw
materials,  production  considerations,  pricing  competition, government policy
toward industry and foreign investment, and other factors may vary substantially
from  country  to  country.

COMPETITION
The  Company  is  the  leading  global  producer of thermosetting resins for the
forest  products  industry  and  a  leading producer of thermosetting resins for
industrial and foundry applications. These resins are used to bind or coat other
materials  during  the  manufacturing  process.  The Company is also the world's
largest  producer  of  formaldehyde.  Much  of  the  formaldehyde  is  consumed
internally  to  produce  thermosetting  resins, with the remainder sold to third
parties.  UV  Coatings  are  produced for fiber optics coating applications. The
Company  manufactures  and  distributes  its  products  worldwide  with the most
significant  markets  being  North  America,  Western  Europe,  Latin  America,
Australia,  and  Malaysia and, generally, holds a leading market position in the
areas  in  which it competes. Resins are provided to a wide variety of customers
for  use  in the manufacture of, among other products, structured panels, medium
density  fiberboard,  particle  board,  laminate  veneers,  insulation  binders,
automotive brakes, and to coat cores and molds in the metal casting process. The
major  competitors  are  Ashland  Specialty  Chemical  Company,  Georgia Pacific
Corporation, Dynea, and several regional domestic and international competitors.
Price,  customer  service and product performance are the primary areas in which
the  Company  competes.

MANUFACTURING  AND  RAW  MATERIALS
The primary raw materials used by the Company are methanol, phenol and urea. Raw
materials are generally available from numerous sources in sufficient quantities
but  are  subject  to  price  fluctuations  that  cannot  always be passed on to
customers.

The  Company  uses  long-term  purchase agreements for its primary and other raw
materials  in  certain circumstances to assure availability of adequate supplies
at  specified  prices.

In  connection  with the shutdown of its melamine crystal plant, the Company has
entered  into  a  long-term  contractual  arrangement  with  the  leading global
melamine  crystal producer to supply a minimum of 70% of the Company's worldwide
melamine  crystal  requirements.  The melamine crystal to be purchased under the
agreement  will  be  sourced  from  several  supplier  production  sites and the
temporary  or  permanent  loss  of  any  individual site would not likely have a
material adverse impact on the Company's ability to satisfy its melamine crystal
needs.

CUSTOMERS
The  Company  does not depend on any single customer and business is not limited
to  any  particular  group of customers, the loss of which would have a material
adverse  effect on the business. The primary customers consist of manufacturers,
and  business  is  generally  not  seasonal.











PATENTS  AND  TRADEMARKS
The  Company  owns  various  patents,  trademark  registrations  and  patent and
trademark applications around the world which are held for use or currently used
in  its  operations.  A majority of the patents relate to the development of new
products  and  processes  for  manufacturing  and use thereof and will expire at
various  times  between  2002 and 2013. No individual patent is considered to be
material.

RESEARCH  AND  DEVELOPMENT
Research  and  development  expenditures  were  $22.7 million, $22.2 million and
$22.7  million  in 2001, 2000 and 1999, respectively.  Development and marketing
of  new  products are carried out at the business unit level and integrated with
quality  control  for  existing  product  lines.

WORKING  CAPITAL
Working  capital  is  generally  funded  through  operations and borrowings from
affiliates  and  under  the  Company's  credit  facility.

EMPLOYEES
At  December  31,  2001,  the  Company  had  approximately  2,800  employees.
Relationships  with  union  and  non-union  employees  are  generally  good.

FINANCIAL  INFORMATION  ABOUT  OPERATING  SEGMENTS
The  Company  presents  its  segment information in accordance with Statement of
Financial  Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of
an  Enterprise  and  Related Information".  The Company's operating segments are
defined  as  those  business  units  for  which  operating results are regularly
reported  internally  to  evaluate  performance  and  allocate  resources.  The
Company's  North  American business units are substantially defined according to
the  primary  markets  in  which  the  Company's  customers  operate,  while its
international  business  units are defined geographically.  The Company believes
its  operating  segments have similar economic characteristics as well as a high
degree of similarity between manufacturing processes, chemical properties of its
end  products,  product  distribution  methods  and  the ways that the Company's
customers  use its products in their manufacturing processes.  Consequently, the
Company's  operating  segments meet the aggregation criteria of SFAS No. 131 and
the  Company presents one reportable operating segment and reports its corporate
and  other  functions  separately.

Prior  year information has been reclassified to include the corporate and other
costs  previously  reported within the Chemical segment as part of the Corporate
and  Other  classification.

In  the  consolidated financial information that follows, the businesses sold or
distributed classification includes the Company's printing inks business through
the date of its sale in 2000 and the infrastructure management services business
prior  to  its  distribution  to  the  Company's  parent  in  2000.

Adjusted  Operating  EBITDA  information is presented with the Company's segment
disclosures  because  it  is  a  primary measure used by the Company to evaluate
operating  results.  See  footnote  (1)  on  page  11 for definition of Adjusted
Operating  EBITDA.

OPERATING  SEGMENTS:
--------------------
<TABLE>
<CAPTION>

SALES  TO  UNAFFILIATED  CUSTOMERS:

-------------------------------------------------------------
(Dollars in millions)              2001      2000      1999
-------------------------------------------------------------
<S>                                 <C>       <C>       <C>

Chemical                         $1,372.1  $1,336.4  $1,223.6
Businesses sold or distributed      -          40.2      50.6
                                  ------- ---------   -------
                                 $1,372.1  $1,376.6  $1,274.2
-------------------------------------------------------------
</TABLE>















<TABLE>
<CAPTION>
TOTAL  ASSETS  AT  YEAR  END:
------------------------------------------------------------------------------------
(Dollars in millions)                                    2001      2000      1999
------------------------------------------------------------------------------------
<S>                                                         <C>     <C>     <C>
         Chemical                                      $ 892.2  $  974.9  $  911.2
         Corporate and other                             237.1     398.9     720.1
         Business sold or distributed                      -         -        38.0
         Discontinued Operations                           -       128.7      29.5
                                                        -------    -------   ------
                                                      $1,129.3  $1,502.5  $1,698.8
------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ADJUSTED  OPERATING  EBITDA:
----------------------------------------------------------------------------------------
(Dollars in millions)                                          2001     2000     1999
----------------------------------------------------------------------------------------
<S>                                                             <C>       <C>      <C>
           Chemical                                            $ 204.1   $220.7   $243.7
           Corporate and other                                   (68.0)   (53.3)   (40.5)
           Businesses sold or distributed                           -       0.7     (5.2)
                                                               --------  -------  -------
           ADJUSTED OPERATING EBITDA (1)                         136.1    168.1    198.0

           Significant and Unusual items (2)                    (147.7)   (64.3)   (34.2)
           Depreciation and amortization                         (59.4)   (55.7)   (52.3)
                                                                -------  -------  -------
           OPERATING (LOSS) INCOME                             $ (71.0)  $ 48.1   $111.5
-----------------------------------------------------------------------------------------
<FN>
(1)See  footnote  (1)  on page 11 for definition of Adjusted Operating EBITDA.
(2)Includes  Significant  and  Unusual  items  shown  below  and on page 15 of
Management's  Discussion  and  Analysis  of  Financial  Condition and Results of
Operations.
</TABLE>

<TABLE>
<CAPTION>
SIGNIFICANT  AND  UNUSUAL
ITEMS  AFFECTING  COMPARABILITY  OF  ADJUSTED  OPERATING  EBITDA:  (3)
------------------------------------------------------------------------------------------
(Dollars in millions)                                          2001     2000     1999
------------------------------------------------------------------------------------------
<S>                                                             <C>       <C>      <C>
            Chemical                                            $(144.2)  $(66.9)  $(41.6)
            Corporate and other                                    (3.5)     2.6      7.4
                                                                --------  ------  --------
                                                                $(147.7)  $(64.3)  $(34.2)
------------------------------------------------------------------------------------------
</TABLE>
(3)See page 15 of the Management's Discussion and Analysis of Financial
Condition  and  Results of  Operations for further information concerning these
items.
<TABLE>
<CAPTION>
DEPRECIATION  AND  AMORTIZATION  EXPENSE:
------------------------------------------------------------------------------------------
(Dollars in millions)                                           2001     2000      1999
------------------------------------------------------------------------------------------
<S>                                                                <C>    <C>    <C>
             Chemical                                            $50.4     $51.0     $43.9
             Corporate and other                                   9.0       3.9       4.2
             Businesses sold or distributed                         -        0.8       4.2
                                                                 -------   ------   ------
                                                                 $59.4     $55.7     $52.3
------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CAPITAL  EXPENDITURES:
------------------------------------------------------------------------------------------
(Dollars in millions)                                        2001       2000       1999
------------------------------------------------------------------------------------------
<S>                                                          <C>       <C>          <C>
           Chemical                                          $37.5     $ 89.2       $ 57.5
           Corporate and other                                 5.0        9.9         14.0
           Businesses sold or distributed                       -         0.1          1.2
           Discontinued operations                             4.8        5.3          2.1
                                                            --------   --------     ------
                                                             $47.3     $104.5        $74.8
------------------------------------------------------------------------------------------
</TABLE>

GEOGRAPHIC  INFORMATION:
------------------------
<TABLE>
<CAPTION>
SALES  TO  UNAFFILIATED  CUSTOMERS:  (1)
-----------------------------------------------------------------------------------------
(Dollars in millions)                                      2001        2000        1999
-----------------------------------------------------------------------------------------
<S>                                                        <C>         <C>          <C>

              United States                               $  908.5    $  909.2   $  830.3
              Canada                                         181.1       152.3      144.2
              Other International                            282.5       315.1      299.7
                                                         ---------   ---------   --------
              Total                                       $1,372.1    $1,376.6   $1,274.2
-----------------------------------------------------------------------------------------
<FN>
(1)  For purposes of geographic disclosures, sales are attributed to the country
in  which  individual  business  locations  reside.
</TABLE>

<TABLE>
<CAPTION>
LONG-LIVED  ASSETS:  (2)
-----------------------------------------------------------------------------------------
(Dollars in millions)                                2001          2000          1999
-----------------------------------------------------------------------------------------
<S>                                                 <C>            <C>           <C>
             United States                            $276.2       $356.4          $363.9
             Canada                                     53.9         60.8            41.9
             Other International                       127.5        139.0           122.7
                                                     -------       ------          ------
             Total                                    $457.6       $556.2          $528.5
-----------------------------------------------------------------------------------------
(2) Long-lived assets include property, plant and equipment, net of accumulated depreciation.
</TABLE>

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

As  of  December  31,  2001,  the  Company  operated  28 domestic production and
manufacturing  facilities  in  16  states, the most significant being a plant in
Louisville,  Kentucky.  In  addition, the Company operated 21 foreign production
and  manufacturing  facilities  primarily  in  Canada,  South  America,  Europe,
Australia  and  Malaysia.

The  Company's  manufacturing  and  processing  facilities  are  generally  well
maintained  and  effectively  utilized.  Substantially all facilities are owned.

The Company is actively engaged in complying with environmental protection laws,
as  well as various federal, state and foreign statutes and regulations relating
to  manufacturing,  processing and distributing its many products. In connection
with  this,  the  Company incurred capital expenditures of $1.2 million in 2001,
$0.8  million  in  2000  and  $2.4  million  in 1999. The Company estimates $2.7
million  will  be  spent  in  2002  for  environmental  control  facilities.

ITEM  3.  LEGAL  PROCEEDINGS
----------------------------

Environmental  Proceedings
--------------------------

The  Company  has  been  notified that it is or may be a potentially responsible
party with respect to the cleanup of approximately 50 waste sites in proceedings
brought  under  the  Comprehensive  Environmental  Response,  Compensation  and
Liability  Act  ("CERCLA")  or  similar  state environmental laws. The Company's
ultimate liability will depend on many factors including its volumetric share of
waste,  the  financial  viability  of other responsible parties, the remediation
methods  and  technology  used,  the  amount  of  time  necessary  to accomplish
remediation and the availability of insurance coverage. While the Company cannot
predict  with certainty the total cost of such cleanup, the Company has recorded
liabilities  of  approximately  $41 million and $20 million at December 31, 2001
and  2000, respectively, for environmental remediation costs for these and other
sites  in amounts that it believes are probable and reasonably estimable.  Based
on currently available information and analysis, the Company believes that it is
reasonably  possible  that  costs  associated with such sites may exceed current
reserves  by  amounts  ranging  from  insignificant  to,  in  the  aggregate,
approximately  $30  million.  This  estimate of the range of reasonably possible
additional  costs  is  less  certain  than the estimates upon which reserves are
based,  and  in  order  to  establish the upper limit of such range, assumptions
least  favorable  to the Company among the range of reasonably possible outcomes
were  used.  In  estimating  both  its  current  reserves  for  environmental
remediation  and  the  possible  range  of additional costs, the Company has not
assumed  that  it  will bear the entire cost of remediation of every site to the
exclusion               of             other           known        potentially


responsible  parties  who  may  be  jointly and severally liable. The ability of
other  potentially  responsible  parties  to  participate  has  been  taken into
account,  based  generally  on  the parties' probable contribution on a per site
basis.

Private actions against the Company and numerous other defendants are pending in
U.S.  District  Court  in Baton Rouge, Louisiana, alleging personal injuries and
property  damage  in  connection  with  a  waste  disposal  site  in  Louisiana.

Affiliate  Bankruptcy  Proceedings
----------------------------------

BCP  Management,  Inc. ("BCPM"),  a wholly owned subsidiary of the Company that
serves  as  the  general  partner  of  Borden  Chemicals  and  Plastic  Limited
Partnership  ("BCP"),  has  certain  fiduciary  responsibilities  to BCP and its
operating subsidiary, Borden Chemical and Plastics Operating Limited Partnership
("BCPOLP").  BCP  and  BCPOLP  were  created  in  November 1987, as separate and
distinct entities from the Company and BCP is 99% owned by the public.  On April
3,  2001,  BCPOLP  and  its subsidiary, BCP Finance Corporation, filed voluntary
petitions  for protection under Chapter 11 of the United States Bankruptcy Code,
Title  11  of  the United States Code, in the United States Bankruptcy Court for
the  District  of  Delaware.  On  March  22,  2002,  BCPM also filed a voluntary
petition for protection under Chapter 11 of the Bankruptcy Code in United States
Bankruptcy  Court  for the District of Delaware.  In addition to a $20.0 million
liability  recorded  in the fourth quarter of 2000, $10.0 million was accrued by
the  Company  in  the  second  quarter of 2001 for potential BCPOLP liabilities.

Imperial  Home  Decor  Group
-----------------------------

In  1998, pursuant to a merger and recapitalization transaction sponsored by The
Blackstone  Group ("Blackstone") and financed by Chase Manhattan Bank ("Chase"),
Borden Decorative Products Holdings, Inc. ("BDPH"), a wholly owned subsidiary of
the Company, was merged with an acquisition vehicle created by Blackstone, which
subsequently  merged  with  Imperial Wallcoverings to create Imperial Home Decor
Group  ("IHDG").  Blackstone provided $84.5 million in equity and Chase provided
$295  million in senior financing. Borden received approximately $314 million in
cash  and 11% of IHDG common stock for its interest in BDPH. On January 5, 2000,
IHDG  filed  for  reorganization  under Chapter 11 of the U. S. Bankruptcy Code.
IHDG  emerged  from  bankruptcy  in  April  2001.The  IHDG Litigation Trust (the
"Trust")  was  created  pursuant  to  the  plan  of  reorganization  in the IHDG
bankruptcy  to  pursue  preference  and  other avoidance claims on behalf of the
unsecured  creditors  of  IHDG.  In  November  2001,  the Trust filed a law suit
against  the  Company  and  certain  of  its affiliates seeking to have the IHDG
recapitalization transaction avoided as a fraudulent conveyance and asking for a
judgment  to  be  entered against the Company for $314.4 million, plus interest,
costs  and  attorney  fees.  The  Company believes it has strong defenses to the
Trust'    s allegations      and     intends  to  defend  the  case  vigorously.

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

The  Company is involved in other litigation throughout the United States, which
is  considered  to  be  in  the  ordinary  course  of  business.

Anticipated  Impact
-------------------

Management  believes,  based  upon  the  information it currently possesses, and
taking  into  account its established reserves for estimated liability, that the
ultimate  outcome  of  the  foregoing  environmental  and  legal proceedings and
actions  is  unlikely  to  have  a  material  adverse  effect  on  the financial
statements  of  the  Company.

ITEM  4.    SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS
--------    -----------------------------------------------------------

The  Company's sole shareholder took action by written consent November 16, 2001
approving  the  amendment of the Company's Restated Certificate of Incorporation
to  change  its  name.

The  Company's Annual Shareholder Meeting for the election of directors was held
November  20,  2001.  The  five  existing directors were reelected and seven new
directors  were  elected,  each  by  unanimous vote of 198,974,994 shares of the
Company's  common  stock  outstanding.












                                     PART II

ITEM  5.  MARKET  FOR  THE  REGISTRANT'S  COMMON  EQUITY
--------------------------------------------------------
AND  RELATED  STOCKHOLDER  MATTERS
----------------------------------

The  Company's authorized common stock consists of 300,000,000 shares with a par
value  of  $0.01  per  share,  199,121,749 as of December 31, 2001, of which are
issued  and  outstanding  and of which 99.9% are controlled by affiliates of KKR
with  the  remainder held by management. No shares of such common stock trade on
any  exchange.  The Company declared dividends on common stock of $36.4 million,
$61.6  million  and  $64.1  million  in  2001,  2000 and 1999, respectively. The
Company's  ability  to  pay  dividends  on its common stock is restricted by its
Credit  Agreement  with  certain  banks (see Notes 10 and 14 to the Consolidated
Financial  Statements).


ITEM  6.   SELECTED  FINANCIAL  DATA
--------   -------------------------
--------------------------------------------------------------------------------
FIVE  YEAR  SELECTED  FINANCIAL  DATA
(All  dollar  and  share  amounts  in  millions,  except  per  share  data)

The  following  represents  five  year  selected financial data for the Company,
restated  for the discontinued operations of Consumer Adhesives. See pages 8 and
15  for  items  impacting  comparability  between  2001,  2000  and  1999.

<TABLE>
<CAPTION>

  CONSOLIDATED             FOR THE YEARS                            2001       2000       1999      1998     1997
-----------------------------------------------------------------------------------------------------------------


<S>                                                           <C>          <C>           <C>       <C>        <C>
SUMMARY OF EARNINGS
Net sales                                                  1,372.1     1,376.6     1,274.2     1,320.5     1,409.6
(Loss) income from continuing operations                    (136.6)      (72.3)       44.5         9.1         6.6
(Loss) income applicable to common stock                    (186.6)      (39.7)      (20.8)      (11.1)      147.6
------------------------------------------------------------------------------------------------------------------
Basic and diluted (loss) income per common share
     from continuing operations                      $       (0.69)  $   (0.36)  $    0.23   $    0.05    $   0.03
Basic and diluted (loss) income per common share             (0.94)      (0.20)      (0.10)      (0.06)       0.74
------------------------------------------------------------------------------------------------------------------

Dividends per share
     Common share                                    $        0.18   $    0.31   $    0.32   $    0.30     $   0.26
     Preferred series A                                       2.52        3.00        3.00        3.00         3.00
-------------------------------------------------------------------------------------------------------------------
Average number of common shares
    outstanding during the year                              199.0       199.0        199.0      199.0        199.0
-------------------------------------------------------------------------------------------------------------------
FINANCIAL STATISTICS

Total Assets                                        $      1,129.3   $  1,502.5   $  1,698.8  $ 1,981.2    $2,122.6
Long-term debt                                               532.5        530.5        541.1      552.0       788.3
-------------------------------------------------------------------------------------------------------------------
Operating EBITDA (1)                                $        (11.6)   $   103.8   $    163.8  $   177.7   $  128.6
Adjusted Operating EBITDA (1)                                136.1        168.1        198.0      171.9      144.6
-------------------------------------------------------------------------------------------------------------------

<FN>

(1)  Operating  EBITDA, as defined by the Company, represents net income (loss), excluding discontinued
operations,  cumulative  effect  of  change  in accounting principle, non-operating income and expense,
interest,  taxes,  depreciation and amortization. Adjusted Operating EBITDA, as defined by the Company,
is composed of Operating EBITDA excluding the effects of Significant and Unusual Items (see pages 8 and
15).  EBITDA  information  is  presented  because  it  is a primary measure used by the chief operating
decision  maker  to  evaluate operating results and because such information is conceptually consistent
with  measurements of operating results used by various investors as a basis for evaluating a Company's
ability  to  meet  debt  and  interest  obligations.  EBITDA should not be considered an alternative to
measures  of  operating performance required by generally accepted accounting principles, including net
income, as a measure of the Company's operating results and cash flows or as a measure of the Company's
liquidity.  Because  EBITDA is not calculated identically by all companies, the presentation herein may
not  be  comparable  to  other  similarly  titled  measures  of  other  companies.
</TABLE>











ITEM  7.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
--------  ------------------------------------------------------
          CONDITION  AND  RESULTS  OF  OPERATIONS
          ---------------------------------------

CRITICAL  ACCOUNTING  POLICIES:
-------------------------------
The Company's significant accounting policies are more fully described in Note 3
to  the  Consolidated  Financial  Statements.  As  disclosed  in  Note  3 to the
Consolidated  Financial  Statements,  preparation  of  financial  statements  in
conformity  with generally accepted accounting principles requires management to
make  estimates  and  assumptions about future events that affect the amounts of
assets,  liabilities, revenues and expenses reported in the financial statements
and  accompanying  notes.  Estimating  and predicting future events requires the
exercise  of  judgment and cannot be done with absolute certainty; consequently,
there can be no assurance that actual results will not differ significantly from
estimated  results.

The  most  significant  accounting  estimates  reflected  in  the  Company's
Consolidated  Financial  Statements  include estimates supporting recognition of
asset  impairments,  business realignment liabilities, environmental remediation
liabilities,  deferred  income  tax assets and liabilities and related valuation
allowances, and pension and post-retirement assets and liabilities.  The Company
bases  its  estimates  and  assumptions  on  historical  experience and business
trends,  current  and  expected  economic conditions, and various other relevant
criteria  that  the  Company believes to be appropriate and reasonable under the
circumstances.

RESULTS  OF  OPERATIONS  BY  SEGMENT:
------------------------------------
Following  is  a  comparison  of  net  sales  and  Adjusted  Operating EBITDA by
reportable  business  segment  for  the  Company:
<TABLE>
<CAPTION>
NET  SALES  TO  UNAFFILIATED  CUSTOMERS:
----------------------------------------------------------------------------------
(Dollars in millions)                                 2001      2000      1999
----------------------------------------------------------------------------------
<S>                                                    <C>       <C>       <C>

           Chemical                                   $1,372.1  $1,336.4  $1,223.6
           Businesses sold or distributed                 -         40.2      50.6
                                                     ---------   -------   -------
                                                      $1,372.1  $1,376.6  $1,274.2
----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING  INCOME:

----------------------------------------------------------------------------
(Dollars in millions)                             2001     2000     1999
----------------------------------------------------------------------------
<S>                                                <C>       <C>      <C>

          Adjusted Operating EBITDA
          --------------------------
          Chemical                               $ 204.1   $220.7   $243.7
          Corporate and other                      (68.0)   (53.3)   (40.5)
          Businesses sold or distributed             -        0.7     (5.2)
                                                 --------  -------  -------
          TOTAL ADJUSTED OPERATING EBITDA (1)      136.1    168.1    198.0

          Significant and unusual items (2)       (147.7)   (64.3)   (34.2)
          Depreciation and amortization            (59.4)   (55.7)   (52.3)
                                                 --------  -------  -------
          OPERATING INCOME                       $ (71.0)  $ 48.1   $111.5
---------------------------------------------------------------------------
<FN>
(1) See footnote (1) on page 11 for definition of Adjusted Operating EBITDA.
(2) Includes  Significant  and  Unusual  items  shown  on  pages 8 and 15 of
Management's Discussion and Analysis of  Financial Condition and Results of Operations
</TABLE>

2001  VS.  2000

Chemical
--------

Sales  in 2001 increased $35.7 million, or approximately 3%, to $1,372.1 million
for  the  year ended December 31, 2001 compared to $1,336.4 million for the same
period  in  2000.  The  improvement is due primarily to generally higher selling
prices,  two  acquisitions  in  the  U.S.  in  the  second  half  of 2000 and an
acquisition  at  the  beginning  of  the  second  quarter  of  2001.  The  most
significant  items that negatively impacted sales were an overall volume decline
and  unfavorable  currency  exchange rates for all international business units.

Higher average selling prices had an approximate $109 million positive impact on
2001  sales.  The higher average selling prices reflect significantly higher raw
material  costs during the first half of the year.  A substantial portion of the
Company's  sales volumes, especially for North American forest products, is sold
under  contracts that provide for monthly or quarterly selling price adjustments
based  on  published cost indices for the Company's primary raw materials (i.e.,
methanol,  phenol  and  urea).

Lower overall sales volume in 2001 reflects generally weaker economic conditions
in North America as well as international regions in which the Company operates.
Excluding  the effect of acquisitions and divestitures, sales volume was down in
all business units, except oilfield products. The overall lower sales volume had
an  approximate  $77 million negative impact on sales versus the prior year. The
increase  in  oilfield  products  volume  is  due to increased drilling activity
reflecting  significantly higher natural gas and oil prices in the first quarter
of  the  year.  Lower  sales volume in forest products resins reflects difficult
market  conditions  and  aggressive  competitor pricing in 2001. Lower volume in
foundry and industrial resins reflects declines in auto production and generally
weaker  industrial  construction  and  electronics  market  conditions. Lower UV
coatings  volume  was  negatively impacted by the slowing of the U.S. economy in
the  second  half  of  the  year.

The  acquisition  of  the  formaldehyde plant and certain other assets of Borden
Chemicals  and  Plastic  Limited  Partnership ("BCP") in third quarter 2000, the
acquisition  of East Central Wax in fourth quarter 2000 and the acquisition of a
foundry  resin  business  at  the  beginning  of  second  quarter  2001 provided
incremental  2001  sales  of  approximately  $48  million.

Unfavorable currency exchange rates for all international operations had a total
unfavorable  impact  on  2001  sales of approximately $40 million, with the most
significant  impacts  coming  from Latin America, Canada and the United Kingdom.

Adjusted Operating EBITDA of $204.1 million for the year ended December 31, 2001
was $16.6 million, or approximately 8%, lower than prior year adjusted operating
EBITDA  of  $220.7  million.  The  main  reasons for the decline are the overall
lower  sales  volume  discussed  above  and  significantly  higher energy costs,
partially  offset  by margin improvement, EBITDA contributed by the acquisitions
discussed  above  and  reduced  general  and  administrative expenses.  Improved
margins in the last three quarters of 2001 are a result of the downward trend in
major  raw  material  costs  versus  the  prior  year.

Corporate  and  Other
---------------------

Adjusted  Operating  EBITDA,  which  is  composed  primarily  of  general  and
administrative  expenses  and  income  and  expenses  related to previously sold
businesses  of  the Company, declined $14.7 million from a loss of $53.3 million
in 2000 to a loss of $68.0 million in 2001.  The decline reflects settlement and
curtailment  charges  of  $16.3 million in 2001 related to the sale of Foods and
the  absence  of  a  2000 gain of $10.5 million on the sale of certain rights to
harvest  shellfish,  which  were partially offset by the absence of 2000 pension
settlement  and  curtailment charges of $8.9 million related to the sale of Wise
and  a 2001 gain of $4.4 million on the sale of a common stock equity investment
held  by  the  Company.

Businesses  Sold  or  Distributed
-------------------------------

The  businesses  sold  or  distributed  classification  represents the Company's
infrastructure  management  services  business  and printing inks business.  The
distribution  of  the  infrastructure  management  services business occurred in
first quarter 2000 and the sale of the printing inks business occurred in fourth
quarter  2000.

2000  VS.  1999

Chemical
--------

Sales of $1,336.4 million in 2000 increased $112.8 million, or approximately 9%,
from  $1,223.6  million  in  1999.  The  most  significant items that positively
impacted  2000  sales were improved volumes of higher-priced specialty products,
higher  selling  prices  for forest products resins, primarily in North America,
two  acquisitions in the United States, and one acquisition in Europe.  The most
significant  items  that negatively impacted sales were lower selling prices for
melamine  products,  unfavorable  currency  exchange  rates,  and  the exit from
certain  non-core  businesses  in  the  United  States,  Latin  America  and the
Philippines.

Overall  volume,  excluding the effect of acquisitions and strategic realignment
activities,  was only 1.2% ahead of prior year, but still had an approximate $71
million positive impact on 2000 sales.  The positive impact was driven primarily
by  substantial  volume improvements in UV coatings and oilfield products, which
had  significantly  higher  per unit selling prices (as measured in metric tons)
compared to all other products.  Higher volumes of melamine crystal and melamine
based  resins

also  had  a  positive  impact  on  2000  sales.  The improvement in UV coatings
primarily  reflects  an increase in the Company's share of the market and market
growth  in  demand  for  optical  fiber. Oilfield products volume benefited from
increased drilling activity, which reflects substantially higher natural gas and
oil prices. Melamine products volume reflects increased export sales of melamine
crystal,  due  to  tightening  global  supply,  and  increased  market  share of
high-pressure  laminates.  North  America forest products volume was essentially
flat compared to the prior year and reflects aggressive competitor pricing and a
downturn  in housing starts throughout the second half of the year, particularly
in  the  fourth  quarter that offset strong housing and construction activity in
the  first  half  of  the  year.

In  2000,  the  Company  acquired the formaldehyde and certain other assets from
BCP.  In  second  quarter 1999 the Company acquired Spurlock Industries, Inc. in
the  United States and in third quarter 1999 acquired Blagden Chemicals, Ltd. in
Europe.  These  acquisitions contributed incremental 2000 sales of approximately
$57  million.

Overall  higher  selling  prices  in  2000  had  an  approximate $33 million net
positive  impact on sales. The increase reflects generally higher selling prices
globally  for forest products resins and formaldehyde, partially offset by lower
pricing for melamine crystal and melamine based resins, as well as the impact of
downward  pressure  on  selling prices due to very competitive market conditions
across  all  businesses. The generally higher selling prices for forest products
resins and formaldehyde reflect the partial pass-through of substantially higher
raw  material costs. The lower pricing for melamine products reflects the global
market  imbalance  for  melamine  crystal  that worsened throughout 1999 and has
persisted  throughout most of 2000. A substantial portion of the Company's sales
volume,  especially  for  North America forest products, is sold under contracts
that  provide  for  monthly  or  quarterly  selling  price  adjustments based on
published  cost indices for the Company's primary raw materials (i.e,. methanol,
phenol  and  urea).  During  the  first  quarter of 2000, the costs of these raw
materials  were  generally  lower than prior year, therefore selling prices were
generally  lower; however, the cost of all three primary raw materials escalated
significantly over the last three quarters, which resulted in upward adjustments
in  selling  prices.

Unfavorable  currency  exchange  rates,  primarily in the United Kingdom, had an
unfavorable  impact on 2000 sales of approximately $28 million.  The unfavorable
exchange  rate  for Ecuador reflects significant currency devaluation throughout
1999 and through May 2000 when the local currency exchange rate was fixed to the
United  States  dollar.

The  1999 sale of the non-strategic United States molding compounds business and
closures  or  sales  of  non-strategic  businesses  in  Latin  America  and  the
Philippines  caused 2000 sales to be approximately $23 million lower compared to
the  prior  year.

Adjusted  Operating  EBITDA  of  $220.7  million  in  2000 was $23.0 million, or
approximately  9%,  lower  than  prior  year Adjusted Operating EBITDA of $243.7
million.  The decline reflects a very difficult business environment, especially
over  the  second  half of the year.  A slowing economy, escalating raw material
costs,  intense competitor pricing activity, and unprecedented natural gas costs
in  the  latter  part  of  the  year all combined to have a significant negative
impact  on  2000  operating  results.  Substantial  margin erosion and generally
higher  plant operating and distribution costs were partially offset by improved
volume  of higher-priced specialty products, more favorable purchasing contracts
for  certain  raw  materials  and the impact of acquisitions.  Profit margins in
North  America  forest  products were significantly impacted by the inability to
fully  recover rapidly escalating costs of methanol, phenol and urea.  Effective
recovery  of  these  rising  costs  was curtailed by delayed pricing adjustments
allowed under supply contracts and competitive pressures to keep prices down.  A
substantial  amount  of  North America forest products sales are based on supply
contracts  that  provide  only  monthly  or quarterly pricing adjustments, which
cause  price increases to lag raw material cost increases during times of rising
raw  material  costs.  Profit  margins  for  melamine crystal and melamine based
resins  were  also  negatively  impacted  by both the high cost of urea and high
natural  gas  cost  since  the  melamine  crystal  production  process  consumes
significant  energy.  Higher  plant operating costs reflect higher energy costs,
while  higher  distribution  costs  reflect  increased  export sales of melamine
crystal  and  generally  higher  fuel  costs.

Corporate  and  Other
---------------------

Adjusted  Operating  EBITDA,  which  consists  primarily  of  general  and
administrative  expenses  and  income  and  expense  related  to previously sold
businesses  of the Company, declined $12.8 million to a loss of $53.3 million in
2000  from  a loss of $40.5 million in 1999. The decline is primarily due to the
incurrence and settlement of various corporate liabilities and expenses of $15.0
million  and  a  $7.6  million  charge  for  certain  benefit  plan settlements,
partially  offset  by  a  $10.5  million  gain  on the sale of certain rights to
harvest  shellfish.




Businesses  Sold  or  Distributed
---------------------------------

The  businesses  sold  or  distributed  classification  represents the Company's
infrastructure  management  services  business  and  printing inks business. The
distribution  of  the  infrastructure  management  services business occurred in
first  quarter  2000  and  sale of the printing inks business occurred in fourth
quarter  2000.
<TABLE>
<CAPTION>
SIGNIFICANT  AND  UNUSUAL  ITEMS  EXCLUDED  FROM  ADJUSTED  OPERATING  EBITDA:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(Dollars in millions)                           2001          2000         1999
-------------------------------------------------------------------------------
<S>                                              <C>           <C>          <C>

     (Loss) gain on disposal of
      businesses, net                      $   (2.3)     $   (0.9)    $    7.4
      Business realignment, impairments
      and other                              (145.4)        (63.4)       (41.6)
                                              -----         -----       -------
                                           $ (147.7)    $   (64.3)    $  (34.2)
-------------------------------------------------------------------------------
</TABLE>


2001
Loss  on  disposal  of  businesses  primarily  relates to the sale of a Chemical
business  in  Ecuador.

Business  realignment,  impairments  and  other consists of business realignment
costs  of  $25.3 million, impairment charges of $101.1 million and other charges
of $19.0 million.  The business realignment costs include plant closure costs of
$12.7 million and severance and other employee costs of $12.6 million.  Included
in  plant  closure  costs are pre-tax gains of $13.5 million ($8.3 million after
tax)  from  the sale of land and other assets associated with closed plants. The
impairment  charges reflect the write-down of the melamine crystal fixed assets,
spare parts and goodwill of $98.2 million and the cost to cancel construction of
a new plant of $2.9 million.  Additionally, the Company recorded a $19.0 million
charge that reflects management's estimate of probable environmental remediation
costs  that the Company has incurred related to fourth quarter 2001 activity for
a  previously  owned  business.

2000
Loss  on  disposal  of  businesses primarily relates to the sale of the printing
inks  business partially offset by lower than expected costs related to the sale
of  the  commercial  and  industrial  wallcoverings  business.

Business  realignment,  impairments  and other represents costs of $38.1 million
related  to  plant  closures  in  the  United  States,  Argentina and the United
Kingdom.  Also  included  is $25.3 million to exit certain raw material purchase
contracts,  which  extended  through  2002,  in  order  to  take  advantage  of
opportunities  that  have  arisen  to  obtain  more  favorable  pricing.

1999
Gain  on  disposal  of  businesses primarily relates to gains on the sale of the
commercial and industrial wallcoverings business due to lower than expected exit
costs.

Business  realignment,  impairments and other of $41.6 million includes the cost
to cancel a plant expansion project, consisting of the write-off of engineering,
equipment  and  other  costs  of  $25.0  million.  In addition, certain Chemical
operations  in  the  Philippines,  Brazil, and Uruguay were closed as part of an
effort  to consolidate operations, resulting in a total charge of $16.6 million.

NON-OPERATING  EXPENSES  AND  INCOME  TAX  EXPENSE:
---------------------------------------------------
<TABLE>
<CAPTION>
NON-OPERATING  EXPENSES

-------------------------------------------------------------------
(Dollars in millions)                       2001    2000      1999
-------------------------------------------------------------------
<S>                                           <C>      <C>      <C>

    Interest expense                      $56.0  $   62.7   $ 63.1
    Affiliated interest expense, net        9.4      15.5     18.8
    Other non-operating expense (income)    4.0     (13.4)   (32.5)
    Investment write-downs and other
        charges                            27.0      68.0      3.0
                                          ------    ------    -----
                                         $ 96.4  $  132.8   $ 52.4
-------------------------------------------------------------------
</TABLE>

2001  vs.  2000
---------------
Non-operating  expenses  decreased $36.4 million for the year ended December 31,
2001  compared  to  the year ended December 31, 2000.  The decrease is primarily
due  to a $31.0 million reduction in investment and other asset write-downs from
2000  and  a  $10.0  million  reduction  from  2000  of charges recorded for the
financial  decline  of a limited partnership for which a wholly owned subsidiary
of  the  Company  serves  as  general  partner  (see Note 20 to the Consolidated
Financial  Statements).  Other decreases include a reduction in interest expense
and  affiliated interest expense of $6.7 million and $4.9 million, respectively,
and  an  increase in affiliated interest income of $1.2 million.  These declines
were  partially  offset  by a $9.4 million reduction in interest income due to
lower  average cash balances in 2001 compared to 2000, the absence of unrealized
gains  on  an  interest rate swap that matured in September 2000 of $6.7 million
and  reduced  affiliated  dividend  income  of  $2.8  million.

2000  vs.  1999
---------------
Non-operating  expenses  increased $80.4 million for the year ended December 31,
2000  compared  to  the  year ended December 31, 1999. The increase is primarily
attributable  to  increased  investment write-downs from $3.0 million in 1999 to
$48.0  million in 2000 (see Note 9 to the Consolidated Financial Statements) and
recording  a  liability  of  $20.0  million  for  potential costs related to the
financial  decline  of a limited partnership for which a wholly owned subsidiary
of  the  Company  serves  as  general  partner  (see Note 20 to the Consolidated
Financial  Statements).  Other changes include a reduction in interest income of
approximately $15 million due to lower average cash balances in 2000 compared to
1999  and  reduced unrealized gains on an interest rate swap of approximately $6
million,  which  terminated  in  September  2000. These decreases were partially
offset  by  higher dividend income of approximately $5 million from an affiliate
and  reduced  affiliated  interest  expense  due  to lower average loan balances
outstanding  in  2000  compared  to  1999.
<TABLE>
<CAPTION>
INCOME  TAX  EXPENSE
--------------------------------------------------------------------------------
(Dollars in millions)                            2001         2000          1999
--------------------------------------------------------------------------------
<S>                                              <C>          <C>            <C>
               Income tax (benefit) expense $   (30.8)  $   (12.4)     $   14.6
               Effective tax rate                 18%         15%            25%
--------------------------------------------------------------------------------
</TABLE>
2001
----
The  2001  effective  tax  rate  reflects  the impact of earnings related to the
expected  sale  of  a  foreign  business that are not expected to be permanently
reinvested  in  foreign  locations  and the inability to utilize the foreign tax
credits  associated  with  those earnings due to usage limitations. In addition,
the  rate reflects the write-down of the fixed assets and related non-deductible
goodwill  of  a  melamine  plant  due  to  its  indefinite  shut-down.

2000
----
The  2000  income  tax benefit primarily reflects a settlement with the Internal
Revenue  Service  ("IRS")  and  the  impact  of usage limitations on foreign tax
credits.  As a result of a settlement reached with the IRS in the second quarter
of  2000,  the  Company  recorded  net  tax  expense of $5 million consisting of
valuation  reserves  recorded  on foreign tax credits of $30 million that are no
longer likely to be utilized, substantially offset by a $25 million reduction of
amounts  established  for  tax  issues  related  to  the  divestiture of certain
segments  of the Company's business that are no longer considered necessary.  In
addition,  approximately  $10  million  of  income  tax  expense was recorded on
foreign source income because related foreign tax credits are not expected to be
utilized  within  the  expiration  period.

1999
----
The  1999  consolidated  effective  rate reflects a higher portion of net income
derived  from  foreign  operations  and the effect of lower tax rates in foreign
jurisdictions.

CASH  FLOWS:
------------
OPERATING

2001  vs. 2000
---------------
Operating  activities  provided  cash of $95.3 million in 2001 compared to $22.9
million  of  cash  provided  in  2000, an improvement of $72.4 million. The most
significant  components  of  this  improvement  are cash taxes received of $36.2
million  in 2001 compared to cash taxes paid of $19.2 million in 2000, increased
cash  flows  in  accounts receivable of $59.4 million due to improved collection
efforts  and collection of higher raw material costs passed through to customers
in the first half of the year, the absence of a 2000 payment of $25.3 million to
exit  certain raw material supply contracts and improved cash flows in inventory
of  $27.2  million  due  to  lower  raw  material costs and a $12.3 million cash
receipt  from  Foods  to  assume the liability for claims under certain employee
benefit  plans.  Partially  offsetting  these  improvements were a $49.3 million
increase in outflows in trade payables due to reduced payment terms with new raw
material  suppliers  and  lower  raw  material  costs,  a  reduction in adjusted
operating EBITDA of $32.0 million, increased cash restructuring payments in 2001
of $15.9 million, increased net interest paid of $6.3 million and the absence of
2000  cash  receipts  from  CCPC  Acquisition  Corp.  and  Wise  (see  below).

2000  vs.  1999
---------------
Operating  activities  provided  cash of $22.9 million in 2000 compared to $71.8
million cash provided in 1999, a decline of $48.9 million.  Significant outflows
compared  to prior year included a decline in adjusted operating EBITDA of $29.9
million,  a  decrease  in  accounts receivable and inventory cash flows of $32.2
million and $15.4 million, respectively, due to higher raw material costs passed
through  to customers and included in inventory, a $25.3 million payment in 2000
to  exit  certain  raw  material supply contracts and increased interest paid of
$7.1 million.  These increased outflows were partially offset by a $16.7 million
increase  in trade payables due to higher raw material costs, lower tax payments
of  $26.9 million, a $3.6 million repayment received from CCPC Acquisition Corp.
for interest accrued on the loan that was repaid in 2000, a $3.7 million payment
received  from Wise, upon its sale, related to its retirement benefit plans, the
absence  of  a  1999  payment  of  approximately $13.0 million to settle certain
long-term  disability claims and the absence of 1999 settlement payments of $6.4
million  related  to  divested  businesses.

INVESTING

2001  vs.  2000
---------------
Investing  activities  provided  cash of $211.1 million in 2001 compared to cash
used  of $195.7 million in 2000. The $406.8 million improvement is primarily due
to  increased proceeds from the sale of assets of $151.0 million, the absence of
2000 acquisitions for $118.1 million, increased proceeds from the divestiture of
businesses  of  $86.1 million and reduced capital expenditures of $57.2 million.
The  increased  proceeds  from  the sale of assets were due to the sale of loans
receivable  from affiliates for their fair value of $75.8 million, the sale of a
common stock equity investment held by the Company for the market value of $64.1
million  and  the sale of land and other assets associated with closed plants of
$14  million.  The  loans  to  affiliates  and $55.2 million of the common stock
equity  investment  held  by  the Company were sold to the Company's parent. The
absence of acquisitions made by Consumer Adhesives and Chemical in 2000 improved
cash  flows  by  $118.1  million in 2001. Divestiture proceeds of $97.0 million,
primarily  from  the  sale of Consumer Adhesives, were ahead of 2000 proceeds of
$10.9  million,  primarily  from the sale of the printing inks business. Further
contributing to the improvement was a reduction in capital expenditures of $57.2
million  primarily  due  to  reduced  plant  expansion  projects.
2000  vs.  1999
---------------
Investing activities used $195.7 million cash in 2000 compared to $229.5 million
cash  used  in  1999,  a  decrease  of  $33.8  million.  The  decrease primarily
represents  the  absence  of a 1999 $50.0 million investment in junior preferred
stock  of  WKI  and an $8.9 million collection of outstanding debt in 2000 which
eliminated  the  Company's  financial  interest  in  Wise,  partially  offset by
increased  capital expenditures of $29.7 million primarily for plant expansions.
Divestiture  proceeds  of  $10.9 million in 2000, primarily from the sale of the
printing  inks  business,  were  ahead of 1999 proceeds of $7.6 million from the
sale  of  the molding compounds business. Acquisitions in 2000 of $118.1 million
consist  of  a  Consumer  Adhesives  business  and  the BCP and East Central Wax
businesses  (see  Note  5  to  the Consolidated Financial Statements) while 1999
acquisitions  of  $119.6  million  consist  of  Spurlock, Blagden and the resins
manufacturing  plant  in  Minnesota.

FINANCING  ACTIVITIES

2001  vs.  2000
---------------
Financing  activities  used  cash  of  $307.6  million  in 2001 compared to cash
provided  of  $5.0 million in 2000.  The $312.6 million increase in cash used is
primarily  due  to  net  repayments of affiliate loans of $212.5 million in 2001
compared  to  net  borrowings of $86.7 million in 2000, 2001 net short-term debt
repayments  of  $41.8 million compared to 2000 net short-term debt borrowings of
$33.3  million  and  a  reduction  in  2001  long-term  debt borrowings of $64.6
million.  Affiliate  activity  in  2001  is comprised primarily of repayments to
Foods  of $125.0 million and BWHLLC of $73.4 million and additional loans to WKI
of  $19.0  million.  These  increased  uses  were  partially  offset  by reduced
long-term  debt  repayments  of $86.0 million, lower 2001 common stock dividends
paid  of  $13.0  million,  the  absence  of  a $10.3 million distribution to the
Company's  parent  made in 2000 (see below) and a 2001 cash capital contribution
from  the  Company's  parent  of  $17.0  million.







2000  vs.  1999
---------------
Financing  activities  generated  cash  of $5.0 million in 2000 compared to cash
used  of $319.0 million in 1999.  The $324.0 million difference is primarily due
to  2000  affiliated  borrowings and receipts of $86.7 million, compared to 1999
net  affiliated  repayments  and loans of $225.5 million. Affiliated activity in
2000  is  comprised  primarily  of  borrowings  from BWHLLC of $61.4 million and
receipts  from  CCPC Acquisition Corp., an affiliate of the Company's parent, of
$56.2  million,  partially  offset  by repayments to Foods of $31.0 million. The
1999  affiliated  activity  includes  repayments  to  BWHLLC and Foods of $169.3
million  and  a  short-term  loan  to  CCPC Acquisition Corp.  In addition, 2000
included short-term debt borrowings of $33.3 million compared to 1999 repayments
of  $3.7  million.  Partially  offsetting  these  net improved inflows are $17.6
million  of increased net long-term debt repayments (primarily Industrial Bonds)
and  the  distribution  of  $10.3  million  in  cash  temporarily  held  by  the
infrastructure  management  services  business for the benefit of its customers.
The $10.3 million distribution represents payroll related withholdings for which
the infrastructure management services business was liable when the business was
distributed  to  the Company's parent (see Note 19 to the Consolidated Financial
Statements).

LIQUIDITY  AND  CAPITAL  RESOURCES:
-----------------------------------
The  Corporate Reorganization was undertaken to simplify the legal structure and
strengthen  the  capital  structure  of the Company and to reduce overhead costs
(see  Note  4  to  the  Consolidated  Financial  Statements).

As part of the Corporate Reorganization, in the fourth quarter 2001, the Company
sold  a common stock equity investment, notes receivable from Consumer Adhesives
and  a  loan  receivable from WKI to its parent  (see Note 4 to the Consolidated
Financial  Statements).  On  March 1, 2002, the Company's investment in Consumer
Adhesives preferred stock was redeemed for a $110.0 million note receivable from
Consumer  Adhesives.  On  March  12,  2002,  the note receivable was sold to the
Company's parent for cash of $110.0 million plus accrued interest. Proceeds from
these  sales  were  used  to  repay  affiliated  debt.

In  fourth  quarter  2001,  the  Company's  parent contributed $614.4 million of
outstanding  Series  A  Cumulative  Preferred  Stock  ("Preferred  Stock")  plus
accumulated  dividends of $6.6 million to the Company as a capital contribution.
Prior  to this, the Company had 24,574,751 shares of Preferred Stock outstanding
with  a  total  of  100,000,000 shares authorized.  Each share had a liquidation
preference  of $25 and was entitled to cumulative dividends at an annual rate of
12% payable quarterly in arrears. The significant impact of this transaction was
to  eliminate  required  future  annual  preferred  dividend  payments  of $73.7
million.

In third quarter 2001, the Company's $809.0 million Credit Agreement was reduced
to  $250.0  million.  Of the reduction, $95.8 million was in accordance with the
Credit  Agreement due to the sale of substantially all of the Foods' operations.
The remaining reduction was made at the election of the Company.  As of December
31,  2001,  the  Company  had $161.0 million (net of $89.0 million in letters of
credit)  available under the Credit Agreement. At December 31, 2001, the Company
also had $0.9 million outstanding under a separate cash collateralized letter of
credit  agreement. The  cash held by the Company of $25.7 million, less the $0.9
cash collateral, as of December 31, 2001 and the cash available under the credit
agreement  may  be  used  for acquisitions and to fund working capital needs and
capital  expenditures.  This  credit  agreement  expires  on July 13, 2002.  The
Company  intends  to  either  replace  the  existing  facility with a new credit
facility  or  to  continue  to rely on borrowings from affiliates to meet future
working  capital  requirements.

During first quarter 2002, the Company finalized an uncommitted letter of credit
facility  totaling $45.0 million, and is currently in the process of negotiating
an  increase.  The  company is required to provide cash collateral equivalent to
101%  of  the letters of credit outstanding under this facility.  The fees under
the  facility are 1/2% per annum on the amount of letters of credit outstanding.
In  addition,  a 1/8% per annum issuance fee is in effect for all new letters of
credit  not  transferred  from  the  existing  $250.0  million Credit Agreement.

Additional  credit  agreements  are  executed  by  the  Company's  international
locations.  As  of  December  31,  2001,  these  locations had credit facilities
totaling $10.7 million.  Of this amount $8.7 million (net of a $1.5 million term
loan  and  $0.5  million  of other draws on the line of credit) was available to
fund  working  capital  needs  and  capital  expenditures.

As  part  of  the  common  control  exercised  over  the Company, procedures are
established  to  enter  into  borrowings  between  affiliates at market interest
rates.

The  Company's planned 2002 capital expenditures are approximately $45.5 million
and  includes  plans  to  continue  to  increase  plant  production  capacity as
necessary.  Capital  expenditures  will  be  financed through operations and, if
necessary,  available  lines  of  credit  or  borrowings  from  affiliates.




The  Company  expects  to  have  enough  liquidity  to  fund  working  capital
requirements  and  support  capital expenditures during 2002 and in future years
due to cash from operations and amounts available under the credit agreement and
from  affiliates.

In  third quarter 2000, the Company entered into a $40.0 million credit facility
with WKI maturing December 31, 2000. This facility was extended through a series
of  amendments  through  April 16, 2001. Effective April 12, 2001, this facility
was  amended  and  restated  extending  the maturity date to March 31, 2004. The
facility  was  further  amended  effective  July  2, 2001 to increase the amount
available  to  $50.0  million.  In accordance with the terms of the restated and
amended  agreement, the facility was reduced to $25.0 million on August 16, 2001
with the perfection of certain pledged collateral. The Company received a second
priority  lien  on  that  same  collateral.  On  September 25, 2001, the Company
extended  an  additional  $3.0 million unsecured credit facility to WKI maturing
October 25, 2001. That facility was increased to $13.0 million effective October
26,  2001  maturing  on  December  28,  2001. No borrowings occurred under those
unsecured facilities and the facility was transferred to the Company's parent in
conjunction  with  the  Corporate  Reorganization.

As  of  December  31, 2001, the Company had $190.4 million, net of allowances of
$110.4  million,  in  deferred tax assets that relate to foreign and alternative
minimum  tax  credits as well as net operating loss carryforwards. These credits
and  carryforwards  are  expected  to  reduce  future  tax  liabilities.

RISK  MANAGEMENT:
-----------------

The  Company  enters  into  various  financial  instruments,  primarily to hedge
interest  rate  risk and foreign currency exchange risk. The Company also enters
into raw materials purchasing contracts and contracts with customers to mitigate
commodity  price  risks.

FOREIGN  EXCHANGE  RISK

In  2001  and  2000, international operations accounted for approximately 34% of
the  Company's sales. As a result, there is exposure to foreign exchange risk on
transactions  that  are denominated in a currency other than the business unit's
functional  currency.  Such  transactions  include  foreign currency denominated
imports  and  exports of raw materials and finished goods (both intercompany and
third  party),  and  loan  payments  (both intercompany and third party). In all
cases,  the  functional  currency  is  the  unit's  local  currency.

It  is the Company's policy to reduce foreign currency cash flow exposure due to
exchange  rate  fluctuations  by  hedging  firmly  committed  foreign  currency
transactions  wherever  economically  feasible.  The  use  of forward and option
contracts  protects  cash flows against unfavorable movements in exchange rates,
to  the  extent of the amount under contract. The Company does not hedge foreign
currency  exposure  in  a  manner  that  would  entirely eliminate the effect of
changes  in  foreign  currency  exchange  rates on net income and cash flow. The
Company  does  not  speculate  in  foreign  currency  and does not hedge foreign
currency  translation  or  foreign  currency  net  assets  and  liabilities. The
counterparties  to  the  forward  contracts  are  financial  institutions  with
investment  grade  credit  ratings.

Foreign  exchange  risk  is  also mitigated because the Company operates in many
foreign  countries,  reducing  the concentration of risk in any one currency. In
addition,  foreign  operations  have  limited  imports and exports, reducing the
potential  impact  of  foreign  currency  exchange rate fluctuations. With other
factors being equal, such as the performance of individual foreign economies, an
average  10%  foreign exchange increase or decrease in any one country would not
materially  impact operating results or cash flow. Although considered unlikely,
an  average  10%  foreign  exchange  increase  or  decrease in all countries may
materially  impact  operating  results  of  the  Company.

In  accordance  with  current accounting standards, the Company recognizes gains
and  losses arising from contracts on a quarterly basis through the Statement of
Operations.

A  summary  of  forward currency and option contracts outstanding as of December
31,  2001 and 2000 follows. Fair values are determined from quoted market prices
at  December  31,  2001  and  2000.















<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                            2001                                                  2000
--------------------------------------------------------------------------------------------------------------------
                  AVERAGE   AVERAGE     FORWARD     FAIR VALUE    AVERAGE     AVERAGE     FORWARD      FAIR VALUE
                   DAYS    CONTRACT    POSITION        LOSS         DAYS     CONTRACT    POSITION         LOSS
                TO MATURITY  RATE   (IN MILLIONS) (IN MILLIONS) TO MATURITY    RATE   (IN  MILLIONS)  (IN MILLIONS)
                  ----------  ------  --------------  ------------  ---------   ------  ----------------------------
<S>                  <C>         <C>         <C>            <C>          <C>        <C>        <C>              <C>
CURRENCY TO SELL
 FOR U.S. DOLLARS
-----------------
British Pound       59         1.45        $51.0       $(0.1)         22        1.47        $88.9           $(1.8)
--------------------------------------------------------------------------------------------------------------------
</TABLE>
INTEREST  RATE  RISK

The  Company has utilized interest rate swaps to lower funding costs or to alter
interest  rate exposures between fixed and floating rates on long-term debt. The
Company  does  not enter into speculative swaps or other financial contracts. As
of  December  31,  2001  and 2000, one interest rate swap was outstanding with a
notional  value  of  $24.3  million.

Fair  values  of the swaps are independently provided using estimated mid-market
levels.  Under  interest  rate  swaps,  the Company agrees with other parties to
exchange,  at  specified  intervals,  the  difference between the fixed rate and
floating  rate  interest  amounts calculated by reference to the agreed notional
principal  amount.  On average, the Company paid 13.7% and received 4.5% in 2001
and paid 10.5% and received 6.3% on the swaps in 2000. The remaining outstanding
swap as of December 31, 2001 and 2000 matures on December 1, 2002. A 1% increase
or  decrease in market interest rates would result in a $0.2 million increase or
decrease,  respectively,  in the fair value of the interest rate swap agreements
at  December  31, 2001 and 2000. The Company is exposed to credit related losses
in the event of nonperformance by the counterparty to the swap, although no such
losses  are  expected  as  the counterparty is a financial institution having an
investment  grade  credit  rating.

A  summary  of the Company's interest rate swap as of December 31, 2001 and 2000
follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                                       2001                               2000
                                           -----------------------------     ----------------------------
  NOTIONAL                                           AVERAGE      FAIR                    AVERAGE     FAIR
  AMOUNT           TRADE    TERMINATION    FIXED     RECEIVE     VALUE        FIXED       RECEIVE     VALUE
(IN MILLIONS)      DATE       DATE       PAY RATE     RATE    (IN MILLIONS)   PAY RATE     RATE    (IN MILLIONS)
--------------   --------    ---------   ---------   -------  -------------   --------   --------   ------------
<S>                 <C>       <C>          <C>        <C>       <C>             <C>        <C>         <C>
$  24.3           12/01/92    12/01/02     13.65%      4.5%   $  (2.7)        13.65%       6.3%    $   (3.4)
----------------------------------------------------------------------------------------------------------------
</TABLE>
The  interest  rate on most debt agreements is fixed. A 10% increase or decrease
in  the  interest  rate of the variable debt agreements would have an immaterial
effect  on  the  Company's  net  income. The fair value of publicly held debt is
based on the price at which the bonds are trading at December 31, 2001 and 2000.
All  other  debt fair values are determined from quoted market interest rates at
December  31,  2001  and  2000.

A  summary  of  the  Company's outstanding debt as of December 31, 2001 and 2000
follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                             2001                                    2000
                     -----------------------------------------       ------------------------------------
                                     Weighted           Fair                         Weighted          Fair
                        Debt          Average           Value           Debt          Average          Value
Year               (in millions)    Interest Rate   (in millions)   (in millions)   Interest Rate   (in millions)
-----------------------------------------------------------------------------------------------------------------
<S>                       <C>             <C>              <C>             <C>             <C>             <C>
2002               $   3.1             8.3%         $    3.1       $     1.4            5.6%        $    1.4
2003                    -               -                -               -              -                  -
2004                    -               -                -               -              -                  -
2005                    -               -                -               -              -                  -
2006                   3.3            13.3%              4.6             -              -                  -
2007 and thereafter  529.2             8.5%            361.3           529.1            8.5%           404.7
                   --------         -------           -------         ------                          -------
                   $ 535.6                             369.0           530.5                           406.1
-----------------------------------------------------------------------------------------------------------------
</TABLE>
The  Company  does  not  use  derivative  financial  instruments  in  investment
portfolios.  Cash  equivalent  investments are placed with instruments that meet
credit  quality  standards. These standards are established within the Company's
investment policies, which also limit the exposure to any one issue. At December
31,  2001,  the  Company  had  $6.9  million  invested  primarily  in marketable
securities  with  average maturity periods of 43 days and average rates of 6.4%.
At  December  31, 2000, the Company had $11.1 million invested primarily in time
deposits with average maturity periods of 28 days and average rates of 5.2%. Due
to  the  short maturity of the Company's cash equivalents, the carrying value on
these  investments  approximates  fair  value  and the interest rate risk is not
significant.  A  10%  increase  or decrease in interest returns on invested cash
would  have  an  immaterial  effect on the Company's net income and cash flow at
December  31,  2001  and  2000.

COMMODITY  RISK

The  Company  is exposed to price risks associated with raw materials purchases,
most  significantly  with  methanol,  phenol  and  urea. For these commodity raw
materials,  the  Company  has purchase contracts, with periodic price adjustment
provisions.  The  commodity  risk  also  is  moderated  through  use of customer
contracts  with  selling price provisions that are indexed to publicly available
indices  for  these  commodity  raw materials as discussed on pages 13 and 14.
Any  commodity futures that the Company may enter into are approved by the Board
of  Directors.

The  Company  has  entered  into  a  long-term  contractual arrangement with the
leading  global  melamine  crystal  producer  to  supply a minimum of 70% of the
Company's  worldwide  melamine crystal requirements.  The melamine crystal to be
purchased  under the agreement will be sourced from numerous supplier production
sites  and  the  temporary  or  permanent  loss of any individual site would not
likely  have  a  material adverse impact on the Company's ability to satisfy its
melamine  crystal  needs.

In  fourth  quarter  2000,  the  Company entered into fixed rate, fixed quantity
contracts to secure a portion of future natural gas usage at certain facilities.
The contracts were entered into to partially hedge the Company's risk associated
with natural gas price fluctuations in peak usage months.  Contracts covered the
period  from  October  2000  through  March  2003.  Gas  purchases  under theses
contracts  totaled $0.9 million in 2001, with $1.1 million of future commitments
at  December  31,  2001.  These  contracts  covered  between 75% and 85% of 2001
natural  gas  usage  during  the  periods  of the contracts at those facilities.

Due  to a sharp increase in natural gas prices in 2000, the Company expanded its
natural  gas  hedging  activities in June 2001 to hedge a portion of natural gas
purchases  for all of North America.  The Company entered into futures contracts
for  the  months of June 2001 through March 2002.  The contracts are settled for
cash  each  month based on the closing market price on the last day the contract
trades  on the New York Mercantile Exchange.  Approximately 24% of the Company's
2001  North  American  natural  gas  usage from June through December was hedged
through  futures  contracts.  Commitments  settled under these contracts in 2001
totaled  $1.7  million,  with $0.5 million of future commitments at December 31,
2001.

Gains and losses on commodity futures contracts are recognized each month as gas
is  used.  Future  commitments  are  marked  to market on a quarterly basis.  In
2001, the Company realized losses totaling $0.6 million at the expiration of its
natural gas futures contracts.  The Company also recorded a loss of $0.5 million
for  the  difference between the fair value and carrying value of future natural
gas  commitments  at  December  31,  2001.

EQUITY  PRICE  RISK

At  December  31,  2001, the Company held a preferred stock investment of $110.0
million  in  Consumer  Adhesives.  Subsequently,  on March 1, 2002, the Consumer
Adhesives preferred stock was redeemed for a $110.0 million note receivable from
Consumer  Adhesives.  On  March  12,  2002,  the note receivable was sold to the
Company's parent for cash of $110.0 million plus accrued interest.  During 2001,
a  common stock equity investment of the Company was sold for $64.1 million.  Of
the  $64.1  million,  sales  to third-party investors totaling $8.9 million were
made  in  2001  resulting  in  a  pre-tax  gain  of  $3.8  million ($2.8 million
after-tax).  The  remaining  $55.2 million of the sale was made to the Company's
parent  as  part of the Corporate Reorganization (see Note 4 to the Consolidated
Financial  Statements).  In  addition, the remaining $10.0 million investment in
preferred  stock  of  WKI was written-off during the year and transferred to the
Company's  parent  at  its  fair  value.

At  December  31,  2000,  investments  held by the Company consisted of a common
stock  equity  investment sold in 2001 (as described above) and an investment in
preferred  stock  of  an  affiliate  that  was written off in 2001 (as described
above).  The  common  stock  investment  represented  approximately  33%  of the
outstanding  shares  and  was  accounted  for  using  the  equity  method.

The  Company  reviews  the  carrying  value  of  investments  in accordance with
existing  accounting  guidance  that requires investments to be adjusted to fair
value  if  the decline in value is considered to be "other than temporary" based
on  certain  criteria.  The  Company  recorded  investment write downs of $10.0,
$48.0  and  $3.0  in  2001,  2000  and  1999,  respectively.

A summary of investments as of December 31, 2001 and 2000 follows. Fair value is
based  on  the  market stock price as of December 31, 2001 and 2000 for publicly
traded common stock.  Fair value for other investments is based on other similar
financial  instruments.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                                                2001                                2000
                                              -------------------------------    --------------------------------
                                                 CARRYING          FAIR        CARRYING          FAIR
                                    DATE          VALUE           VALUE          VALUE           VALUE
    DESCRIPTION                    ACQUIRED    (IN MILLIONS)  (IN MILLIONS)  (IN MILLIONS)   (IN MILLIONS)
------------------------------------------------------------------------------------------------------------------
<S>                                 <C>             <C>           <C>           <C>                  <C>
   Equity method securities       10/11/96          -               -           $45.0              $107.8
   Cost method securities         8/13/01         $110.0         $110.0         $10.0              $ 10.0
-------------------------------------------------------------------------------------------------------------------
</TABLE>

Readers  are  cautioned  that  forward-looking  statements  contained  under the
heading  of  "Risk Management" should be read in conjunction with the disclosure
under  the  heading:  "Forward-Looking  and  Cautionary  Statements".

RECENTLY  ISSUED  ACCOUNTING  STANDARDS
---------------------------------------

In  June  2001,  the  FASB  issued  SFAS  No. 142 "Goodwill and Other Intangible
Assets" which addresses accounting and reporting for acquired goodwill and other
intangibles.  The  most  significant  changes  made  by  SFAS  No.  142 are: (1)
goodwill  and  intangible  assets  with  indefinite  lives  will  no  longer  be
amortized;  (2)  goodwill  and  intangible  assets with indefinite lives must be
tested  for  impairment  at  least annually; and (3) the amortization period for
intangible  assets  with  finite lives will no longer be limited to forty years.
The  Company will adopt SFAS No. 142 effective January 1, 2002, as required.  At
that  time,  annual  amortization  of  existing  goodwill  will  cease  on  the
unamortized  portion  associated  with  previous  acquisitions.  As  required, a
transitional impairment test is required for existing goodwill as of the date of
adoption  of  this Standard.  This test must be completed within the first year.
Any impairment loss resulting from applying the goodwill impairment test will be
reported  as  a cumulative effect of a change in accounting principle.  Goodwill
recorded after adoption of this Standard is to be tested for impairment at least
annually  and  any  resulting impairment is not considered part of the change in
accounting  principle.  The Company is in the process of evaluating goodwill and
may  be  required  to  write  off  amounts  under  the  transitional  assessment
provisions  of  SFAS  No.  142.

In  July  2001,  the  FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations", which addresses financial accounting and reporting for obligations
associated  with the retirement of tangible long-lived assets and the associated
asset retirement costs.  Under this Statement, an asset retirement obligation is
recognized  at  its  fair  value  in  the period in which it is incurred.  Asset
retirement  costs  are  capitalized  as  part  of  the  carrying  amount  of the
long-lived  asset  and  a  related  amortization expense is recognized in future
periods.  This  Statement  is effective for the Company for financial statements
issued  for fiscal years beginning after January 1, 2003.  The Company is in the
process  of  determining  the  impact  of  adopting  this  Statement.

In  August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal  of  Long-Lived  Assets",  which  addresses  financial  accounting  and
reporting  for  the  impairment of long-lived assets.  This Statement supercedes
SFAS  No.  121  "Accounting  for  the  Impairment  of  Long-Lived Assets and for
Long-Lived  Assets  to be Disposed Of" and establishes a single accounting model
which  requires  long-lived  assets  be tested for impairment whenever events or
change  in  circumstances  indicate  that  their  carrying  value  may  not  be
recoverable.   Under  the  requirements of SFAS No. 144, discontinued operations
are  measured  at  the  lower of their carrying value or fair value less cost to
sell  and  future  operating  losses are no longer recognized before they occur.
SFAS  No. 144 broadens the presentation of discontinued operations in the income
statement  to  include  a  component  of  an  entity (rather than a segment of a
business).  A  component  of  an  entity  must  be  clearly  distinguished,
operationally,  and  for  financial  reporting  purposes,  from  the rest of the
entity.  The Company will adopt this Standard prospectively effective January 1,
2002.

FORWARD-LOOKING  AND  CAUTIONARY  STATEMENTS
--------------------------------------------

The  Company  and  its  officers  may,  from  time to time, make written or oral
statements regarding the future performance of the Company, including statements
contained  in the filings with the Securities and Exchange Commission. Investors
should  be  aware  that  these  statements  are  based  on  currently  available
financial,  economic  and  competitive  data and on current business plans. Such
statements  are  inherently uncertain and investors should recognize that events
could  cause  the  Company's  actual  results  to  differ  materially from those
projected  in  forward-looking  statements  made by or on behalf of the Company.
Such risks and uncertainties are primarily in the areas of financial information
about  operating  segments,  results  of operations by business unit, liquidity,
legal,  environmental  liabilities  and  risk  management.



ITEM  7A:   QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK
---------   ----------------------------------------------------------------

Refer  to  the  "Risk  Management"  section  included  in  Item 7 - Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results  of Operation.


















































































<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
ITEM  8.   FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA
--------   -----------------------------------------------
CONSOLIDATED  STATEMENTS  OF  OPERATIONS
BORDEN  CHEMICAL,  INC.

                                                                   Year ended December 31,
(In millions, except per share data)                                2001                      2000                 1999
--------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>                        <C>             <C>
           Net sales                                           $    1,372.1             $   1,376.6              $  1,274.2
           Cost of goods sold                                       1,060.6                 1,055.6                   894.4
                                                                     -------                -------                   -----

           Gross margin                                               311.5                   321.0                   379.8
                                                                     ------                   ------                  -----
           Distribution expense                                        63.9                    63.8                    61.9
           Marketing expense                                           42.0                    46.2                    46.8
           General & administrative expense                           132.7                   134.0                   126.7
           Gain on sale of assets                                      (3.8)                  (10.1)                   (1.3)
           Loss (gain) on divestiture of businesses                     2.3                     0.9                    (7.4)
           Business realignment, impairments and other                145.4                    38.1                    41.6
                                                                     ------                   -------                   -----
           Operating (loss) income                                    (71.0)                   48.1                   111.5
                                                                     ------                   -------                 ------
           Interest expense                                            56.0                    62.7                    63.1
           Affiliated interest expense, net of affiliated interest
              income of $3.0, $1.8 and $1.2, respectively               9.4                    15.5                    18.8
           Other non-operating expense (income)                         4.0                   (13.4)                  (32.5)
           Investment write-downs and other charges                    27.0                    68.0                     3.0
                                                                     -------                 -------                   ------

           (Loss) income from continuing operations
            before income tax                                        (167.4)                  (84.7)                   59.1
            Income tax (benefit) expense                              (30.8)                  (12.4)                   14.6
                                                                    --------                  ------                  ------

            (Loss) income from continuing operations                 (136.6)                  (72.3)                   44.5
                                                                    --------                 -------                   -----

            Discontinued operations:
              Income from operations, net of tax                       11.8                    13.3                    10.4
              Gain (loss) on disposal, net of tax                      -                       93.0                    (2.0)
                                                                     --------               ---------                -------

            Net (loss) income                                        (124.8)                   34.0                    52.9

            Preferred stock dividends                                 (61.8)                  (73.7)                  (73.7)
                                                                    ---------                 -------              ---------

            Net loss applicable to common stock                 $    (186.6)             $    (39.7)               $  (20.8)
                                                                 ==========                 =========              ========
</TABLE>
































<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED  STATEMENTS  OF  OPERATIONS
(CONTINUED)
BORDEN  CHEMICAL,  INC.


                                                                Year ended December 31,
(In millions, except per share data)                      2001              2000         1999
---------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>               <C>           <C>
     Basic and Diluted Per Share Data
     ----------------------------------

    (Loss) income from continuing operations      $     (0.69)      $      (0.36)    $    0.23
    Discontinued operations:
       Income from operations, net of tax                0.06               0.06          0.05
       Gain (loss) on disposal, net of tax                -                 0.47         (0.01)
                                                       -------            -------       -------
    Net (loss) income                                   (0.63)              0.17          0.27
    Preferred stock dividends                           (0.31)             (0.37)        (0.37)
                                                       -------            --------      -------

    Net loss applicable to common stock          $      (0.94)      $      (0.20)    $   (0.10)
                                                       =========          ========      =======

    Dividends per common share                  $        0.18       $       0.31     $    0.32
    Dividends per preferred share               $        2.52       $       3.00     $    3.00

    Average number of common shares outstanding
       during the period                                199.0              199.0         199.0
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See  Notes  to  Consolidated  Financial  Statements




















































<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
CONSOLIDATED  BALANCE  SHEETS
BORDEN  CHEMICAL,  INC.

(In  millions)

                                                                  December 31,                 December 31,
ASSETS                                                               2001                          2000
------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>                            <C>
CURRENT ASSETS
         Cash and equivalents                               $        25.7                    $        26.9
         Accounts receivable (less allowance for doubtful
            accounts of $16.7 in 2001 and $12.7 in 2000)            176.9                            229.0
         Loan receivable from affiliate                               -                                6.1
         Inventories:
           Finished and in-process goods                             54.2                             57.3
           Raw materials and supplies                                38.1                             49.2
           Deferred income taxes                                     63.5                             42.4
           Other current assets                                       9.3                             13.2
           Net assets of discontinued operations                       -                             128.7
                                                                   -------                          -------
                                                                    367.7                            552.8
                                                                   -------                          -------

INVESTMENTS AND OTHER ASSETS
         Investments                                                 -                                45.0
         Investments in affiliates                                  110.0                             10.0
         Deferred income taxes                                       89.7                             80.2
         Prepaid pension assets                                      -                               111.5
         Other assets                                                23.7                             41.2
                                                                  --------                          -------
                                                                    223.4                            287.9
                                                                  --------                          -------

PROPERTY AND EQUIPMENT
         Land                                                        30.1                             27.2
         Buildings                                                   98.3                             83.7
         Machinery and equipment                                    652.2                            747.9
                                                                  --------                          -------
                                                                    780.6                            858.8
         Less accumulated depreciation                             (323.0)                          (302.6)
                                                                  ---------                         -------
                                                                    457.6                            556.2

INTANGIBLES
         Net of accumulated amortization of $21.8 in 2001
           and $20.2 in 2000                                         80.6                            105.6
                                                                   -------                          -------

TOTAL ASSETS                                               $      1,129.3                    $     1,502.5
                                                                ==========                         ========
------------------------------------------------------------------------------------------------------------
</TABLE>
See  Notes  to  Consolidated  Financial  Statements






























<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
CONSOLIDATED  BALANCE  SHEETS
BORDEN  CHEMICAL,  INC.

(In  millions,  except  share  data)

                                                                            December 31,           December 31,
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY                                 2001                    2000
---------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                        <C>
CURRENT LIABILITIES
         Accounts and drafts payable                                      $       125.5         $      150.3
         Debt payable within one year                                               3.1                 43.5
         Loans payable with affiliates                                             78.6                283.1
         Other current liabilities                                                136.7                174.2
                                                                                 -------               ------
                                                                                  343.9                651.1
                                                                                 -------               ------

OTHER LIABILITIES
         Long-term debt                                                           532.5                530.5
         Non-pension post-employment benefit obligations                          150.9                153.7
         Other long-term liabilities                                              199.3                152.9
                                                                                 --------              ------
                                                                                  882.7                837.1
                                                                                 --------              ------
COMMITMENTS AND CONTINGENCIES (SEE NOTE 20)

SHAREHOLDERS' (DEFICIT) EQUITY
         Preferred stock - Issued 0 and 24,574,751 shares in 2001 and
           2000, respectively                                                       -                  614.4
         Common stock - $0.01 par value: authorized 300,000,000 shares,
           Issued 199,121,749 and 198,974,994 shares in 2001 and
           2000, respectively                                                       2.0                  2.0
         Paid in capital                                                        1,106.8                353.3
         Receivable from parent                                                  (404.8)              (414.9)
         Accumulated other comprehensive income                                  (134.5)               (60.3)
         Accumulated deficit                                                     (666.8)              (480.2)
                                                                                -------                ------
                                                                                  (97.3)                14.3
                                                                                --------               ------

TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY                      $     1,129.3         $    1,502.5
                                                                               ========              ========
-------------------------------------------------------------------------------------------------------------
</TABLE>
See  Notes  to  Consolidated  Financial  Statements






































<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
BORDEN  CHEMICAL,  INC.

                                                                                      Year ended December 31,
(In millions)                                                                  2001         2000        1999
----------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>             <C>           <C>
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
         Net income                                                   $     (124.8)   $    34.0    $    52.9
         Adjustments to reconcile net income to net
           cash from (used in) operating activities:
           (Gain) loss on disposal of discontinued operations, net of tax.     -           (93.0)        2.0
           Loss (gain) on divestiture of businesses                           2.3            0.9        (7.4)
           Gain on the sale of assets                                        (3.8)         (10.1)       (1.3)
           Deferred tax (benefit) provision                                 (25.9)          18.8         5.9
           Depreciation and amortization                                     59.4           55.7        52.3
           Business realignment and asset impairments                       145.4           38.1        41.6
           Unrealized loss (gain) on interest rate swap                       1.8           (4.9)      (10.8)
           Investment write-downs and other charges                          27.0           68.0         3.0
         Net change in assets and liabilities:
           Trade receivables                                                 31.7          (27.7)       4.5
           Inventories                                                       14.7          (12.5)       2.9
           Trade payables                                                   (20.2)          28.9       12.2
           Income taxes                                                      44.1          (47.9)     (32.1)
           Other assets                                                     (71.1)          21.5       (3.7)
           Other liabilities                                                 14.7          (37.8)     (50.5)
         Cash (used) provided by discontinued operations                       -            (9.1)       0.3
                                                                           -------         ------      ------
                                                                             95.3           22.9       71.8
                                                                           --------        -------     ------

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
         Capital expenditures                                               (47.3)        (104.5)     (74.8)
         Proceeds from the divestiture of businesses                         97.0           10.9        7.6
         Purchase of businesses                                               -           (118.1)    (119.6)
         Proceeds from the sale of assets                                   160.9            9.9        9.6
         Collection (purchase) of affiliate's receivables                     0.5           (0.5)        -
         Return from (investment in) affiliate, net                            -             6.6      (52.3)
                                                                           --------        ------     ------
                                                                            211.1         (195.7)    (229.5)
                                                                            -------        -------    ------

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
        Net short-term debt (repayments) borrowings                         (41.8)          33.3       (3.7)
        Borrowings of long-term debt                                         57.4          122.0         -
        Repayments of long-term debt                                        (54.0)        (140.0)      (0.6)
        Affiliated (repayments/loans) borrowings/receipts                  (212.5)          86.7     (225.5)
        Interest received from parent                                        48.6           48.6       48.9
        Common stock dividends paid                                         (48.6)         (61.6)     (64.4)
        Preferred stock dividends paid                                      (73.7)         (73.7)     (73.7)
        Capital contribution from (distribution to) parent                   17.0          (10.3)        -
                                                                         ---------        --------  --------
                                                                           (307.6)           5.0     (319.0)
                                                                         ---------        --------  --------
</TABLE>






























<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS  (CONTINUED)
BORDEN  CHEMICAL,  INC.


                                                                                 Year ended December 31,
(In millions)                                                             2001             2000           1999
---------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                 <C>           <C>
         (Decrease) in cash and equivalents                          $   (1.2)       $   (167.8)    $   (476.7)
         Cash and equivalents at beginning
           of year                                                       26.9             194.7          671.4
                                                                       -------           -------        ------
         Cash and equivalents at end
           of year                                                   $   25.7        $     26.9     $    194.7
                                                                      ========          ========        =======


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
         Cash paid (received):
            Interest, net                                             $  70.3        $    64.0      $     56.9
            Income taxes, net                                           (36.2)            19.2            46.1
         Non-cash activity:
           Capital contribution by parent                                31.1             44.3            26.4
           Accrued dividends on investment in affiliate                   -                6.5             1.5
           Distribution of net assets of infrastructure management
           services business to the Company's parent                      -                6.0              -
         Reclassification of minimum pension liability adjustment
           (to)/from shareholders' equity                               (66.6)             1.8             1.5
----------------------------------------------------------------------------------------------------------------
</TABLE>
See  Notes  to  Consolidated  Financial  Statements




















































<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  (DEFICIT)  EQUITY
BORDEN  CHEMICAL,  INC.
<BTB>
(In  millions)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                         Accumulated
                                        Preferred     Common     Paid-in     Receivable      Other         Accumulated
                                          Stock        Stock     Capital        from      Comprehensive       Deficit     Total
                                                                               Parent        Income
<S>                                         <C>          <C>       <C>           <C>            <C>             <C>         <C>
-----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998           $    614.4     $   2.0    $  358.9    $  (415.3)    $   (51.0)       $   (419.7)    $  89.3
-----------------------------------------------------------------------------------------------------------------------------------
Net income                                                                                                      52.9        52.9

Translation adjustments and other                                                             (3.0)                         (3.0)

Minimum pension liability (net of $0.8 tax)                                                    1.5                           1.5
                                                                                                                          ---------

COMPREHENSIVE INCOME                                                                                                     $  51.4
                                                                                                                          ---------

Preferred stock dividends                                                                                      (73.7)      (73.7)

Common stock dividends                                            (64.1)                                                   (64.1)

Interest accrued on notes from parent (net of $14.0 tax)           34.5          0.4                                        34.9

Capital contribution from parent                                   26.4                                                     26.4
-----------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1999           $    614.4     $   2.0    $  355.7    $  (414.9)    $   (52.5)       $   (440.5)    $  64.2
-----------------------------------------------------------------------------------------------------------------------------------
Net income                                                                                                      34.0        34.0

Translation adjustments and other                                                            (9.6)                          (9.6)

Minimum pension liability (net of $0.9 tax)                                                   1.8                            1.8
                                                                                                                        ---------

COMPREHENSIVE INCOME                                                                                                     $  26.2
                                                                                                                         --------

Preferred stock dividends                                                                                      (73.7)      (73.7)

Common stock dividends                                            (61.6)                                                   (61.6)

Other distributions                                               (16.3)                                                   (16.3)

Interest accrued on notes from parent (net of $17.4 tax)           31.2                                                     31.2

Capital contribution from parent                                   44.3                                                     44.3
-----------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2000           $    614.4     $   2.0    $  353.3    $  (414.9)    $   (60.3)       $    (480.2)    $ 14.3
-----------------------------------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements

</TABLE>

























<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  (DEFICIT)  EQUITY
BORDEN  CHEMICAL,  INC.

(In  millions)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                         Accumulated
                                        Preferred     Common     Paid-in     Receivable     Other          Accumulated
                                          Stock        Stock     Capital       from      Comprehensive       Deficit     Total
                                                                  Parent      Income
-----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000           $    614.4     $   2.0    $  353.3    $  (414.9)    $   (60.3)       $    (480.2)   $  14.3
<S>                                       <C>          <C>        <C>           <C>            <C>               <C>         <C>
Net income                                                                                                     (124.8)    (124.8)

Translation adjustments and other                                                             (6.9)                         (6.9)

Cumulative effect of change in accounting principle (net of $1.9 tax)                         (3.3)                         (3.3)

Derivative activity (net of $1.3 tax)                                                          2.6                           2.6

Minimum pension liability (net of $36.0 tax)                                                 (66.6)                        (66.6)
                                                                                                                           --------

COMPREHENSIVE INCOME                                                                                                     $ (199.0)
                                                                                                                           --------
Preferred stock dividends                                                                                       (61.8)      (61.8)

Common stock dividends                                            (36.4)                                                    (36.4)

Interest accrued on notes from parent (net of $13.8 tax)           24.7         10.1                                         34.8

Gain on Consumer Adhesives Sale to affiliate (net of $37.4 tax)    94.8                                                      94.8

Gain on sale of common stock equity                                10.2                                                      10.2
investment to affiliate (net of $5.6 tax)

Common stock and warrants issued to management                      1.2                                                       1.2

Capital contribution from parent of
   preferred stock and accrued dividend   (614.4)                 621.0                                                       6.6

Capital contribution from parent            -                      38.0                                                      38.0
-----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2001           $      -       $   2.0    $1,106.8    $  (404.8)    $   (134.5)      $    (666.8)   $  (97.3)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See  Notes  to  Consolidated  Financial  Statements





































NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
(DOLLARS  IN  MILLIONS  EXCEPT  PER  SHARE  DATA)

1.     BACKGROUND

Current  Description  Summary
-----------------------------

The  Company,  Borden Chemical, Inc. (formerly Borden, Inc.) was incorporated on
April  24,  1899.  After  the sale of the Consumer Adhesives business segment in
2001 to an affiliate, the sole remaining business of the Company is the Chemical
business,  which  is  engaged primarily in manufacturing, processing, purchasing
and  distributing  forest  products and industrial resins, formaldehyde, coating
and  other specialty and industrial chemicals worldwide. The Company's executive
and  administrative  offices  are located in Columbus, Ohio. Chemical production
facilities  are  located  throughout  the  United  States  and  in  many foreign
countries.

On March 14, 1995,  affiliates of Kohlberg Kravis Roberts & Co. ("KKR") acquired
control  of  the  Company.  In  late  1995,  the  Company  began  the process of
redesigning  its  operating  structure in order to maximize value for its owners
and  determined that certain businesses did not fit into its long-term strategic
plan.  At  the  end  of  1995,  the  Company consisted of the following business
segments:  Chemical,  Food,  Other Consumer Products, Decorative Products, Dairy
and  businesses  held  for  sale.  A  group of centralized corporate departments
located  in  Columbus, Ohio provided certain governance and other administrative
services  to  all the Company's operating business units and businesses held for
sale.  As of the end of 2000, all business segments had been divested except the
Chemical  and  Consumer  Adhesives  segments.  In  2001  the  Consumer Adhesives
segment  was divested (see below), leaving the Chemical as the Company's sole
remaining  business.

In  the  fourth quarter of 2001, the Company merged with its subsidiaries Borden
Chemical  Holdings,  Inc.  ("BCHI")  and  Borden  Chemical, Inc. (BCI), executed
certain  financial  transactions  with its parent and changed its name to Borden
Chemical,  Inc.  (the  "Corporate  Reorganization") reflecting the fact that the
only  remaining  business  of the Company is the Chemical business (see Note 4).
The  Corporate Reorganization was undertaken to simplify the legal structure and
strengthen the capital structure of the Company and to reduce overhead costs. As
part  of  the  Corporate  Reorganization,  certain  functions  were  downsized,
eliminated  or  transferred  to  a  separate  legal entity, Borden Capital, Inc.
("Capital"),  also  owned  by  the Company's parent. Subsequent to the Corporate
Reorganization,  Capital  provides  certain  management,  consulting  and  board
services  to  the Company as well as other entities owned by KKR and will charge
fees  to  the  Company  and  the  other  entities  for  these  services.

On August 13, 2001, options sold to BW Holdings, LLC ("BWHLLC"), an affiliate of
the  Company's  parent, in 1996 to purchase 74% of the common shares of Consumer
Adhesives  were  exercised  for  $54.1.  Also,  on  August  13,  2001, a company
controlled  by  BWHLLC purchased the remaining 26% of Consumer Adhesives' common
shares  for  $40.0 (collectively "the Consumer Adhesives Sale").  In addition to
the  cash  proceeds  received,  the  Company  retained continuing investments in
Consumer  Adhesives  in the form of notes receivable and preferred stock.  Prior
to  the  Consumer  Adhesives  Sale,  these  investments  were  eliminated in the
Consolidated Financial Statements.  The notes receivable from Consumer Adhesives
were  sold  to the Company's parent on November 19, 2001 for $57.7 (see Note 4).
The  carrying value of the preferred stock was $110.0 at December 31, 2001.  The
preferred  stock was redeemed on March 1, 2002 for a $110.0 note receivable from
Consumer  Adhesives.  On  March  12,  2002,  the note receivable was sold to the
Company's  parent  for  cash of $110.0 plus accrued interest. As a result of the
Consumer  Adhesives  Sale  and  subsequent sale of the preferred stock, Consumer
Adhesives is reflected as a discontinued operation in the Consolidated Financial
Statements for all periods presented. A pre-tax gain of $132.2 ($94.8 after-tax)
was  recognized  in  Paid-in-Capital  due  to  the  affiliated  nature  of  the
transaction.

2.     NATURE  OF  OPERATIONS

The  Company  is  engaged primarily in manufacturing, processing, purchasing and
distributing  forest  products and industrial resins, formaldehyde, coatings and
other  specialty  and  industrial  chemicals  worldwide.  Prior  to the Consumer
Adhesives  Sale,  the  Company  also  manufactured,  processed,  purchased  and
distributed  consumer  glues  and  adhesives  in  North  America  (see  Note 1).

Domestic products are sold by in-house sales forces throughout the United States
to  industrial  users.  To  the  extent  practicable, international distribution
techniques  parallel  those  used  in  the United States and are concentrated in
Canada,  Western  Europe,  Latin  America,  Australia  and  Malaysia.








At  December  31, 2001, 28 of a total 49 manufacturing and processing facilities
are  located in the United States and in 2001 approximately 66% of the Company's
sales  were  generated  in  the  United  States.

Information about the Company's operating and geographic segments is provided in
Item  1  on  pages  7 to 9 and is an integral part of the Consolidated Financial
Statements.

3.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

Significant  accounting  policies  followed by the Company, as summarized below,
are  in  conformity  with  generally  accepted  accounting  principles.

PRINCIPLES  OF CONSOLIDATION - The Consolidated Financial Statements include the
accounts  of  Borden  Chemical,  Inc. and its subsidiaries, after elimination of
intercompany  accounts and transactions. The Company's share of the net earnings
of  20%  to  50%  owned  companies is included in income on an equity basis. The
Company amortizes any excess of cost over the underlying equity in net assets of
an  equity  investment.

USE  OF  ESTIMATES  - The preparation of financial statements in conformity with
generally  accepted  accounting principles requires management to make estimates
and  assumptions  that affect the reported amounts of assets and liabilities and
disclosure  of  contingent  assets  and liabilities at the date of the financial
statements  as  well as the reported amounts of revenues and expenses during the
reporting  period.  The  most  significant  estimates reflected in the financial
statements  include  asset  impairments,  business  realignment  liabilities,
environmental  remediation  liabilities, deferred tax assets and liabilities and
related  valuation  allowances,  and  pension  and  post-retirement  assets  and
liabilities.  Other  estimates  include  valuation  allowances  for  accounts
receivable  and  inventories  and  general insurance liabilities. Actual results
could  differ  from  these  estimated  amounts.

CASH  AND  EQUIVALENTS  -  The  Company  considers all highly liquid investments
purchased  with  an  original  maturity  of  three  months  or  less  to be cash
equivalents.  Included  in  the  Company's cash equivalents are interest bearing
time  deposits  of $6.9 in 2001 and $11.1 in 2000. At December 31, 2001, $0.9 of
the  Company's  cash  was  restricted  as  collateral  under  a letter of credit
facility.  The  effect  of  exchange  rate  changes  on  cash  is  not material.

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

PROPERTY  AND  EQUIPMENT  -  Land,  buildings,  and  machinery and equipment are
carried  at cost. Depreciation is recorded on the straight-line basis by charges
to expense at rates based on estimated useful lives of properties (average rates
for  buildings  4%;  machinery and equipment 8%). Major renewals and betterments
are  capitalized.  Maintenance,  repairs  and  minor  renewals  are  expensed as
incurred.

INTANGIBLES  -  The  excess of purchase price over net tangible and identifiable
intangible  assets of businesses acquired ("goodwill") is carried as intangibles
in  the Consolidated Balance Sheet. It is the Company's policy to carry goodwill
arising  prior  to  November 1, 1970, at cost, while goodwill arising after that
date  is  amortized  on  a straight-line basis over not more than 40 years. Also
included  in  intangibles  are  certain trademarks, patents and other intangible
assets  used  in the operations of the businesses that amounted to $9.3 and $6.6
at  December 31, 2001 and 2000, respectively. These intangibles are amortized on
a straight-line basis over the shorter of the legal or useful life of the asset.
The  Company  will adopt Statement of Financial Accounting Standard ("SFAS") No.
142, "Goodwill and Other Intangible Assets," as of January 1, 2002 (see Recently
Issued  Accounting  Pronouncements  on  page  35).

IMPAIRMENT  - The Company periodically evaluates the recoverability of property,
equipment,  investments  and intangibles by assessing whether the carrying value
can  be  recovered  over  its  remaining useful life through the expected future
undiscounted  operating  cash  flows  of the underlying business. Any impairment
loss  required  is  determined  by  comparing the carrying value of the asset to
operating  cash  flows on a discounted basis. Impairments will be assessed under
SFAS  No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
as  of  January  1,  2002 (see Recently Issued Accounting Pronouncements on page
35).

REVENUE  RECOGNITION  -  Revenues  are  recognized when products are shipped and
title  transfers  to  the  buyer.

SHIPPING  AND HANDLING -  The Company records freight billed to customers in net
sales.  Shipping  costs  are  incurred  to  move  the  Company's  products  from
production and storage facilities to the customers.  Handling costs are incurred








from the point the product is removed from inventory until it is provided to the
shipper  and generally include costs to store, move and prepare the products for
shipment.  The  Company  incurred shipping costs of $63.9 in 2001, $63.8 in 2000
and $61.9 and in 1999. These costs are classified as distribution expense in the
Consolidated  Statements  of  Operations.  Due  to  the  nature of the Company's
business,  handling  costs  incurred  prior  to  shipment  are  not significant.

FOREIGN CURRENCY TRANSLATIONS - Assets and liabilities of foreign affiliates are
translated at the exchange rates in effect at the balance sheet date, and income
and  expenses  are  translated  at  average exchange rates prevailing during the
year.  The  effect  of  translation  is  accounted  for  as  an  adjustment  to
shareholders'  equity.

The Company incurred realized and unrealized net foreign exchange losses (gains)
aggregating  $0.9  in  2001,  ($0.2)  in  2000  and  ($0.7)  in  1999.

INCOME  TAXES  -  Income  tax expense is based on reported results of operations
before income taxes. Deferred income taxes represent the tax effect of temporary
differences  between  amounts of assets and liabilities recognized for financial
reporting  purposes  and  such amounts recognized for tax purposes. Deferred tax
balances are adjusted to reflect tax rates, based on current tax laws, that will
be  in  effect  in  the  years  in  which  temporary differences are expected to
reverse.  Deferred  tax assets are reduced by a valuation allowance when, in the
opinion  of  management,  it is more likely than not that some portion or all of
the  deferred  tax  assets  will  not  be  realized.

DERIVATIVE  FINANCIAL  INSTRUMENTS  -  The Company primarily uses three types of
derivatives:  interest  rate  swaps  (which effectively convert a portion of the
Company's variable rate obligations to fixed), forward exchange contracts (which
reduce  the  Company's  cash flow exposure to changes in foreign exchange rates)
and  natural gas  futures  (which  reduce  the Company's cash flow exposure to
changes  in natural gas prices).  The Company does not hold or issue derivative
financial  instruments  for trading purposes.  The Company has not elected hedge
accounting  for  any  derivatives; consequently, all derivatives are measured at
fair value and recorded on the balance sheet as an asset or liability, depending
upon  the  Company's  underlying  rights  or  obligations.

EARNINGS  PER  SHARE - Basic and diluted net income attributable to common stock
is  computed  by  dividing  net  income by the weighted average number of common
shares outstanding during the period. At December 31, 2001, 1.0 million warrants
and  6.9  million  options  to  purchase  common  shares  of  the  company  were
outstanding  and  not  considered  dilutive.  Prior  to  2001, options issued by
subsidiaries  that  enabled  the  holder  to obtain stock of the subsidiary were
assumed  to  be  exercised  if  they were dilutive. As of December 31 2001, as a
result  of  the  Consumer  Adhesives  Sale  (see  Note  1)  and  the  Corporate
Reorganization  (see Note 4), there were no options to purchase subsidiary stock
outstanding.  At  December  31, 2000, there were 5.5 million options to purchase
subsidiary  stock  outstanding, of which 1.1 million were considered dilutive to
EPS. At December 31, 1999, there were 6.2 million options to purchase subsidiary
stock  outstanding,  of  which  5.0  million  were  considered  dilutive to EPS.

The  Company's  diluted  EPS  is  calculated  as  follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------
                                                  2001     2000     1999
--------------------------------------------------------------------------
<S>                                             <C>         <C>       <C>
Net loss applicable to common shareholders    $ (186.6)  $ (39.7) $ (20.8)
Effect of dilutive options in subsidiary stock     -         -       (0.5)
                                               --------    ------   ------
Diluted EPS - Numerator                       $ (186.6)  $ (39.7) $ (21.3)
                                               ========   =======   ======
Weighted average shares - Denominator            199.0     199.0    199.0
                                               ========   =======   ======
Diluted EPS                                    $ (0.94)  $ (0.20) $ (0.10)
                                                ========   =======  ======
--------------------------------------------------------------------------
</TABLE>




CONCENTRATIONS  OF  CREDIT RISK - Financial instruments that potentially subject
the  Company  to  concentrations of credit risk consist principally of temporary
cash  investments and accounts receivable. The Company places its temporary cash
investments  with high quality institutions and, by policy, limits the amount of
credit  exposure  to  any  one  institution.  Concentrations of credit risk with
respect to accounts receivable are limited, due to the large number of customers
comprising  the  Company's  customer  base  and  their  dispersion  across  many
different  industries  and  geographies.  The Company generally does not require
collateral  or  other  security  to  support  customer  receivables.







RECENTLY  ISSUED  ACCOUNTING  STANDARDS

SFAS  No.  142 addresses the accounting for goodwill and other intangible assets
after an acquisition.  The most significant changes made by SFAS No. 142 are: 1)
goodwill  and  intangible  assets  with  indefinite  lives  will  no  longer  be
amortized;  2)  goodwill  and  intangible  assets  with indefinite lives must be
tested  for  impairment  at  least  annually; and 3) the amortization period for
intangible  assets  with  finite lives will no longer be limited to forty years.
The  Company will adopt SFAS No. 142 effective January 1, 2002, as required.  At
that  time,  annual  amortization  of  existing  goodwill  will  cease  on  the
unamortized  portion  associated  with  previous  acquisitions.  As  required, a
transitional impairment test is required for existing goodwill as of the date of
adoption  of  this Standard.  This test must be completed within the first year.
Any impairment loss resulting from applying the goodwill impairment test will be
reported  as  a  cumulative  effect  of  a  change  in  accounting  principle.

The  Company  is in the process of evaluating the carrying value of goodwill and
may  be  required  to  write-off  amounts  under  the  transitional  assessment
provisions  of  SFAS  No.  142.

In  July  2001,  the  FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations", which addresses financial accounting and reporting for obligations
associated  with the retirement of tangible long-lived assets and the associated
asset retirement costs.  Under this Statement, an asset retirement obligation is
recognized  at  its  fair  value  in  the period in which it is incurred.  Asset
retirement  costs  are  capitalized  as  part  of  the  carrying  amount  of the
long-lived  asset  and, as such, a related amortization expense is recognized in
future periods.  This Statement is effective for financial statements issued for
fiscal  years beginning after January 1, 2003.  The Company is in the process of
determining  the  impact  of  adopting  this  Statement.

In  August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal  of  Long-Lived  Assets",  which  addresses  financial  accounting  and
reporting  for  the  impairment  of long-lived assets. This statement supercedes
SFAS  No. 121 and establishs a single accounting model which requires long-lived
assets  be  tested  for  impairment  whenever events or changes in circumstances
indicate  that  their  carrying  value  may  not  be  recoverable.  Under    the
requirements  of SFAS No. 144, discontinued operations are measured at the lower
of  their  carrying  value  or fair value less cost to sell and future operating
losses  are  no  longer  recognized before they occur. SFAS No. 144 broadens the
presentation  of  discontinued  operations  in the income statement to include a
component  of an entity (rather than a segment of a business). A component of an
entity must be clearly distinguished, operationally, and for financial reporting
purposes,  from  the  rest  of  the entity. The Company will adopt this Standard
prospectively  effective  January  1,  2002.

RECLASSIFICATION  - Certain prior year amounts have been reclassified to conform
with  the  2001  presentation.

4.     CORPORATE  REORGANIZATION

In  fourth  quarter 2001, the Company merged with its subsidiaries BCHI and BCI,
executed  certain financial transactions with its parent and changed its name to
Borden  Chemical,  Inc.  reflecting the fact that the only remaining business of
the  Company  is  the  Chemical  business.  The  Corporate  Reorganization  was
undertaken  to simplify the legal structure and strengthen the capital structure
of  the  Company  and  to  reduce  overhead  costs.  As  part  of  the Corporate
Reorganization, certain functions were downsized, eliminated or transferred to a
separate  legal  entity, Capital, also owned by the Company's parent. Subsequent
to the Corporate Reorganization, Capital provides certain management, consulting
and  board  services  to  the Company as well as other entities owned by KKR and
will  charge  fees  to  the  Company  and the other entities for these services.

The  Company's  parent  contributed  all  of the outstanding Series A Cumulative
Preferred  Stock  ("Preferred  Stock") plus accumulated dividends of $6.6 to the
Company  as  a  capital  contribution. Prior to this, the Company had 24,574,751
shares  of  Preferred  Stock  outstanding  with  a  total  of 100,000,000 shares
authorized.  Each  share had a liquidation preference of $25 and was entitled to
cumulative  dividends at an annual rate of 12% payable quarterly in arrears. The
significant  impact  of this transaction was to eliminate required annual future
preferred  dividend  payments  of  $73.7.

As part of the Corporate Reorganization, the Company recorded severance costs of
$1.5  for  workforce  reductions  and  additional  costs  of $2.0 related to the
Corporate  Reorganization. These amounts are classified as business realignment,
impairments  and  other  in  the  Consolidated  Statements  of  Operations.

In  conjunction  with  the  Corporate  Reorganization in the fourth quarter, the
Company  sold  certain  assets to its parent for cash. The Company sold a common
stock  equity  investment  for $55.2 resulting in a pre-tax gain of $15.8 ($10.2
after-tax)  that  is  recorded  as  an  increase  to  Paid-in-Capital due to the
affiliated  nature  of the transaction. Notes receivable from Consumer




Adhesives  were  sold for $57.7, and a loan receivable from WKI Holding Company,
Inc.  ("WKI") (see Note 19) of $25.1 was sold for its fair value of $18.1. Prior
to  the sale, the Company recorded a $7.0 charge which is included in investment
writedowns  and  other  charges  to reflect the decline in fair value of the WKI
loan  receivable.  On  March  12, 2001, the Company used the proceeds of $110.0,
from  the  sale  to the Company's parent of its remaining investment in Consumer
Adhesives,  to  further repay its affiliated debt. All assets sales were sold at
the  fair  value  at  the  date  of  sale.

To  further  simplify  its capital structure, during 2002 the Company intends to
cancel  a  $404.8 note receivable (plus accrued interest) from its parent, which
has  been  accounted for as a reduction from equity. Historically, the Company's
parent  funded  the  interest  due on the note through common dividends received
from  the  Company.  Quarterly  interest  has  not  been paid, nor an associated
dividend  declared,  since  October 15, 2001 and no further interest or dividend
payments  are  expected  in  2002.

The  Company  paid Capital $8.7 to assume certain liabilities, the fair value at
the  date  of  sale,  net  of  certain  assets  transferred,  including accounts
receivable  from  WKI of $3.6.  These liabilities were for accrued compensation,
certain employee benefit obligations and accrued liabilities associated with the
transferred  employees  and  functions.

Beginning  in  1996,  key subsidiaries of the Company issued stock options under
their  individual Stock Purchase and Option Plans for Key Employees. The options
held  by  Chemical  employees  became  options of the Company effective with the
Corporate  Reorganization  (see  Note 15).  In addition, the Company settled the
minority  interest  liability  related  to  the  ownership  of shares in BCHI by
management  of BCHI by exchanging shares of the Company's stock and common stock
warrants for the BCHI shares held by management. This resulted in an increase to
Paid-in-Capital  for  $1.2,  the  book value of the liability which approximates
fair  value.

Capital began providing management, consulting and board services to the Company
after  the Corporate Reorganization. The Company provides certain administrative
services  to  Capital.  The  Company  is  charged an annual fee of $9.0, payable
quarterly  in  arrears,  for  the  net  cost  of  the  services.

5.     BUSINESS  ACQUISITIONS

All  of the Company's acquisitions described below have been accounted for using
the  purchase  method  of accounting.  Accordingly, results of operations of the
acquired entities have been included from the date of acquisition and any excess
of  purchase  price  over  the  sum of amounts assigned to identified assets and
liabilities  has  been  recorded  as  goodwill.

In  2001,  the  Company  and  Delta-HA, Inc. merged their North American foundry
resins  and  coatings  businesses.  In  conjunction  with the merger the Company
recognized  an  accrual  of  approximately $7.0 to restructure operations of the
acquired  entity,  minority  interest  liability  of  $4.5  to recognize the 25%
minority  ownership,  and  recorded  goodwill  of  approximately  $9.0.

In  2000,  the  Company  acquired the formaldehyde and certain other assets from
Borden  Chemicals  and Plastics Limited Partnership ("BCP"), an affiliate of the
Company,  for  $23.8  and acquired East Central Wax, Inc., a manufacturer of wax
emulsions  for the wood products industry, for $2.8.  Both acquisitions were for
cash.  No  goodwill  was recorded with the BCP acquisition and $1.9 was recorded
with  the  East  Central  Wax  acquisition.

In  2000, the Company also acquired certain assets and liabilities of a Canadian
based  Consumer  Adhesives business for $91.5 in cash. The business manufactured
glue,  glue  sticks,  paints,  tapes  and  craft/stationery  products  at  its
manufacturing  facility  in  Ontario,  Canada.  Goodwill  recorded  with  the
acquisition  was  $16.3.  This  business  was  sold in conjunction with the 2001
Consumer  Adhesives  Sale  (see  Note  7).

In  1999,  the  Company  acquired Blagden Chemicals, Ltd. ("Blagden") for $71.5,
Spurlock  Industries,  Inc.  ("Spurlock")  for $40.6, and a resins manufacturing
plant  in  Minnesota  for  $7.5.  Blagden  produces  formaldehyde and resins for
forest  products,  foundry,  and  industrial applications at three manufacturing
facilities in the United Kingdom and a fourth in the Netherlands.  Spurlock is a
formaldehyde and resins producer primarily for forest products applications with
manufacturing  facilities in Virginia, Arkansas and New York.  Goodwill of $31.0
and $14.0 was recorded with the Blagden and Spurlock acquisitions, respectively.













6.     DIVESTITURES,  BUSINESS  REALIGNMENT  AND  ASSET  IMPAIRMENTS

In  2001,  management continued to review and adjust its structure to streamline
its  operations  in  order  to  improve  business financial results and maximize
returns  to  owners  of  the  Company.  As a result of this process, the Company
committed  to  certain  business realignment activities, divested businesses and
reorganized  its  corporate  structure  (see  Note 4). Management of the Company
expects  to  continue to review its operating structure and strategic options in
2002.

Divestitures
------------

The  following  schedule summarizes the net cash proceeds, pre-tax and after-tax
gains  and  losses associated with business divestiture activities over the last
three  years.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                                     NET CASH PROCEEDS                      GAIN (LOSS)
                                                      -----------------                      -----------

                                            2001    2000     1999                   2001    2000   1999
                                           ------  -------  ------                 ------  ------  ------
<S>                                          <C>     <C>      <C>                   <C>      <C>     <C>
CONTINUING OPERATIONS
     Ecuador                              $  5.3                                 $  (2.3)
     Printing Inks                                  $ 10.3                                 $ (3.5)
     Commercial & industrial
        wall coverings                                                                        2.0  $ 5.5
     Molding compounds business                             $ 7.6
     Other                                             0.6                                    0.6    1.9
                                         -------   ------  -------               -------  ------  -------
TOTAL CONSOLIDATED PRE-TAX               $  5.3     $ 10.9  $ 7.6                $  (2.3)  $ (0.9) $ 7.4
                                          ------  -------  ------                 -------  ------  ------

CONSOLIDATED AFTER-TAX (LOSS) GAIN                                               $  (2.8)  $ (0.5) $ 4.8
                                                                                  =======   ======  =====

DISCONTINUED OPERATIONS (SEE NOTE 7)
     Consumer Adhesives                  $  94.1                                 $  132.2
     Decorative Products                                                                           $ 0.9
     Dairy                                                                                          (5.8)
     Other                                                                                           1.8
                                        -------   -------   ------               -------  -------  ------
TOTAL CONSOLIDATED PRE-TAX               $  94.1       -    $   -                $  132.2  $   -   $(3.1)
                                        =======  ======  ======                 =======   ======    =====
CONSOLIDATED AFTER-TAX GAIN (LOSS)                                               $  94.8   $ 93.0  $(2.0)
                                                                                 ======   ======   ======
---------------------------------------------------------------------------------------------------------
</TABLE>

In  2001,  the Company divested its Consumer Adhesives business (see Notes 1 and
7)  and  its chemical operation in Ecuador. Proceeds from the Consumer Adhesives
Sale were $94.1, net of $2.4 cash sold with the business, resulting in a pre-tax
gain  of  $132.2  ($94.8 after-tax) which was recorded in Paid-in-Capital due to
the  affiliated nature of the transaction. Proceeds from the sale of the Ecuador
chemical  business  were  $5.3,  resulting  in  a  pre-tax  loss  of  $2.3 ($2.8
after-tax).

In  2000,  the  Company  sold  its  chemical  printing  inks business for $10.3,
resulting  in  a  pre-tax loss of $3.5 ($2.2 after-tax), and distributed 100% of
its  ownership in its infrastructure management services business to its parent,
which  was treated as a dividend at the recorded net book value of approximately
$16.

In 1999, the Company recorded $7.4 of additional pre-tax gain, due to lower than
expected exit costs related primarily to the previous sale of its commercial and
industrial  wallcoverings  business  which  was sold prior to 1999.  The Company
also  sold  the  molding  compounds  business  that  was acquired in 1998 with a
melamine  resins business, which was accounted for as part of the acquisition of
the  melamine  resins  business  acquired  from  Sun  Coast  Industries.

Business  Realignment,  Impairments  and  Other
-----------------------------------------------

During  2001,  the  Company recorded business realignment, impairments and other
expense of $145.4, consisting of business realignment expense of $25.3, non-cash
asset  impairment  charges  of  $101.1  and  other  charges  of $19.0 related to
environmental  remediation  costs  related  to  a  previously  owned  business.






Provided  below  is a summary of business realignment reserve activity for 2001:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
                                          RESERVES                                  RESERVES
                                         DECEMBER 31,        2001         2001    DECEMBER 31,
                                            2000           EXPENSE (1)   CHARGES      2001
---------------------------------------------------------------------------------------------------
<S>                                         <C>              <C>            <C>        <C>

Plant closure costs                    $    32.3         $     12.7     $   (30.7)   $   14.3
  Severance and other employee costs         -                 12.6          (4.1)        8.5
                                       ---------         ----------     ----------   --------
                                       $    32.3         $     25.3     $   (34.8)   $   22.8
---------------------------------------------------------------------------------------------------
<FN>
(1)     Excludes  $101.1  of  non-cash  impairment  charges  and $19.0 of other charges related to a
previously  owned  business.
</TABLE>


Business realignment expense in 2001 of $25.3 consists of $12.7 of plant closure
costs  and  $12.6  of  severance  and other employee costs.  Plant closure costs
include  fixed  asset write-offs of $11.5, plant employee severance of $4.1, and
demolition,  environmental  and other costs of $7.6, offset by a pre-tax gain on
the  sale  of  land  associated  with  a closed plant of $10.5 ($6.5 after-tax).

In  fourth  quarter 2001, the Company announced that it had decided to offer for
sale  its  wholly-owned  subsidiary,  Melamine  Chemicals,  Inc.  ("MCI"), which
manufactured  melamine  crystal  at  a  plant  in  Louisiana.  For  economic and
strategic  purposes,  the  Company  has  entered  into  a  long-term contractual
arrangement,  which  took  effect  January  1, 2002, with a major supplier for a
substantial  portion  of its future melamine crystal needs. As of the end of the
year  no  sale  had been negotiated and in January 2002, the plant was shut-down
indefinitely.  Under  SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of", the Company recorded a 2001
expense  of  $98.2  for  impairment  of  melamine  fixed assets, spare parts and
goodwill  of  $62.5,  $3.0 and $32.7, respectively. The Company expects to incur
additional  employee  and environmental costs in the first quarter 2002. Also in
fourth  quarter  2001,  the Company discontinued construction of a new plant and
recorded  a  charge  of  $2.9  of  engineering,  construction and other costs to
reflect  estimated  net  recoverable  value  of  the  land  and  building.

Additionally,  in  the  fourth quarter 2001, the Company recorded a $19.0 charge
that  reflects management's estimate of probable environmental remediation costs
that  the  Company  has  incurred  related to fourth quarter 2001 activity for a
previously  owned  business.

Following  are  discussions of business realignment charges recorded in 2000 and
1999:

In fourth quarter 2000, the Company recorded a charge of $24.5 related primarily
to  the  closure  of  two  forest  products  plants in the United States and the
consolidation  of  its  administrative  headquarters in the United Kingdom.  The
charge  consists  primarily  of  severance  costs  and  asset  write-downs.

In third quarter 2000, the Company recorded an additional charge of $1.8 related
to additional environmental remediation costs associated with a plant closure in
Argentina. In second quarter 2000, the Company recorded a charge of $9.0 related
primarily  to the closure of a United Kingdom formaldehyde and resins plant. The
charge  primarily  consists  of  severance  costs.

In  first  quarter  2000,  the Company recorded $2.8 primarily for severance and
environmental  remediation  costs related to the closure of resins operations in
Argentina  and  California.

In  third  quarter  1999,  management approved a plan to close a Brazil Chemical
operation  and  Uruguay  Chemical  business.  As  a result, a charge of $3.6 was
recorded  which  relates  primarily  to write off of fixed assets .

In  second  quarter  1999,  the  Company finalized a plan for the closure of the
Chemical  resins operations in the Philippines. As part of this plan, long-lived
assets to be disposed of were written down to net realizable value, resulting in
a  business  realignment  charge  of  $13.0.  Also  in  second quarter 1999, the
Company  discontinued  a  plant  expansion  project.  As  a  result, the Company
wrote-off  $25.0  of  engineering,  equipment  and  other  costs.











7.     DISCONTINUED  OPERATIONS

The  summary  of  discontinued  operations  below  includes  Consumer Adhesives'
results  through  the date of the Consumer Adhesives Sale and the 1999 loss from
discontinued  operations  recorded by an investee accounted for under the equity
method:

<TABLE>
<CAPTION>
----------------------------------------------------------------
                                   2001       2000       1999
                                  ------     ------     -----
<S>                                 <C>       <C>        <C>
Net sales                         $106.3     $138.0    $99.3
Income before income taxes         17.4       19.1      16.4
Income tax expense                  5.6        5.8       6.0
                                 -------    -------    -----
 Income from discontinued
     operations                   $11.8      $13.3     $10.4
----------------------------------------------------------------
</TABLE>

In addition to the amounts shown above, gains and losses (net of tax) recognized
on  the  sale  of  discontinued  operations  are  included  separately  in  the
Consolidated  Statements  of  Operations  (see  also  Note  6).

As  a  result  of  a settlement reached with the Internal Revenue Service in the
second  quarter of 2000, amounts established for tax issues related to the prior
divestiture  of  certain  segments  of  the  Company's  business  were no longer
considered  necessary.  A portion of these amounts was classified as gain on the
sale  of  discontinued operations in 2000, consistent with the classification of
these  amounts  when  established  (see  also  Item  7  relating to Management's
discussion  on income tax expense). Included as gain on disposal of discontinued
operations  in  2000  for  these  amounts  is  $93.0.

Included  in  the 1999 net of tax loss on disposal of discontinued operations is
$2.0  which  represents  the  loss  of  $3.7 recorded by the Company's investee,
accounted  for  under  the equity method, offset by a favorable claim settlement
related  to  a  1997  divestiture  of $0.6, and a gain of $1.1 due to lower than
expected  exit  costs  related  to  a  1996  divestiture.

8.     OTHER  COMPREHENSIVE  INCOME

Other  Comprehensive  income  includes  the  following  items:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
                                                2001     2000    1999
                                               -------  ------  -------
<S>                                              <C>      <C>     <C>
 Foreign currency translation adjustments      $(12.7)  $(9.6)  $10.4
 Reclassification adjustments                     5.8      -    (13.4)
 Cumulative effect of change in accounting
    principle                                    (3.3)    -         -
 Derivative activity                              2.6     -         -
 Minimum pension liability                      (66.6)   1.8      1.5
                                                 -----   -----  ------
                                               $(74.2) $(7.8)   $(1.5)
                                               ======   ======  ======
--------------------------------------------------------------------------
</TABLE>

The  2001  reclassification  adjustment  reflects  the  accumulated  translation
adjustment  recognized  on the sale of the Company's operations in Ecuador.  The
reclassification  adjustments  in  1999  primarily  represent  the  accumulated
translation  adjustment  included  as  part  of the charge to close the Chemical
operations  in  the  Philippines.

The cumulative effect of change in accounting principle represents the impact of
the adoption of Statement of Financial Accounting Standards No. 133, "Accounting
for  Derivative  Instruments  and  Hedging Activities," on January 1, 2001.  The
Company  recorded a pre-tax initial transition adjustment to Other Comprehensive
Income  of  $5.2  ($3.3  net  of  tax)  of  which  $3.9  ($2.6  net  of tax) was
reclassified  into  earnings  for  the  year  ended  December  31,  2001.

9.  INVESTMENTS  AND  INVESTMENTS  IN  AFFILIATES  Investment  in  affiliates at
December  31,  2001  represents  the  Company's investment in Consumer Adhesives
preferred  stock.  In  March  2002,  the preferred stock was redeemed for a note
receivable,  which  was  then  sold  to the Company's parent, along with accrued
interest,  at  fair  value  (see  Note  4). The investment in Consumer Adhesives
preferred  stock  eliminated  in  consolidation  at  December  31,  2000.

Investments at December 31, 2000 represent a common stock equity investment that
was sold in 2001 for $64.1.  Of the total proceeds, $8.9 was received from sales
to third parties and $55.2 was received from the Company's parent as part of the
Corporate  Reorganization  (see  Note  4).

Investment  in  affiliates  at  December  31,  2000  represents  the  Company's
investment in WKI preferred stock which was written off in 2001.

The Company continuously reviews the carrying value of investments in accordance
with  existing  accounting  guidance that requires investments to be adjusted to
fair  value  if  the decline in value is considered to be "other than temporary"
based  on  certain  criteria.  The  Company  recorded  investment write-downs of
$10.0,  $48.0  and  $3.0  in  2001,  2000  and  1999,  respectively.

10.     DEBT,  LEASE OBLIGATIONS, UNCONDITIONAL PURCHASE OBLIGATIONS AND RELATED
COMMITMENTS

Debt  outstanding  at  December  31,  2001  and  2000  is  as  follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                                       2001                               2000
                                                                      -------                            ------
                                                                           Due Within                         Due Within
                                                                Long-Term   One Year          Long-Term         One Year
                                                                ---------   ----------       ----------        ---------
<S>                                                                <C>         <C>                 <C>              <C>
9.2% Debentures due 2021                                     $    117.1                       $  117.1

7.875% Debentures due 2023                                        250.0                          250.0

Sinking fund debentures:
8-3/8% due 2016                                                    78.5                           78.5
9-1/4% due 2019                                                    48.7                           48.7


Industrial Revenue Bonds (at an average rate of 9.5% in 2001
and 2000)                                                          34.9  $     1.4                36.2         $     1.1
Other (at an average rate of 13.3% in 2001 and 9.5% in 2000)        3.3         -                                    1.8

Total current maturities of long-term debt                                     1.4                                   2.9

Short-term debt (primarily foreign bank loans
at an average rate of 10.6%)                                                   1.7                                  40.6
Total debt                                                   $    532.5  $     3.1           $  530.5          $    43.5
-------------------------------------------------------------------------------------------------------------------------
</TABLE>


In  fourth  quarter 2000, the Credit Agreement was reduced from $895.0 to $809.0
in  accordance  with  the terms of the Credit Agreement. In the third quarter of
2001,  the  Credit  Agreement  was further reduced to $250.0.  Of the reduction,
$95.8  was  in accordance with the terms of the Credit Agreement due to the sale
of  substantially all of foods business (Foods) assets.  The remaining reduction
was  made  at the election of the Company.  As of December 31, 2001, the Company
had a contractually committed line of credit of $250.0 which expires on July 13,
2002.  Current  pricing  under the LIBOR based borrowing option is LIBOR plus 25
basis  points.  The  commitment  fee on the unused portion of the facility is 10
basis  points.

The Credit Agreement, as amended, contains covenants that significantly limit or
prohibit,  among  other  things,  the Company's and its subsidiaries' ability to
incur  indebtedness,  make  prepayments  of certain indebtedness, pay dividends,
engage  in  transactions  with  affiliates,  create  liens,  make changes in its
business  or  control  of  the  Company,  sell  assets,  engage  in  mergers and
consolidations,  and  use  proceeds from asset sales and certain debt and equity
issuances.  In  addition, the credit facility requires that capital expenditures
be  limited  to  certain  specified amounts and that certain financial ratios be
maintained,  including  a  minimum  ratio  of  EBITDA (Earnings Before Interest,
Taxes,  Depreciation  and  Amortization  as adjusted by the Credit Agreement) to
interest  expense  and  a  maximum  ratio  of  total  debt  to  EBITDA.

At  December  31,  2001 and 2000, there were no borrowings outstanding under the
Credit  Agreement  and  $89.9 and $95.0 in letters of credit, as of December 31,
2001 and 2000, respectively. Provisions under the Credit Agreement require Foods
to  guarantee  the Company's obligations under the Credit Agreement. The Company
had  $161.0  available  for borrowing under its Credit Agreement at December 31,
2001,  and  incurred  commitment  fees  of  $1.5  in  2001  and  $1.3  in  2000.














During first quarter 2002, the Company finalized an uncommitted letter of credit
facility  totaling  $45.0,  and  is  currently  in the process of negotiating an
increase.  The Company is required to provide cash collateral equivalent to 101%
of  the  letters  of credit outstanding under this facility.  The fees under the
facility  are 1/2% per annum on the amount of letters of credit outstanding.  In
addition,  a  1/8%  per  annum  issuance fee is in effect for all new letters of
credit  not  transferred  from the existing $250.0 Credit Agreement.  Given that
the  facility  is an uncommitted agreement, no financial covenants or expiration
date  exist,  thus  either  party  can  give notice of cancellation at any time.

Additional  credit  agreements  are  executed  for  the  Company's international
locations.  As  of  December  31,  2001,  these  locations had credit facilities
totaling  $10.7.  Of  this  amount  $8.7 (net of $1.5 in a term loan and $0.5 in
other  draws  on  the  line  of  credit) was available for borrowing under these
credit  agreements.  The  Company's  international  units incurred no commitment
fees  in  2001.

Purchase  Obligations
---------------------
In  fourth  quarter  2000,  the  Company entered into fixed rate, fixed quantity
contracts to secure a portion of future natural gas usage at certain facilities.
The contracts were entered into to partially hedge the Company's risk associated
with natural gas price fluctuations in peak usage months.  Contracts covered the
period  from  October  2000  through  March  2003.  Gas  purchases  under these
contracts  totaled $0.9 million in 2001, with $1.1 million of future commitments
at  December  31,  2001.  These  contracts  covered  between 75% and 85% of 2001
natural  gas  usage  during  the  periods  of the contracts at those facilities.

Due  to a sharp increase in natural gas prices in 2000, the Company expanded its
natural  gas  hedging  activities in June 2001 to hedge a portion of natural gas
purchases  for all of North America.  The Company entered into futures contracts
for  the  months of June 2001 through March 2002.  The contracts are settled for
cash  each  month based on the closing market price on the last day the contract
trades  on the New York Mercantile Exchange.  Approximately 24% of the Company's
2001  North  American  natural  gas  usage from June through December was hedged
through  futures  contracts.  Commitments  under these contracts in 2001 totaled
$1.7  million,  with  $0.5  million  of future commitments at December 31, 2001.

Aggregate  maturities  of  total  debt,  minimum  annual rentals under operating
leases  and  unconditional  purchase obligations for natural gas at December 31,
2001,  for  the  Company  is  as  follows:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
                                                                  MINIMUM          PURCHASE
                                                              RENTALS  UNDER   OBLIGATIONS  FOR
                                                   DEBT      OPERATING LEASES      NATURAL GAS
---------------------------------------------------------------------------------------------------
<S>                                                <C>           <C>                   <C>
2002                                            $   3.1  $     15.3             $      1.2
2003                                                 -         14.1                    0.4
2004                                                 -         13.5                     -
2005                                                 -         12.6                     -
2006                                                3.3        12.5                     -
2007 and thereafter                               529.2         4.7                     -
                                                --------     -------               --------
                                                $ 535.6  $     72.7             $      1.6
---------------------------------------------------------------------------------------------------
</TABLE>

Rental  expense  amounted  to  $19.6,  $22.9  and  $21.5 in 2001, 2000 and 1999,
respectively.

11.     INCOME  TAXES
Comparative  analysis  of  the Company's income tax expense (benefit) related to
continuing  operations  follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
                                                    CURRENT                        DEFERRED
                                                    -------                        --------
                                           2001    2000     1999             2001     2000    1999
                                           ------  -------  ------          -------  ------  ------
<S>                                         <C>     <C>      <C>              <C>      <C>     <C>
Federal                                    $(0.4)  $(28.5)  $(8.2)           $(25.8)  $15.3   $ 7.1
State and Local                             (4.3)    (1.5)    0.9              (0.8)   (1.3)   (0.2)
Foreign                                     (0.2)    (1.2)   16.0               0.7     4.8    (1.0)
                                           ------   ------  -----              -----  -----  -------
                                           $(4.9)  $(31.2)  $ 8.7            $(25.9)  $18.8   $ 5.9
---------------------------------------------------------------------------------------------------
</TABLE>

The  Company's  income tax expense related to discontinued operations was $5.6,
$5.8  and  $6.0  in 2001, 2000 and 1999, respectively. The Company's income tax
expense  from the gain on disposal of discontinued operations was $37.4 in 2001,
which  is  reflected  as  a  reduction  to Paid-in-Capital due to the affiliated
nature      of      the      transaction      (see  Note  1).    The   Company's
income  tax  (benefit)  expense  related  to  the  gain  (loss) on disposal from
discontinued  operations  was $(93.0) and $(1.1) in 2000 and 1999, respectively.

A  reconciliation  of  the  Company's difference between income taxes related to
continuing operations computed at Federal statutory tax rates and provisions for
income  taxes  is  as  follows:
<TABLE>
<CAPTION>
<S
-------------------------------------------------------------------------------------------------->
                                               2001                   2000                     1999
---------------------------------------------------------------------------------------------------
<S>                                           <C>                     <C>                       <C>
Income taxes computed at
     Federal statutory tax rate            $(58.6)                 $(29.6)                   $20.7
State tax provision, net of
     Federal benefits                        (5.8)                   (2.7)                     0.9
Foreign tax differentials                     1.2                     1.8                      0.2
Foreign source income also subject
     to U.S. taxation                        12.4                    13.1                     (7.2)
Losses and other expenses
     not deductible for tax                   2.8                      -                         -
Asset impairment                             31.7                      -                         -
Adjustment of prior estimates               (14.5)                    5.0                        -
---------------------------------------------------------------------------------------------------
Income Tax (benefit) expense               $(30.8)                 $(12.4)                   $14.6
---------------------------------------------------------------------------------------------------

The domestic and foreign components of the Company's income from continuing operations before income taxes are as follows:
---------------------------------------------------------------------------------------------------
                                            2001                    2000                       1999
                                          --------               -------                      -----
<S>                                         <C>                    <C>                          <C>
Domestic                                 $(165.5)                $(89.9)                      $16.6
Foreign                                     (1.9)                   5.2                        42.5
                                         $(167.4)                $(84.7)                      $59.1
---------------------------------------------------------------------------------------------------
</TABLE>

The tax effects of the Company's significant temporary differences, and loss and
credit  carryforwards, which comprise the deferred tax assets and liabilities at
December  31,  2001  and  2000  follow:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                                                           2001                                2000
----------------------------------------------------------------------------------------------------
<S>                                                        <C>                                  <C>
ASSETS
Non-pension post-employment benefit
  obligations                                           $  53.8                            $  49.7
Divestiture reserve                                         6.6                               16.8
Accrued expenses and other expenses                        82.9                               79.6
Foreign accrued expenses, pensions and
   other expenses                                           3.6                                4.5
Loss and credit carryforwards                             190.4                              198.0
Pension liability                                           9.0                               (1.3)
Gross deferred tax assets                                 346.3                              347.3
                                                         ------------------------------------------
Valuation allowance                                      (110.4)                            (101.7)
                                                          235.9                              245.6
                                                         ------------------------------------------

LIABILITIES
Property, plant, equipment and intangibles                 56.1                              59.8
Foreign property, plant, equipment/other                    7.0                              14.7
Certain foreign intangibles                                (0.7)                             (1.2)
Prepaid pension                                              -                               35.7
Deferred gain on sale of partnership interest              17.7                              17.8
Other prepaids                                              2.6                              (3.8)
                                                         ------------------------------------------
Gross deferred tax liabilities                             82.7                             123.0
---------------------------------------------------------------------------------------------------
Net asset                                               $ 153.2                          $  122.6
---------------------------------------------------------------------------------------------------
</TABLE>


The  Company's  net  deferred tax asset at December 31, 2001 was $153.2. Of this
amount, $152.1 represents net domestic deferred tax assets related to future tax
benefits.  Included in the domestic deferred tax asset is $21.0 of net operating
loss  carryforward  for U.S. federal tax purposes, which will begin to expire in
2021.  Realization  of  the  domestic  net  operating  loss  is  dependent  upon
generation  of approximately $60.0 of future income before the expiration dates.
Also  included  within  the  domestic deferred tax asset is $59.7 of foreign tax
credits  with  a related valuation allowance of $49.6. These foreign tax credits
consist entirely of foreign tax credit carryover which was generated in 1998 and
1999  and  will  begin  expiring in 2004. Realization of the entire net domestic
deferred  tax  asset  is dependent on generation of approximately $435 of future
taxable  income.

The  Company  has not recorded income taxes applicable to undistributed earnings
of  foreign subsidiaries that are indefinitely reinvested in foreign operations.
Undistributed earnings permanently reinvested amounted to $130.8 at December 31,
2001.

12.     PENSION  AND  RETIREMENT  SAVINGS  PLANS

Most  U.S. employees of the Company are covered under a non-contributory defined
benefit  plan  ("the  Pension  Plan").  The  Pension  Plan provides benefits for
salaried  employees based on eligible compensation and years of credited service
and  for  hourly  employees  based  on  years  of  credited  service.

Certain  employees  in  other  countries  are  covered  under  contributory  and
non-contributory  defined benefit foreign plans. Additionally, eligible salaried
and hourly employees may contribute up to 5% of their pay (7% for certain longer
service  salaried employees), which is currently matched by the Company at 100%.
The Company has the option to match up to 125% of this amount based on financial
performance.  Charges  to  operations  for  matching  contributions  under  the
Company's retirement savings plans in 2001, 2000 and 1999 amounted to $5.3, $6.2
and  $5.9,  respectively.

The  Company's funding of the pension plan equals or exceeds the minimum funding
requirements  imposed  by  Federal  and  foreign  laws  and  regulations.

Subsequent  to  the  Consumer  Adhesives  sale in 2001 and the sales of the food
business  (Foods) and the salty snacks business (Wise) in 1996 (see Note 1), the
Company's  pension  plan  retained  the  liabilities related to the employees of
these  businesses.  The projected benefit obligation and plan assets include the
domestic  obligation  and assets for the Consumer Adhesives business in 2001 and
2000  and  for  Foods  in  2000.  The  Company  recorded  receivables from these
businesses  for  their  actuarially determined liabilities adjusted annually for
actuarially  determined  expense  and funding payments.  The receivable from the
Consumer  Adhesives  business  is included in other assets at December 31, 2001.
The  receivables  from  Foods  and  Wise  were  collected  in  2001  and  2000,
respectively,  upon  the sales of these businesses from the affiliated group and
the  resultant  settlement  of  significant  portions  of  these  liabilities.
Consequently,  the  Company recorded settlement and curtailment charges of $10.7
relating  to  this  settlement  of  plan  liabilities  for  Foods in 2001 and an
additional  $5.6  settlement for other lump sum payments made by the plan during
2001.  In  2000  a  settlement  charge  of  $8.9  was  recorded  relating to the
settlement of the liability for Wise, as well as other lump sum settlements made
during  2000.








































The  assets  and  benefit  obligations  of  the  plans  were  as  follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                                                                         2001                   2000
----------------------------------------------------------------------------------------------------
<S>                                                                       <C>                    <C>
CHANGE IN BENEFIT OBLIGATION

Benefit obligation at beginning of year                                 $306.4               $332.3

Service cost                                                               4.3                  4.7
Interest cost                                                             22.0                 23.5
Actuarial losses                                                          16.2                  8.8
Foreign currency exchange rate changes                                    (0.2)                (0.4)
Benefits paid                                                            (45.8)               (46.6)
Plan amendments                                                            0.1                 (0.7)
Acquisitions                                                                -                   7.4
Settlements/curtailments                                                 (19.9)               (22.6)
Special termination benefits                                               5.1
                                                                         ------               ------
                                                                        $288.2               $306.4
                                                                        ------               -------
CHANGE IN PLAN ASSETS

Fair value of plan assets at beginning of year                          $386.9               $381.0
Actual return on plan assets                                             (60.1)                67.4
Foreign currency exchange rate changes                                    (0.2)                (0.2)
Employer contribution                                                      1.1                  3.1
Benefits paid                                                            (45.8)               (46.6)
Acquisitions                                                                                    8.1
Settlements/curtailments                                                 (21.4)               (25.9)
                                                                       ---------            --------
Fair value of plan assets at end of year                                $260.5               $386.9
                                                                       --------              -------

Plan assets (less than) in excess of benefit obligation                 $(27.6)              $ 80.5

Unrecognized net actuarial loss                                          103.6                 22.3
Unrecognized initial transition gain                                                           (0.1)
Unrecognized prior service cost                                            2.7                  4.7
                                                                       --------              -------
Net amount recognized                                                   $ 78.7               $107.4
                                                                        -------              -------
----------------------------------------------------------------------------------------------------
</TABLE>
Amounts  recognized in the balance sheets, after reclassification of the prepaid
pension  asset  to  reflect  a minimum pension liability adjustment, consist of:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                                                                          2001                  2000
----------------------------------------------------------------------------------------------------
<S>                                                                       <C>                   <C>
Prepaid benefit cost based on a September 30 measurement date                                $112.0
Accrued benefit liability                                               $(27.1)                (5.3)
Intangible asset                                                           2.7
Accumulated other comprehensive income                                   103.1                  0.7
                                                                        -------             --------
  Net amount recognized                                                 $ 78.7               $107.4
----------------------------------------------------------------------------------------------------
</TABLE>

Plan  assets  consist  primarily of equity securities and corporate obligations.

The Company's pension expense excludes the expense related to the Foods and Wise
following  the dates they were sold by the Company.  Consumer Adhesives' expense
is  insignificant for all periods presented. Following are the components of net
pension  expense  recognized  by  the  Company:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                             2001                       2000                      1999
----------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                        <C>                        <C>
Service cost                                              $  3.4                     $  2.9                    $  3.1
Interest cost on projected benefit obligation               18.7                       18.8                      17.8
Expected return on assets                                  (22.9)                     (21.4)                    (22.2)
Amortization of prior service cost                           0.4                        0.5                       0.7
Amortization of initial transition asset                    (0.1)                      (0.3)                     (0.4)
Recognized actuarial loss                                    3.7                        6.4                       5.4
Settlement/curtailment loss                                 16.3                        8.9                       0.6
                                                          -------                    -------                   -------
Net pension expense                                       $ 19.5                     $ 15.8                    $  5.0
----------------------------------------------------------------------------------------------------------------------
</TABLE>


The weighted average rates used to determine net pension expense for the Company
were as follows:
<TABLE>
<CAPTION>
<BTB>
--------------------------------------------------------------------------------------------------------------------
                                                              2001                        2000                 1999
--------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                         <C>                   <C>
Discount rate                                                  7.7%                        7.7%                 6.7%
Rate of increase in future compensation levels                 4.7%                        4.7%                 4.2%
Expected long-term rate of return on plan assets               8.7%                        8.7%                 7.9%
--------------------------------------------------------------------------------------------------------------------
</TABLE>

The projected benefit obligation and fair value of plan assets for the Company's
pension  plans with benefit obligations in excess of plan assets were $288.2 and
$260.5,  respectively,  as of December 31, 2001 and $5.6 and $0.0, respectively,
as  of  December  31,  2000.

Most  employees  not  covered by the Company's plans are covered by collectively
bargained  agreements,  which  are  generally  effective  for  five years. Under
Federal pension law, there would be continuing liability to these pension trusts
if  the  Company  ceased  all or most participation in any such trust, and under
certain other specified conditions. The Statements of Operations include charges
of  $0.4,  $0.2  and  $1.3 in 2001, 2000 and 1999, respectively, for payments to
pension  trusts  on  behalf  of  employees  not  covered by the Company's plans.

13.     NON-PENSION  POSTRETIREMENT  BENEFIT

The  Company  provides  certain  health and life insurance benefits for eligible
domestic  and Canadian retirees and their dependents. The cost of postretirement
benefits is accrued during employees' working careers. Domestic participants who
are  not  eligible  for  Medicare are provided with the same medical benefits as
active  employees,  while  those who are eligible for Medicare are provided with
supplemental  benefits.  Canadian  participants  are  provided with supplemental
benefits  to the national healthcare plan in Canada. The domestic postretirement
medical  benefits  are  contributory;  the  Canadian  medical  benefits  are
non-contributory.  The  domestic  and  Canadian  postretirement  life  insurance
benefits  are  non-contributory.  Benefits  are funded on a pay-as-you-go basis.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
                                                            2001                        2000
<S>                                                         <C>                          <C>
-------------------------------------------------------------------------------------------------
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year                    $108.1                     $103.4
Interest cost                                                 7.9                        7.3
Contributions by plan participants                            2.8                        2.0
Actuarial losses                                             16.4                        8.2
Benefits paid                                               (12.8)                     (11.8)
Plan amendment                                                -                         (1.0)
Divestitures                                                 (2.0)                        -
Assumption of liability from Foods                            8.1                         -
                                                       --------------             ------------

Benefits obligation at end of year                          128.5                       108.1

Unrecognized net actuarial (loss) gain                        4.9                        23.8
Unrecognized prior service benefit                           10.6                        19.5
                                                       ------------              --------------
Accrued postretirement
 obligation at end of year                                  $144.0                      $151.4
-------------------------------------------------------------------------------------------------
</TABLE>

The  Company assumed the remaining domestic post-retirement benefit liability of
$8.1  from  Foods  in  December  2001.

Also  included  in the Consolidated Balance Sheets at December 31, 2001 and 2000
are  other  post-employment  benefit obligations of $6.9 and $2.3, respectively.

A  7.25%  and  7.74%  weighted average discount rate was used in determining the
postretirement  benefit  obligation at December 31, 2001 and 2000, respectively.
For  measurement  purposes,  health care costs are assumed to increase 5.25% for
pre-65 benefits and 8.75% for post-65 benefits in 2002 grading down gradually to
a  constant  5.25%  annual  increase  by the year 2008 for post-65 benefits. The
comparable assumptions for the prior year were 9.25% and 5.75% by the year 2008.






Following are the components of net postretirement benefit recognized for 2001,
2000  and  1999:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
                                                  2001               2000                 1999
-----------------------------------------------------------------------------------------------
<S>                                               <C>                 <C>                  <C>
 Interest cost on projected benefit obligation  $ 7.9              $ 7.3                 $ 6.7
 Amortization of prior service benefit           (8.9)              (9.3)                 (8.7)
 Immediate recognition of initial obligation                                               1.0
 Recognized actuarial gain                       (0.5)              (1.8)                 (2.7)
 Settlement / curtailment gain                   (0.5)              (1.1)
                                                ------              ------               ------
 Net postretirement benefit                     $(2.0)             $(4.9)                $(3.7)
-----------------------------------------------------------------------------------------------
</TABLE>

Assumed  health  care  cost trend rates have a significant effect on the amounts
reported  for  health  care  plans. A one-percentage-point change in the assumed
health  care  cost  trend  rates  would  have  the  following  effects:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                               1% increase                                     1% decrease
                                                            ---------------                                 --------------
<S>                                                               <C>                                               <C>
Effect on total service cost and interest cost components     $     0.6                                      $     (0.5)
Effect on postretirement benefit obligation                         7.8                                            (7.0)
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14.     SHAREHOLDERS'(DEFICIT)EQUITY

Preferred  Stock
----------------
On  November  19,  2001, the Company's parent contributed all of the outstanding
Preferred  Stock  plus accumulated dividends of $6.6 to the Company as a capital
contribution.  (See  Note  4  for  additional  information).

Common  Stock  and  Warrants  and  Options  on  Common  Stock
-------------------------------------------------------------
The  Company  has  199,121,749 shares of $0.01 par value common stock issued and
outstanding  and  300,000,000  shares  authorized.  This includes 146,755 shares
held  by  management  of  the  Company,  which  were  issued  as a result of the
Corporate Reorganization.  In addition, management received warrants to purchase
1,039,864  shares  of  common stock.  The warrants have a strike price of $2.78,
the  fair  value  at  the  date  of  grant,  and  a  twenty-year  life.

Other  Shareholders'  Equity
----------------------------
The  Company  declared  common  stock  cash  dividends of $36.4, $61.6 and $64.1
during  2001,  2000  and  1999,  respectively.  The dividends were recorded as a
charge  to  paid-in  capital  to  reflect  a  return of capital to the Company's
parent.

At  December  31,  2001,  the  Company  held $404.8 of notes receivable from its
parent,  which accrue interest at 12% per year, payable quarterly, and mature on
September  29,  2005. The notes were received from an affiliate of the Company's
parent  as  proceeds from the 1996 sales of Wise and Foods and from the issuance
of  options on the common stock of the Consumer Adhesives business and of Borden
Decorative  Products  Holdings,  Inc., the latter of which was cancelled in 1998
upon  the  sale of that business. Interest due on the notes of $10.1 at December
31,  2001  will  not  be  paid  and,  to  further simplify the Company's capital
structure,  during 2002 the Company intends to cancel this note  receivable from
its  parent  (see  Note  4).

During  1996  the Company sold an option to BWHLLC to purchase what was then all
of the common stock of the Consumer Adhesives business for $54.1, which was 110%
of  the  August  16,  1996 fair market value of the common stock. The option was
issued at fair value with a five-year expiration.  During 2000, the Company made
a  capital  contribution  to  the  Consumer  Adhesives  business in exchange for
additional shares of stock.  On August 13, 2001, the option was exercised and an
affiliate  of  the  Company  purchased  the remaining 26% of Consumer Adhesives'
common  shares  issued  in  2000,  for $40.0.  A deferred pre-tax gain of $132.2
($94.8  after-tax)  related  to  this transaction is included in Paid-in-Capital
(see  Note  1).

The  Corporate Reorganization resulted in the issuance of shares of common stock
of  the  Company  and  warrants  to  purchase common stock to certain management
members,  in  exchange  for  the  shares they held in BCHI.  This resulted in an
increase  to  Paid-in-Capital  for $1.2, the book value of the minority interest
liability  that  represented  their  previous  interest  in  BCHI.

In addition to the contribution of the Preferred Stock and accumulated dividends
discussed  above,  the  Company's  parent contributed $17.0 of cash as a capital
contribution  in  conjunction  with the Corporate Reorganization.  The Company's
parent  also  contributed  tax benefits to the Company of $21.0, $44.0 and $26.4
during  2001,  2000  and  1999,  respectively.  The  Company  is included in its
parent's  tax  return  and the deductible interest expense on the parent's notes
payable  reduces  the  Company's  tax  liability.

During 2000, the Company distributed 100% of its ownership in the infrastructure
management  services  business  to  the  Company's parent.  The distribution was
recorded  at  net book value of $16.3, including $8.6 owed by the Company to the
infrastructure  management  services  business  in accordance with a tax sharing
agreement.  Subsequent  to  the distribution, substantially all of the assets of
the  infrastructure  management  services  business were sold to a subsidiary of
Interliant,  Inc.  Subsequent  to  this  sale,  the  remaining  assets  of  the
infrastructure  management  services  business,  with  a  net  book  value  of
approximately  $0.3,  were  contributed  back  to the Company from the Company's
parent.

The Company recorded a net of tax minimum pension liability adjustment of $66.6,
$1.8  and  $1.5  for  2001, 2000 and 1999, respectively, relating to underfunded
pension  plans,  which  is  reflected in accumulated other comprehensive income.

15.      STOCK  OPTION  PLANS  AND  OTHER  STOCK  BASED  COMPENSATION

Unit  Appreciation  Rights
--------------------------
Certain employees of the Company hold unit appreciation rights ("UAR's") granted
by  the  Company  in BWHLLC. The UAR's have a ten year life with vesting periods
ranging  from  4  to  5  years.  The UAR's are accounted for under the liability
method  as prescribed by Accounting Principles Board Opinion No. 25, "Accounting
for  Stock  Issued  to  Employees"  ("APB No. 25"), and any compensation expense
incurred  in  conjunction  with the UAR's will be reflected in the Statements of
Operations  for  the  Company.  For  2001,  2000  and  1999, the Company has not
recorded  any  compensation  expense  attributable  to  the  UAR's.  There  were
45,832,312  UAR's  outstanding  at  December 31, 2001 and no UAR's available for
future  grants.

Stock  Options
--------------
As  a  result  of  the Corporate Reorganization, the Consumer Adhesives Sale and
distribution  of  the  infrastructure management services business, there are no
options  on  subsidiary  stock outstanding as of December 31, 2001. Beginning in
1996,  key
subsidiaries  of  the  Company  issued  stock  options  under  their
individual Stock Purchase and Option Plans for Key Employees. Under these plans,
equity  in  the  Chemical,  Consumer  Adhesives  and  infrastructure  management
services  business  units  was  sold  to  key  management personnel. Fixed stock
options  were  granted  to purchase additional shares at varying exercise prices
between  $5.00 and $11.50. In addition, each company granted fixed stock options
to  employees  under their respective broad-based option plans. The options were
issued with exercise prices at or above fair value, with vesting over five year
and  ten  year  lives.

The  options  granted  to  Chemical  employees  became  options  of  the Company
effective  with  the  Corporate  Reorganization.    The conversion of subsidiary
shares  and  options  provided  subsidiary  management with equivalent intrinsic
value  at  the  new  measurement date.  Accordingly, no compensation expense was
recorded.  The  strike  prices  of  the  options have a range of $4.13 to $5.00,
which exceeds estimated fair value.  As of December 31, 2001 there are 6,871,380
options  outstanding  on the Company's common stock and no options available for
future  grants.

The  liability  for options relating to the Consumer Adhesives business was sold
with  this business and the liability for options relating to the infrastructure
management  services business was included in the distribution of this business.
The  options  related  to  the  infrastructure management services business were
subsequently  exercised  upon the sale of that business by the Company's parent.

The  Company  has  adopted  the  disclosure-only  provisions  of  SFAS  No. 123,
"Accounting  for  Stock-Based Compensation". Under the provisions of APB No. 25,
compensation expense recorded by the Company was $0.1 for 2000.  No compensation
expense  under  APB No. 25 was recorded in 2001 nor 1999.  Had compensation cost
for  the Company's stock option plans been determined based on the fair value at
the grant date consistent with the provisions of SFAS No. 123, the Company's net
loss  and  basic  and  diluted  net  loss  per share would have been the amounts
presented  below:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                                                   2001                2000            1999
-----------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                  <C>             <C>
Net loss applicable to common stock- as reported                 $(186.6)              $(39.7)        $(20.8)
Net loss applicable to common stock - proforma                    (187.2)               (40.8)         (22.1)
Basic and diluted net income (loss) per share - as reported        (0.94)               (0.20)         (0.10)
Basic and diluted net income (loss) per share - proforma           (0.94)               (0.21)         (0.11)
-----------------------------------------------------------------------------------------------------------------
</TABLE>


The  Corporate  Reorganization  resulted  in  a  new  measurement date for these
options  for  purposes  of  measuring  compensation  expense.  To  determine
compensation  cost  according to SFAS No. 123, the fair value of each option was
estimated  as  of  the  measurement  date using the Black-Scholes option-pricing
model  with  a  risk  free  weighted average interest rate of 4.37% and expected
lives  of  five  years.

Information  regarding  the  management stock option plans for the Company is as
follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                      2001                      2000                         1999
                                              ---------------------     -----------------------      ---------------------
                                                            Weighted                    Weighted                  Weighted
                                                            Average                     Average                   Average
                                                            Exercise                    Exercise                  Exercise
                                               Shares        Price     Shares            Price       Shares         Price
-------------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>          <C>          <C>               <C>        <C>              <C>
Options outstanding, beginning of year         4,382,500 $   5.43      5,380,155       $ 5.37       4,842,155      $ 5.00
     Options exercised                             -          -           -               -             -            -
     Options granted                               -           -           -               -           926,000        7.13
     Option conversion                         4,451,880     4.38
     Options relating to distributed business      -           -       (564,655)         5.00           -            -
     Options forfeited                        (1,963,000)    5.09      (433,000)         5.22        (388,000)       5.00
Options outstanding end of year                6,871,380     4.38      4,382,500         5.43        5,380,155       5.37
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The  option  conversion  relates  to  the increase in options as a result of the
Corporate Reorganization (see Note 4).  Options relating to distributed business
represents options for the infrastructure management services business which was
distributed  to  the  Company's  parent  during  2000  (see  Note  19).

At  December  31, 2001 there were 5,213,104 options exercisable, with a range of
exercise  prices  of  $4.13 to $5.00, a weighted average exercise price of $4.26
and  a  weighted  average remaining life of 5 years. At December 31, 2000, there
were  2,528,400  options  exercisable  with a weighted average exercise price of
$5.15.  At  December  31,  1999, there were 1,882,900 options exercisable with a
weighted  average  exercise  price  of  $5.00.

16.      DERIVATIVE  FINANCIAL  INSTRUMENTS

The effect on the Company's other comprehensive income from adoption of SFAS No.
133  as  of January 1, 2001 was a charge of $5.3 ($3.3 net of tax), as discussed
further  in  Note  8.  As  of  December  31,  2001,  the  Company had derivative
liabilities  of  $3.3  classified  as  other  current  liabilities.

Interest  Rate  Swaps
---------------------
The  Company  enters  into  interest rate swaps to alter interest rate exposures
between  fixed  and floating rates on long-term debt. Under interest rate swaps,
the  Company  agrees with other parties to exchange, at specified intervals, the
difference  between  fixed rate and floating rate interest amounts calculated by
reference  to  an  agreed  notional  principal  amount.  The  notional amount of
interest  rate swaps was $24.3 at December 31, 2001 and 2000. The remaining swap
has  a  maturity date of December 1, 2002. The net impact of interest rate swaps
was  an increase in the Company's interest expense of $2.2 in 2001, $6.7 in 2000
and $11.6 in 1999. The year-end fair value of the interest rate swaps was a loss
of  $2.7  in  2001  and  $3.4  in  2000.

The following table summarizes the weighted average interest rates for the swaps
used  by the Company.  Variable rates change with market conditions and may vary
significantly  in the future. A 1% increase or decrease in market interest rates
would  result in a $0.2 increase or decrease, respectively, in the fair value of
the  interest  rate  swap  agreements.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                    2001                        2000                      1999
--------------------------------------------------------------------------------------------------
<S>                                  <C>                        <C>                        <C>
Pay fixed swaps
   Average rate paid                13.7%                    10.5%                         10.4%
   Average rate received             4.5%                     6.3%                          5.2%
--------------------------------------------------------------------------------------------------
</TABLE>

An  interest  rate  swap,  having a notional amount of $200.0, no longer met the
criteria  for  hedge accounting and was marked to market prior to termination on
September  1,  2000.  On  that date the Company recognized a gain of $4.9 in the
Consolidated  Statement  of  Operations  (see  Note 3). Unrealized gains on this
instrument  of  $10.8  in  1999  were  included in the Consolidated Statement of
Operations  and  other  long-term  liabilities.



Foreign  Exchange
-----------------
International  operations  account  for  a  significant portion of the Company's
revenue  and operating income. It is the policy of the Company to reduce foreign
currency  cash  flow  exposure  due  to  exchange  rate  fluctuations by hedging
anticipated  and  firmly  committed  transactions wherever economically feasible
(within  the  risk  limits established in the Company's policy). These contracts
are  part of a worldwide program to minimize foreign currency exchange operating
income  and  balance  sheet  exposure.

The  Company closely monitors foreign currency cash flow transactions and enters
into  forward  and  option  contracts to buy and sell foreign currencies only to
reduce  foreign  exchange  exposure  and  protect  the U.S. dollar value of such
transactions  to  the  extent  of  the  amount  under  contract.

In  accordance  with current accounting standards, gains and losses arising from
contracts  are  recognized  on  a  quarterly  basis  through  the  Statement  of
Operations  (see  Note  3).  The  Company  does  not  hold  or  issue derivative
financial  instruments  for  trading  purposes.

At December 31, 2001 and 2000, the Company had $51.0 and $88.9, respectively, of
notional  value  of forward foreign currency exchange contracts outstanding. The
unsecured  contracts mature within 12 months and are principally with banks. The
Company  is  exposed to credit loss in the event of non-performance by the other
parties  to  the  contracts.  The Company evaluates the credit worthiness of the
counterparties'  financial  condition  and  does  not  expect  default  by  the
counterparties.

Option  and  Commodity  Future  Contracts
-----------------------------------------
The  Company  is  exposed  to  price  fluctuations associated with raw materials
purchases,  most  significantly  with  methanol,  phenol  and  urea.  For  these
commodity raw materials, the Company has purchase contracts, with periodic price
adjustment  provisions.  The Company also adds selling price provisions that are
indexed  to publicly available indices on customer contracts for these commodity
raw  materials.  The  Board  of  Directors  approves  of  all commodity futures.

In  the  fourth  quarter  of  2000,  the  Company entered into fixed rate, fixed
quantity contracts to secure a portion of future natural gas usage at certain of
the  Company's  facilities.  The  contracts were entered into to partially hedge
the  Company's risk associated with natural gas price fluctuations in peak usage
months  through  March  2003.  Gas purchases under these contracts totaled $0.9
million  in  2001, with $1.1 million of future commitments at December 31, 2001.

Due  to a sharp increase in natural gas prices in 2000, the Company expanded its
natural  gas  hedging  activities in June 2001 to hedge a portion of natural gas
purchases  for all of North America.  The Company entered into futures contracts
for  the  months  of  June 2001 through March 2002 to purchase natural gas.  The
contracts  are  settled for cash each month based on the closing market price on
the  last  day  the  contract  trades  on  the  New  York  Mercantile  Exchange.
Commitments  settled  under  these  contracts  totaled $1.7, with $0.5 of future
commitments  at  December 31,  2001.

Gains and losses on commodity futures contracts are recognized each month as gas
is  used.  Future  commitments  are  marked  to market on a quarterly basis.  In
2001, the Company realized losses totaling $0.6 million at the expiration of its
natural gas futures contracts.  The Company also recorded a loss of $0.5 million
for  the  difference between the fair value and carrying value of future natural
gas  commitments  at  December  31,  2001.

17.     FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

The following table presents the carrying or notional amounts and fair values of
the  Company's  financial  instruments  at  December 31, 2001 and 2000. The fair
value  of a financial instrument is the estimated amount at which the instrument
could  be exchanged in a current transaction between willing parties, other than
in  a  forced or liquidation sale. Fair values are determined from quoted market
prices  where  available  or  based  on  other  similar  financial  instruments.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts
payable  and  other  accruals  are considered reasonable estimates of their fair
values.  The  carrying  value  of  the  loans  receivable  from  and  payable to
affiliates  approximates  fair  values  as  management  believes  the loans bear
interest  at  market  interest  rates.













The  following  table includes financial instrument carrying and fair values for
the  Company.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                2001                                       2000
                                     -------------------------                 ------------------------
                                      Carrying          Fair                   Carrying          Fair
                                       Amount           Value                   Amount          Value
                                      -------         ----------                -------         -------
<S>                                     <C>              <C>                      <C>              <C>
Nonderivatives
Assets
     Investment securities            $ 110.0         $   110.0                 $  55.0          $117.8
Liabilities
     Debt                               535.6             369.0                   574.0           449.6

                                     Notional             Fair                  Notional            Fair
                                      Amount              Value                  Amount             Value
                                   -----------        -----------            -------------       ----------
Derivatives relating to:
Foreign currency contracts - loss    $   51.0          $   (0.1)                $  88.9           $(1.8)
Interest rate swaps - loss               24.3              (2.7)                   24.3            (3.4)
-------------------------------------------------------------------------------------------------------------
</TABLE>

18.     SUPPLEMENTAL  INFORMATION

<TABLE>
<CAPTION>

------------------------------------------------------------------------
                                 2001            2000               1999
------------------------------------------------------------------------
<S>                              <C>             <C>                <C>

Depreciation                    $54.0          $51.5               $48.5
Amortization                      5.4            4.2                 3.8
Research and Development         22.7           22.2                22.7
------------------------------------------------------------------------
</TABLE>

19.     RELATED  PARTY  TRANSACTIONS

Corporate  Reorganization  Transactions
---------------------------------------
The Corporate Reorganization included certain financial transactions between the
Company  and  its  parent  (see  Note  4).

Financing  and  Investing  Arrangements
---------------------------------------
In  the  third  quarter 2000 the Company entered into a $40 credit facility with
WKI  maturing on December 31, 2000.  This facility was extended through a series
of  amendments  through  April 16, 2001.  Effective April 12, 2001 this facility
was  amended  and  restated  extending the maturity date to March 31, 2004.  The
facility  was  further  amended  effective  July  2, 2001 to increase the amount
available  to  $50.  In  accordance  with  the terms of the restated and amended
agreement,  the  facility  was  reduced  to  $25  on  August  16,  2001 with the
perfection  of  certain  pledged  collateral.  The  Company  received  a  second
priority  lien  on  that  same  collateral.  On  September  25, 2001 the Company
extended  an additional $3 unsecured credit facility to WKI maturing October 25,
2001.  That facility was increased to $13 effective October 26, 2001 maturing on
December  28,  2001.  No  borrowings occurred under the unsecured facilities and
the  facility  was  transferred  to the Company's parent in conjunction with the
Corporate  Reorganization  (see  Note  4).

Affiliates  of  the Company invest cash with the Company at rates that generally
approximate  market.  These  investments  are  recorded  in  loans  payable with
affiliates.  Foods  had $78.6 and $206.9 invested at December 31, 2001 and 2000,
respectively.  BWHLLC's cash invested with the Company was $73.4 at December 31,
2000.  At  December 31, 2000, Borden Foods Holdings LLC, Foods' parent, had $2.3
cash  invested  with  the Company and CCPC Acquisition Corp, WKI's parent and an
affiliate  of  the  Company's  parent,  had $0.5 invested with the Company.  The
Company  recorded  affiliated interest expense of $12.4, $17.3 and $20.0 related
to  amounts  invested  by  affiliates  during 2001, 2000 and 1999, respectively.

At  December  31, 2000, $0.5 of receivables purchased from WKI were outstanding,
all  of  which  were  collected  in  January  2001.

As  a  guarantor  of  the  Company's debt, Foods receives an annual fee from the
Company  of  $1.1.

Administrative  Service,  Management  and  Consulting  Arrangements
-------------------------------------------------------------------
The  Company  provides administrative services to Foods and provided services to
Wise  prior  to  its sale by BWHLLC. Fees received for these services are offset
against  the  Company's  general  and administrative expenses, and totaled $3.0,
$2.4  and  $11.9  for  the  years  ended  December  31,  2001,  2000  and  1999,
respectively.  The  amount  of  services  provided  was reduced in 2000 with the
distribution  and  sale  of the infrastructure management services business (see
below).

The  Company also renders management, consulting and financial services to Foods
for  an  annual  fee  of  $1.0  payable quarterly  in  arrears.

Prior  to  the  Corporate  Reorganization,  the  Company  rendered  management,
consulting  and financial services to WKI for an annual fee of $2.5. The related
receivable  at  December  31, 2000 was $1.7. WKI also reimbursed the Company for
certain  expenses  incurred  on  its  behalf.  The  related receivable for these
expenses  at  December  31,  2000  was  $0.5.

As  a  result  of  the  Corporate  Reorganization,  Capital provides management,
consulting  and  board services to the Company, and the Company provides certain
administrative  services  to Capital.  Capital charges the Company an annual fee
of  $9.0,  payable  quarterly  in  arrears,  which  represents the net amount of
Capital's  services less the Company's cost of providing administrative services
to Capital.  At December 31, 2001, $0.8 was included in accounts payable for one
month  of  the  annual  fee  due  to  Capital  under  this  arrangement.

Prior  to  the Corporate Reorganization, KKR rendered management, consulting and
board  services  to the Company for an annual fee of $10.0, payable quarterly in
arrears. The 2001 fee through the date of the Corporate Reorganization was $9.2.
At  December  31,  2001, $1.7 is included in accounts payable to Capital for the
two  months  of  fourth quarter 2001 fees prior to the Corporate Reorganization.
Effective  with  the  Corporate Reorganization, the Company is no longer charged
directly  for  any  KKR  fees.

The  Company  incurs  certain  costs  on  Capital's  behalf and is reimbursed by
Capital for 100% of these costs. Included in accounts receivable at December 31,
2001  is  a  $0.6  receivable  for  these  expenses.

Other  Transactions  and  Arrangements
--------------------------------------
Prior  to  Consumer  Adhesives  Sale  (see  Note  1),  the  Company and Consumer
Adhesives  were  parties  to  a  tax  sharing  agreement.  Under this agreement,
Consumer  Adhesives  paid  income  taxes to the Company as if Consumer Adhesives
filed  stand-alone  federal and state income tax returns.  At December 31, 2001,
the  Company  had  an  outstanding  receivable  from  Consumer Adhesives of $6.7
million  for  unpaid  federal  and  state  income  taxes  .

Included  in  other  assets  at  December 31, 2000 is $10.9 as a receivable from
Foods  for  its  portion  of  the  pension  liability.  During 2001, the Company
received  payments  of  $11.8  from  Foods  for its portion of the Company's net
pension  liability.  In  the  fourth quarter of 2001, the Company received $12.3
from  Foods to assume the liability for payment of claims made under essentially
all  of Foods' employee benefit plans. As of December 31, 2001, the Company owed
$0.1  to  Foods  for  reimbursement  of  payments  made  on  its  behalf.

As  described in Note 5 and in Management's Discussion and Analysis, the Company
acquired  certain  assets  from  BCP  in  2000. A wholly owned subsidiary of the
Company serves as the general partner of BCP. The purchase price of these assets
is  considered  to  be  at fair value as determined by an independent appraisal.
During 2001, 2000 and 1999, the Company purchased $11.0, $102.5 and $64.7 of raw
materials  from  BCP. In addition, the Company paid $25.3 in 2000 to BCP to exit
certain  raw  material  purchase  contracts.

In  February  2000,  the  Company  distributed  100%  of  its  ownership  in the
infrastructure  management  services  business  to  the  Company's  parent.  The
distribution was recorded at net book value of $16.3, including $8.6 owed by the
Company  to the infrastructure management services business in accordance with a
tax sharing agreement.  Subsequent to the distribution, substantially all of the
assets  of  the  infrastructure  management  services  business  were  sold to a
subsidiary of Interliant, Inc. in exchange for $2.5 in cash and 1,041,179 shares
of  Interliant,  Inc.  stock.  In  June  2000,  the  remaining net assets of the
infrastructure  management  services  business,  with  a  net  book  value  of
approximately  $0.3,  were  contributed  back  to the Company from the Company's
parent.

20.     COMMITMENTS  AND  CONTINGENCIES

ENVIRONMENTAL  MATTERS  -  The  Company  like  others  in similar businesses, is
subject  to  extensive  Federal,  state  and  local  environmental  laws  and
regulations.  Although  environmental  policies  and  practices  are designed to
ensure  compliance  with  these  laws  and  regulations, future developments and
increasingly  stringent  regulation could require the Company to make additional
unforeseen  environmental  expenditures.  Accruals for environmental matters are
recorded  when  it is probable that a liability has been incurred and the amount
of  the  liability  can  be  reasonably  estimated.  Environmental  accruals are
routinely  reviewed  on  an interim basis as events and developments warrant and





are  subjected  to  a  comprehensive  review  annually  during the fiscal fourth
quarter.  In  addition, under an Environmental Indemnity Agreement (EIA) between
the  Company  and BCP, the Company has agreed, subject to certain conditions and
limitations, to indemnify BCP from certain environmental liabilities incurred at
BCP  facilities,  which  were  previously  owned  by  the  Company, on or before
November  30,  1987  and share on an equitable basis those arising from facts or
circumstances  existing  and requirements in effect both prior to and after such
date. The Company has accrued approximately $41 and $20 at December 31, 2001 and
2000,  respectively, for all probable environmental remediation, indemnification
and  restoration  liabilities.  This  is  management's  best  estimate  of these
liabilities.  Based on currently available information and analysis, the Company
believes  that  it  is  reasonably  possible  that  costs  associated  with such
liabilities may exceed current reserves by amounts that may prove insignificant,
or  by  amounts,  in  the  aggregate,  of  up  to  approximately  $30.

LEGAL  MATTERS  -  The  Company  has  recorded  $2.8  and $4.1 in liabilities at
December  31,  2001  and  2000  respectively,  for  legal  costs in amounts that
management  believes are probable and reasonably estimable. Actual costs are not
expected  to  exceed  these  amounts.  The  Company  believes,  based  upon  the
information  it  currently  possesses,  and  taking into account its established
reserves  for  estimated liability and its insurance coverage, that the ultimate
outcome  of the foregoing proceedings and actions is unlikely to have a material
adverse  effect  on  the  Company's  financial  statements.

In  1998, pursuant to a merger and recapitalization transaction sponsored by the
Blackstone  Group ("Blackstone") and financed by Chase Manhattan Bank ("Chase"),
Borden Decorative Products Holdings, Inc. ("BDPH"), a wholly owned subsidiary of
the Company, was merged with an acquisition vehicle created by Blackstone, which
subsequently  merged  with  Imperial Wallcoverings to create Imperial Home Decor
Group  ("IHDG").  Blackstone provided $84.5 million in equity and Chase provided
$295  million in senior financing. Borden received approximately $314 million in
cash  and 11% of IHDG common stock for its interest in BDPH. On January 5, 2000,
IHDG  filed  for  reorganization  under chapter 11 of the U. S. Bankruptcy Code.
IHDG  emerged from bankruptcy in April 2001. The IHDG Litigation Trust ("Trust")
was  created  pursuant  to  the plan of reorganization in the IHDG bankruptcy to
pursue  preference  and  other  avoidance  claims  on  behalf  of  the unsecured
creditors  of  IHDG.  In  November  2001, the Trust filed a law suit against the
Company  and certain of its affiliates seeking to have the IHDG recapitalization
transaction  avoided  as a fraudulent conveyance and asking for a judgment to be
entered  against  the  Company  for  $314.4  million,  plus  interest, costs and
attorney  fees.  The  Company  believes  it  has  strong defenses to the Trust's
allegations  and  intends  to  defend  the  case  vigorously.

OTHER  - BCP Management, Inc. ("BCPM"), a wholly owned subsidiary of the Company
that  serves  as  the  general  partner of Borden Chemicals and Plastics Limited
Partnership  ("BCP"),  has  certain  fiduciary  responsibilities  to BCP and its
operating subsidiary, Borden Chemical and Plastics Operating Limited Partnership
("BCPOLP").  BCP  and  BCPOLP  were  created  in  November 1987, as separate and
distinct entities from the Company and BCP is 99% owned by the public.  On April
3,  2001,  BCPOLP  and  its subsidiary, BCP Finance Corporation, filed voluntary
petitions  for protection under Chapter 11 of the United States Bankruptcy Code,
Title  11  of  the United States Code, in the United States Bankruptcy Court for
the  District  of  Delaware.  On  March  22,  2002,  BCPM also filed a voluntary
petition for protection under Chapter 11 of the Bankruptcy Code in United States
Bankruptcy Court for the District of Delaware.  In addition to a $20.0 liability
recorded  in the fourth quarter of 2000, $10.0 was accrued by the Company in the
second  quarter  of  2001  for  potential  BCPOLP  liabilities.































21.     QUARTERLY  FINANCIAL  DATA  (UNAUDITED)

The  following  represents  Quarterly  Financial  Data  for  the  Company:
<TABLE>
<CAPTION>

2001 QUARTERS                                       FIRST             SECOND              THIRD              FOURTH (1)
-------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>               <C>                 <C>                 <C>
Net sales                                     $    361.1             $377.5              $335.4               $ 298.1
-------------------------------------------------------------------------------------------------------------------------
Gross profit (2)                                    57.9               72.9                62.8                  54.0
-------------------------------------------------------------------------------------------------------------------------
Business realignment, and other impairments         (4.1)              14.0                10.7                 124.8
Loss on divestiture of businesses                     -                  -                  2.2                   0.1
-------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations             0.5              (27.8)                1.9                (111.2)
-------------------------------------------------------------------------------------------------------------------------
Discontinued operations:
     Income from operations, net of tax              0.3                6.1                 5.4                    -
-------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                    0.8              (21.7)                7.3                (111.2)
-------------------------------------------------------------------------------------------------------------------------
Preferred stock dividends                           18.4               18.5                18.4                   6.5
-------------------------------------------------------------------------------------------------------------------------
Net (loss) income applicable to common stock       (17.6)             (40.2)              (11.1)               (117.7)
Basic and diluted, per share of common stock:
Income (loss) from continuing operations             -                (0.11)               0.04                 (0.62)
Discontinued operations:                             -
      Income from operations, net of tax             -                 0.03                0.03                   -
Net (loss) income applicable to common stock       (0.09)             (0.20)              (0.06)                (0.59)
Dividends per common share                          0.06                -                  0.12                    -
Dividends per preferred share                       0.75               0.75                0.75                  0.27
Average number of common shares outstanding        199.0              199.0               199.0                 199.0
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
2000 QUARTERS                                      FIRST              SECOND              THIRD             FOURTH (3)
-------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>                <C>                 <C>                 <C>
Net sales                                    $    333.7               $338.3             $352.9             $351.7
-------------------------------------------------------------------------------------------------------------------------
Gross profit (2)                                   80.3                 75.5               66.0               35.5
-------------------------------------------------------------------------------------------------------------------------
Business realignment, impairments and other         2.8                  9.0                1.8               24.5
Loss on divestiture of businesses                    -                    -                  -                 0.9
-------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations           10.4                  4.7              (10.9)             (76.5)
-------------------------------------------------------------------------------------------------------------------------
Discontinued operations:
     Income from operations, net of tax             1.9                  7.7                3.0                0.7
     Gain on disposal, net of tax                    -                  93.0                  -                 -
-------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                  12.3                105.4               (8.0)             (75.7)
-------------------------------------------------------------------------------------------------------------------------
Preferred stock dividends                          18.4                 18.5               18.4               18.4
-------------------------------------------------------------------------------------------------------------------------
Net (loss) income applicable to common stock       (6.1)                86.9              (26.4)             (94.1)
-------------------------------------------------------------------------------------------------------------------------
Basic and diluted, per share of common stock:
    Income (loss) from continuing operations       0.05                 0.02              (0.05)             (0.38)
Discontinued operations:
      Income from operations, net of tax           0.01                 0.04               0.01                  -
      Gain on disposal, net of tax                  -                   0.47                -                    -
Net (loss) income applicable to common stock      (0.03)                0.44              (0.14)             (0.47)
Dividends per common share                         0.13                 0.06               0.06               0.06
Dividends per preferred share                      0.75                 0.75               0.75               0.75
Average number of common shares outstanding       199.0                199.0              199.0              199.0
-------------------------------------------------------------------------------------------------------------------------
<FN>
(1)     As described in Note 6, the Company's fourth quarter 2001 results include a $98.2 impairment charge
related  to  the  shut-down  of  the  melamine  crystal  plant and a $19.0 charge related to a previously owned business.
(2)     Gross  profit  is  defined  as  gross  margin  less  distribution  expense.
(3)     As  described  in  Note  6,  the  Company's  fourth quarter 2000 results includes a charge of $24.5
related  to  plant closures.  The Company's fourth quarter 2000 results also include a $25.3 charge to exit
certain  raw  material  purchase  contracts  which  is recorded in cost of sales (see page 15).  In the fourth
quarter  of  2000,  the  Company recorded a liability of $20.0 related to a limited partnership for which a
wholly  owned  subsidiary  serves  as  general  partner  (see  Note  18).
</TABLE>













                          INDEPENDENT AUDITORS' REPORT




To  the  Board  of  Directors
and  Shareholders  of  Borden  Chemical,  Inc.


We have audited the accompanying consolidated balance sheets of Borden Chemical,
Inc.  (formerly  Borden,  Inc.)  (a  subsidiary  of  Borden  Holdings, Inc.) and
subsidiaries  as  of  December  31,  2001 and 2000, and the related consolidated
statements  of  operations,  shareholders'  (deficit) equity, and cash flows for
each  of the three years in the period ended December 31, 2001.  These financial
statements  are  the  responsibility  of  the  Company's  management.  Our
responsibility  is  to express an opinion on these financial statements based on
our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to  obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

In  our  opinion,  such consolidated financial statements present fairly, in all
material  respects,  the  financial  position  of  Borden  Chemical,  Inc.  and
subsidiaries  at December 31, 2001 and 2000, and the results of their operations
and  their  cash  flows for each of the three years in the period ended December
31,  2001  in  conformity  with  accounting principles generally accepted in the
United  States  of  America.


DELOITTE  &  TOUCHE  LLP


Columbus,  Ohio


February  22,  2002,  except  for  the fourth paragraph of Note 4 and the fourth
paragraph  of  Note  20,  both  as  to  which  the  date  is  March  22,  2002.




































ITEM  9.        CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS
--------        --------------------------------------------------
     ON  ACCOUNTING  AND  FINANCIAL  DISCLOSURE
     ------------------------------------------

                       None

















































































                                    PART III

ITEM  10.    DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT
---------    --------------------------------------------------------
Set  forth  below are the names and ages of the Directors and Executive Officers
of  the  Company  as  of  March  1, 2002, and the positions and offices with the
Company  currently  held  by  each of them.  Their terms of office extend to the
next  Annual  Meeting  of  the  Board of Directors or until their successors are
elected.


                                                                       Served in
                                                        Age  on         Present
                                                       Dec.  31,        Position
           Name               Position  &  Office       2001              Since
     ----------     -----------------------------     ---------           -----
C.R. Kidder      Chairman  of  the  Board,  Director,
                     Chief  Executive  Officer           57                1995
H.R. Kravis     Director                                 57                1995
J.K. Saer       Director                                 45                2001
G.R. Roberts    Director                                 58                1995
S.M. Stuart     Director                                 42                1995
B.F. Carroll    Director                                 30                2001
P.J. Norris     Director                                 54                2001
K.M. Kelley     Director                                 43                2001
N.A. Reardon    Director                                 49                2001
W.H. Carter     Director, Executive Vice  President, and
               Chief  Financial Officer                  48                1995
W.F. Stoll, Jr.Director, Executive Vice President and
               General Counsel                           53                1996
T.J. Zappala   Executive Vice President                  44                2001
J.M. Kaestle   Executive Vice President                  46                2001



C.  Robert  Kidder  was  elected  a  Director,  Chairman  of the Board and Chief
Executive Officer of the Company on January 10, 1995. Since November 24, 2001 he
has  been employed as President of Borden Capital, Inc. He is also a director of
WKI  Holding  Company,  Inc.,  Electronic  Data  Systems  Corporation and Morgan
Stanley.  He  is  a  member  of the Executive and Compensation Committees of the
Board.

Henry  R. Kravis acted as Chairman of the Board of the Company from December 21,
1994,  to  January 10, 1995.  He has been a member of KKR & Co., LLC since 1996,
was  a  General  Partner of Kohlberg Kravis Roberts & Co. from its establishment
through  1995  and  has been a General Partner of KKR Associates, L.P. since its
establishment.  He is also a Director of Accuride Corporation, Alliance Imaging,
Inc.,  Amphenol  Corporation,  The Boyds Collection, Ltd., Evenflo Company Inc.,
The  Gillette  Company,  IDEX Corporation, KinderCare Learning Centers, Inc. KSL
Recreation  Corporation, PRIMEDIA Inc., Regal Cinemas, Inc., Sotheby's Holdings,
Inc., Spalding Holdings Corporation, and Willis Group Holdings Limited.  He is a
member  of the Executive Committee of the Board.  Messrs. Kravis and Roberts are
first  cousins.

John  K.  Saer  was elected a director of the Company November 20, 2001.  He has
been a director with Kohlberg Kravis Roberts & Co. since January 2001.  Prior to
that,  from  1996  to  December  2000  he  was  Chief  Financial  Officer of KSL
Recreation Corp. He is a member of the Executive and Compensation Committees and
Chairman  of  the  Audit  Committee  of  the  Board.

George  R. Roberts has been a member of KKR & Co., LLC since 1996, was a General
Partner  of  Kohlberg  Kravis Roberts & Co. from its establishment through 1995,
and  has been a General Partner of KKR Associates, L.P. since its establishment.
He  is  also a Director of Accuride Corporation, Amphenol Corporation, The Boyds
Collection,  Ltd., DPL, Inc., Evenflo Company Inc., IDEX Corporation, KinderCare
Learning  Centers,  Inc.,  KSL  Recreation  Corporation,  Owens-Illinois,  Inc.,
PRIMEDIA Inc., Safeway, Inc., and Spalding Holdings Corporation.  Messrs. Kravis
and  Roberts  are  first  cousins.

Scott  M.  Stuart  has  been a member of KKR & Co., LLC since 1996. He began his
employment  with  Kohlberg  Kravis Roberts & Co. as an Executive in 1986.  He is
also  a  Director of AEP Industries, Inc., The Boyds Collection, Ltd., DPL, Inc.
and  WKI  Holding Company, Inc. He is a member of the Executive Committee of the
Board.

Brian F. Carroll was elected a Director of the Company November 20, 2001. He has
been  an  executive  with  Kohlberg  Kravis  Roberts & Co., since July 1999, and
before  that,  from  March  1995 to July 1997. He is also a director of Spalding
Holdings Corporation  and  WKI  Holding  Company,  Inc.  He  is Chairman of the
Compensation  Committee  and  a  member  of  the  Audit  Committee of the Board.






Paul  J. Norris was elected a director of the Company November 20, 2001.  He was
elected  President  and  Chief Executive Officer of W.R. Grace & Co. in November
1998 and became Chairman in January 1999.  Prior to joining W.R. Grace & Co., he
was  Senior Vice President of Allied Signal Incorporated and served as President
of  its specialty chemicals business from 1997 to November 1998.  He is a member
of  the  Audit  and  Executive  Committees  of  the  Board.

Kevin  M.  Kelley  served  as  Executive  Vice President, Corporate Strategy and
Development  from April 5, 1999 to November 24, 2001. Since November 24, 2001 he
has  been  employed as Executive Vice President and Treasurer of Borden Capital,
Inc. He was elected a director of the Company November 20, 2001. From April 1996
to  March 1999, he was Managing Director of Ripplewood Holdings LLC.  He is also
a director of WKI Holding Company, Inc. and AEP Industries, Inc.  He is a member
of  the  Executive  Committee  of  the  Board.

Nancy  A. Reardon served as Senior Vice President, Human Resources and Corporate
Affairs  from  March  3, 1997 to December 2000 and Executive Vice President from
December  2000  to  November  24,  2001.  Since  November  24, 2001 she has been
employed  as  Executive  Vice President of Borden Capital, Inc.  Ms. Reardon was
elected  a  director  of  the  Company  November  20,  2001. She was Senior Vice
President  - Human Resources and Communications for Duracell International, Inc.
from 1991 through February 1997.  She is also a director of WKI Holding Company,
Inc.  She  is  a  member  of  the  Compensation  Committee  of  the  Board.

William  H.  Carter  was  elected  Executive  Vice President and Chief Financial
Officer  effective  April 3, 1995 and a director November 20, 2001. He is also a
director  of  BCP  Management, Inc. (the General Partner of Borden Chemicals and
Plastics  Limited  Partnership)  and  WKI  Holding  Company,  Inc.

William  F.  Stoll,  Jr.  was  elected Senior Vice President and General Counsel
effective  July  1,  1996  and  promoted to Executive Vice President in December
2000.  He  was  elected  a  director of the Company November 20, 2001.  Prior to
joining  the  Company  in  1996 he was a Vice President of Westinghouse Electric
Corporation,  and served as its Deputy General Counsel from 1988 to 1996.  He is
also a director of BCP Management, Inc. (the General Partner of Borden Chemicals
and  Plastics  Limited  Partnership)  and  AEP  Industries,  Inc.

Timothy  J.  Zappala  was  elected  an  Executive  Vice President of the Company
November  24,  2001.  He  joined  Borden  Chemical,  Inc.  in  May  1998 as Vice
President  and  General Manager - Melamine Resins and Derivatives business unit.
In  July  1999  he  was  elected  Executive Vice President- Foundry & Industrial
Products  (which  later  combined  with  the  Melamine crystal and resins and UV
Coatings  and  Inks businesses to become the Performance Resins Group). Prior to
joining  the  Borden  Chemical, Inc., he was Vice President & General Manager of
the  Polymers  Division of Hampshire Chemical Corp, a subsidiary of Dow Chemical
Company,  from  1996  to  May  1998.

John  M. Kaestle was elected an Executive Vice President of the Company November
24,  2001.  He  joined  Borden  Chemical,  Inc.  in March 2001 as Executive Vice
President  -  Forest  Products Group. Prior to joining Borden Chemical, Inc., he
served as Vice President Containerboard Sales and Logistics, and Chief Financial
Officer, Containerboard Packaging and Recycling Division of Weyerhauser Company,
from  1981  to  2001.





















































The  Long-Term Incentive Plans-Awards In Last Fiscal Year table is not included
since the Registrant has no long-term incentive plan.

Retirement  Benefits
--------------------
The  Borden Employees Retirement Income Plan ("ERIP") for salaried employees was
amended  as  of  January  1,  1987, to provide benefit credits of 3% of earnings
which  are  less  than  the  Social  Security  wage base for the year plus 6% of
earnings  in  excess  of the wage base. Earnings include annual incentive awards
paid  currently but exclude any long-term incentive awards. Benefits for service
through December 31, 1986, are based on the plan formula then in effect and have
been  converted  to  opening  balances under the plan. Both opening balances and
benefit  credits  receive interest credits at one-year Treasury bill rates until
the  participant  commences  receiving  benefit payments. For the year 2001, the
interest  rate  as  determined  in  accordance with the plan language was 6.11%.
Benefits  vest  after completion of five years of employment for employees hired
on  or  after  July  1,  1990.

The  Company  has supplemental plans which will provide those benefits which are
otherwise  produced by application of the ERIP formula, but which, under Section
415 or Section 401 (a)(17) of the Internal Revenue Code, are not permitted to be
paid  through a qualified plan and its related trust. The supplemental plan also
provides  a  pension  benefit using the ERIP formula based on deferred incentive
compensation  awards  and  certain  other  deferred  compensation, which are not
considered  as  part  of compensation under the ERIP. The total projected annual
benefits  payable under the formulas of the ERIP at age 65 without regard to the
Section  415  or  401(a)(17)  limits  and  recognizing  supplemental pensions as
described  above, are as follows for the Named Executive Officers of the Company
in  2001:  W.  H.  Carter  -  $129,406, C. R. Kidder - $183,995, N. A. Reardon -
$45,787, K.M. Kelley - $124,901, M.E. Ducey - $90,042, W.F. Stoll - $63,874 (not
including  the  special  employment  contract  benefit described below) and J.M.
Kaestle  -  $37,117.

The  Company has a special retirement arrangement with Mr. Stoll, Executive Vice
President  and  General  Counsel.  Under  this  arrangement,  the  Company  will
calculate  the  benefit  Mr. Stoll would have received from his former employer,
using  predetermined  assumptions,  and  deduct  from this amount the retirement
benefits accrued under the Borden Retirement Programs. Any shortfall in benefits
will  be paid by the Company as a non-qualified benefit. Special provisions also
apply  in  the  event  of  death  or  disability.

In  addition,  certain Executive Officers receive Company matching contributions
on  the  first  7%  of  contributions  to  the  Retirement Savings Plan. Company
matching  contributions  on  employee contributions in excess of 5% are provided
under  the supplemental plans. This benefit is not provided if the executive has
any  other  pension  benefit  guarantee.

Compensation  of  Directors
---------------------------
In  2001, each director who was not an employee of the Company receive an annual
retainer  of  $45,000. Directors who were also employees of the Company were not
entitled  to  remuneration  for serving as directors. No additional compensation
was  provided  for  committee  participation  or  special  assignments.

Directors  who  served prior to March 15, 1995 and who were not employees of the
Company  are  provided,  upon attaining age 70, annual benefits through a funded
grantor  trust  equal  to their final annual retainer if they served in at least
three  plan  years.  Such  benefits  can  continue  for  up  to  15  years
..

Employment,  Termination  and  Change  in  Control  Arrangements
----------------------------------------------------------------
Mr.  Ducey has an arrangement with the Company that provides for continuation of
his  annual  salary  for  two  years following his termination date of March 31,
2002.  The  agreement also provides for payment of incentive compensation earned
in  2001,  unused vacation, a perquisite allowance and an amount for relocation,
and  provides  specific  detail  on  the  continuation  or  termination of other
benefits.  The Company will repurchase Mr. Ducey's equity ownership based upon a
value  calculated  at  the  end  of  February.  The  agreement  also  contains a
non-compete  provision.


The  Company  has  arrangements  with  Mr.  Stoll  and  Mr. Carter providing for
enhanced  severance  upon  termination  of  employment.













Compensation  Committee  Interlocks  and  Insider  Participation
----------------------------------------------------------------
Messrs.  Carroll  and  Saer are members of the Company's Compensation Committee.
Both  are  employees of Kohlberg Kravis Roberts & Co. See "Certain Relationships
and  Related  Transactions." Mr. Kidder, Chairman and Chief Executive Officer of
the  Company,  is  also  a  member  of  the  Compensation  Committee.































































ITEM  11.     EXECUTIVE  COMPENSATION
---------     -----------------------

The  options/SAR  Grants  in  last  fiscal  year table has been omitted since no
options  were  granted  in  2001.

The following table provides certain summary information concerning compensation
of  the  Company's  Chief  Executive  Officer  and  the  four  other most highly
compensated  Executive  Officers  as  of December 31, 2001 (the "Named Executive
Officers")  for  the  periods  indicated.

<TABLE>
<CAPTION>
==================================================================================================================================
                                                   SUMMARY COMPENSATION TABLE
==================================================================================================================================
<S>                                   <C>         <C>         <C>          <C>                  <C>                     <C>
                                                         ANNUAL COMPENSATION            LONG-TERM COMPENSATION
                                             -----------------------------------------           AWARDS
                                                                                        ----------------------
                                                                      OTHER ANNUAL     SECURITIES UNDERLYING        ALL OTHER
                                                                      COMPENSATION          OPTIONS/LSAR           COMPENSATION
NAME AND PRINCIPAL POSITION          YEAR      SALARY ($)  BONUS ($)      ($)                   (#)                   ($)(2)
==================================================================================================================================
                                      2001  (6) 1,092,000    644,280   (1) 98,815                     0               62,970
C.R. Kidder                           2000      1,194,063          0       87,757                   (3)               99,503
Chairman and Chief Executive Officer  1999      1,171,500  1,054,350       75,608                   (3)               90,255
----------------------------------------------------------------------------------------------------------------------------------
M.E. Ducey (5)
President and Chief Operating Officer 2001        471,173    248,589            0         (7) 1,501,200            1,127,694
----------------------------------------------------------------------------------------------------------------------------------
W.H. Carter                           2001        486,250    215,890            0                     0               34,907
Executive Vice President and          2000        462,538    200,000            0                   (3)               31,878
Chief Financial Officer               1999        437,538    247,541            0                   (3)               32,815
----------------------------------------------------------------------------------------------------------------------------------
W.F. Stoll, Jr.                       2001        409,000    180,068            0                     0               19,571
Executive Vice President              2000        387,425     90,000            0                   (3)               22,260
and General Counsel                   1999        362,425    206,168            0                   (3)               18,754
----------------------------------------------------------------------------------------------------------------------------------
J.M. Kaestle
Executive Vice President,
Forest Products Group                 2001        188,461    158,157            0                     0                3,365
----------------------------------------------------------------------------------------------------------------------------------
K.M. Kelley                           2001    (6) 425,000    204,238  (4) 277,393                     0               22,922
Former Executive Vice President,      2000        462,500    125,000      291,216                   (3)               46,339
Strategy and Development              1999        334,327    185,625       13,835                   (3)               46,339
----------------------------------------------------------------------------------------------------------------------------------
N.A. Reardon                          2001    (6) 357,500    138,252            0                     0               17,213
Former Senior Vice President          2000        387,795     50,000            0                   (3)               22,289
Human Resources and Corporate Affairs 1999        365,295    206,575            0                   (3)               18,754
----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)     Includes  $60,000  pursuant  to  the  Executive  Perquisite  Benefit  Plan  and $ 38,815 not paid to Mr. Kidder but
allocable  to  his  personal  use  of  company  aircraft.
(2)     Amounts  shown in this column for 2001 consist of matching company contributions to the Retirement Savings Plan and
the executive supplemental benefit plans.  The amount shown for Mr. Ducey also includes $930,000 salary continuance through
March  2004,  $40,000  in  2002  for  perquisities,  $44,712  for  unused  vacation  and  $80,000  in  2002 for relocation.
(3)     Unit  appreciation  rights  in  BW  Holdings,  LLC  held  by these officers are not exercisable for units or stock.
(4)     Includes  $247,393  in  forgiven  principal  and  interest  from  a  loan  to  Mr.  Kelley.
(5)     Mr.  Ducey  was  elected  President  and  Chief Operating Officer effective November 24,2001 and resigned effective
January  11,  2002.
(6)   Represents  salary  through  November  15,  at  which time Mr. Kidder, Mr. Kelley and Ms. Reardon became employees of
Borden  Capital,  Inc.
(7)     Represents  shares  underlying  stock  options  and warrants received by Mr. Ducey as a result of the merger of the
Registrant  with  Borden  Chemical  Holdings,  Inc.  None  of  these  options  or  warrants  are  in-the-money.
</TABLE>























ITEM  12.    SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL
---------    --------------------------------------------
               OWNERS  AND  MANAGEMENT
               -----------------------

The  following  table  sets  forth  certain information regarding the beneficial
ownership of the Registrant's Common Stock and other equity securities issued by
affiliated entities, as of March 1, 2002, by (a) persons known to the Registrant
to  be the beneficial owners of more than five percent of the outstanding voting
stock  of the Registrant,  (b) each director of the Registrant,  (c) each of the
Named  Executive  Officers  of the Registrant during the 2001 fiscal year of the
Registrant  and  (d) all directors and executive officers of the Registrant as a
group. Except as otherwise noted, the persons named in the table below have sole
voting and investment power with respect to all securities shown as beneficially
owned  by  them.

     Name of                                               Beneficial  Ownership
  Beneficial  Owner                                       of  Equity  Securities
-------------------                               ------------------------------
                                                        Shares/Units     Percent
                                                        ------------     -------

KKR  Associates  (1)                                    198,974,994       98.75
     9  West  57th  Street
New  York,  New  York  10019
C.  Robert  Kidder                                         369,569(2)       *
Henry  R.  Kravis(1)                                          --            *
George  R.  Roberts(1)                                        --            *
Scott  M.  Stuart(1)                                          --            *
Brian  F.  Carroll                                           -0-            *
John  K.  Saer                                               -0-            *
Paul  J.  Norris                                             -0-            *
Michael  E.  Ducey                                       1,032,300(3)
William  H.  Carter                                        120,481(2)       *
Kevin  M.  Kelley                                          120,481(2)       *
Nancy  A.  Reardon                                         120,481(2)       *
William  F.  Stoll,  Jr.                                   120,481(2)       *
John  M.  Kaestle                                             -0-
All  Directors  and  Executive  Officers
   as  a  group(4)                                            (4)           *

*Beneficial ownership does not exceed 1.0% of the respective class of securities

(1)     The  Registrant's  Common  Stock  shown  as  beneficially  owned  by KKR
Associates  is  directly  held  by Borden Holdings, Inc., a Delaware corporation
which is wholly owned by BW Holdings, LLC, a Delaware limited liability company,
the  managing  member of which is a limited partnership, of which KKR Associates
is  the  sole  general  partner  and  as  to  which it possesses sole voting and
investment  power.  KKR  Associates  is also the beneficial owner of 632,000,000
units  of  BW  Holdings,  LLC.  KKR Associates is a limited partnership of which
Messrs.  Edward A. Gilhuly, Perry Golkin, James H. Greene, Jr., Henry R. Kravis,
Robert  I. MacDonnell, Michael W. Michelson, Paul E. Raether, George R. Roberts,
Scott M. Stuart and Michael T. Tokarz are the general partners. Such persons may
be  deemed  to  share  beneficial  ownership of the shares shown as owned by KKR
Associates.  The  foregoing  persons  disclaim  beneficial ownership of any such
shares.
(2)  Represents  units  in  BW  Holdings,  LLC.
(3)  As  of  March 1, Mr. Ducey beneficially owned 31,500 shares of common stock
        of  the  Registrant,  and  1,000,800
       shares  subject  to  currently  exercisable  stock  options and warrants.
(4)  Equity  securities  beneficially  owned  by  all  directors and executive
       officers  as  a  group  consist  of:  851,493  units
       of  BW  Holdings,  LLC.,  35,000  shares of the Registrant, and 1,100,880
       shares  of  the  Registrant  subject  to
       currently  exercisable  options  and  warrants.






















ITEM  13.   CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS
---------   --------------------------------------------------

All  of  the Company's common stock is owned by a holding company which is owned
by  an  affiliate  of  KKR  Associates,  a New York limited partnership of which
Messrs.  Edward A. Gilhuly, Perry Golkin, James H. Greene, Jr., Henry R. Kravis,
Robert  I. MacDonnell, Michael W. Michelson, Paul E. Raether, George R. Roberts,
Scott  M.  Stuart and Michael T. Tokarz are the general partners. KKR Associates
has  sole  voting  and  investment  power  with  respect to such shares. Messrs.
Kravis,  Roberts  and  Stuart  are  directors  of  the  Company.

Through  November  24,  2001,  KKR rendered management, consulting and financial
services  to  the Company and its businesses for $9.2 million, payable quarterly
in  arrears.  Messrs.  Kravis,  Roberts, and Stuart are general partners of KKR.

In  2000,  the  Company  made a loan to Mr. Carter, Executive Vice President and
Chief Financial Officer, in the amount of $375,000, of which $225,000 is secured
with  a  mortgage  on his residence. The interest rate applicable to the loan is
prime  less  .25%.  As  of  December  31,  2001, the full amount of the loan was
outstanding,  plus  accrued  interest  of  $35,232.

Pursuant to his terms of employment in 1999, Mr. Kelley received a loan from the
Company  in  the  amount  of  $675,000.  The  principal and accrued interest are
payable upon termination of employment, only if such termination occurs prior to
April  4,  2002,  and only to the extent of amounts not forgiven. As of December
31,  2001,  two-thirds  of  the  loan  had  been  forgiven.


The  Company  entered  into  an  agreement  effective  Nov. 24, 2001 with Borden
Capital,  Inc.,  a  subsidiary  of  the  Company's  parent, for the provision of
management  services  by  Capital  to  the  Company  and  for  the  provision of
administrative  services  by the Company to Capital.  The cost of these services
is  a  net  expense  to  the Company of $9 million payable quarterly in arrears.
Messrs.  Kidder,  Kelley and Ms. Reardon, directors of the Company, are officers
of  Capital.




















































                                                          PART IV


ITEM        14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
---------    -------------------------------------------------------------------

(a) List of documents filed as part of this report
    ----------------------------------------------

    1.  Financial  Statements
       ---------------------

All  financial  statements  of the registrant are set forth under Item 8 of this
Report  on  Form  10-K.

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

        Report  of  Independent  Auditors

        For  the  three  years  ended  December  31,  2001:
           Schedule  II  -  Valuation  and  Qualifying  Accounts

    3.  Exhibits




































































                                                INDEPENDENT AUDITORS' REPORT



To  the  Board  of  Directors
and  Shareholders  of  Borden  Chemical,  Inc.



We  have  audited the consolidated financial statements of Borden Chemical, Inc.
(formerly  Borden Inc.) (a subsidiary of Borden Holdings, Inc.) and subsidiaries
as  of December 31, 2001 and 2000, and for each of the three years in the period
ended  December  31, 2001, and have issued our report thereon dated February 22,
2002  except for the fourth paragraph of Note 4 and the fourth paragraph of Note
20,  both  as to which the date is March 22, 2002; such financial statements and
report  are  included  elsewhere in this Form 10-K. Our audits also included the
financial  statement  schedule of Borden Chemical, Inc. and subsidiaries, listed
in Item 14. This consolidated financial statement schedule is the responsibility
of  the  Company's management. Our responsibility is to express an opinion based
on  our  audits. In our opinion, such consolidated financial statement schedule,
when  considered in relation to the basic financial statements taken as a whole,
presents  fairly  in  all  material  respects the information set forth therein.

DELOITTE  &  TOUCHE  LLP
Columbus,  Ohio


February  22,  2002,  except  for  the fourth paragraph of Note 4 and the fourth
paragraph  of  Note  20,  both  as  to  which  the  date  is  March  22,  2002.





















































<TABLE>
<CAPTION>
     SCHEDULE  II  -  VALUATION  AND  QUALIFYING  ACCOUNTS
-----------------------------------------------------------------------------------------------------------------
<S>                                    <C>                 <C>              <C>                    <C>
                                     Balance            Charged to                                Balance
                                 December 31, 1998        Expense         Write-offs           December 31, 1999
Allowance for
doubtful accounts                $   10.2           $   3.0           $      (1.7)              $      11.5
-----------------------------------------------------------------------------------------------------------------
                                     Balance            Charged to                                Balance
                                 December 31, 1999        Expense         Write-offs           December 31, 2000
-----------------------------------------------------------------------------------------------------------------
Allowance for doubtful accounts  $   11.5           $   3.7           $      (2.5)              $      12.7
-----------------------------------------------------------------------------------------------------------------
                                     Balance            Charged to                                Balance
                                 December 31, 2000        Expense         Write-offs           December 31, 2001
-----------------------------------------------------------------------------------------------------------------
Allowance for doubtful accounts  $   12.7           $   5.2           $      (1.2)              $      16.7
-----------------------------------------------------------------------------------------------------------------
</TABLE>


































































          3.     Exhibits
                 --------

     Management contracts, compensatory plans and arrangements are listed herein
     at  Exhibits  (10)(v)  through  (10)(xv).

                     (3)(i) Restated Certificate of Incorporation dated March
                            14, 1995, and Certificate of Amendment of Restated
                            Certificate of Incorporation dated June 23, 1995,
                            both incorporated herein by reference from Exhibit
                            (3) to the June 30, 1995  Form  10-Q.

                       (ii) By-Laws incorporated herein by reference from
                            Exhibit (3)(ii) to the September 30, 1996, Form
                            10-Q.

                     (4)(i) Form of Indenture dated as of January 15, 1983, as
                            supplemented by the First Supplemental Indenture
                            dated as of March 31, 1986, and the Second
                            Supplemental Indenture, dated as of June 26, 1996,
                            relating to the $200,000,000 8-3/8% Sinking Fund
                            Debentures due 2016, incorporated herein by
                            reference from Exhibits (4)(a) and (b) to Amendment
                            No. 1 to Registration Statement on Form S-3, File
                            No. 33-4381 and Exhibit (4)(iv) to the June 30,
                            1996, Form 10-Q.

                       (ii) Form of Indenture dated as of December 15, 1987, as
                            supplemented by the First Supplemental Indenture
                            dated as of December 15, 1987, and the Second
                            Supplemental Indenture dated as of February 1, 1993,
                            and the Third Supplemental Indenture dated as of
                            June 26, 1996, incorporated herein by reference
                            from Exhibits (4)(a) through (d) to Registration
                            Statement on Form S-3, File No. 33-45770, and
                            Exhibit (4)(iii) to the June 30, 1996, Form 10-Q,
                            relating to the following Debentures and Notes:

                            (a)   The $150,000,000 9-1/4% Sinking Fund
                                  Debentures due 2019.
                            (b)   The $200,000,000 9-1/5% Debentures due 2021.
                            (c)   The $250,000,000 7-7/8% Debentures due 2023.

                      (iii) Form of Indenture relating to Senior Securities,
                            incorporated herein by reference from Exhibit 4.1 to
                            the Company's Registration Statement on Form S-3,
                            File No. 33-57577.

                       (iv) Form of Indenture relating to Subordinated
                            Securities incorporated herein by reference from
                            Exhibit 4.2 to the Company's Registration
                            Statement on Form S-3, File No. 33-57577.

                    (10)(i) Recapitalization Agreement, dated as of October 14,
                            1997, among BORDEN, INC., a New Jersey corporation,
                            BORDEN DECORATIVE PRODUCTS HOLDINGS, INC., a
                            Delaware corporation and an indirect wholly owned
                            Subsidiary of Borden, and BDPI HOLDINGS CORPORATION,
                            a Delaware corporation incorporated herein by
                            reference to Exhibit (10)(i) to the 1997 Form 10-K
                            Annual Report.

                       (ii) Credit Agreement dated as of December 15, 1994
                            amended and restated as of July 14, 1997,
                            incorporated herein by reference to Exhibit
                            (10)(ii) to the June 30, 1997, Form 10-Q.




                      (iii) Stockholders Agreement, dated as of June 20, 1996,
                            by and among Borden, Inc. and J. Brendan Barba, Paul
                            M. Feeny, David MacFarland, Robert Cron, Kenneth J.
                            Avia, Melanie K. Barba, John Powers, Lauren Powers,
                            Carolyn Vegliante and Lawrence Noll, incorporated
                            herein by reference to Exhibit 2 to Schedule 13D,
                            dated July 1, 1996. File No. 005-37385.

                       (iv) Governance Agreement, dated as of June 20, 1996,
                            between Borden, Inc. and AEP Industries Inc.,
                            incorporated herein by reference to Exhibit 5 to
                            Schedule 13D, dated July 1, 1996, File No.
                            005-37385.

                        (v) Amended and Restated 1996 Unit Incentive Plan for
                            Key Employees of Borden, Inc. and Associated
                            Persons, as of June 29, 1999, incorporated herein
                            by reference to Exhibit (10)(v) to the 1999 Form
                            10-K Annual Report.

                        (vi) Amended  and Restated 1996 Unit Incentive Plan for
                            Key Employees of Borden, Inc.and Associated Persons,
                            as of December 31, 2000 incorporated herein by
                            reference to Exhibit  (10)(VI)  to  the  2000
                            Form  10-K  Annual Report.

                      (vii) 1994 Stock Option Plan incorporated by reference to
                            Exhibit (10)(v) to the 1993 Form 10-K Annual Report.

                     (viii) Executive Supplemental Pension Plan Amended and
                            Restated as of January, 1996 incorporated by
                            reference to Exhibit (10)(xiii) to the 1998 Form
                            10-K Annual Report.

                       (ix) Advisory Directors Plan, incorporated herein by
                            reference from Exhibit (10)(viii) to the 1989 Form
                            10-K Annual Report.

                        (x) Advisory Directors Plan Trust Agreement,
                            incorporated herein by reference from Exhibit
                            (10)(ix) to the 1988 Form 10-K Annual Report.

                       (xi) Management Agreements
                            ----------------------
                            (a)   Employment Agreement with W. F. Stoll, Jr.,
                                  dated June 6, 1996, incorporated by reference
                                  to Exhibit (10)(vi) to the June 30, 1996 Form
                                  10-Q.
                            (b)   Summary of Terms of Employment for Kevin M.
                                  Kelley, incorporated herein by reference to
                                  Exhibit (10) to the June 30, 1999 Form 10-Q.
                            (c)   Pay Agreement and Release of M. E. Ducey dated
                                  December 20, 2001.

                      (xii) Executive Perquisite Benefits Plan dated January 1,
                            1996, incorporated by reference to Exhibit (10)
                            (xxiv) to the 1995 Form 10-K Annual Report.

                     (xiii) Consulting Agreement dated August 21, 1995,
                            incorporated herein by reference to Exhibit 10 to
                            the September 30, 1995 Form 10-Q.

                      (xiv) Joint Management Services Agreement dated October 1,
                            2001 between Borden Chemical, Inc. and Borden
                            Capital, Inc.

                       (xv) 2000 Management Incentive Plan for Borden Capital
                            Management Partners.incorporated herein by reference
                            to Exhibit (10)(xv) to 2000 Form 10-K Annual Report.


                      (xvi) 1996 Stock Purchase and Option Plan for Key
                            Employees of Borden Chemical, Inc., and
                            Subsidiaries, as amended March 16, 1998.

                     (xvii) Certificate of Merger of Borden Chemical Holdings,
                            Inc. into Borden, Inc. November 21, 2001.

                    (xviii) Perquisite Benefits Policy.

                      (xix) Pledge and Assignment Agreement, dated as of
                            January 18, 2002, made by Borden Chemical, Inc.
                            (formerly known as Borden, Inc.), a New Jersey
                            Corporation (the "Pledgor"), to Credit Suisse First
                            Boston.

                       (xx) Reimbursement agreement for Uncommitted Letter of
                            Credit Facility between Credit Suisse First Boston,
                            New York Branch dated January 18, 2002.

                      (xxi) Form of Warrant issued November 24, 2001 to purchase
                            common stock of Borden Chemical, Inc.

                     (xxii) Form of Management Stockholder Agreement.

                    (xxiii) Form of Non-Qualified Stock Option Agreement.

                    (21)    Subsidiaries of Registrant.

                    (23)(i) Accountants' Consent.

          4.   Financial Statement Schedules
               -------------------------------

               The following is the separate financial statements of Foods
               Holdings filed in accordance with rule 3-10 of Regulation S-X.
               Foods Holdings is a guarantor of the Company's credit facility
               and all of the Company's outstanding publicly held debt.

(a)    Reports on Form 8-K
      ----------------------
          A form 8-K was filed July 31, 2001 related to the sale of Foods assets
          in July 2001.  In addition, a form 8-K was filed December 3, 2001
          related to the Company's name change from Borden, Inc. to Borden
          Cemical, Inc. in November 2001.











































































                                   SIGNATURES



     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange  Act  of  1934, the Company has duly caused this report to be signed on
its  behalf  by  the  undersigned,  thereunto  duly  authorized.


                                      BORDEN,  INC.

                                      By  /s/William H. Carter
                                         -------------------------------------
                                      William  H.  Carter
                                      Executive  Vice  President  and  Chief
                                      Financial  Officer
                                      (Principal  Financial  Officer)

Date March 29, 2002


     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
report  has  been signed below by the following persons on behalf of the Company
and  in  the  capacities  indicated,  on  the  date  set  forth  above.


Signature                Title
---------                -----
/s/C. Robert Kidder
---------------------------
                            Chairman  of  the  Board  and
C.  Robert  Kidder          Chief  Executive  Officer



/s/ Henry R. Kravis         Director      /s/Paul J. Norris             Director
--------------------------               ------------------------------
Henry  R.  Kravis                         Paul  J.  Norris


/s/John K. Saer             Director      /s/Kevin M. Kelley            Director
--------------------------               ------------------------------
John  K.  Saer                            Kevin  M.  Kelley


/s/George R. Roberts        Director      /s/Nancy A. Reardon           Director
--------------------------                ------------------------------
George  R.  Roberts                       Nancy  A.  Reardon


/s/Scott M. Stuart          Director      /s/William H. Carter          Director
--------------------------                ------------------------------
Scott  M.  Stuart                          William  H.  Carter


/s/Brian F. Carroll         Director      /s/William F. Stoll Jr.       Director
--------------------------                ------------------------------
Brian  F.  Carroll                         William  F.  Stoll  Jr.































<PAGE>
                                                                Exhibit  xi  (c)
                                             DECEMBER  20,  2001

                            PAY AGREEMENT AND RELEASE
                                OF MICHAEL DUCEY

This  agreement  effective  on  the  last  date executed below, contains all the
understandings  between Michael Ducey and Borden Chemical, Inc. and its parents,
subsidiaries  or  affiliates,  including  without  limitation,  their  officers,
employees  and  agents  in their individual and representative capacities, known
collectively  as  the  "Company"  in  connection  with  your  separation  from
employment.  This  agreement  provides  the  specific  details of benefits to be
received by you including those under the Company's Employment and Benefits Upon
Termination  Plan  and  the conditions agreed to by you for the receipt of those
benefits.

1.     The Company will pay you a gross amount of $930,000, to be paid to you on
a  wage  continuation  basis,  every  two weeks, beginning April 1, 2002 through
March  31,  2004.  This  payment  reflects  (2)  years  of  gross annual salary.
Between  now  and  your  termination  date  you  will  be  transitioning  your
responsibilities.

2.     You  will  be  paid  for  unused  2001 or accrued 2002 vacation upon your
termination.  This  payment  will be made less deductions required by statute or
regulations.

3.     Your  participation in the Company's Management Equity Plan will end with
your  termination  on  March 31,2002.  Under the plan and the agreements between
you and the Company, the Company has up to seventy-five (75) days following your
termination  to  exercise  its option to call your shares.  However, the Company
will  determine the Modified Book Value as of February 28, 2002, the last day of
the  month  immediately  preceding  your  termination date and will process your
payment, net of any amount owed by you to Fifth-Third Bank.  All options will be
cancelled.

4.     If  the  BCI  Incentive  Plan generates a plan payment for 2001, you will
receive your benefit, less deductions required by statute or regulations, during
first  quarter  2002.  Payment  will be based on BCI financial performance along
with BCI's overall rating on objectives and the agreed upon "pool". You will not
participate  in  the  BCI  Incentive  Plan  for  2002.

5.     You  will be paid a 2002 perquisite allowance of $40,000, less deductions
required  by  statute  or  regulations,  during  January  2002.

6.     During April 2002, you will be paid a relocation payment of $80,000, less
deductions  required  by  statute  or  regulations.

7.     You  agree  to  conduct  yourself in a manner that does not disparage the
Company, or is damaging to or otherwise contrary to the Company's best interests
and  you  agree  that  this  agreement is strictly confidential and you will not
reveal  its terms except in connection with an official investigation or to your
legal  or financial advisors or spouse.  The Company agrees to not disparage you
if  contacted  for  a  reference.

8.     You  also  understand  that  by  continuing  to  make  your  monthly
contributions, you may continue participation in the Medical and Dental programs
sponsored  by  the  Company  for  two  (2)  years  following your termination of
employment.  This  medical  and  dental  benefit  continuation  period  will run
concurrent with COBRA.  All other health and welfare benefits, including but not
limited  to  long-term  disability  and salary continuance, will be discontinued
upon  your  date  of  termination.  In  the  event you are reemployed by another
company,    you    should     initiate   participation    in    their    benefit
plans    as    soon    as     you    are     eligible.       At    that    time,
Borden  benefits will cease.    In  addition to the amount  paid   under    this

Agreement, any money due from the Company benefit plans will  be paid to you
upon application for such benefits pursuant to the terms of such  plans.

9.     You  will  be provided with executive level outplacement services through
Right  Management  Consultants  or  Drake  Beam Morin, Inc. The Company does not
warrant  or guarantee the results of the services provided and you agree to hold
the  Company  harmless  from any claims in connection with the services provided

10.     You accept the money and benefits to be paid to you under this Agreement
as  full  settlement  of  all  claims  and  causes of action arising out of your
employment  by  the  Company  and  the  termination  of  that  employment.

11.     You  agree that you are entering into this agreement and release as your
own  free decision in order to receive the payments and other benefits described
above.  You  understand that the Company would not make these payments or extend
these  benefits  to  you  without  your  voluntary  consent  to  this Agreement.

You  understand  that  by  signing  this Agreement you are waiving all rights to
reinstatement  or  future employment with the Company and that you are giving up
your  right  to, and agreeing not to, file charges or lawsuits: (a) with respect
to  any  discrimination  you  believe  you have suffered due to age, disability,
race,  sex,  religion,  national  origin  or  any  other  reason related to your
employment by the Company, or the termination of that employment, including, but
not  limited to, any claims under Title VII of the Civil Rights Act of 1964, the
Age  Discrimination in Employment Act, the Equal Pay Act, the Rehabilitation Act
of  1973,  Section 1981 of the Civil Rights Act of 1866, the Civil Rights Act of
1991,  the  Americans with Disabilities Act, the Family and Medical Leave Act of
1993,  the  Worker Adjustment and Retraining Notification Act, the Older Workers
Benefit  Protection  Act,  the  Fair Labor Standards Act, and any other federal,
state,  or  local  statute  or  regulation  regarding  employment,  worker's
compensation,  discrimination  in  employment  or termination of employment; (b)
with  respect  to  any  theory  of  libel, slander, breach of contract, wrongful
discharge,  detrimental reliance, infliction of emotional distress, tort, or any
other  theory  under  the  common  law;  and  (c) with respect to any claims for
uncompensated  expenses,  severance pay, incentive or bonus pay, overtime pay or
any  other  form  of  compensation.

You  intend  that this Agreement will bar each and every claim, demand and cause
of  action  above  specified,  whether  known  or  unknown to you at the time of
execution  of  this  Agreement.  As a result, you acknowledge that you might, in
the  future,  discover  claims  or  facts in addition to or different from those
which  you  now  know or believe to exist with respect to the subject matters of
this  Agreement  and  which, if known or suspected at the time of executing this
Agreement,  may  have  materially  affected  this settlement.  Nevertheless, you
hereby  waive  any right, claim, or cause of action that might arise as a result
of such different or additional claims or facts.  You also agree that should you
breach this agreement by filing any charge or beginning any suit as described in
this  paragraph  you  will  immediately  repay  to the Company the sums you have
received  under  paragraph 1, above, less $100.00 and further agree that in such
event the Company will have no further obligation to provide you with additional
pay  or  benefits  under  this  agreement, but that all other provisions of this
agreement  will  remain  in  effect.

12.     You  agree  that,  prior to your termination date of March 31, 2002, you
will  return  to  the Company all Company credit cards, keys, customer lists and
records, policy and procedure manuals, price lists, business contracts and other
documents and information belonging to the Company.  The Company has agreed that
you  may  retain  the  following  assets:  computer,  printer  and  fax machines
currently  located  in your home and your cell phone.  Arrangements will be made
with  IT  department  to  coordinate  the  transfer  and remove company specific
software  and access no later that your termination date.  You will need to make
arrangements  for  personal  cell  phone  and  internet  service  following your
termination.  The Company further agrees that you may retain the office desk you
are  currently  using.

13.     You  recognize that the Company possesses certain business and financial
information  about  its operations, information about new or envisioned products
or  services,  manufacturing  methods, product research, product specifications,
records,  plans,  prices,  costs, customer lists, concepts and ideas, and is the
owner  of proprietary rights in certain systems, methods, processes, procedures,
technical  and  non-technical  information,  inventions, machinery, research and
other  things  which  constitutes  valuable  trade  secrets of the Company.  You
acknowledge  that  you  have  been  employed  in positions in which you have had
access  to  such  information  and that the Company has a legitimate interest in
protecting  such  confidential  and proprietary information in order to maintain
and  enhance  a  competitive edge within its industries.  Accordingly, you agree
that  you will not use or remove, duplicate or disclose, directly or indirectly,
to  any persons or entities outside the Company any information, property, trade
secrets or other things of value which have not been publicly disclosed.  In the
event  that  you  are  requested  or  required  in a judicial, administrative or
governmental  proceeding  to disclose any information that is the subject matter
of  this  Paragraph,  you will provide the Company with prompt written notice of
such  request  and  all  related  proceedings  so  that  the Company may seek an
appropriate  protective  order  or remedy or, as soon as practicable, waive your
compliance  with  the  provisions  of  this  Paragraph

As  further  consideration  for the payments agreed to by the Company, you agree
that  you  will  not,  directly  or  indirectly,  for  a period of two (2) years
following termination, engage in any capacity (including, but not limited to, as
employee,  director,  agent or consultant) in work or other activity the same or
similar  to  work  you  performed  at  any  time  for  the  Company,  for  Dynea
International  or  Georgia-Pacific  Corporation  or  other  companies  in direct
competition  with  Borden  Chemical,  Inc.

This  agreement  is  subject  to  the  following  exceptions:

a)     You may engage in work with a company other than Dynea or Georgia-Pacific
so long as the annual revenues of such company's competitive overlap with Borden
Chemical  is less than One Hundred Fifty Million Dollars ($150,000,000) and such
company  does  not  compete  with  Borden  Chemical  in  the  formaldehyde,
formaldehyde-based  resins  (urea  and  phenolic),  oil  field  proppants and UV
coatings  businesses.
b)     You may engage in work with a company other than Dynea or Georgia-Pacific
so  long  as your employment is in an area of that company that is not in direct
competition  with  Borden  Chemical,  subject  to such company acknowledging the
existence  of  this  non-compete  agreement  and  the  confidentiality agreement
between you and Borden Chemical and agreeing (i) that you will have no direct or
indirect  involvement in any business in competition with Borden Chemical during
the  term  of this non-compete agreement and (ii) that such company will neither
solicit  nor  accept  confidential, proprietary or trade secret information with
respect  to  Borden  Chemical  or  its  business.

This  non-compete  agreement  supercedes  and  replaces  any and all non-compete
agreements  currently  in effect between you and Borden Chemical, Inc. or  other
related  Borden  affiliates  at  the  time  of  execution.  All  confidentiality
agreements  in effect between you and Borden Chemical, Inc. shall remain in full
force  and  effect.

14.     You agree that you will not, directly or indirectly, for a period of two
(2)  years  following  termination,  solicit  or  recruit other employees of the
Company  to  leave  their  employment  with  the  Company.

15.     By  entering  into  this  Agreement,  the  Company does not admit to the
breach  of  any  contractual or other promises to you, and does not admit to the
violation  of  any federal, state, local or other statute or law, including, but
not  limited  to,  those laws referred to in Paragraph 10 of this Agreement, and
any  claimed  breaches  or  violations  are  hereby  specifically  denied.

16.     The  Parties  agree that this Agreement shall be construed in accordance
with  Ohio  law,  and  that  any  action  brought  by any party hereunder may be
instituted and maintained only in the appropriate court having jurisdiction over
Ohio.

17.     In  making  your decision, you recognize that you have the right to seek
advice and counsel from an attorney, if you so choose.  You also have twenty-one
(21)  days from the date this agreement is presented to you to decide whether to
sign  this  agreement.

18.     You  have  seven (7) calendar days from the date you sign this Agreement
to  cancel it in writing.  You also understand that this Agreement will not bind
either  you  or the Company until after the seven-day period you have to cancel.
No payments will be made under this Agreement until it becomes binding.  You may
cancel  this  Agreement  by  signing the cancellation box below (or by any other
written  signed  notice)  and  delivering it to the Company within seven days of
your  signing  this  Agreement.

                                       Very  truly  yours,

                                       /s/  C.  Robert  Kidder

                                       C.  Robert  Kidder
                                       Chairman
                                       Borden  Chemical,  Inc.

                                       December 20, 2001
                                       -----------------


















ACCEPTED:
/s/  Michael  E.  Ducey                    December  28,  2001
------------------------                   -------------------
Associate's  Signature                     Date

WITNESS:  Sonia  Clemons                    At:  Columbus,  Ohio
          --------------                         ---------------
                                                 Location

CANCELLATION  NOTICE:

(To  cancel this Agreement, sign below and deliver this copy of the Agreement to
the  Company  within  7  days  of  the  date  you  signed  the  Agreement.)
I  hereby  cancel  this  Agreement.

------------------------------- ---------------------------------------
Date                         Signature






















                                                                   Exhibit XIV

                       JOINT MANAGEMENT SERVICES AGREEMENT
                       ----------------------------------

                                             October  1,  2001


Borden  Chemical,  Inc.
180  East  Broad  Street
Columbus,  Ohio  43215

          This  letter  serves  to  confirm  our  mutual agreement regarding the
services  to  be  provided  to  and  from  our  companies:
1.     BCI  has  retained  us,  and  we  hereby  agree  to accept such
retention,  to  provide  BCI,  when  and  if  called  upon,  certain  management
consulting  services of the type customarily performed by us which are set forth
in  Exhibit  A  hereto.
2.     We have retained BCI, and BCI agrees to accept such retention, to provide
us  with  certain  administrative services which are set forth in Exhibit B
hereto.
3.      The  parties  agree  to net the cost of the services BCI performs for us
against the cost of our services to BCI.  The parties further agree that the net
result  is  that  BCI  will  pay  us  an annual fee of Nine Million Dollars
($9,000,000),  payable  in  quarterly installments each in arrears at the end of
each  calendar  quarter.
4 .     The  parties  agree  that  each  may also invoice the other for
additional  fees  in connection with services requested by the other party which
are above and beyond those called for by this agreement, provided that agreement
is  reached between the parties in advance as to the extent of such services and
any  anticipated  expenses,  including  outside  counsel.
5.      The  parties  agree  that  they  shall endeavor to keep each other
informed  as  to the nature and extent of services to be performed hereunder and
shall  reasonably  consult  with  each  other  regarding  such  services.
6 .     Each  party  hereto agrees to indemnify and hold the other, its
affiliates  and  all  executives,  officers,  directors,  employees,  agents and
controlling  persons  (each  such  person,  including  us, being an "Indemnified
Party")  harmless  from  and  against  any  and  all losses, claims, damages and
liabilities,  joint,  several  or otherwise, to which such Indemnified Party may
become  subject under any applicable federal or state law, or otherwise, related
to  or  arising  out  of  any  activity  contemplated  by  this agreement or its
retention  pursuant  to,  and its or its affiliates' performance of the services
contemplated by, this agreement and will reimburse any Indemnified Party for all
expenses  (including  reasonable counsel fees and disbursements) upon request as
they  are  incurred  in connection with  the   investigation   of,   preparation
for    or    defense   of   any    pending  or threatened claim or any action or
proceeding  arising  therefrom,  whether  or   not   such   claim,    action  or
proceeding  is  initiated or brought  by  the  party  hereto  provided, however,
that no party  hereto   will  be  liable  under  the  foregoing  indemnification
provision (and amounts previously  paid  that  are determined not required to be
paid pursuant to the terms of this  Paragraph   shall be repaid promptly) to the
extent that any loss, claim, damage, liability  or  expense  is found in a final
judgment by a court to have resulted from  the   willful   misconduct, bad faith
or gross negligence of the other party hereto.   The  parties  also  agree  that
no  Indemnified  Party  shall have any liability   (whether  direct or indirect,
in contract or tort or otherwise) to the other  related  to   or  arising out of
their  retention pursuant to, or their affiliates'  performance  of the services
contemplated by, this agreement except to  the  extent that  any  loss,   claim,
damage, liability or expense is found in a final,  non-appealable  judgment by a
court to have resulted from such party's willful  misconduct,   bad   faith   or
gross  negligence.
          The  parties also agree that, without the prior written consent of the
other,  neither  party  will  settle,  compromise or consent to the entry of any
judgment  in  any  pending or threatened claim, action or proceeding to which an
Indemnified  Party  is  an  actual  or  potential  party and in respect of which
indemnification  could  be  sought  under  the  indemnification provision in the
immediately  preceding  paragraph, unless such settlement, compromise or consent
includes  an  unconditional release of each Indemnified Party from all liability
arising  out  of  such  claim,  action  or  proceeding.
          Promptly  after receipt by an Indemnified Party of notice of any suit,
action,  proceeding  or investigation with respect to which an Indemnified Party
may be entitled to indemnification hereunder, such Indemnified Party will notify
the  other  party  hereto  in  writing  of  the  assertion  of such claim or the
commencement  of such suit, action, proceeding or investigation, but the failure
so  to  notify shall not relieve the other party from any liability which it may
have hereunder, except to the extent that such failure has materially prejudiced
the  other  party.  If  the other party so elects within a reasonable time after
receipt  of such notice, it may participate at its own expense in the defense of
such  suit,  action,  proceeding  or  investigation.  Each Indemnified Party may
employ  separate  counsel to represent it or defend it in any such suit, action,
proceeding  or  investigation  in  which it may become involved or is named as a
defendant  and,  in  such event, the reasonable fees and expense of such counsel
shall  be  borne  by  the other party hereto; provided, however, that such party
will  not  be  required  in connection with any such suit, action, proceeding or
investigation,  or separate but substantially similar actions arising out of the
same    general   allegations   or   circumstances,   to   pay   the   fees  and
disbursements of more  than  one  separate counsel (other  than  local  counsel)
for    all    Indemnified    Parties     in     any     single     action     or
proceeding.       Whether    or     not    both    parties  participate  in  the
defense  of any claim, both parties shall cooperate  in  the  defense    thereof
and shall furnish such records, information and testimony,   and  attend    such
conferences,   discovery   proceedings,   hearing,   trial   and   appeals,   as
may  be  reasonably  requested  in  connection  therewith.
          If  the  indemnification  provided for hereunder is finally judicially
determined  by  a  court  of  competent  jurisdiction  to  be  unavailable to an
Indemnified  Party,  or  insufficient to hold any Indemnified Party harmless, in
respect  of  any  losses, claims, damages or liabilities (other than any losses,
claims,  damages  or  liabilities  found  in a final judgment by a court to have
resulted  from our willful misconduct, bad faith or gross negligence), then both
parties  will contribute to the amount paid or payable by such Indemnified Party
as  a  result  of  such  losses,  claims,  damages  or  liabilities  (i) in such
proportion  as  is  appropriate  to  reflect  the relative benefits received, or
sought  to  be  received,  by  each party in connection with the transactions to
which  such indemnification, contribution or reimbursement is sought, or (ii) if
(but  only  if)  the allocation provided by clause (i) above is not permitted by
applicable  law,  in  such  proportion as is appropriate to reflect not only the
relative  benefits  referred to in clause (i) but also the relative fault of the
parties,  as  well  as  any other relevant equitable considerations.  The amount
paid  or  payable  by  a  party  as  a result of the losses, claims, damages and
liabilities  referred to above will be deemed to include any legal or other fees
or  expenses  reasonably incurred in defending any action or claim.  The Parties
agree  that  it would not be just and equitable if contribution pursuant to this
paragraph  were  determined  by pro rata allocation or by any other method which
does  not  take  into  account  the equitable considerations referred to in this
paragraph.  The  indemnity,  contribution and expenses reimbursement obligations
each  party  has  under this Paragraph shall be in addition to any liability the
party  may  have,  and notwithstanding any other provision of this letter, shall
survive  the  termination  of  this  agreement.
7.     We    shall    each   act   as   independent  contractors with respect to
the duties performed under this agreement.  The provisions hereof shall inure to
the benefit of and shall be binding upon the parties hereto and their respective
successors  and  assigns.  Nothing  in  this agreement, expressed or implied, is
intended  to  confer  on  any  person  other  than  the  parties hereto or their
respective  successors  and  assigns,  and,  to  the  extent expressly set forth
herein,  the  Indemnified  Parties, any rights or remedies under or by reason of
this  agreement.  Without  limiting the generality of the foregoing, the parties
acknowledge that nothing in this agreement, expressed or implied, is intended to
confer  on  any  present  or  future holders of any securities of the parties or
their  subsidiaries  or  affiliates,  or  any  present or future creditor of the
parties  or their subsidiaries or affiliates, any rights or remedies under or by
reason  of  this  agreement  or  any  performance  hereunder.
8.     This agreement shall be governed   by   and   construed   in   accordance
with  the  laws  of  Ohio  without  regard  to  principles  of conflicts of law.
9.     The    terms   of   this   agreement   are  effective  as of November 24,
2001.  This   agreement  shall  continue in effect from year to year, subject to
termination  by  either  party  upon  thirty  (30)  days'  written  notice.
10.    Each    party  hereto  represents    and    warrants  that  the execution
and  delivery  of  this  agreement by such party has been duly authorized by all
necessary  action  of  such  party.
11.    If  any  term  or  provision  of   this   agreement   or  the application
thereof  shall,  in  any  jurisdiction  and  to  any  extent,  be   invalid  and
unenforceable,  such  term  or  provision  shall  be  ineffective,  as  to  such
jurisdiction,  solely  to  the  extent  of  such  invalidity or unenforceability
without  rendering  invalid  or  unenforceable any remaining terms or provisions
hereof  or affecting the validity or enforceability of such term or provision in
any  other jurisdiction.  To the extent permitted by applicable law, the parties
hereto  waive  any  provision  of law that renders any term or provision of this
agreement  invalid  or  unenforceable  in  any  respect.
12.    Each    party  waives  all  right  to  trial   by   jury  in  any action,
proceeding  or  counterclaim  (whether  based  upon contract, tort or otherwise)
related  to  or  arising out of our retention pursuant to, or our performance of
the  services  contemplated  by  this  agreement.
13.    It  is   expressly   understood   that   the foregoing paragraphs 2, 4, 9
and  10  in  their  entirety,  survive  any  termination  of  this  agreement.
          If  the  foregoing  sets forth the understanding between us, please so
indicate  on  the  enclosed  signed  copy  of  this letter in the space provided
therefor  and  return it to us, whereupon this letter shall constitute a binding
agreement  among  us.

                                   Very  truly  yours,
                                   BORDEN  CAPITAL
                                   MANAGEMENT  PARTNERS,  INC.

                                   By:
                                       -------------------------

                                   Title:
                                         -----------------------


AGREED  TO  AND  ACCEPTED:

BORDEN  CHEMICAL,  INC.


By:
   --------------------------------

Title:
       ----------------------------

































































                                    EXHIBIT A

                        TYPE OF SERVICES TO BE PERFORMED
                        --------------------------------
                   BY BORDEN CAPITAL MANAGEMENT PARTNERS, INC.
                  --------------------------------------------
                            FOR BORDEN CHEMICAL, INC.
                            -------------------------



..     Director  Services
..     Management  Consulting











































































                                    EXHIBIT B

                  TYPE OF SERVICES TO BE PERFORMED OR PROVIDED
                  --------------------------------------------
                            BY BORDEN CHEMICAL, INC.
                            ------------------------
                  FOR BORDEN CAPITAL MANAGEMENT PARTNERS, INC.
                  --------------------------------------------



..     Corporate  Secretarial  Services
..     Treasury  /Cash  Management
..     Payroll  Administration
..     Benefits  Administration
..     Accounting  Services
..     IT  Support
..     Voice  Communication  Support
..     Legal
..     Risk  Management
..     Tax  Preparation  &  Advice
..     Office  Space  &  Services





























































                                                                   Exhibit xvi


                       1996 STOCK PURCHASE AND OPTION PLAN
                              FOR KEY EMPLOYEES OF
                 BORDEN CHEMICAL HOLDINGS, INC. AND SUBSIDIARIES
                              As amended March 2002

1.     -Purpose  of  Plan
        -----------------

     The  1996  Stock  Purchase  and  Option  Plan  for  Key Employees of Borden
Chemical,  Inc.  and  Subsidiaries  (the  "Plan")  is  designed:
                                           ----

a)     to  promote  the  long  term  financial  interests  and  growth of Borden
Chemical,  Inc.  (the  "Corporation")  and  its  subsidiaries  by attracting and
retaining  management  personnel  with  the  training, experience and ability to
enable  them  to  make  a  substantial  contribution  to  the  success  of  the
Corporation's  business;

b)      to  motivate  management personnel by means of growth-related incentives
to  achieve  long  range  goals;  and

c)      to  further  the identity of interests of participants with those of the
stockholders  of  the  Corporation through opportunities for increased stock, or
stock-based,  ownership  in  the  Corporation.

2.     Definitions
       -----------

     As used in the Plan, the following words shall have the following meanings:

a)     "Grant"  means  an  award  made to a Participant pursuant to the Plan and
        -----
described  in  Paragraph  5,  including,  without  limitation,  an  award  of an
Incentive  Stock  Option,  Stock  Option,  Stock  Appreciation  Right,  Dividend
Equivalent  Right,  Restricted  Stock,  Purchase  Stock,  Performance  Units,
Performance  Shares  or  Other  Stock  Based  Grant,  or  any combination of the
foregoing.

b)      "Grant  Agreement"  means  an  agreement  between  the Corporation and a
Participant  that sets forth the terms, conditions and limitations applicable to
a  Grant.

c)      "Board  of  Directors"  means the Board of Directors of the Corporation.

d)      "Committee"  means the Compensation Committee of the Board of Directors.

e)      "Common  Stock"  or  "Share" means common stock of the Corporation which
may  be  authorized  but  unissued,  or  issued  and  reacquired.

f)      "Employee"  means  a  person,  including  an  officer,  in  the  regular
full-time  employment  of the Corporation or one of its Subsidiaries who, in the
opinion  of  the  Committee, is, or is expected, to be primarily responsible for
the  management, growth or protection of some part or all of the business of the
Corporation.

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

h)      "Fair  Market  Value"  means such value of a Share as reported for stock
exchange  transactions  and/or  determined  in  accordance  with  any applicable
resolutions  or  regulations  of  the  Committee in effect at the relevant time.

i)      "Participant"  means  an  Employee,  or  other  person  having  a unique
relationship  with  the  Corporation  or one of its Subsidiaries, to whom one or
more  Grants  have  been  made  and  such  Grants have not all been forfeited or
terminated  under  the  Plan;  provided, however, a non-employee director of the
Corporation  or  one  of  its  Subsidiaries  may  not  be  a  Participant.

j)      "Stock-Based  Grants"  means  the  collective  reference to the grant of
Stock  Appreciation  Rights,  Dividend  Equivalent  Rights,  Restricted  Stocks,
Performance  Units,  Performance  Shares  and  Other  Stock  Based  Grants.

k)      "Stock  Options"  means  the  collective  reference  to "Incentive Stock
Options"  and  "Other  Stock  Options".


l)      "Subsidiary"  means  any  corporation  other  than the Corporation in an
unbroken  chain  of  corporations  beginning with the Corporation if each of the
corporations  other  than the last corporation in the unbroken chain owns 50% or
more  of  the  voting  stock  in  one  of  the other corporations in such chain.







3.     Administration  of  Plan
       ------------------------

a)     The  Plan shall be administered by the Committee.  None of the members of
the  Committee  shall  be  eligible to be selected for Grants under the Plan, or
have  been  so  eligible  for selection within one year prior thereto; provided,
                                                                       --------
however,  that the members of the Committee shall qualify to administer the Plan
-------
for  purposes  of  Rule  16b-3 (and any other applicable rule) promulgated under
Section  16(b) of the Exchange Act to the extent that the Corporation is subject
to  such  rule.  The  Committee  may  adopt  its own rules of procedure, and the
action  of  a  majority  of the Committee, taken at a meeting or taken without a
meeting  by  a  writing  signed by such majority, shall constitute action by the
Committee.  The  Committee  shall  have  the  power and authority to administer,
construe  and  interpret the Plan, to make rules for carrying it out and to make
changes  in  such  rules.  Any  such  interpretations, rules, and administration
shall  be  consistent  with  the  basic  purposes  of  the  Plan.

b)     The  Committee  may  delegate to the Chief Executive Officer and to other
senior  officers  of  the  Corporation its duties under the Plan subject to such
conditions and limitations as the Committee shall prescribe except that only the
Committee  may  designate  and  make  Grants  to Participants who are subject to
Section  16  of  the  Exchange  Act.

c)     The Committee may employ attorneys, consultants, accountants, appraisers,
brokers  or other persons.  The Committee, the Corporation, and the officers and
directors of the Corporation shall be entitled to rely upon the advice, opinions
or  valuations  of  any such persons.  All actions taken and all interpretations
and  determinations  made  by  the  Committee  in  good faith shall be final and
binding upon all Participants, the Corporation and all other interested persons.
No  member  of  the  Committee  shall  be  personally  liable  for  any  action,
determination  or  interpretation made in good faith with respect to the Plan or
the  Grants,  and  all  members of the Committee shall be fully protected by the
Corporation  with  respect  to any such action, determination or interpretation.

4.     Eligibility
       -----------

     The  Committee  may  from  time  to time make Grants under the Plan to such
Employees, or other persons having a unique relationship with Corporation or any
of  its  Subsidiaries,  and  in  such form and having such terms, conditions and
limitations  as  the  Committee may determine.  No Grants may be made under this
Plan  to  non-employee  directors  of  Corporation  or  any of its Subsidiaries.
Grants  may  be  granted  singly,  in  combination  or  in  tandem.  The  terms,
conditions  and limitations of each Grant under the Plan shall be set forth in a
Grant  Agreement, in a form approved by the Committee, consistent, however, with
the  terms  of  the  Plan; provided, however, such Grant Agreement shall contain
                           --------  -------
provisions dealing with the treatment of Grants in the event of the termination,
death or disability of a Participant, and may also include provisions concerning
the  treatment  of  Grants  in  the event of a change of control of Corporation.

5.     -Grants
        ------
     From  time  to  time, the Committee will determine the forms and amounts of
Grants  for  Participants.  Such  Grants  may  take  the  following forms in the
Committee's  sole  discretion:

a)     Incentive  Stock  Options- These are stock options within the meaning of
        -------------------------
Section  422  of  the  Internal  Revenue  Code  of 1986, as amended ("Code"), to
purchase    Common    Stock.      In    addition    to     other    restrictions




contained    in    the    Plan,    an     option    granted      under      this
Paragraph 5(a),    (i)    may    not    be   exercised    more   than  10  years
after  the date  it  is  granted,   (ii) may  not  have  an  option  price  less
than  the  Fair  Market Value of Common Stock on the date the option is granted,
(iii)  must  otherwise comply with Code Section 422, and (iv) must be designated
as  an  "Incentive  Stock  Option" by the Committee.  The maximum aggregate Fair
Market Value of Common Stock (determined at the time of each Grant) with respect
to  which  any Participant may first exercise Incentive Stock Options under this
Plan  and  any  Incentive Stock Options granted to the Participant for such year
under  any  plans  of  the Corporation or any Subsidiary in any calendar year is
$100,000.  Payment  of  the  option  price shall be made in cash or in shares of
Common  Stock,  or  a  combination  thereof, in accordance with the terms of the
Plan,  the Grant Agreement, and of any applicable guidelines of the Committee in
effect  at  the  time.

b)     Other  Stock  Options - These are options to purchase Common Stock which
       ---------------------
are  not  designated by the Committee as "Incentive Stock Options".  At the time
of  the  Grant  the  Committee  shall determine, and shall have contained in the
Grant  Agreement  or  other  Plan  rules, the option exercise period, the option
price, and such other conditions or restrictions on the grant or exercise of the
option  as  the  Committee  deems appropriate, which may include the requirement
that  the  grant  of options is predicated on the acquisition of Purchase Shares
under  Paragraph  5(e)  by  the  Optionee.  In  addition  to  other restrictions
contained  in the Plan, an option granted under this Paragraph 5(b), (i) may not
be  exercised  more  than 10 years after the date it is granted and (ii) may not
have  an  option exercise price less than 50% of the Fair Market Value of Common
Stock  on  the date the option is granted.  Payment of the option price shall be
made  in  cash  or  in  shares  of  Common  Stock,  or a combination thereof, in
accordance  with  the  terms of the Plan and of any applicable guidelines of the
Committee  in  effect  at  the  time.

c)     Stock  Appreciation  Rights  - These are rights that on exercise entitle
       ---------------------------
the  holder  to  receive  the  excess of (i) the Fair Market Value of a share of
Common Stock on the date of exercise over (ii) the Fair Market Value on the date
of  Grant  (the "base value") multiplied by (iii) the number of rights exercised
                 ----------
as  determined  by  the  Committee.  Stock Appreciation Rights granted under the
Plan may, but need not be, granted in conjunction with an Option under Paragraph
5(a) or 5(b).  The Committee, in the Grant Agreement or by other Plan rules, may
impose  such  conditions  or  restrictions on the exercise of Stock Appreciation
Rights  as it deems appropriate, and may terminate, amend, or suspend such Stock
Appreciation Rights at any time.  No Stock Appreciation Right granted under this
Plan  may be exercised less than 6 months after the date it is granted except in
the  event  of death or disability of a Participant, or more than 10 years after
the  date  it  is granted.  To the extent that any Stock Appreciation Right that
shall  have  become  exercisable, but shall not have been exercised or cancelled
or,  by  reason  of  any  termination  of  employment,  shall  have  become
non-exercisable,  it  shall  be  deemed  to  have  been exercised automatically,
without  any  notice  of  exercise,  on the last day of which it is exercisable,
provided that any conditions or limitations on its exercise are satisfied (other
than (i) notice of exercise and (ii) exercise or election to exercise during the
period prescribed) and the Stock Appreciation Right shall then have value.  Such
exercise  shall  be deemed to specify that the holder elects to receive cash and
that  such  exercise  of a Stock Appreciation Right shall be effective as of the
time  of  automatic  exercise.

d)     Restricted  Stock  -  Restricted  Stock  is  Common Stock delivered to a
       -----------------
Participant  with  or  without  payment  of  consideration  with restrictions or
conditions  on  the Participant's right to transfer or sell such stock; provided
                                                                        --------
that  the  price  of any Restricted Stock delivered for consideration and not as
bonus stock may not be less than 50% of the Fair Market Value of Common Stock on
the  date such Restricted Stock is granted or the price of such Restricted Stock
may  be  the  par  value.  If a Participant irrevocably elects in writing in the
calendar  year  preceding  a  Grant  of  Restricted Stock, dividends paid on the
Restricted  Stock granted may be paid in shares of Restricted Stock equal to the
cash  dividend  paid  on Common Stock.  The number of shares of Restricted Stock
and  the  restrictions  or  conditions  on such shares shall be as the Committee
determines,  in  the Grant Agreement or by other Plan rules, and the certificate
for  the Restricted Stock shall bear evidence of the restrictions or conditions.
No  Restricted  Stock may have a restriction period of less than 6 months, other
than  in  the  case  of  death  or  disability.

e)     Purchase  Stock - Purchase Stock are shares of Common Stock offered to a
       ---------------
Participant  at  such  price  as determined by the Committee, the acquisition of
which  will  make  him  eligible  to  receive under the Plan, including, but not
limited  to,  Other  Stock  Options;  provided,  however, that the price of such
                                      --------   -------
Purchase  Shares may not be less than 50% of the Fair Market Value of the Common
Stock  on  the  date  such  shares  of  Purchase  Stock  are  offered.

f)     Dividend  Equivalent  Rights - These are rights to receive cash payments
       ----------------------------
from  the  Corporation  at  the  same  time  and  in the same amount as any cash
dividends  paid  on an equal number of shares of Common Stock to shareholders of
record during the period such rights are effective.  The Committee, in the Grant
Agreement or by other Plan rules, may impose such restrictions and conditions on
the  Dividend  Equivalent Rights, including the date such rights will terminate,
as  it  deems  appropriate,  and  may terminate, amend, or suspend such Dividend
Equivalent  Rights  at  any  time.

G)     Performance  Units  -  These are rights to receive at a specified future
       ------------------
date,  payment  in cash of an amount equal to all or a portion of the value of a
unit granted by the Committee.  At the time of the Grant, in the Grant Agreement
or by other Plan rules, the Committee must determine the base value of the unit,
the  performance factors applicable to the determination of the ultimate payment
value  of  the  unit  and  the period over which Corporation performance will be
measured.  These  factors  must  include  a minimum performance standard for the
Corporation  below which no payment will be made and a maximum performance level
above  which no increased payment will be made.  The term over which Corporation
performance  will  be  measured  shall  be  not  less  than  six  months.

h)     Performance  Shares  - These are rights to receive at a specified future
       -------------------
date,  payment  in  cash  or Common Stock, as determined by the Committee, of an
amount  equal to all or a portion of the Fair Market Value for all days that the
Common  Stock  is  traded  during the last forty-five (45) days of the specified
period of performance of a specified number of shares of Common Stock at the end
of  a  specified  period based on Corporation performance during the period.  At
the  time  of the Grant, the Committee, in the Grant Agreement or by Plan rules,
will  determine  the  factors  which  will  govern  the portion of the rights so
payable and the period over which Corporation performance will be measured.  The
factors  will  be  based  on  Corporation performance and must include a minimum
performance standard for the Corporation below which no payment will be made and
a  maximum performance level above which no increased payment will be made.  The
term  over which Corporation performance will be measured shall be not less than
six  months.  Performance  Shares  will  be  granted  for  no  consideration.

i)     Other  Stock-Based Grants - The Committee may make other Grants under the
       -------------------------
Plan  pursuant  to  which  shares  of  Common Stock (which may, but need not, be
shares of Restricted Stock pursuant to Paragraph 5(d)), are or may in the future
be  acquired,  or Grants denominated in stock units, including ones valued using
measures  other than market value.  Other Stock-Based Grants may be granted with
or  without  consideration;  provided, however, that the price of any such Grant
                             --------  -------
made  for  consideration  that  provides for the acquisition of shares of Common
Stock  or other equity securities of the Corporation may not be less than 50% of
the Fair Market Value of the Common Stock or such other equity securities on the
date  of  grant of such Grant.  Such Other Stock-Based Grants may be made alone,
in  addition  to or in tandem with any Grant of any type made under the Plan and
must  be  consistent  with  the  purposes  of  the  Plan.

6.     Limitations  and  Conditions
       ----------------------------

a.     The  number  of  Shares  available  for  Grants  under this Plan shall be
11,470,633  shares  of  the  authorized  Common  Stock.  Unless  restricted  by
applicable  law,  Shares  related  to  Grants  that  are  forfeited, terminated,
cancelled  or expire unexercised, shall immediately become available for Grants.

b.     No  Grants  shall  be  made  under  the  Plan  beyond ten years after the
effective  date  of  the  Plan,  but  the  terms of Grants made on or before the
expiration  thereof  may  extend beyond such expiration.  At the time a Grant is
made or amended or the terms or conditions of a Grant are changed, the Committee
may  provide  for  limitations  or  conditions  on  such  Grant.

c.     Nothing  contained  herein  shall  affect the right of the Corporation to
terminate  any  Participant's  employment  at  any  time  or  for  any  reason.

d.     Deferrals of Grant payouts may be provided for, at the sole discretion of
the  Committee,  in  the  Grant  Agreements.

e.     Except  as  otherwise  prescribed  by  the  Committee, the amounts of the
Grants  for  any  employee  of  a Subsidiary, along with interest, dividend, and
other  expenses accrued on deferred Grants shall be charged to the Participant's
employer  during  the period for which the Grant is made.  If the Participant is
employed by more than one Subsidiary or by both the Corporation and a Subsidiary
during  the  period  for  which  the  Grant is made, the Participant's Grant and
related  expenses  will  be  allocated  between  the  companies  employing  the
Participant  in  a  manner  prescribed  by  the  Committee.

f.     Other  than  as  specifically  provided  with  regard  to  the death of a
Participant,  no  benefit  under  the  Plan  shall  be  subject in any manner to
anticipation, alienation, sale,  pledge, encumbrance, or charge, and any attempt
to  do so shall be void.  No such benefit shall, prior to receipt thereof by the
Participant,  be  in  any  manner liable for or subject to the debts, contracts,
liabilities,  engagements,  or  torts  of  the  Participant. Notwithstanding the
foregoing,  the  Committee may, in its discretion, authorize all or a portion of
the options to be granted to an optionee to be on terms which permit transfer by
such  optionee  to  (1)  the  spouse,  children or grandchildren of the optionee
("Immediate  Family  Members"), (ii) a trust or trusts for the exclusive benefit
of  such  Immediate Family Members, (iii) a partnership or other entity in which
such  Immediate  Family Members are the only partners, members or beneficiaries,
provided that, (x) the stock option agreement pursuant to which such options are
 -------------
granted  must  be  approved  by  the  Committee,  and must expressly provide for
transferability  in  a  manner  consistent  with  this  Section,  (y) subsequent
transfers of transferred options shall be prohibited except transfers by will or
by  the  applicable  laws  of  descent and distribution, and (z) the transferees
shall agree to be bound by the provisions of this Plan.  Following transfer, any
such  options  shall  continue to be subject to the same terms and conditions as
were  applicable  immediately  prior  to  transfer.

g.     Participants  shall  not  be,  and  shall  not  have any of the rights or
privileges  of,  stockholders  of  the  Corporation  in  respect  of  any Shares
purchasable  in  connection  with  any  Grant  unless  and  until  certificates
representing  any  such  Shares  have  been  issued  by  the Corporation to such
Participants.

h.      No  election  as  to  benefits  or  exercise  of  Stock  Options,  Stock
Appreciation Rights, or other rights may be made during a Participant's lifetime
by  anyone other than the Participant except by a legal representative appointed
for  or  by  the  Participant.

i.     Absent  express  provisions  to  the  contrary, any grant under this Plan
shall  not  be  deemed  compensation  for  purposes  of  computing  benefits  or
contributions  under  any retirement plan of the Corporation or its Subsidiaries
and  shall  not  affect any benefits under any other benefit plan of any kind or
subsequently  in  effect  under  which the availability or amount of benefits is
related  to  level  of  compensation.  This  Plan  is not a "Retirement Plan" or
"Welfare  Plan"  under  the  Employee Retirement Income Security Act of 1974, as
amended.

j.     Unless  the  Committee  determines otherwise, no benefit or promise under
the  Plan  shall  be secured by any specific assets of the Corporation or any of
its  Subsidiaries,  nor  shall  any  assets  of  the  Corporation  or any of its
Subsidiaries  be  designated as attributable or allocated to the satisfaction of
the  Corporation's  obligations  under  the  Plan.

7.     Transfers  and  Leaves  of  Absence
       -----------------------------------

     For  purposes  of the Plan, unless the Committee determines otherwise:  (a)
a  transfer  of  a  Participant's  employment  without  an intervening period of
separation  among  the  Corporation  and  any  Subsidiary  shall not be deemed a
termination  of  employment,  and  (b) a Participant who is granted in writing a
leave  of  absence  shall  be  deemed  to  have  remained  in  the employ of the
Corporation  during  such  leave  of  absence.

8.     Adjustments
       -----------

     In  the  event of any change in the outstanding Common Stock by reason of a
stock  split,  spin-off,  stock dividend, stock combination or reclassification,
recapitalization  or  merger, change of control, or similar event, the Committee
may  adjust appropriately the number of Shares subject to the Plan and available
for or covered by Grants and Share prices related to outstanding Grants and make
such  other  revisions to outstanding Grants as it deems are equitably required.

9.     Merger,  Consolidation,  Exchange,
       Acquisition,  Liquidation  or  Dissolution
       ------------------------------------------

     In  its  absolute  discretion, and on such terms and conditions as it deems
appropriate,  coincident  with  or  after  the  grant of any Stock Option or any
Stock-Based  Grant,  the  Committee  may  provide  that  such  Stock  Option  or
Stock-Based  Grant  cannot be exercised after the merger or consolidation of the
Corporation  into  another corporation, the exchange of all or substantially all
of  the assets of the Corporation for the securities of another corporation, the
acquisition  by  another  corporation  of  80% or more of the Corporation's then
outstanding  shares  of  voting stock or the recapitalization, reclassification,
liquidation or dissolution of the Corporation, and if the Committee so provides,
it  shall,  on such terms and conditions as it deems appropriate in its absolute
discretion,  also  provide,  either  by  the  terms  of  such  Stock  Option  or
Stock-Based  Grant  or  by  a resolution adopted prior to the occurrence of such
merger,  consolidation,  exchange,  acquisition,  recapitalization,
reclassification,  liquidation  or  dissolution,  that,  for some period of time
prior to such event, such Stock Option or Stock-Based Grant shall be exercisable
as  to  all  shares  subject  thereto,  notwithstanding anything to the contrary
herein  (but  subject  to  the  provisions of Paragraph 6(b)) and that, upon the
occurrence of such event, such Stock Option or Stock-Based Grant shall terminate
and  be of no further force or effect; provided, however, that the Committee may
                                       --------  -------
also  provide,  in  its  absolute  discretion,  that even if the Stock Option or
Stock-Based  Grant shall remain exercisable after any such event, from and after
such event, any such Stock Option or Stock-Based Grant shall be exercisable only
for  the  kind  and  amount  of  securities  and/or  other property, or the cash
equivalent  thereof,  receivable  as  a  result of such event by the holder of a
number of shares of stock for which such Stock Option or Stock-Based Grant could
have  been  exercised  immediately  prior  to  such  event.

10.     Amendment  and  Termination
        ---------------------------

     The Committee shall have the authority to make such amendments to any terms
and conditions applicable to outstanding Grants as are consistent with this Plan
provided  that,  except  for  adjustments under Paragraph 8 or 9 hereof, no such
action  shall  modify  such Grant in a manner adverse to the Participant without
the  Participant's  consent  except  as  such  modification  is  provided for or
contemplated  in  the  terms  of  the  Grant.

     The Board of Directors may amend, suspend or terminate the Plan except that
no such action, other than an action under Paragraph 8 or 9 hereof, may be taken
which  would,  without  shareholder  approval,  increase the aggregate number of
Shares  available  for  Grants under the Plan, decrease the price of outstanding
Options  or  Stock  Appreciation Rights, change the requirements relating to the
Committee  or  extend  the  term  of  the  Plan.

11.     Foreign  Options  and  Rights
        -----------------------------

     The  Committee  may make Grants to Employees who are subject to the laws of
nations other than the United States, which Grants may have terms and conditions
that  differ  from  the  terms thereof as provided elsewhere in the Plan for the
purpose  of  complying  with  foreign  laws.

12.     Withholding  Taxes
        ------------------

     The  Corporation  shall have the right to deduct from any cash payment made
under the Plan any federal, state or local income or other taxes required by law
to  be  withheld  with  respect to such payment.  It shall be a condition to the
obligation  of  the Corporation to deliver shares upon the exercise of an Option
or  Stock  Appreciation Right, upon payment of Performance units or shares, upon
delivery  of  Restricted  Stock  or  upon exercise, settlement or payment of any
Other  Stock-Based Grant that the Participant pay to the Corporation such amount
as  may  be  requested  by  the  Corporation  for  the purpose of satisfying any
liability  for such withholding taxes.  Any Grant Agreement may provide that the
Participant may elect, in accordance with any conditions set forth in such Grant
Agreement, to pay a portion or all of such withholding taxes in shares of Common
Stock.

13.     Effective  Date  and  Termination  Dates
        ----------------------------------------

The  Plan  shall  be  effective  on  and  as  of the date of its approval by the
stockholders  of the Corporation and shall terminate ten years later, subject to
earlier  termination  by  the  Board  of  Directors  pursuant  to  Paragraph 10.




















































                                                                  Exhibit xvii



<PAGE>




                              CERTIFICATE OF MERGER

                                       OF

                         BORDEN CHEMICAL HOLDINGS, INC.
                            (a Delaware Corporation)
                                      INTO

                                  BORDEN, INC.
                           (a New Jersey Corporation)

To  the  Department  of  the  Treasury
State  of  New  Jersey

     Pursuant  to  the provisions of Sections 14A:10-5.1 and 14A:10-7 of the New
Jersey  Business  Corporation  Act,  the  New Jersey parent business corporation
hereinafter  named  does  hereby  certify  that:

     1.  The name of the subsidiary corporation, which is a business corporation
organized  under the laws of the State of Delaware, is BORDEN CHEMICAL HOLDINGS,
INC.

     2.  The  name  of  the  parent corporation, which is a business corporation
organized  under  the  laws  of  the  State  of  New  Jersey,  is  BORDEN,  INC.

     3.  The  number  of  outstanding shares of the subsidiary corporation is as
follows:  10,132,000  Senior  Preferred,  all  of  which are owned by the parent
corporation,  24,540,000  Junior Preferred, all of which are owned by the parent
corporation,  and 70,805,200 Common Shares, 70,224,700 of which are owned by the
parent  corporation.

     4.  The  Plan  of  Merger  (attached  hereto)  for  merging  the subsidiary
corporation  into  the parent corporation was approved by the Board of Directors
of  the  parent  corporation on November 16, 2001 and by the sole shareholder of
the  parent  corporation  by  written  consent without a meeting on November 16,
2001.

     5.  A copy of the Plan of Merger was mailed to the minority shareholders of
the subsidiary corporation on November 21, 2001 along with a statement informing
each  shareholder  of the right to dissent and to be paid the fair value for his
shares,  and  outlining  the  procedures  with which he shall comply in order to
assert  and  enforce  that  right.

     6.  Neither  the certificate of incorporation of the parent corporation nor
the  certificate  of  incorporation  of  the subsidiary corporation requires the
approval  of  its  shareholders  to  authorize  the  merger  herein  certified.

     7.  The  applicable  provisions  of  the  laws  of  the  jurisdiction  of
organization  of  the  subsidiary  corporation  relating  to  the  merger of the
subsidiary  corporation into the parent corporation will have been complied with
upon  compliance  with  any  of  the  filing and recording requirements thereof.

     8.  The  parent  corporation  will  continue its existence as the surviving
corporation  pursuant  to  the provisions of the New Jersey Business Corporation
Act.

     9.  The  merger herein certified shall become effective in the State of New
Jersey  on  November  24,  2001.

     10.  The  following  amendment  to  the  Certificate  of  Incorporation was
approved  by  the  directors and thereafter duly adopted by unanimous consent of
the  sole  shareholder, which holds 198,974,994 shares, representing 100% of the
common  stock  of  the  corporation  on the 16th day of November, 2001:  "At the
effective  time  of  the merger, the parent corporation shall amend its Restated
Certificate  of  Incorporation  to  change  its  name  to Borden Chemical, Inc."















Executed  on  this  21st  day  of  November,  2001.

                              BORDEN  CHEMICAL  HOLDINGS,  INC.



                                By:
                                    ----------------------------------
                                Name  of  Signer:  Michael  E.  Ducey
                                Capacity  of  Signer:  CEO  &  President


                              BORDEN,  INC.



                                By:
                                    ----------------------------------
                                Name  of  Signer:  William  F.  Stoll,  Jr.
                                Capacity  of  Signer:  Executive  Vice President



































































<PAGE>


                                 PLAN OF MERGER
                                 --------------
                         BORDEN CHEMICAL HOLDINGS, INC.
                         ------------------------------
                                      INTO
                                      ----
                                  BORDEN, INC.
                                  ------------

     BORDEN,  INC.,  which  is a business corporation of the State of New Jersey
("BORDEN")  and is the owner of all of the outstanding preferred shares of stock
and  greater than 90% of the common shares of stock of BORDEN CHEMICAL HOLDINGS,
INC.,  which  is  a  business corporation of the State of Delaware ("HOLDINGS"),
hereby  merges  BORDEN CHEMICAL HOLDINGS, INC. into BORDEN, INC. pursuant to the
provisions  of  the  Delaware  General  Business  Corporation Act and of the New
Jersey  Business  Corporation  Act.

     The  Effective  Date  of  the  merger  shall  be  November  24, 2001.

     The  separate  existence of BORDEN CHEMICAL HOLDINGS, INC. shall cease upon
the  Effective  Date of the merger pursuant to the provisions of the laws of the
State  of  Delaware;  and  BORDEN,  INC.  shall  continue  its  existence as the
surviving  corporation  pursuant  to  the  provisions of the New Jersey Business
Corporation  Act.

     On the Effective Date, each issued and outstanding common share of HOLDINGS
stock  (other  than  shares  owned by HOLDINGS as treasury shares and common and
preferred  HOLDINGS  shares  held by BORDEN, which shares shall automatically be
cancelled  and  no  consideration  shall be delivered in exchange therefore, and
shares  as  to which appraisal rights are properly exercised) shall be converted
into  and  become the right to receive .35 share of common stock of BORDEN and a
warrant,  on  the  terms  and  conditions described in the attachment hereto, to
purchase  2.48  shares  of  common  stock  of  BORDEN  at  $2.78  per  share.

     The  issued shares of BORDEN shall not be converted in any manner, but each
said share which is issued as of the Effective Date of the merger shall continue
to  represent  one  issued  share  of  BORDEN,  INC.

     The  Board  of  Directors  and  the  proper  officers  of BORDEN are hereby
authorized,  empowered,  and  directed to do any and all acts and things, and to
make, execute, deliver, file, and/or record any and all instruments, papers, and
documents which shall be or become necessary, proper, or convenient to carry out
or put into effect any of the provisions of this Plan of Merger or of the merger
herein  provided  for.

     At  the  effective  time  of  the  merger,  BORDEN shall amend its Restated
Certificate  of  Incorporation  to  change  its  name to "Borden Chemical, Inc."




































<PAGE>
                                                       Exhibit  xviii

                               PERQUISITE BENEFITS

ANNUALCASHPAYMENT
-----------------

Each  year certain key executives receive perquisite cash payments as determined
by  the  Board of Directors. With this perquisite payment you can purchase those
additional  services  that provide the greatest value for you. This payment will
be  made  during  first  quarter  of  each  year,  following  Board  approval.

DISABILITY  INCOME  PLAN
------------------------

You  will  be  paid  100%  of  base  salary  during  the  first two years of any
disability.  Total  disability  benefits  payable  under the Company's Long Term
Disability  (LTD)  Plan  are  calculated in conjunction with any Social Security
benefits that are awarded, i.e., Social Security benefits plus LTD benefits plus
Salary  Continuance  benefits  will  equal 100% of base salary for the first two
years.

To  receive  any  supplemental disability benefits beyond the first two years of
disability,  you must have elected to cover 60% your income up to $120,000 under
the  LTD  plan  during  annual  open  enrollment.

LIFE  INSURANCE
---------------

Basic  life  insurance  is  provided  on  the same basis as for other associates
(i.e.,  coverage  is  200%  of  eligible  pay  at  a cost per month of $.175 per
thousand  dollars  of coverage).  Additionally, you are covered for another 100%
of eligible pay in the form of a death benefit payable from the Executive Family
Survivor  Protection  Plan.

Eligible  pay  is  defined  as  the  higher  of current base salary only, or the
previous  year's  base  salary  plus  annual  incentive,  paid  or  deferred.

As  this  coverage  is  not an insured benefit, any payment is taxable income to
your  beneficiary.

You  also  are eligible to purchase Supplemental Group Term Life Insurance in an
amount  equal  to  one,  two  or three times eligible pay at rates which are age
related,  subject  to  passing  a  physical  examination.

24-HOUR  BUSINESS,  PERSONAL,  AND  TRAVEL  ACCIDENT  PLAN  -  ASSOCIATE  ONLY
------------------------------------------------------------------------------

The  Company provides a 24-hour non-contributory benefit of three times eligible
pay  for  accidental  death.


PERSONAL  UMBRELLA  POLICY
--------------------------

You  are  provided  a  personal excess liability insurance policy.  The limit of
liability  under  this  policy  is  five  million  dollars in excess of required
underlying  limits ($100,000 liability in the individual homeowner's policy, and
$250,000  per  person,  $500,000  per accident for bodily injury and $50,000 per
accident  for  property  damage  or $300,000 for a combined limit of both bodily
injury  and  property  damage  under motor vehicle coverage). You will receive a
copy  of  the  policy  rider.


EXECUTIVES'  SUPPLEMENTAL  PENSION  PLAN  (ESPP)
------------------------------------------------
The ESPP allows up to 25% salary deferral on a pre-tax basis.  The ESPP contains
a  "CAP  make-up"  account for company contributions to the Cash Account Program
for  pension  credits  which  would  otherwise  be  forfeited due to ESPP salary
deferral.    Also,    the     ESPP     provides    Retirement    Savings    Plan
(RSP)  "make-up"  company  matching  contributions  in  those  cases  where  IRS
regulations limit company  matching  contributions   to  the  RSP.   Your   ESPP
account earns interest  equal  to  the  Fixed  Income   Fund   return   in   the
Retirement  Savings  Plan.

Proceeds  from  your  ESPP  account  will be paid in accordance with your annual
elections  for  each year's deferral (a specified future date, at termination of
employment  or  in  annual  installments  following  termination).

You  will  be  asked to complete ESPP forms in December of each year to indicate
your  participation  elections  for  the  following  year.






                                                                   Exhibit xix





 PLEDGE  AND  ASSIGNMENT  AGREEMENT,  dated  as of January 18, 2002, made by
BORDEN CHEMICAL, INC. (formerly known as Borden, Inc.), a New Jersey Corporation
(the "Pledgor"), to CREDIT SUISSE FIRST BOSTON, a Swiss bank, acting through its
New  York  Branch  (the  "Bank").

                             PRELIMINARY STATEMENTS:
     (1)  The  Pledgor  will  deposit  from  time  to  time  monies in a deposit
account  in  the Bank of New York in the name of the Bank, which monies shall be
identified  by  Customer  I.D.  Number  135461 (the "Collateral Account"), which
shall  be  under  the  sole control of the Bank and subject to the terms of this
Agreement.
     (2)  The  Bank  has  entered into a Reimbursement Agreement dated as of the
date  hereof  (said  Agreement,  as  it  may  hereafter  be amended or otherwise
modified  from  time  to  time,  being  the "Reimbursement Agreement", the terms
defined  therein  and  not otherwise defined herein being used herein as therein
defined) with the Pledgor, as applicant (the "Applicant"), pursuant to which the
Bank  has agreed to Issue letters of credit from time to time for the account of
the  Pledgor  pursuant  to  the  terms  of  the  Reimbursement  Agreement.
(3)  It  is  a  condition precedent to the establishment of the Facility and the
Issuance  of the Letters of Credit by the Bank under the Reimbursement Agreement
that  the Pledgor shall have made the pledge and assignment contemplated by this
Agreement.

NOW  THEREFORE, in consideration of the premises and in order to induce the Bank
to  establish  the  Facility  and  Issue  Letters  of  Credit  pursuant  to  the
Reimbursement  Agreement,  the  Pledgor  hereby  agrees  as  follows:

SECTION  1.  Pledge  and  Assignment.  The Pledgor hereby pledges and assigns to
             -----------------------
the  Bank,  and  grants  to  the  Bank  a  security  interest  in, the following
collateral  (the  "Collateral"):

     (a)  the  Collateral  Account,  all funds held therein and all certificates
and  instruments,  if  any,  from  time  to  time representing or evidencing the
Collateral  Account;
     (b)  all Investments (as hereinafter defined) from  time  to  time, and all
certificates  and  instruments,  if  any,  from  time  to  time  representing or
evidencing  the  Investments;
     (c)  all  notes,  certificates  of  deposit, deposit accounts, checks and
other  instruments  from  time  to  time  hereafter  delivered  to  or otherwise
possessed  by the Bank for or on behalf of the Pledgor in substitution for or in
addition  to  any  or  all  of  the  then  existing  Collateral;
     (d)  all interest, dividends, cash, instruments and other   property   from
time to  time  received,  receivable  or  otherwise  distributed  in  respect of
or in exchange for  any  or  all  of  the  then  existing  Collateral;  and
     (e)  all  Proceeds  (as such term is defined in the Code defined in Section
13(d)  below)  of  any  and  all  of  the  foregoing  Collateral.

     SECTION  2.  Security  for  Obligations.  This  Agreement  and the security
                  --------------------------
interest  granted  hereunder  secures  the  payment  and  performance  of  the
Obligations  and  all  obligations and liabilities of the Pledgor hereunder (the
"Liabilities").

SECTION  3.  Delivery  of  Collateral.  All certificates or instruments, if any,
             ------------------------
representing  or  evidencing the Collateral shall be delivered to and held by or
on behalf of the Bank pursuant hereto and shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments of transfer or
assignment  in  blank,  all in form and substance satisfactory to the Bank.  The
Bank  shall  have the right, at any time in its discretion and without notice to
the Pledgor, to transfer to or to register in the name of the Bank or any of its
nominees  any  or  all  of the Collateral.  In addition, the Bank shall have the
right  at  any  time  to  exchange  certificates  or instruments representing or
evidencing  Collateral  for  certificates  or  instruments  of smaller or larger
denominations.

SECTION  4.  Maintaining  the Collateral Account.  So long as the Facility is in
             -----------------------------------
effect  or  any  Letter  of  Credit  is  outstanding  or  the  Pledgor  has  not
indefeasably  paid  in  full  all  Obligations  after  the  Termination  Date:

     (a)  The  Pledgor  will  maintain  the Collateral Account with the Bank and
will  transfer  immediately available funds to the Bank from time to time (i) to
maintain  a balance in the Collateral Account equal to 101% of the amount of the
Letter  of  Credit  Obligations,  (ii)  to  satisfy  the  condition precedent in
connection  with any LC Request prior to the Issuance of any Letter of Credit as
provided  in  the Reimbursement Agreement, and (iii) as otherwise required under
the  Reimbursement  Agreement.

     (b)  It  shall  be  a  term  and  condition  of   the  Collateral  Account,
notwithstanding any  term  or  condition  to the contrary in any other agreement
relating to the Collateral Account and except as otherwise   provided   by   the
provisions of Section 6  and Section 13, that no amount (including  interest  on
the Collateral Account) shall  be  paid or released to or for the account of, or
withdrawn by or for the account of, the Pledgor or any  other  person or  entity
from the Collateral Account.

The  Collateral  Account  shall  be  subject  to  such applicable laws, and such
applicable  regulations  of the Board of Governors of the Federal Reserve System
and  of  any  other appropriate banking or governmental authority, as may now or
hereafter  be  in  effect.

     SECTION  5.  Investing of Amounts in the Collateral Account. The Bank will,
                  ----------------------------------------------
subject  to  the  provisions  of Section 6 and Section 13, from time to time (a)
invest  amounts  on  deposit  in  the  Collateral  Account  in Money Market Time
Deposits  with Credit Suisse First Boston ("Money Market Time Deposits)" and (b)
invest  interest  paid  on  such  investments referred to in clause (a) above in
Money  Market  Time Deposits (the investments referred to in clauses (a) and (b)
above  being  collectively  "Investments").  Interest  and proceeds that are not
invested  or  reinvested in Investments as provided above shall be deposited and
held  in  cash  in  the  Collateral  Account.

SECTION  6.  Release  of  Amounts.  The  Pledgor  hereby  authorizes the Bank to
             --------------------
withdraw, from time to time, and apply immediately available funds on deposit in
the  Collateral  Account to any and all outstanding Liabilities.  Upon a written
request  of  the Pledgor to the Bank and provided that no Event of Default shall
have  occurred or be continuing, the Bank shall remit to the Pledgor any amounts
in  the  Collateral  Account  in  excess  of 101% of the amount of the Letter of
Credit Obligations at such time.  Any amount released to the Pledgor pursuant to
this  Section 6 shall be free and clean of the Bank's security interest provided
herein.  Upon the release and termination pursuant to Section 17 of the security
interest  granted  hereunder,  the  Bank  shall  remit any funds remaining after
repayment  of  all  Liabilities  to  the  Pledgor.

SECTION 7.  Representations and Warranties.  The Pledgor represents and warrants
            ------------------------------
as  follows:
     (a)  The  Pledgor  is the legal and beneficial owner of the Collateral free
and clear of any lien, security  interest, option or other charge or encumbrance
except  for  the  security  interest  created  by  this  Agreement.
     (b)  The pledge and assignment of the Collateral pursuant to this Agreement
creates  a  valid  and  perfected  first  priority  security  interest  in  the
Collateral,  securing  the  Liabilities.
     (c)  No  consent  of   any  other   person  or entity and no authorization,
approval, or other  action by, and no notice to or filing with, any governmental
authority  or regulatory  body is required (i) for the pledge and assignment by
the Pledgor   of   the  Collateral  pursuant  to  this  Agreement  or  for   the
execution, delivery or performance  of  this  Agreement  by  the  Pledgor,  (ii)
for the perfection or maintenance  of  the  security  interest  created   hereby
(including  the first priority nature of such security interest) or  (iii)   for
the exercise by the Bank of  its  rights  and  remedies  hereunder.

SECTION  8.  Further  Assurances.  The  Pledgor agrees that at any time and from
             -------------------
time  to  time, at the expense of the Pledgor, the Pledgor will promptly execute
and  deliver all further instruments and documents, and take all further action,
that  may be necessary or desirable, or that the Bank may reasonably request, in
order  to  perfect  and protect any security interest granted or purported to be
granted  hereby  or  to  enable  the Bank to exercise and enforce its rights and
remedies  hereunder  with  respect  to  any  Collateral.  The   Pledgor   hereby
authorizes  the  Bank  to file one  or   more    financing    or    continuation
statements,    and  amendments  thereto,  relating to all or  any  part  of  the
Collateral    without    the     signature     of     the     Pledgor     where
permitted    by     law.     A    photocopy    or    other    reproduction   of
this  Agreement  or  any  financing  statement  covering  the   Collateral    or
any  part  thereof  shall be sufficient as a financing statement where permitted
by  law.

SECTION  9.  Transfers and Other Liens.  The Pledgor agrees that it will not (i)
             -------------------------
sell,  assign  (by  operation  of law or otherwise), or otherwise dispose of, or
grant  any  option  with  respect  to,  any of the Collateral, or (ii) create or
permit  to  exist  any  lien,  security  interest,  option  or  other  charge or
encumbrance  upon  or  with  respect  to  any  of the Collateral, except for the
security  interest  under  this  Agreement.

SECTION  10.  Bank  Appointed Attorney-in-Fact.  The Pledgor hereby appoints the
              --------------------------------
Bank  the Pledgor's attorney-in-fact, with full authority in the place and stead
of the Pledgor and in the name of the Pledgor or otherwise, from time to time in
the Bank's discretion to take any action and to execute any instrument which the
Bank  may  deem  necessary  or  advisable  to  accomplish  the  purposes of this
Agreement,  including,  without  limitation, to receive, indorse and collect all
instruments  made  payable  to  the  Pledgor  representing any interest payment,
dividend  or other distribution in respect of the Collateral or any part thereof
and  to  give  full  discharge  for  the  same.

SECTION  11.  Bank  May  Perform.  If the Pledgor fails to perform any agreement
              ------------------
contained  herein,  the  Bank  may itself perform, or cause performance of, such
agreement,  and  the expenses of the Bank incurred in connection therewith shall
be  payable  by  the  Pledgor  under  Section  14.

SECTION  12.  The Bank's Duties.  The powers conferred on the Bank hereunder are
              -----------------
solely  to  protect its interest in the Collateral and shall not impose any duty
upon  it  to  exercise  any  such  powers.  Except  for  the safe custody of any
Collateral  in its possession and the accounting for moneys actually received by
it  hereunder,  the  Bank  shall  have  no  duty  as  to  any  Collateral, as to
ascertaining  or  taking  action  with respect to calls, conversions, exchanges,
maturities,  tenders or other matters relative to any Collateral, whether or not
the Bank has or is deemed to have knowledge of such matters, or as to the taking
of  any  necessary  steps  to  preserve  rights against any parties or any other
rights pertaining to any Collateral.  The Bank shall be deemed to have exercised
reasonable  care  in  the  custody  and  preservation  of  any Collateral in its
possession  if such Collateral is accorded treatment substantially equal to that
which  the  Bank  accords  its  own  property.

SECTION 13.  Remedies upon Default.  If any Event of Default shall have occurred
             ---------------------
and  be  continuing:
     (a)  The  Bank may, without notice to the Pledgor except as required by law
and at any time or from time to time, charge, set-off and otherwise apply all or
any  part  of  the  Collateral  Account  against  any  of Pledgor's Liabilities.
     (b)  The Bank may also exercise in respect of the Collateral,  in  addition
to other rights and remedies provided for herein or otherwise  available  to  it
all the  rights  and  remedies  of  a  secured  party   on  default   under  the
Uniform Commercial  Code  in  effect  in the State of New York at that time (the
"Code") (whether  or  not  the  Code  applies to the affected  Collateral),  and
may also, without  notice  except  as  specified  below,  sell  the   Collateral
or any part thereof  in  one or more parcels at public or private sale,  at  any
of the Bank's offices  or elsewhere, for cash, on credit or for future delivery,
and upon such other  terms  as  the Bank may deem commercially reasonable.   The
Pledgor agrees that,  to the extent notice of sale shall be required by law,  at
least ten days' notice to the Pledgor of the time and place of any  public  sale
or the time after which  any  private sale is to  be   made   shall   constitute
reasonable notification. The  Bank  shall  not  be obligated to make any sale of
Collateral regardless of notice  of  sale  having been given.    The  Bank   may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made  at
the time and place to which it was  so  adjourned.
     (c)  Any   cash   held  by  the  Bank  as  Collateral and all cash proceeds
received by the  Bank  in respect of any sale of,   collection   from,  or other
realization upon all or any part of the Collateral may, in the discretion of the
Bank, be held by the  Bank  as  collateral  for, and/or then  or  at  any   time
thereafter be applied (after  payment  of  any  amounts payable   to  the   Bank
pursuant to Section 14) in whole  or  in  part  by  the  Bank  against,  all  or
any part of the Pledgor's obligations  under  or   in   connection    with   the
Reimbursement Agreement in such order  as  the Bank shall elect.  Any surplus of
such cash or cash proceeds held by  the  Bank   and    remaining    after    the
indefeasible payment in full of all such  obligations,  the  termination  of the
Facility and the expiry of all Letters of Credit,  shall  be  paid  over  to the
Pledgor or to whomsoever may be lawfully entitled  to  receive  such  surplus.

     Notwithstanding  the  foregoing  provisions, the Bank shall have the rights
provided  to  it  under  Section  2.06(j)  of  the  Reimbursement  Agreement.

SECTION  14.  Expenses.  The Pledgor will upon demand pay to the Bank the amount
              --------
of  any  and all reasonable expenses, including the reasonable fees and expenses
of  its  counsel  and  of  any  experts  and agents, which the Bank may incur in
connection  with  (i)  the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise or enforcement of any of the rights of the
Bank  hereunder  or (iv) the failure by the Pledgor to perform or observe any of
the  provisions  hereof.

SECTION  15.  Amendments,  Etc.  No amendment or waiver of any provision of this
              ----------------
Agreement,  and no consent to any departure by the Pledgor herefrom shall in any
event  be  effective unless the same shall be in writing and signed by the Bank,
and then such waiver or consent shall be effective only in the specific instance
and  for  the  specific  purpose  for  which  given.

SECTION  16.  Addresses  for  Notices.  All  notices  and  other  communications
              -----------------------
provided  for  hereunder shall be in writing (including telecopier, telegraphic,
telex  or  cable  communication)  and  mailed, telecopied, telegraphed, telexed,
cabled  or  delivered  to it, if to the Pledgor, at its address specified in the
Reimbursement  Agreement,  and  if  to the Bank, at its address specified in the
Reimbursement  Agreement, or, as to either party, at such other address as shall
be  designated  by  such party in a written notice to the other party.  All such
notices  and  other  communications shall, when mailed, telecopied, telegraphed,
telexed  or  cabled,  be  effective  when  deposited  in  the mails, telecopied,
delivered  to  the telegraph company, confirmed by telex answerback or delivered
to  the  cable  company,  respectively.

SECTION  17.  Continuing  Security  Interest;  Assignments  under  Reimbursement
              ------------------------------------------------------------------
Agreement.  This  Agreement  shall  create a continuing security interest in the
---------
Collateral  and shall (i) remain in full force and effect until the later of (x)
the  indefeasible  payment  in  full  of  the Liabilities, (y) the expiration or
termination  of  the  Facility,  and  (z)  the date on which no Letter of Credit
remains  outstanding;  (ii)  be  binding  upon  the  Pledgor, its successors and
assigns;  and (iii) inure to the benefit of, and be enforceable by, the Bank and
its successors, transferees and assigns.  Without limiting the generality of the
foregoing  clause  (iii),  the  Bank may assign or otherwise transfer all or any
portion  of  its  rights  and  obligations  under  the  Reimbursement  Agreement
(including,  without  limitation, all or any portion of its obligations to Issue
Letters  of  Credit) with the consent of the Pledgor, which consent shall not be
unreasonably  withheld,  to any other person or entity, and such other person or
entity  shall  thereupon  become vested with all the benefits in respect thereof
granted  to  the  Bank herein or otherwise.  However, if an Event of Default has
occurred  or  is continuing, the aforementioned consent of the Pledgor shall not
be  required.  Upon  the  later  of  the  indefeasible  payment  in  full of the
Pledgor's  Liabilities,  the  expiration  or termination of the Facility and the
date  on which no Letter of Credit is outstanding, the security interest granted
hereby  shall  terminate  and  all  rights to the Collateral shall revert to the
Pledgor.  Upon  any  such  termination, the Bank will, at the Pledgor's expense,
return  to  the  Pledgor  such  of the Collateral as shall not have been sold or
otherwise  applied  pursuant  to the terms hereof and execute and deliver to the
Pledgor  such documents as the Pledgor shall reasonably request to evidence such
termination.

SECTION  18.  Governing  Law;  Terms.  This  Agreement  shall be governed by and
              ----------------------
construed  in  accordance  with  the  laws  of  the  State  of New York.  Unless
otherwise  defined  herein  or  in the Reimbursement Agreement, terms defined in
Article  9  of  the  Code  are  used  herein  as  therein  defined.



















































<PAGE>
IN  WITNESS  WHEREOF,  the Pledgor has caused this Agreement to be duly executed
and  delivered  by  its  officer  thereunto duly authorized as of the date first
above  written.

                                           BORDEN  CHEMICAL,  INC.

                                           By
                                              ---------------------------
                                              Name:  Ronald  P.  Starkman
                                              Title:  Treasurer

ACCEPTED  AND  AGREED:
CREDIT  SUISSE  FIRST  BOSTON,
NEW  YORK  BRANCH


By
   --------------------------------
     Name:  Bill  O'Daly
     Title:  Director


By
   --------------------------------
     Name:  Cassandra  Droogan
     Title:  Associate
























































                                                                    Exhibit xx



<PAGE>
                             REIMBURSEMENT AGREEMENT

                                       FOR

                      UNCOMMITTED LETTER OF CREDIT FACILITY

                                     BETWEEN

                           CREDIT SUISSE FIRST BOSTON,

                                 NEW YORK BRANCH

                                       AND

                              BORDEN CHEMICAL, INC.
                      -------------------------------------








































































<PAGE>

                             REIMBURSEMENT AGREEMENT
     THIS  REIMBURSEMENT  AGREEMENT  dated as of January 18, 2002 is made by and
between  CREDIT  SUISSE  FIRST BOSTON, a Swiss bank, acting through its New York
Branch (the "BANK"), and BORDEN CHEMICAL, INC. (formerly known as Borden, Inc.),
a  New  Jersey  corporation  (the  "APPLICANT").

                                    RECITALS
     A.     The  Applicant  has requested that the Bank establish an uncommitted
facility  (the  "FACILITY")  under  which  the  Applicant  may from time to time
request  that  the Bank Issue (as such term is defined below) one or more of its
irrevocable  letters  of  credit,  in  such  amounts  and  in  favor  of  such
beneficiaries  as the Applicant may specify (each, together with all extensions,
amendments,  renewals  and  replacements,  a  "LETTER  OF  CREDIT").

     B.     As  a  condition to the Issuance (as such term defined below) by the
Bank of  any  Letter of Credit as Applicant might request  from  time   to  time
Under the Facility, the Bank  has  required,  among  other   things,   that  the
Applicant grant it  the  reimbursement  and  other  rights  set  forth  in  this
Agreement.

     NOW,  THEREFORE,  in  consideration  of  the foregoing and the undertakings
herein  set  forth and intending to be legally bound, the Applicant and the Bank
hereby  agree  as  follows:

                                    ARTICLE I

Section  1.01          DEFINITIONS.  In  this  Agreement  (except  as  otherwise
                       -----------
expressly  provided for or unless the context otherwise requires), the following
terms  have the meanings specified in this Article, unless the context otherwise
requires:

     "AFFILIATE"  means,  with  respect  to   any designated Person, each Person
who  directly, or indirectly through one or more intermediaries, controls, or is
controlled  by,  or  is  under  common  control with, another designated Person.

     "AGENT"  means  Citibank  N.A.  as  administrative agent under the Existing
Credit  Agreement.

     "AGREEMENT"  means  this  Reimbursement  Agreement,  as  the  same  may  be
amended, supplemented  or  otherwise  modified  from  time  to  time.

     "APPLICANT"  has  the meaning assigned to such term in the preamble to this
Agreement.

     "BANK"  has the meaning assigned to such term in the preamble to this
Agreement.

     "BENEFICIARY" means the beneficiary named in such Letter of Credit's LC
Request, together  with  its  successors  and  permitted  assigns.

     "BUSINESS  DAY"  means any day other than a Saturday, a Sunday, or a day on
which  banking  institutions in the State of New York are required or authorized
by  law  to  close.

     "COLLATERAL PLEDGE AGREEMENT" means the Pledge  and  Assignment   Agreement
dated as of  the  date hereof made by the Applicant in favor of the Bank, as the
 same may be  amended,  supplemented  and  otherwise modified from time to time.

     "COLLATERAL  ACCOUNT"  has  the  meaning  assigned to such term in the Cash
Collateral  Pledge  Agreement.

     "CLOSING  DATE"  means the date on which the conditions set forth in herein
have been  satisfied  or  waived  in  writing  by  the  Bank.

     "CONTRACT  INTEREST  RATE"  means  a  fluctuating  interest  rate per annum
(computed  on  the  basis  of  a year of 360 days from the actual number of days
elapsed)  equal  to the rate used by the Bank from time to time as its Base Rate
(i.e.,  the  base  commercial  lending  rate  used  by  the  Bank,  which is not
necessarily  the  lowest rate of interest charged by the Bank in connection with
extensions  of  credit)  plus  two percent (2%), such rate of interest to change
automatically  as  of  the  effective  date  of  each  change  in the Base Rate.

     "CONTROL"  (including,  with  the  correlative  meanings,  the  terms
"controlling",  "controlled  by" and "under common control with") means, as used
with respect to any Person, the possession, directly or indirectly, of the power
to  direct  or  cause the direction of the management and policies of such other
Person, or of the Person, whether through contract, stock ownership, partnership
interests, membership, voting rights, governing boards, committees, divisions or
other  bodies  with  one  or  more  common members, directors, trustees or other
managers,  or  otherwise.

     "DRAW" means a draw on any Letter of Credit for payment, made in accordance
with  the  terms  and  conditions  of  such  Letter  of  Credit.

     "EVENT  OF  DEFAULT" has the meaning assigned to such term in Section 6.01.

     "EXISTING CREDIT AGREEMENT" means the Credit Agreement dated as of December
15,  1994,  as  amended  and  restated  as  of  July  14, 1997, by and among the
Applicant as borrower, Borden Foods Holdings Corporation and Wise Holdings, Inc.
as  affiliate  guarantors,  the  banks  named therein as Banks, Citibank N.A. as
administrative  agent, Bankers Trust Company, The Chase Manhattan Bank, Citibank
N.A.  and  Credit  Suisse First Boston as Lead Managing Agents and BT Securities
Corporation,  Chase  Securities  Inc.,  Citicorp  Securities, Inc. as arrangers.

     "EXISTING  LC"  means  certain  outstanding letters of credit issued by the
Bank  under  the  Existing Credit Agreement and identified in Schedule 1 hereto.

     "FACILITY"  has  the  meaning assigned to such term in the recitals to this
Agreement.

     "GOVERNMENTAL AUTHORITY" means any federal, state, or local governmental or
quasi-governmental  subdivision, authority, or other instrumentality thereof and
any  entity asserting or exercising executive, legislative, judicial, regulatory
or  administrative  functions  of  or  pertaining  to  government.

     "GOVERNMENTAL  ACTION"  means  all  permits, authorizations, registrations,
consents,  certifications,  approvals,  waivers,  exceptions, variances, claims,
orders,  judgements  and  decrees,  licenses, exemptions, publications, filings,
notices  to  and  declarations  of  or with any Governmental Authority and shall
include  all  permits  and  licenses  required  to use, operate and maintain the
assets  of  the  Applicant.

     "INDEBTEDNESS"  means,    with    respect   to    any    Person,   (a)  all
indebtedness,     obligations      or     other     liabilities     of      such
Person      (i)      for     borrowed     money    or     evidenced    by   debt
securities,     debentures,     acceptances,    notes    or     other    similar
instruments,  and  any accrued interest, fees and charges relating thereto, (ii)
under  profit  payment  agreements  or  in  respect  of  obligations  to redeem,
repurchase  or  exchange  any  Securities  of such Person or to pay dividends in
respect  of  any  stock, (iii) with respect to letters of credit issued for such
Person's  account,  (iv)  to  pay  the  deferred  purchase  price of property or
services,  except  accounts payable and accrued expenses arising in the ordinary
course of business, (v) in respect of capital leases or (vi) under guaranties of
the  type  of  indebtedness  referred  to  in  clauses  (i)  through  (v) above.

     "ISSUE"  means,  with  respect  to  any  Letter of Credit, either issue, or
extend  the  expiry  of,  or renew, or assume the obligation as issuer under, or
increase  the  amount  of,  such  Letter  of  Credit,  and  the term "ISSUED" or
"ISSUANCE"  shall  have  a  corresponding  meaning.

     "LC ASSUMPTION NOTICE" means a notice substantially in the form of Schedule
2  attached  to  the  Letter  Agreement.

     "LC  REQUEST" has the meaning assigned to such term in Section 2.02 herein.

     "LETTER  AGREEMENT"  means the Letter Agreement dated as of the date hereof
among  the  Bank,  the  Applicant  and  the  Agent,  as the same may be amended,
supplemented  or  otherwise  modified  from  time  to  time.

     "LETTER OF CREDIT" has the meaning assigned to such term in the recitals to
this  Agreement.

     "LETTER  OF  CREDIT  OBLIGATIONS"  means  an amount  equal to the amount of
(i) the aggregate  face amount of all outstanding Letters  of Credit Issued plus
(ii) the aggregate  amount  of  the  unpaid  reimbursement   obligations  of the
Applicant hereunder.

     "LOAN DOCUMENTS" means this Agreement, the Cash Collateral Pledge Agreement
and  the  Letter  Agreement.

     "MAXIMUM  FACILITY  AMOUNT"  means  $  35,000,000.

     "OBLIGATIONS"  means  all  reimbursement  obligations,  advances,  debts,
liabilities,  obligations,  covenants  and  duties owing by the Applicant to the
Bank  or any Person entitled to indemnification pursuant to Section 2.09 of this
Agreement, of any kind or nature, present or future, whether or not evidenced by
any  note,  guaranty  or  other  instrument, arising under this Agreement or any
other  Loan  Document,  whether  or  not  for  the  payment  of money.  The term
includes,  without limitation, all interest, charges, expenses, fees, attorneys'
fees  and disbursements and any other sum chargeable to the Applicant under this
Agreement  or  any  other  Loan Document and the obligations of the Applicant to
cash  collateralize  each  Letter  of  Credit  .

     "PARTICIPANT" has the meaning assigned to such term in Section 7.10 herein.

     "PERSON"  means  any  individual, for-profit or not-for-profit corporation,
partnership,  joint  venture,  association,  limited  liability company, limited
liability  partnership,  joint-stock company, trust, unincorporated organization
or  government  or  any  agency  or  political  subdivision  thereof.

     "TERMINATION  DATE"  means  the  later  of (i) March 31, 2003 and (ii) such
later  date  as  the  Facility  may  be  extended  to  pursuant to Section 2.05.

                                   ARTICLE II

                         LETTER OF CREDIT; REIMBURSEMENT

SECTION  2.01     ISSUANCE  OF  LETTERS  OF  CREDIT.  Subject  to  the terms and
                  ---------------------------------
conditions set forth herein, the Bank may Issue for the account of the Applicant
one  or  more  Letters  of Credit during the period from the Closing Date to the
Termination  Date  provided  that  the aggregate amount of all Issued Letters of
Credit  shall  not  exceed  at  any  time  the  Maximum  Facility  Amount.
Notwithstanding  anything to the contrary in this Agreement, the Bank shall have
no  obligation  to  Issue  any  Letter  of  Credit,  and any Issuance under this
Agreement  shall  be  at  the  Bank's  sole  discretion.

SECTION  2.02     PROCEDURES  FOR  ISSUANCE  OF LETTERS OF CREDIT; REQUEST.  The
                  --------------------------------------------------------
Applicant  may  from  time  to  time  request that the Bank Issue one or more of
Letters  of  Credit.  The request for an Issuance of a Letter of Credit shall be
made  by  means  of  an  application  made  in compliance with the terms of this
Agreement  ("LC  Request"),  the form of which is attached hereto as Schedule 2.
There  shall  be  a  separate  LC  Request  for each Letter of Credit requested.

SECTION  2.03     Assumption  of  Existing  LC.  In the event that an LC Request
                  ----------------------------
pertains  to a request for the Bank to assume an Existing LC and the Bank agrees
to  Issue  such  Existing LC, the Bank shall send an LC Assumption Notice to the
Applicant  and  the  Agent  at  the addresses set forth in the Letter Agreement.

SECTION  2.04     SCOPE  OF  THIS  AGREEMENT.  This Agreement shall apply to all
                  --------------------------
Letters  of  Credit  Issued  by  the  Bank  hereunder  and  to  all  extensions,
amendments,  renewals  and  replacements  thereto  regardless  of  whether  such
extensions,  amendments,  renewals or replacements are automatic under the terms
of  such  Letters of Credit or occur by election of the Bank or any Beneficiary.

SECTION  2.05     TERMINATION.  The  Facility  created  by  this Agreement shall
                  -----------
terminate  on the Termination Date, provided that the Applicant may apply for an
extension  of the Facility prior to such termination.  Extension of the Facility
and  the  length  of any such extension will be solely at the Bank's discretion.
Notwithstanding any termination of the Facility, this Agreement will continue in
full  force  and effect with respect to any Letters of Credit outstanding at the
time  of  such  termination,  including  any extensions, amendments, renewals or
replacements  thereof.  If, following termination of the Facility, the Applicant
submits  an  LC  Request  and  a  Letter of Credit is Issued by the Bank, the LC
Request  submitted  by  the Applicant shall be deemed to have been a request for
renewal of the Facility as well as for Issuance of the Letter of Credit, and the
Bank's  issuance of such Letter of Credit shall be deemed to be a renewal of the
Facility  with  respect  to  such Letter of Credit so Issued.  Accordingly, this
Agreement  and  the  Cash Collateral Agreement shall apply to any such Letter of
Credit.

SECTION  2.06     REIMBURSEMENTS.
                  --------------

Principal.  The  Applicant  hereby  unconditionally  covenants  and  agrees  to
----------
reimburse  and/or pay to the Bank, not later than 4:00 p.m., New York City time,
-------
on  the  date  of any Draw under any Letter of Credit all amounts which the Bank
shall  have  paid  under  such  Letter  of  Credit.

Interest.  The  Applicant  hereby unconditionally covenants and agrees to pay to
--------
the  Bank  interest  on  any  and  all  amounts  owing to the Bank hereunder and
remaining  unpaid  by  the Applicant, from and including the date such amount is
due,  to  but  not  including  the date of payment in full thereof, at a rate of
interest  equal  to  the  Contract  Interest  Rate  from time to time in effect.
Amounts payable under this Section 2.06(b) shall be payable at any time and from
time  to  time  on  demand  of  the  Bank.

Foreign Currency.  If the Bank is required to make any payment under a Letter of
----------------
Credit  in  a  currency  other  than  United  States dollars, the Applicant will
reimburse  the  Bank  in United States dollars at the spot exchange rate for the
foreign  currency  into United States dollars, as calculated by the Bank, on the
date  the  reimbursement  is  made  to  the  Bank.

Fees.  The  Applicant  hereby unconditionally covenants and agrees to pay to the
----
Bank  the  fees  set  forth  on  Schedule  3  hereto.

Charges  and  Expenses.  The  Applicant  shall  pay  to  the Bank all reasonable
----------------------
transaction  charges  that the Bank may make for claims paid under any Letter of
------
Credit.  Upon  submission  of  the  Bank's  bill therefor to the Applicant, such
transaction  charges  shall be payable.  In addition, the Applicant shall pay to
the  Bank  on  demand any and all reasonable charges and expenses which the Bank
may  pay  or  incur  relative  to  any  Letter  of  Credit.

Increased  Costs.
-----------------

        i.     If    after     the    date    of  this Agreement any  enactment,
promulgation     or     adoption     of     or     change   in   any  applicable
law,  treaty,   regulation   or    rule    or     in    the   interpretation  or
administration     thereof    by    any    governmental     authority,    court,
central  bank  or  comparable  agency  charged  with  the   interpretation    or
administration  thereof,  or  compliance by the Bank or any Participant with any
guideline,  request  or  directive  issued after the date hereof (whether or not
having the force of law) of any such Governmental Authority, court, central bank
or  comparable  agency,  shall  either  impose,  modify  or  deem applicable any
reserve,  special  deposit, capital, insurance assessment or similar requirement
against  letters of credit issued by, or assets held by, or deposits with or for
the  account  of,  or  credit extended by the Bank or any Participant (including
without limitation a guideline, request or directive which affects the manner in
which  the  Bank  or  any  Participant  reserves  for its obligations under this
Agreement  and any Letter of Credit), and the result of any event referred to in
this  sentence  shall be to (a) increase the direct or indirect cost to the Bank
or  any Participant of issuing or maintaining any Letter of Credit or the Bank's
obligations  under  this  Agreement  or (b) reduce the amounts receivable by the
Bank  or  a  Participant  upon  reimbursement  in accordance with this Agreement
(which  increase in cost or reduction in amount received or to be received shall
be determined by the Bank and evidenced in writing to the Applicant) then within
ten  (10)  Business  Days after demand by the Bank (accompanied by a certificate
which  sets  forth in reasonable detail the determination of such increased cost
or  reduction  in amount received or to be received), the Applicant shall pay to
the Bank, from time to time as specified by the Bank, additional amounts that in
the  aggregate shall be sufficient to compensate the Bank or any Participant for
such  increased  cost  or  reduction  in  amount  received  or  to  be received.

  ii. If after the date of this Agreement the Bank or any Participant shall have
determined  that  any  enactment,  promulgation  or adoption of or change in any
applicable   law,  treaty,  regulation,  rule  or  guideline  regarding  capital
adequacy,  or   in   the  interpretation  or   administration  thereof,  by  any
Governmental  Authority,  court,  central bank or comparable agency charged with
the  interpretation  or administration thereof, or compliance by the Bank or any
Participant  with any guideline, request or directive regarding capital adequacy
(whether  or  not  having  the force of law and whether or not failure to comply
thereunder would be unlawful) of any such Governmental Authority, court, central
bank  or  comparable  agency,  affects or would affect the amount of or reserves
required  or  expected  to  be maintained by the Bank or any Participant (or any
controlling  affiliate)  and  the  Bank  or  any Participant determines that the
amount  of  such  capital  is  increased  by  or  is  based  on  its Issuance or
maintenance  of  any  Letter  of  Credit,  or  the Bank's obligations under this
Agreement,  then,  within  ten  (10)  Business  Days  after  demand  by the Bank
(accompanied  by  a  certificate  which  sets  forth  in  reasonable  detail the
determination  of  the  increased cost resulting therefrom), the Applicant shall
pay  to the Bank, from time to time as specified by the Bank, additional amounts
sufficient  to  compensate  the Bank or any Participant therefor.  A certificate
setting  forth  the  computation  of  such  additional  amounts submitted to the
Applicant by the Bank shall, in the absence of manifest error, be conclusive and
binding  for  all  purposes.

Place  of  Payment.  All  payments  by  the  Applicant  to  the  Bank under this
------------------
Agreement  shall  be made in lawful currency of the United States at its address
--------
as set forth in Section 7.01, or at such other addresses and to the attention of
such  other person the Bank may stipulate by written notice to the Applicant, or
by a wire transfer in immediately available funds from the Applicant to the Bank
in accordance with written wire instructions given to the Applicant by the Bank.

Application  of  Payments.  All  payments  by the Applicant to the Bank shall be
applied,  first, to pay expenses, fees and interest due and, then, to reduce the
principal  balance  of  sums  due.

No  Set-Off.  All  payments  by the Applicant under this Agreement shall be made
without  any  set-off,  counterclaim  or  deduction  whatsoever.

Collateral Account.  The Collateral shall be under the sole dominion and control
of  the Bank and the Bank alone shall have the power to disburse proceeds of the
Collateral.  The  Applicant  hereby  authorizes  the  Bank  to sell or otherwise
liquidate  from  time  to  time  any  investments and securities relating to the
Collateral  Account  and to apply from time to time such proceeds to any and all
outstanding  Obligations.

SECTION  2.07          SURVIVAL.  Notwithstanding  anything  to  the  contrary
                       --------
contained in this Agreement, the Bank's rights, interests and remedies hereunder
and  under the Cash Collateral Pledge Agreement shall not terminate or expire or
be  deemed  to have been discharged or released until no Letters of Credit shall
be  outstanding hereunder after the Termination Date and until the Bank has been
indefeasibly  paid in full for all amounts then owing under this Agreement, and,
moreover,  where specifically provided herein, the obligations of the Applicant,
and  the  related  rights,  interests  and  remedies  of  the Bank, will survive
termination  of  this  Agreement.

SECTION  2.08          OBLIGATIONS  ABSOLUTE.  The  obligations of the Applicant
                       ---------------------
under this Agreement shall be absolute, unconditional and irrevocable, and shall
be  performed strictly in accordance with the terms of this Agreement, under all
circumstances  whatsoever,  including  without  limitation  the  following
circumstances: (i) validity or enforceability of this Agreement or any Letter of
Credit  or  any  documents  delivered  in  connection  therewith or contemplated
therein,  unless the lack of validity or enforceability is determined by a court
of  competent  jurisdiction prior to the payment on such Letter of Credit by the
Bank  which  created the Applicant's obligation hereunder; (ii) the existence of
any  claim,  set-off, defense or other right which the Applicant may have at any
time  against  any  Beneficiary  (or  any  persons or entities for whom any such
Beneficiary  may be acting); (iii) any statement or any document presented under
any  Letter  of Credit proving to be forged, fraudulent, insufficient, untrue or
inaccurate  in  any  respect;  or  (iv) any of the circumstances contemplated in
clauses  (1) through (8), inclusive, of Section 2.10.  The Applicant understands
and agrees that no payment by it under any other agreement (whether voluntary or
otherwise)  shall  constitute  a defense to its obligations hereunder, except to
the extent that the Bank has been indefeasibly paid in full for all amounts then
owing  under  this  Agreement.

SECTION  2.09     INDEMNIFICATION.  The  Applicant  hereby indemnifies and holds
                  ---------------
harmless  the  Bank  and its Affiliates (and the respective directors, officers,
employees,  representatives  and  agents of the Bank and each of its Affiliates)
(individually,  an  "Indemnified  Party"  and  collectively,  the  "Indemnified
Parties")  from  and  against  any and all claims, damages, losses, liabilities,
costs  or  expenses (including reasonable attorneys' fees for counsel of each of
the  Indemnified  Parties'  choice)  whatsoever  which any Indemnified Party may
incur  (or     which    may  be  claimed  against  any  Indemnified Party by any
person   or  entity  whatsoever)   by    reason    of    or    in     connection
with    (a)    the   Issuance    of    any    Letter    of    Credit,    or    a
transfer      of,     or      payment    or    failure  to   pay   (under    the
circumstances           specified           in           Section            2.10
hereof)      under,         any         Letter        of        Credit;      (b)
any   breach   by  the Applicant of any representation, warranty, covenant, term
or  condition  in,  or  the  occurrence  of  any  default under, this Agreement,
including  all  reasonable  fees  or  expenses  resulting from the settlement or
defense  of  any claims or liabilities arising as a result of any such breach or
default,  and (c) the involvement of any of the Indemnified Parties in any legal
suit,  investigation,  proceeding, inquiry or action as a consequence, direct or
indirect,  of  the  Bank's  entering  into this Agreement, or any other event or
transaction  contemplated  by  any of the foregoing; provided that the Applicant
shall  not  be  required  to  indemnify  any  of the Indemnified Parties for any
claims,  damages, losses, liabilities, costs or expenses to the extent, but only
to  the  extent,  caused by (i) the wilful misconduct or gross negligence of the
Bank, or (ii) the Bank's wilful misconduct or gross negligence in failing to pay
under  any  Letter  of  Credit  after  presentation of a draft.  Nothing in this
Section is intended to limit the Applicant's reimbursement obligations contained
in  Section  2.06.  This indemnification shall survive the expiration or earlier
termination  of  any  Letter  of  Credit.

SECTION  2.10     LIABILITY OF BANK.  As between the Applicant, on one hand, and
                  -----------------
the Bank, on the other, the Applicant assumes all risks of the acts or omissions
of any Beneficiary with respect to the use of any Letter of Credit.  Neither the
Bank  nor  any  of  its respective Affiliates, nor any of its or its Affiliates'
respective  officers,  directors,  employees  or  agents  shall  be  liable  or
responsible  for:  (1)  the use which may be made of any Letter of Credit or for
any  acts or omissions or statements of any Beneficiary in connection therewith;
(2)  the  form,  validity, sufficiency, accuracy or genuineness of any documents
(including  without  limitation  any  documents  presented  under  any Letter of
Credit),  or  of  any statement therein or endorsement thereon, even if any such
documents,  statements  or endorsements should in fact prove to be in any or all
respects  invalid,  insufficient,  fraudulent, forged, inaccurate or untrue; (3)
the  validity  or  sufficiency  of  any  instrument transferring or assigning or
purporting  to  transfer or assign any Letter of Credit or the rights or benefit
thereunder  or  proceeds  thereof,  in  whole  or in part, which may prove to be
invalid  or  ineffective  for  any reason; (4) errors, omissions, interruptions,
losses  or  delays  in  transmission or delivery of any messages by mail, cable,
telegraph,  telex,  telephone  or  otherwise;  (5)  any  loss  or  delay  in the
transmission  or  otherwise of any document or notice of claim required in order
to  make  a claim under any Letter of Credit; (6) any breach of contract between
the  Applicant  and  any  Beneficiary;  (7) any acts or events beyond the Bank's
control;  or (8) any other circumstances whatsoever in making or failing to make
payment  under  any  Letter of Credit against presentation of documents which do
not  comply  with  the  terms of such Letter of Credit, including failure of any
documents  to bear adequate reference to such Letter of Credit; except only that
the  Applicant shall have a claim against the Bank for acts or events documented
in  (1) through (8) above, and the Bank shall be liable to the Applicant, to the
extent,  but  only  to  the  extent, of any direct, as opposed to consequential,
damages  suffered by the Applicant which the Applicant proves were caused solely
by  (i)  the  Bank's  wilful  misconduct  or gross negligence or (ii) the Bank's
wilful failure to pay under a Letter of Credit after the presentation to it by a
Beneficiary  of  a proper draft strictly complying with the terms and conditions
thereof and of such Letter of Credit unless the Bank in good faith believes that
it  is  prohibited  by applicable laws or regulations other legal authority from
making such payment.  In furtherance and not in limitation of the foregoing, the
Bank  may  accept  documents  that  appear on their face to be in order, without
responsibility  for  further  investigation,  regardless   of  any   notice   or
information  to  the  contrary;  provided that if the Bank shall receive written
notification  from  both  the    Beneficiary     and     the    Applicant   that
documents    conforming    to   the  terms   of   a   Letter   of  Credit  to be
presented to the Bank are not  to  be  honored,  the  Bank  agrees  that it will
not honor such documents.

                                   ARTICLE III

                              CONDITIONS PRECEDENT

SECTION  3.01          INITIAL  DOCUMENTATION.  As  a condition precedent to the
                       ----------------------
Bank's establishment of the Facility, the Bank shall have received, or waived in
writing  the  receipt  of,  each  of  the  following, each in form and substance
satisfactory  to  the  Bank:

(a)     A  duly  executed  original, or counterpart original, of this Agreement;

(b)     A  duly  executed  original,  or counterpart original, of the Collateral
Pledge  Agreement  and  any  other  document,  certificate  or statement that is
required  to  be  executed,  filed  or  delivered  thereunder;

(c)     A  certificate  signed by the Secretary or an Assistant Secretary of the
Applicant  which (i) certifies that all of the representations and warranties of
the  Applicant  contained  herein  are true and correct, (ii) certifies that the
resolution  or  resolutions  of  the  Board  of  the  Directors of the Applicant
authorizing  execution  of  this Agreement contained therein or attached thereto
were  duly  adopted  on the date specified in the certificate (or certifies that
approval  of  the  Board  of  Directors  of  the Applicant for the execution and
delivery  of  this  Agreement  are  not  required), and (iii) certifies that the
person  or  persons  who executed this Agreement on behalf of the Applicant were
duly  authorized  to  so  act, and provides specimen signatures of such persons;

(d)     A  duly  executed  original,  or  counterpart  original,  of  the Letter
Agreement;

(e)     An  opinion  by  counsel  of  the  Applicant,  in  form  and  substance
satisfactory  to  the  Bank;  and
(f)     Such  other  documents,  certificates,  approvals,  assurances and legal
opinions  as  the  Bank  may  reasonably  request.

SECTION 3.02          Conditions Precedent to Issuance of each Letter of Credit.
                      ---------------------------------------------------------
Prior  to  the Issuance of each Letter of Credit, the following conditions shall
have  been  satisfied:

(a)     The  Bank  shall  have  received an LC Request in the form of Schedule 2
hereto;

(b)     The  Applicant  shall have deposited cash into the Collateral Account in
an  amount equal to 101% of the face amount of the Letter of Credit requested by
the  Applicant  in  such  LC  Request;

(c)     The  balance  of  the  Collateral  Account shall be at least 101% of the
amount  of  the  Letter  of Credit Obligations.  For purposes of this Subsection
(c),  Letter  of  Credit  Obligations  shall also include the face amount of any
outstanding  LC  Request  with  respect  to  which  the  amount set forth in the
foregoing  Subsection  (b)  shall  have  been  deposited;

(d)     As  of the date of such Issuance, both before and after giving effect to
the  Letter  of Credit to be Issued on such date, all of the representations and
warranties  contained in Section 4.01 shall be true and complete in all material
respects;

(e)     As  of  the  date of such Issuance, no Event of Default, nor event which
with  the  giving  of  notice  or  passage  of time would constitute an Event of
Default, shall have occurred and be continuing or would result from the Issuance
of  the  requested  Letter  of  Credit;  or

(f)     The  Applicant  shall have delivered such other documents, certificates,
approvals,  assurances  and  documents  as  the  Bank  may  reasonably  request.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

     The Applicant represents and warrants to and for the benefit of the Bank as
follows:

SECTION  4.01          EXISTENCE.  The  Applicant  is  duly  organized,  validly
                       ---------
existing and in good standing under the laws of the jurisdiction of the State of
New  Jersey.

SECTION  4.02          POWER, AUTHORIZATION AND NO CONFLICTS.  The Applicant has
                       -------------------------------------
all  requisite  power  and  authority and the legal right to own and operate its
properties  and  to  conduct  its  business and operations as they are currently
being  conducted and as proposed to be conducted by it.  The execution, delivery
and  performance  by  the  Applicant  of  this Agreement and the Cash Collateral
Pledge  Agreement  (i)  is  within  the  Applicant's  powers, (ii) has been duly
authorized by all necessary corporate or other action, (iii) does not contravene
the  organizational  documents of the Applicant or any license held by it or any
material contract or restriction binding on or affecting the Applicant or any of
its  assets,  and  (iv) will not result in the creation of any mortgage, pledge,
lien or encumbrance upon any of the Applicant's assets (other than the pledge to
the  Bank).

SECTION  4.03          GOVERNMENTAL  AUTHORIZATIONS  AND  OTHER  APPROVALS.  The
                       ---------------------------------------------------
Applicant  has  all  necessary  Governmental Actions and qualifications, and has
complied  in  all  material  respects  with  all applicable laws and regulations
necessary  to  conduct  its  business  as  it  is  presently  conducted.  No
authorization, approval or other action by, and no notice to or filing with, any
Governmental  Authority  is  required  for  the  due  execution,  delivery  and
performance  by  the  Applicant  of this Agreement or the Cash Collateral Pledge
Agreement,  except  such  as have been obtained or are not issuable on or before
the  date  of  execution  and  delivery  of  this  Agreement.

SECTION  4.04          VALIDITY  AND BINDING EFFECT.  Each of this Agreement and
                       ----------------------------
the  Cash Collateral Pledge Agreement is the legal, valid and binding obligation
of  the  Applicant,  enforceable  against  the  Applicant in accordance with its
terms, subject to the application by a court of general principles of equity and
to  the  effect  of  any  applicable  bankruptcy,  insolvency,  reorganization,
moratorium  or  similar Legal Requirement affecting creditors' rights generally.

SECTION  4.05          SOLVENCY.  The  Applicant  is and, after giving effect to
                       --------
this  Agreement  and     all     other     agreements    of  the Applicant being
entered   into     on    the    date    of    execution    and    delivery    of
this Agreement, will be solvent (which for this  purpose  shall  mean that it is
able to pay its current debts as they come due).

SECTION 4.06          FULL DISCLOSURE.  All information furnished to the Bank by
                      ---------------
or  on  behalf  of  the  Applicant  in  connection  with  this Agreement and the
Applicant's  obligations  contemplated  hereby  and  thereby  do not contain any
untrue  statement  of  a material fact with respect to the Applicant, and do not
omit  to state a material fact with respect to the Applicant, necessary in order
to  make  the  statements  contained  therein  not  misleading  in  light of the
circumstances  under  which  they  were  made.  There  is  no  fact known to the
Applicant which materially adversely affects or in the future may (so far as the
Applicant  can  now  foresee)  adversely  affect  the  business,  operations,
properties,  assets  or  financial condition of the Applicant which has not been
disclosed  to  the  Bank  or made available to creditors and investors generally
through  public  filings  with the Securities and Exchange Commission before the
date  of  execution  and  delivery  of  this  Agreement.

                                    ARTICLE V

                                GENERAL COVENANTS

     So  long  as  this Agreement is in effect or any amount is due and owing to
the  Bank  hereunder,  the  Applicant  covenants  and agrees that, except to the
extent  the  Bank  shall  otherwise  consent  in  writing, each of the following
covenants  shall  be  performed and complied with by the Applicant as indicated:

SECTION  5.01          CONDUCT  OF  BUSINESS; MAINTENANCE OF EXISTENCE; MERGERS.
                       --------------------------------------------------------
The  Applicant  will  (i)  preserve  and  maintain  in full force and effect its
existence  as  a  corporation or other legal entity, as in effect on the date of
execution  of  this  Agreement, (ii) not dissolve or otherwise dispose of all or
substantially  all  of  its  assets and (iii) not consolidate with or merge into
another entity or permit one or more other entities to consolidate with or merge
into  it,  except,  in  any such event, where a corporation or bank (or, if such
assuming  entity is the surviving entity in a merger or a consolidation with the
Applicant,  the surviving entity) having a credit rating equal to or better than
the  credit  rating  of  the  Applicant  on  the date of such event (or, if such
assuming  entity is the surviving entity in a merger of a consolidation with the
Applicant,  immediately after the consummation thereof), or otherwise acceptable
to  the  Bank, assumes or guarantees the obligations of the Applicant under this
Agreement  in  a  form  satisfactory  to  the  Bank.

SECTION 5.02          MAINTENANCE OF GOVERNMENTAL AUTHORIZATIONS.  The Applicant
                      ------------------------------------------
will  maintain  in  full  force  and  effect all of its Governmental Actions and
qualifications  necessary  for  the  conduct  of its business as it is presently
being, and as it is proposed to be, conducted and the ownership and operation of
its  assets.

SECTION  5.03          REPORTING  REQUIREMENTS.  The  Applicant  will furnish or
                       -----------------------
cause  to  be  furnished  to  the  Bank  the  following:

a.     As  soon  as available and in any event within forty-five (45) days after
the  close  of  each  fiscal  quarter  of  each  Fiscal  Year  of the Applicant:

i.  unaudited  financial statements for the Applicant, including a balance sheet
and  related  statement  of  income as of the end of such fiscal quarter and for
such  fiscal  quarter  and  the  current  Fiscal  Year to the end of such fiscal
quarter,  that shall be internally prepared and presented on a consistent basis;

ii.    a  certificate  signed  by  an  officer of the Applicant (i) stating that
during  such  fiscal quarter the Applicant has observed and performed all of its
covenants  and  agreements  set  forth in this Agreement, except as disclosed in
such certificate and (ii) stating that no Default has occurred or is continuing,
except  as  disclosed  in  such  certificate.

  b.   As  soon  as  available  and in any event within one hundred twenty (120)
days  after  the  close  of  each  fiscal  year  of  the  Applicant:

a.     audited financial statements for the Applicant, including a balance sheet
and related statements of income and changes in financial position as of the end
of  such  fiscal  year  and  for  such  fiscal  year, that shall be prepared and
reported  without  qualification by an independent accountant in accordance with
generally accepted accounting procedures, and shall fairly present the financial
condition  of  the  Applicant  as  at  the  end  of  such  fiscal  year;  and
b.     a  certificate  signed  by  an  officer of the Applicant stating that (i)
during  such  fiscal  year  the  Applicant has observed and performed all of its
covenants  and  agreements  set  forth in this Agreement, except as disclosed in
such  certificate  and  (ii) no Default has occurred or is continuing, except as
disclosed  in  such  certificate;  and
c.     As  soon  as  possible  and  in  any event within fifteen (15) days after
receipt  of  notice  thereof,  notice  of  any pending or threatened litigation,
investigation  or  other  proceeding  involving the Applicant which could have a
material  adverse  effect  on  the  operations  or  financial  condition  of the
Applicant;

d.     As  soon  as  possible,  notice  of  any  material  adverse change in the
business,  condition  (financial  or  otherwise),  operations,  performance  or
properties  of  the Applicant that would materially adversely affect the ability
of  the Applicant to perform its obligations under this Reimbursement Agreement;

e.     As  soon  as possible and in any event within fifteen (15) days after the
occurrence  of  Default,  a  certificate  signed  by an officer of the Applicant
setting  forth  the  details  of such Default and the action which the Applicant
proposes  to  take  with  respect  thereto;

f.     Such  other  information  respecting  the  operations  and  properties,
financial  or  otherwise,  of  the  Applicant  as the Bank may from time to time
reasonably  request.

                                   ARTICLE VI

                              DEFAULTS AND REMEDIES

SECTION 6.01          DEFAULTS.  Each of the following shall constitute an event
                      --------
of  default  hereunder  ("Event  of  Default"):

a)     Failure  by  the  Applicant  to pay any amount required to be paid by the
Applicant  under  this  Agreement  when  the  same shall become due and payable;

b)     Failure  by  the  Applicant to perform or comply with any of the terms or
conditions  contained  in  Section  5.01  of  this  Agreement;

c)     Failure by the Applicant to perform or comply with any of the other terms
or  conditions  contained  in this Agreement and continuance of such failure for
thirty  (30)  days  after  the  earlier  of  written notice from the Bank to the
Applicant  or the Applicant has actual knowledge that such failure has occurred,
or  such  longer period to which the Bank may agree in the case of a default not
curable  by  the  exercise  of due diligence within such thirty (30) day period,
provided  that  the  Applicant  shall have commenced to cure such default within
such  30  day  period  and  shall  complete  such  cure as quickly as reasonably
possible  with  the  exercise  of  due  diligence;

d)     Any  of  the  representations or warranties of the Applicant set forth in
this  Agreement  proves to have been false or misleading in any material respect
when  made  or  at  the  time  of  Issuance  of  any  Letter  of  Credit;

e)     Any  material  provision  of  this  Agreement for any reason ceases to be
valid  and  binding  on the Applicant, or is declared to be null and void, or is
violating  any  applicable  laws  or regulations relating to a maximum amount of
interest permitted to be contracted for, charged or received, or the validity or
enforceability  thereof  is  contested  by  the  Applicant  or  any Governmental
Authority,  or  the  Applicant  denies  that  it has any or further liability or
obligation  under  this  Agreement;

f)     The  Applicant  (i)  applies  for  or  consents  to  the appointment of a
receiver,  trustee,  liquidator  or custodian or the like of the Applicant or of
property  of  the  Applicant  or  (ii)  admits  in  writing the inability of the
Applicant  to  pay  its  debts  generally  as  they become due, or (iii) makes a
general  assignment  for  the  benefit  of  creditors,  or (iv) is adjudicated a
bankrupt or insolvent, or (v) commences a voluntary case under the United States
Bankruptcy  Code or files a voluntary petition or answer seeking reorganization,
an  arrangement  with  creditors  or  an  order  for  relief  or seeking to take
advantage  of  any  insolvency  law  or  files  an answer admitting the material
allegations  of  a  petition  filed  against  the  Applicant  in any bankruptcy,
reorganization or insolvency proceeding, or action of the Applicant is taken for
the  purpose  of  effecting any of the foregoing, or (vi) has instituted against
it,  without the application, approval or consent of the Applicant, a proceeding
in  any  court of competent  jurisdiction,   under   any   laws    relating   to
bankruptcy,       insolvency,       reorganization       or       relief      of
debtors,     seeking    in    respect    of    the    Applicant  an   order  for
relief    or  an   adjudication  in   bankruptcy,  reorganization,  dissolution,
winding    up    or    liquidation,    a  composition  or    arrangement    with
creditors,  a  readjustment  of  debts,  the appointment of a trustee, receiver,
liquidator  or  custodian  or  the  like  of  the  Applicant  or  of  all or any
substantial  part of the assets of the Applicant or other like relief in respect
thereof  under  any  laws relating to bankruptcy or insolvency law, and, if such
proceeding  is  being  contested  by  the  Applicant in good faith, the same (A)
results  in  the  entry  of  an  order  for  relief  or any such adjudication or
appointment or (B) remains undismissed and undischarged for a period of 60 days;

g)     Failure  by  the  Applicant  to  make  any  payment  when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) with
respect  to  any Indebtedness (other than an Obligation) if the aggregate amount
of  such other Indebtedness is fifteen million dollars ($15,000,000) or more; or
any  breach,  default  or  event  of default shall occur, or any other condition
shall  exist under any instrument, agreement or indenture pertaining to any such
Indebtedness,  if  the  effect  thereof (with or without the giving of notice or
lapse  of  time  or  both)  is to cause an acceleration, mandatory redemption or
other  required  repurchase of such Indebtedness or permit the holder or holders
of  such  Indebtedness  to  accelerate  the maturity of any such Indebtedness or
require  a  redemption  or  other  repurchase  of such Indebtedness; or any such
Indebtedness  shall be otherwise declared to be due and payable (by acceleration
or  otherwise)  or  required to be prepaid, redeemed or otherwise repurchased by
the Applicant (other than by a regularly scheduled required prepayment) prior to
the  stated  maturity  thereof;  or  the  holder  or holders of any lien, in any
amount,  shall  commence foreclosure of such lien upon property of the Applicant
having  an aggregate value in excess of thirty million dollars ($30,000,000); or

h)     At  any  time,  for  any reason, (i) the Cash Collateral Pledge Agreement
ceases  to  be  in full force and effect or the Applicant seeks to repudiate its
obligations  thereunder and the liens intended to be created thereby are, or any
other  Person seeks to render such liens, invalid and unperfected, or (ii) liens
in favor of the Bank contemplated by the Cash Collateral Pledge Agreement shall,
at  any  time,  for  any reason, be invalidated or otherwise cease to be in full
force  and  effect,  or  such  liens shall be subordinated or shall not have the
priority contemplated by this Agreement or the Cash Collateral Pledge Agreement.

     An  Event  of Default shall be deemed "continuing" until cured or waived in
writing  in  accordance  with  Section  7.05.

SECTION  6.02          REMEDIES.
                       --------
a)     Upon  the  occurrence of any Event of Default described in subsection (f)
of this Section 6.01, the Facility shall automatically and immediately terminate
and  the  unpaid  principal  amount of, and any and all accrued interest on, the
Obligations  and all accrued fees shall automatically become immediately due and
payable,  without  presentment,  demand, or protest or other requirements of any
kind,  all  of  which  are  hereby  expressly  waived     by    the   Applicant,
and      the      Applicant    right    to      make     LC     Requests   shall
thereupon     terminate.       Upon     the     occurrence    and    during  the
continuance    of    any   other Event of Default, the Bank may   upon   written
notice  to  the   Applicant     (i)     declare    that    the    Facility    is
terminated,  whereupon  the  right  of  the  Applicant to make LC Requests shall
immediately  terminate,  and/or  (ii) declare the unpaid principal amount of and
any  and  all accrued and unpaid interest on the Obligations to be, and the same
shall thereupon be, immediately due and payable, without presentment, demand, or
protest  or  other  requirements  of  any  kind  (including, without limitation,
valuation  and  appraisement, diligence, presentment, notice of intent to demand
or  accelerate and of acceleration), all of which are hereby expressly waived by
the  Applicant.

b)     If  an  Event  of  Default  has  occurred and is continuing, the Bank may
exercise,  or  cause  to  be exercised, any and all such remedies as it may have
under  this  Agreement  or  the Cash Collateral Pledge Agreement or at law or in
equity.

SECTION  6.03          NO WAIVER; REMEDIES CUMULATIVE.  No waiver of, or consent
                       ------------------------------
with respect to, any provision of this Agreement shall in any event be effective
unless the same shall be in writing and signed by the Bank, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which it was given.  No failure on the part of the Bank to exercise,
and  no  delay  in  exercising,  any  right  hereunder shall operate as a waiver
thereof; and no single or partial exercise of any right hereunder shall preclude
any  other  or further exercise thereof or the exercise of any other right.  The
remedies  herein  provided  are  cumulative  and  not  exclusive of any remedies
available  under  any  other  document  or  at  law  or  in  equity.

SECTION  6.04          Set-Off.  UPON  THE OCCURRENCE AND DURING THE CONTINUANCE
                       -------
OF  AN EVENT OF DEFAULT HEREUNDER, THE BANK IS HEREBY AUTHORIZED AT ANY TIME AND
FROM  TIME  TO  TIME  WITHOUT  NOTICE  TO  THE  APPLICANT (ANY SUCH NOTICE BEING
EXPRESSLY  WAIVED  BY  THE  APPLICANT)  AND,  TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE  LAW, TO SET OFF AND TO APPLY ANY AND ALL BALANCES, CREDITS, DEPOSITS
(GENERAL  OR  SPECIAL, TIME OR DEMAND, PROVISIONAL OR FINAL), ACCOUNTS OR MONEYS
AT  ANY TIME HELD AND OTHER INDEBTEDNESS AT ANY TIME OWING BY THE BANK TO OR FOR
THE  ACCOUNT  OF  THE  APPLICANT  AGAINST  ANY AND ALL OF THE OBLIGATIONS OF THE
APPLICANT NOW OR HEREAFTER EXISTING UNDER THIS AGREEMENT, OR ANY OTHER AGREEMENT
OR  INSTRUMENT  DELIVERED  BY THE APPLICANT TO THE BANK IN CONNECTION THEREWITH,
WHETHER  OR  NOT THE BANK SHALL HAVE MADE ANY DEMAND HEREUNDER OR THEREUNDER AND
ALTHOUGH  SUCH  OBLIGATIONS  MAY  BE CONTINGENT OR UNMATURED.  THE RIGHTS OF THE
BANK  UNDER  THIS  SECTION  6.04  ARE  IN  ADDITION TO OTHER RIGHTS AND REMEDIES
(INCLUDING, WITHOUT LIMITATION, OTHER RIGHTS OF SET-OFF) WHICH THE BANK MAY HAVE
INCLUDING,  BUT  NOT  LIMITED TO, THE BANK'S RIGHTS PROVIDED TO IT UNDER SECTION
2.06(J)  HEREIN.
                                   ARTICLE VII

SECTION  7.01          NOTICES.  All  notices  and other communications provided
                       -------
for  hereunder  shall  be  in  writing  and  sent  by United States certified or
registered  mail,  return  receipt requested, or by telex, telecopier or private
delivery  service,  addressed  as  follows:

If  to  the  Bank:     Credit  Suisse  First  Boston
                       New  York  Branch
                       11  Madison  Avenue
                       New  York,  New  York  10010
                       Attention:     Emma  Artun,  AVP
                                      Letter  of  Credit  Dept.
                       Fax:  (212)  325-8315
                       Tel.:  (212)  538-1370

                       and

                       Credit  Suisse  First  Boston
                       New  York  Branch
                       11  Madison  Avenue
                       New  York,  New  York  10010
                       Attention:     Bill  O'Daly,  VP
                                      Credit  Products  Group
                       Fax:  (212)  743-2254
                       Tel:  (212)  325-1986

If  to  the  Applicant:
                       Borden  Chemical,  Inc.
                       180  East  Broad  Street
                       Columbus,  Ohio  43215-3799
                       Attention:     Ronald  Starkman
                                      Vice  President  and  Treasurer
                       Fax:  (614)  225-4421
                       Tel.:  (614)  225-4682

The  parties hereto may change the address to which notices to it are to be sent
by  written  notice  given to the other persons listed in this Section 7.01. All
notices  shall,  when mailed as aforesaid, be effective on the date indicated on
the return receipt, and all notices given by other means shall be effective when
received.

SECTION  7.01     SUCCESSORS  AND  ASSIGNS.  This  Agreement  shall inure to the
                  ------------------------
benefit  of  and  shall  be binding upon the parties hereto and their respective
successors and assigns.  The Bank may not assign its rights under this Agreement
without  the  consent  of the Applicant, which consent shall not be unreasonably
withheld.  However, if an Event of Default shall have occurred or be continuing,
such Applicant's consent will not be required.  The Applicant may not assign its
rights  under this Agreement without the prior written consent of the Bank.  The
Applicant  and  the Bank intend that no person other than the parties hereto and
their  successors  and  assigns  as  permitted hereunder shall have any claim or
interest  under  this  Agreement  or  right  of  action  hereon  or  hereunder.

SECTION  7.03          COUNTERPARTS.  The  execution hereof by each party hereto
                       ------------
shall  constitute  a  contract between them for the uses and purposes herein set
forth,  and  this  Agreement may be executed in any number of counterparts, with
each executed counterpart constituting an original and all counterparts together
constituting  one  agreement.

SECTION 7.04          COSTS, EXPENSES AND TAXES.  The Applicant agrees to pay on
                      -------------------------
demand  all  reasonable  costs  and  expenses of the Bank in connection with the
preparation,  execution,  delivery  and  administration  of  this Agreement, any
Letter  of  Credit,  and any other documents that may be delivered in connection
with  this  Agreement,  any  amendments  or  supplements  to a Letter of Credit,
including,  without  limitation, and the reasonable fees and expenses of counsel
for  the  Bank  with respect thereto and with respect to advising the Bank as to
its  rights and responsibilities under this Agreement, any Letter of Credit, and
all  costs  and  expenses,  if  any,  (including, without limitation, reasonable
counsel  fees  and  expenses  of  the  Bank)  in connection with the enforcement
thereof.  In  addition,  the  Applicant  shall  pay  any and all stamp and other
taxes,  recording fees, taxes and charges and all other fees and charges payable
or  determined  to  be  payable in connection with the execution and delivery of
this Agreement, any Letter of Credit, and such other documents relating thereto,
and  agrees  to indemnify and to hold the Bank harmless from and against any and
all  liabilities  with  respect  to  or  resulting  from  any delay in paying or
omission  to  pay  such  taxes  and  fees  (which  indemnity  shall  survive the
Termination Date); provided that the Bank promptly notifies the Applicant of any
such  taxes  and  fees.

SECTION  7.05          AMENDMENTS.  No  amendment,  waiver or consent under this
                       ----------
Agreement  shall  be  effective  unless  such amendment, waiver or consent is in
writing  executed  and  delivered  by  the  Applicant  and  the  Bank.

SECTION 7.06          SEVERABILITY.  If any provision hereof is found by a court
                      ------------
of competent jurisdiction to be prohibited or unenforceable in any jurisdiction,
it  shall  be  ineffective  as  to  such jurisdiction only to the extent of such
prohibition  or unenforceability, and such prohibition or unenforceability shall
not  invalidate  the  balance  of  such provision as to such jurisdiction to the
extent  it  is not prohibited or unenforceable, nor invalidate such provision in
any other jurisdiction, nor invalidate the other provisions hereof, all of which
shall  be  liberally  construed  in  favor  of  the  Bank in order to effect the
provisions  of  this  Agreement.

SECTION  7.07          COMPLETE  AGREEMENT.  Taken  together  with  the  other
                       -------------------
instruments  and documents delivered in compliance herewith, this Agreement is a
complete  memorandum  of  the  agreement  of  the  Applicant  and  the  Bank.

SECTION 7.08          CONSENT TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL.  The
                      ----------------------------------------------------
Applicant  hereby  irrevocably  (i)  agrees that any suit, action or other legal
proceeding  arising out of or relating to this Agreement or any Letter of Credit
may be brought in any federal or state court located in New York and consents to
the  jurisdiction  of  such  court  in any such suit, action or proceeding, (ii)
agrees  that any suit, action or other legal proceeding by the Applicant against
the Bank shall be brought solely in a federal or state court located in New York
and  (iii)  waives any objection which it may have to the laying of venue of any
such  suit,  action  or proceeding in any such court and any claim that any such
suit,  action  or  proceeding  has  been  brought in an inconvenient forum.  The
Applicant  hereby  irrevocably consents to the service of any and all process in
any  such suit, action or proceeding by mailing of copies of such process to the
Applicant  at  its  address  provided  herein  or pursuant to Section 7.01.  The
Applicant agrees that a final judgment in any such action or proceeding shall be
conclusive  and  may be enforced in other jurisdictions by suit on the judgement
or  in  any  other  manner  provided by applicable law.  All mailings under this
section  shall  be  by  certified  or registered mail, return receipt requested.
Nothing  in  this  Section  shall  affect  the  right of the Bank to serve legal
process  in  any other manner permitted by applicable law or affect the right of
the  Bank  to  bring any suit, action or proceeding against the Applicant or its
property  in  the  courts  of any other jurisdiction.  THE PARTIES HERETO HEREBY
WAIVE  THE  RIGHT  TO  TRIAL BY JURY IN ANY ACTION ARISING UNDER THIS AGREEMENT.

SECTION  7.09          GOVERNING  LAW.  This Agreement shall be governed by, and
                       --------------
construed  in  accordance  with,  the  laws  of  the  State of New York (without
reference  to  its  principles  of conflicts of law) and the Uniform Customs and
Practice  for  Documentary  Credits,  ICC Publication No. 500 (UCP 500).  In the
event  of  a  conflict  between  New York law and the UCP 500, the UCP 500 shall
govern.

SECTION  7.10          PARTICIPATION.
                       -------------

a)     Notwithstanding  any  other  provision  of  this Agreement, the Applicant
understands  that  the Bank may at any time and from time to time enter into one
or  more participation agreements with other insurance companies, banks or other
financial  institutions (each a "Participant") whereby the Bank will allocate to
each  such  Participant  certain  percentages  of the payment obligations of the
Applicant under this Agreement and the funding obligations of the Bank under any
Letter  of  Credit.  The Applicant acknowledges that, for the convenience of all
parties,  this  Agreement  is being entered into with the Bank only and that the
Applicant's  obligations under this Agreement are and will be undertaken for the
benefit  of,  and  as  an  inducement  to, the Participants as well as the Bank.
Without limiting the foregoing, the Applicant acknowledges that Section 2.09 and
the  indemnity  of  the  Bank under Section 7.04 are also for the benefit of the
Participants  as  if such sections specifically referred to the Participants and
their  participation  in  the funding obligations of the Bank, and the Applicant
agrees to pay any amounts required by such provisions for the account of any one
or  more  Participants  to  the  Bank  on  demand  of  the  Bank.

b)     The  Bank  hereby  agrees  to give written notice to the Applicant of any
assignment  to  any  Participant,  containing  the  identity and address of such
Participant  and  the  percentages  of  the payment obligations of the Applicant
transferred  to  such  Participant.

SECTION  7.11          ASSIGNMENT  OF RIGHTS BY BANK.  Notwithstanding any other
                       -----------------------------
provision  of  this Agreement, the Applicant understands that the Bank is or may
be  assigning  and  transferring  all  or  a  portion  of  its rights under this
Agreement  to  other Persons.  The Applicant acknowledges that, to the extent of
such  assignment,  the  Applicant's  obligations  under  this  Agreement will be
undertaken  for  the  benefit  of  such  other  Persons as if such agreement and
obligations specifically referred to such other Persons and the Applicant agrees
to  pay any amounts required by such agreement and obligations, to the extent of
such  assignment,  for  the  account  of  such  other  Persons.

SECTION  7.12          FURTHER  ASSURANCES.  The  Applicant  will  execute  and
                       --------------------
deliver  such  further  instruments  and  perform  such  further  acts as may be
requested  by  the  Bank  from  time  to  time to confirm the provisions of this
Agreement  and/or to confirm the priority and/or perfection of any lien, pledge,
assignment  or  security  interest  created  or  intended  to be created by this
Agreement  in  any  property, right or interest of the Applicant.  The Applicant
agrees  to pay all reasonable costs of any such acts required to be taken by the
Applicant  hereunder  including  without  limitation  the  recording, filing and
acknowledging  of such documents in such public offices as the Bank may require.

SECTION  7.13          TAXES.  All  payments  made  by  the Applicant under this
                       -----
Agreement  shall  be  made  free  and  clear of, and without reduction for or on
account of, any present or future stamp or other taxes, levies, imposts, duties,
charges,  fees,  deductions,  withholdings,  restrictions  or  conditions of any
nature  whatsoever  now  or  hereafter  imposed,  levied,  collected withheld or
assessed  by  the United States or the State (or by any political subdivision or
taxing authority thereof or therein), excluding income, franchise, excess lines,
excise  and similar taxes now or hereafter imposed on the Bank (such nonexcluded
taxes  hereinafter  referred  to  as  "Taxes").  If any Taxes are required to be
withheld  from any amounts payable to the Bank hereunder, the amounts so payable
shall  be  increased to the extent necessary to yield to the Bank (after payment
of  all  Taxes) premiums, interest, or any such other amounts payable hereunder,
in  the amounts or at the rates specified in this Agreement.  Whenever any Taxes
are  payable by the Applicant, as promptly as possible thereafter, the Applicant
shall  send  to  the  Bank  evidence  of  payment  thereof.

SECTION  7.14          EFFECT  OF  SCHEDULES, ANNEXES, EXHIBITS.  Any schedules,
                       ----------------------------------------
annexes or exhibits attached to this Agreement shall be deemed to be an integral
part  of  this  Agreement  as  if  fully  set  forth  herein.


























<PAGE>
IN  WITNESS WHEREOF, the Applicant and the Bank have caused this Agreement to be
duly  executed  and  delivered  as  of  the  date  first  written  above.


                                     APPLICANT:

                                     BORDEN  CHEMICAL,  INC.

                                     By:
                                         -----------------------------
                                     Name:  Ronald  P.  Starkman
                                     Title:  Treasurer

                                     BANK:

                                     CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH

                                     By:
                                         -----------------------------
                                     Name:  Bill  O'Daly
                                     Title:  Director

                                     By:
                                         -----------------------------
                                     Name:  Cassandra  Droogan
                                     Title:  Associate
























































<PAGE>
                                   SCHEDULE 1
                           TO REIMBURSEMENT AGREEMENT
                                  EXISTING LCS
<TABLE>
<CAPTION>

#                    BENEFICIARY                                           LOC     EXPIRY DATE     LOC
                                                                        NUMBER                  AMOUNT

<C>            <S>                                                     <C>       <C>         <C>
           1.
           2.    United Pacific Insurance                              06000686    7/1/2002   4,693,599.26
-------------  ------------------------------------------------------  --------  ----------  -------------
           3.    SAFECO                                                06000685   6/30/2002  11,988,307.00
-------------  ------------------------------------------------------  --------  ----------  -------------
           4.    Rothschild                                            06000705   1/27/2002   7,644,672.38
-------------  ------------------------------------------------------  --------  ----------  -------------
           5.    Liberty Mutual                                        06000703   6/30/2002   1,950,000.00
-------------  ------------------------------------------------------  --------  ----------  -------------
           6.    FNB Of Commerce                                       06000712    3/5/2002  34,700,000.00
-------------  ------------------------------------------------------  --------  ----------  -------------
           7.    American Guaranty and Liability Ins                   06000792   6/30/2002     500,000.00
-------------  ------------------------------------------------------  --------  ----------  -------------
           8.    Fischer-Calo Site Trust                               06000810   6/30/2002   2,055,750.26
-------------  ------------------------------------------------------  --------  ----------  -------------
           9.    Self-Insurance Division, PA                           06000905   6/30/2002   2,700,000.00
-------------  ------------------------------------------------------  --------  ----------  -------------
          10.    Chair, Workers Compensation Board NY                  06000909   6/30/2002   6,829,000.00
-------------  ------------------------------------------------------  --------  ----------  -------------
          11.    National Union Fire                                   06000910   6/30/2002   7,800,000.00
-------------  ------------------------------------------------------  --------  ----------  -------------
          12.    State of Florida                                      06000911   6/30/2002   2,200,000.00
-------------  ------------------------------------------------------  --------  ----------  -------------
          13.    Ohio Bureau of Workers Comp                           06000953  12/19/2002  ***875,000.00
-------------  ------------------------------------------------------  --------  ----------  -------------
          14.    Self-Insurance Plans California                       06000938    5/1/2002     892,100.00
-------------  ------------------------------------------------------  --------  ----------  -------------
          15.    Commonwealth of Kentucky                              07000602   5/31/2002     628,150.00
-------------  ------------------------------------------------------  --------  ----------  -------------
          16.    TrizecHahn Regional Pooling LLC                       07001034   6/30/2002   1,750,000.00
-------------  ------------------------------------------------------  --------  ----------  -------------
          17.    St. John County Florida                               07001041   6/30/2002     100,000.00
-------------  ------------------------------------------------------  --------  ----------  -------------
          18.    Ins Co of NA                                          07001320   6/30/2002   2,426,220.00
-------------  ------------------------------------------------------  --------  ----------  -------------
          19.    D.L. Peterson trust                                   07001798   6/30/2002     150,000.00
-------------  ------------------------------------------------------  --------  ----------  -------------
                                                                                             -------------
                                                                                             89,882,798.90

               and TS-10036126 Trade Letter of Credit for $211,853.00

               ***Cash Collateralized
</TABLE>































<PAGE>
                                   SCHEDULE 2
                           TO REIMBURSEMENT AGREEMENT

APPLICATION  FOR  ISSUANCE  OF  A  LETTER  OF  CREDIT
-----------------------------------------------------
     Pursuant  to the Reimbursement Agreement between Borden Chemical, Inc. (the
"APPLICANT")  and  Credit Suisse First Boston, New York Branch (the "Bank"), the
Applicant  hereby  requests that the Bank issue its irrevocable Letter of Credit
with  the  following  terms:

Reference  Number  (only  if  Existing  LC):  TS -
                                                   -----------------------------
Effective  Date  (only  if  Existing  LC):
                                           -------------------------------------
Name  of  Beneficiary:
                       ---------------------------------------------------------
Amount  of  Letter  of  Credit:
                                ------------------------------------------------
Expiration  Date:
                  --------------------------------------------------------------
Automatic  Renewal:      Yes          No
                             --------    --------
Renewable  at  Option  of  Bank:    Yes         No
                                        -------    -------
Requirements  for  Draw   [If  form  of  L/C  not  attached]:
--------------------------------------------------------------------------------

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

Accommodation  Party:      Yes             No
                               ---------      ----------
   [If  YES,  attach  "  Annex 1:   Authorization and Agreement of Accommodation
    Party"]
   [If  Existing  LC  attach  copy  hereto]

Capitalized  terms not defined herein shall have the meaning assigned to them in
the  Reimbursement  Agreement.

     The  Applicant,  by  the signature of its duly authorized officer appearing
below,  hereby  certifies  that  (i)  the  representations and warranties of the
Applicant  containing  in Article IV of the Reimbursement Agreement are true and
                          ----------
correct  on  the  date  of  this  Application,












































<PAGE>
and  (ii)  no  Event  of  Default (as defined in the Reimbursement Agreement) or
event  which,  with  the passage of time or the giving of notice would become an
Event  of  Default,  has  occurred  and  is  continuing.

                         APPLICANT

Date:                    Company  Name:
                                       -------------------------------

                         By:
                              ----------------------------------------
                               Name:
                               Title:













































































<PAGE>
------
ANNEX  1:  AUTHORIZATION  AND  AGREEMENT  OF  ACCOMMODATION  PARTY
------------------------------------------------------------------
TO:    Credit  Suisse  First  Boston,  New  York  Branch
We join the request to you to issue the above-described Letter of Credit and, in
consideration  thereof,  we irrevocably agree that if the Applicant fails to pay
when  due  any amount or amounts owing to you in respect of the Letter of Credit
or  the  foregoing  Agreement between the Applicant and you, we will immediately
pay  the  same to you upon demand without the necessity of you taking any action
to  enforce any or your rights or remedies against the Applicant.  The Applicant
is  authorized to assign or transfer to you all or any part of any security held
by the Applicant for our obligations arising in connection with this transaction
and,  upon  any  such assignment or transfer, you will be vested with all powers
and  right  in  respect  of  the  security  transferred  or  assigned  to  you.

ACCOMMODATION  PARTY                      ACCOMMODATION  PARTY

NAME:                                     NAME:
     ----------------------------------        ---------------------------------

BY:                                       BY:
   -----------------------------------        ----------------------------------

TITLE:                                    TITLE:
      --------------------------------          --------------------------------

ADDRESS:                                  ADDRESS:
         -----------------------------            ------------------------------

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

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

TEL.  NO.                                 TEL.  NO.
         -----------------------------             -----------------------------

FAX.  NO.                                 FAX.  NO.
         -----------------------------             -----------------------------













































<PAGE>
                                   SCHEDULE 3
                           TO REIMBURSEMENT AGREEMENT

                                      FEES
The  Applicant  agrees  to  pay  the  following  fees  to  the  Bank:
     a.     Issuance  Fee:  12.5  basis  points of the face value amount of each
Letter  of  Credit  Issued,  to be paid upon the Issuance of each such Letter of
Credit.  Notwithstanding  anything  to  the contrary in this subsection (a), the
issuance  fee  provided in this subsection (a) shall not apply to assumptions by
the  Bank  of  Existing  LCs.
b.     Letter of Credit Fee:  With respect to all outstanding Letters of Credit,
an  amount  accruing  from  and including the date of Issuance of each Letter of
Credit, to and including the final expiration thereof,  determined by applying a
rate  equal  to  0.50% per annum on the amount from time to time available to be
drawn under all outstanding Letters of Credit.  Such fee to be payable quarterly
in  arrears.




































































                                                                   Exhibit xxi







<PAGE>
                                 FORM OF WARRANT

                           To Purchase Common Stock of

                              BORDEN CHEMICAL, INC.

                        Issuance Date:  November 24, 2001












                        Number of Shares of Common Stock:

                      [          ] (subject to adjustment)


























































<PAGE>

                             TABLE OF CONTENTS


ARTICLE  I.     DEFINITIONS
                Section  1.01  Definitions
                Section  1.02  Other  Defined  Terms
                Section  1.03  Other  Definitional  Provisions
                Section  1.04
ARTICLE  II.    EXERCISE  OF  WARRANT
                Section  2.01  Exercisability  of  Warrant
                Section  2.02  Manner  of  Exercise
                Section  2.03  Payment  of  Taxes
                Section  2.04  Fractional  Shares
                Section  2.05  Continued  Validity
ARTICLE  III.   EXPIRATION  OF  WARRANTS
                Section  3.01  Expiration
ARTICLE  IV.    TRANSFER,  DIVISION  AND  COMBINATION
                Section  4.01  Transfer
                Section  4.02  Division  and  Combination
                Section  4.03  Expenses
ARTICLE  V.     ADJUSTMENTS;  SIGNIFICANT  TRANSACTIONS
                Section  5.01  General
                Section  5.02  Significant  Transactions
ARTICLE  VI.    RESTRICTIONS  ON  TRANSFERABILITY
                Section  6.01  Restrictive  Legends
                Section  6.02  Restriction  on  Transfers



ARTICLE  VII.   LOSS  OR  MUTILATION
                Section  7.01  Loss  or  Mutilation
ARTICLE  VIII.  LIMITATION  OF  LIABILITY
                Section  8.01  Limitation  of  Liability
ARTICLE  IX.    MISCELLANEOUS
                Section  9.01  Nonwaiver
                Section  9.02  Applicability  of  Management  Stockholder's
                               Agreement
                Section  9.03  Notices
Section  9.04  Interpretation
Section  9.05  Entire  Agreement;  No  Third-Party  Beneficiaries
Section  9.06  Successors  and  Assigns
Section  9.07  Amendment
Section  9.08  Severability
Section  9.09  GOVERNING  LAW;  JURISDICTION

EXHIBIT  A     SUBSCRIPTION  FORM
EXHIBIT  B     ASSIGNMENT  FORM





































<PAGE>

NEITHER  THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS.  THIS  WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY NOT BE
TRANSFERRED,  SOLD,  ASSIGNED,  EXCHANGED,  MORTGAGED,  PLEDGED, HYPOTHECATED OR
OTHERWISE  DISPOSED  OF OR ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS OF,
AND  ARE  OTHERWISE RESTRICTED BY THE PROVISIONS OF, THE SECURITIES ACT OF 1933,
AS  AMENDED,  THE  RULES  AND  REGULATIONS  THEREUNDER  AND  THIS  WARRANT.

1)     AND,  with  respect  to  each  Warrant held by any Holder (as hereinafter
defined)  who is a party to a Management Stockholder's Agreement (as hereinafter
defined):

     THIS  WARRANT  IS  SUBJECT  TO RESTRICTIONS ON TRANSFERABILITY CONTAINED IN
ARTICLE VIII OF THIS WARRANT AND OF A CERTAIN MANAGEMENT STOCKHOLDER'S AGREEMENT
BETWEEN  BORDEN  CHEMICAL, INC. (AS SUCCESSOR TO BORDEN CHEMICAL HOLDINGS, INC.)
AND  THE  HOLDER (THE "MANAGEMENT STOCKHOLDER'S AGREEMENT").  COPIES OF THE FORM
OF  WARRANT  AND FORM OF MANAGEMENT STOCKHOLDER'S AGREEMENT ARE ON FILE WITH THE
SECRETARY OF BORDEN CHEMICAL, INC.  THE HOLDER OF THIS WARRANT, BY ACCEPTANCE OF
THIS  WARRANT,  AGREES  TO  BE  BOUND BY THE PROVISIONS OF THIS WARRANT AND SUCH
MANAGEMENT  STOCKHOLDER'S  AGREEMENT.

                                     WARRANT
                       TO PURCHASE ____________ SHARES OF
                     COMMON STOCK (SUBJECT TO ADJUSTMENT) OF
                              BORDEN CHEMICAL, INC.

     THIS  IS  TO  CERTIFY THAT, for value received,
                                                    ------------------------- [,
 a
  ------------------------------------------------]  or  [its]  [his]  [her]
registered  assigns,  is the registered  owner  of  a  Warrant  (as  hereinafter
defined), which entitles the Holder  (as  hereinafter defined), to purchase from
Borden Chemical, Inc., a New Jersey  corporation  (the  "Company"),
-----------------  (            ) shares of Common
                    -----------
Stock  (as hereinafter defined and subject to adjustment as provided herein), in
whole  or  in  part, including fractional parts, all on the terms and conditions
and  pursuant  to  the  provisions  hereinafter  set  forth.



















































<PAGE>

                              W I T N E S S E T H:
                              -------------------
          WHEREAS,  Borden  Chemical  Holdings,  Inc.  ("BCHI"),  a  Delaware
corporation,  has been merged (the "Merger") with and into Borden Inc. ("BI"), a
New  Jersey  corporation,  pursuant  to  the provisions of the Delaware Business
Company  Act  and  of  the  New  Jersey  Business  Company  Act;  and

          WHEREAS,  on  the  effective  date  of  the  Merger,  each  issued and
outstanding  share  of  capital  stock  of  BCHI (other than treasury shares and
common  and  preferred  shares  held by BI, which shares have automatically been
cancelled,  and  shares as to which appraisal rights are properly exercised) has
been  converted  into the right to receive 0.35 of a share of common stock of BI
and  a  warrant to purchase 2.48 shares of common stock of BI at $2.78 per share
on  the  terms  and  conditions described in an attachment to the certificate of
merger  filed  in  connection  with  the  Merger  (collectively,  the  "Merger
Consideration");  and

          WHEREAS,  this  Warrant  is  a  warrant  issued  as   part   of   the
aforementioned  Merger  Consideration;  and

          WHEREAS, this Warrant and Common Stock issuable upon exercise of this
Warrant  are  held  subject  to  the  Management  Stockholder's  Agreement  (as
hereinafter  defined)  to  the  extent  set  forth  herein;  and

          WHEREAS,  at  the  effective  time of the Merger, BI changed its name
to "Borden Chemical,  Inc.".

NOW,  THEREFORE,  in  consideration of the covenants and agreements contained in
this  Warrant,  and  for  other good and valuable consideration, the receipt and
sufficiency  of  which  are hereby acknowledged, the Company and the undersigned
Holder  each  hereby  agrees  as  follows:

                                    Article  I.

                                   DEFINITIONS

                          SECTION 7.13     DEFINITIONS.
                                           ------------
For  purposes  of  this  Warrant:
"Affiliate" shall mean, with respect to the Company, any entity directly or
 ---------
indirectly controlling, controlled by, or under common control with, the Company
or any other entity designated by the Board of Directors in which the Company or
an  affiliate  has  an  interest.
"Aggregate  Exercise Price" shall mean, with respect to the exercise of all or a
 -------------------------
portion  of this Warrant, the Exercise Price multiplied by the number of Warrant
Shares  purchased  upon  such  exercise.
"Board  of  Directors"  shall  mean  the  board  of  directors  of  the Company.
 --------------------
"Business  Day" shall mean any day that is not a Saturday, a Sunday or other day
 -------------
on which banks are required or authorized by law to be closed in The City of New
York.

"Committee"  shall  mean  the Compensation Committee of the Board of Directors.
  ---------
"Common  Stock"  shall  mean the collective reference to the common stock of the
 -------------
Company,  par value $.01 per share, as constituted on the Issuance Date, and any
capital  stock into which such Common Stock may thereafter be changed, and shall
also  include (a) capital stock of the Company of any other class (regardless of
how  denominated)  issued  to  the  holders  of  shares of Common Stock upon any
reclassification thereof in which all such shares are converted into a new class
of  capital  stock  and (b) shares of common stock of any successor or acquiring
corporation  received  by  or  distributed to the holders of Common Stock of the
Company.
"Determination Date" shall mean the date as of which the Fair Market Value is to
 ------------------
be  determined.
"Exchange  Act"  shall mean the Securities Exchange Act of 1934, as amended, and
 -------------
the  rules  and  regulations  promulgated  thereunder.
"Exercise Period" shall mean the period during which this Warrant is exercisable
 ---------------
pursuant  to  Section  2.01  hereof.
"Exercise  Price" shall mean $2.78 per share of Common Stock, as the same may be
 ---------------
adjusted  from  time  to  time  pursuant  to  the  terms  hereof.
"Expiration  Date"  shall mean the date that is the twenty (20) year anniversary
 ----------------
of  the  Issuance  Date.
"Fair  Market Value" shall mean, as of any Determination Date, (i) the
 ------------------
price  per share equal to the average of the last sale price of the Common Stock
on each exchange on which the Common Stock may at the time be listed or, (ii) if
there  shall have been no sales on any such exchanges on the Determination Date,
the average of the closing bid and asked prices on each such exchange at the end
of  the  Determination Date or, (iii) if there is no such bid and asked price on
the Determination Date, on the next preceding date when such bid and asked price
occurred or, (iv) if the Common Stock shall not be so listed, the average of the
closing  sales  prices as reported by NASDAQ (or any other nationally recognized
stock  exchange)  at  the  end of the Determination Date in the over-the-counter
market.  If  the  Common  Stock  is  not so listed or reported by NASDAQ (or any
other nationally recognized stock exchange), then the Fair Market Value shall be
the  Modified  Book  Value Per Share (as defined in the Management Stockholder's
Agreement).
"Governmental Entity" shall mean any Federal, state or local government or
 -------------------
any  court,  administrative agency or commission or other governmental authority
or  agency,  domestic  or  foreign.
"Holder"  shall  mean the Person in whose name this Warrant is registered on the
 ------
books  of  the  Company  maintained  for  such purpose or the Person holding any
Warrant  Shares,  as  initially  set  forth  on the first and last pages of this
Warrant,  including,  in  each  case,  permitted  transferees  thereof.

"Issuance  Date"  shall  mean  the  date  upon  which this Warrant is originally
 --------------
issued,  as  set  forth  on  the  Cover  page  of  this  Warrant.
 -----
"Management Stockholder's Agreement" shall mean with respect to each Holder who
 ----------------------------------
is  a  party thereto, the Management Stockholder's Agreement between such Holder
and  the  Company  (as  successor to BCHI), as may be amended from time to time.
"NASDAQ"  shall  mean  the  National Association of Securities Dealers Automatic
 ------
Quotation  System.
"Permanent  Disability"  shall  have  the  meaning assigned to such term in the
 ---------------------
Management  Stockholder's  Agreement.
"Person"  shall mean an individual, partnership, limited liability company,
 ------
corporation,  business  trust,  joint  stock  company,  trust,  unincorporated
association,  joint  venture, governmental authority or other entity of whatever
nature.
"Retirement" shall have the meaning assigned to such term in the Management
 ----------
Stockholder's  Agreement.
"Sale  Participation  Agreement" shall mean with respect to each Holder who is a
 ------------------------------
party thereto, the Sale Participation Agreement between such Holder, the Company
and  BDS  Two, Inc., (as successor to BDH Two, Inc.) as may be amended from time
to  time.
"Securities  Act"  shall  mean  the  Securities Act of 1933, as amended, and the
 ---------------
rules  and  regulations  promulgated  thereunder.
"Subsidiary"  means any corporation other than the Company in an unbroken chain
  ----------
of  corporations  beginning  with  the Company if each of the corporations other
than  the  last corporation in the unbroken chain owns 50% or more of the voting
stock  in  one  of  the  other  corporations  in  such  chain.
"Tender  Offer"  shall  mean  any  public  offer to substantially all holders of
 -------------
Common  Stock  to  purchase  at  least  50%  of  the  Common  Stock  at the time
outstanding.
"Transfer" shall mean any disposition of any Warrant or Warrant Shares or of any
 --------
interest  in  either  thereof,  which  would  constitute a sale or transfer of a
beneficial  interest  thereof  within  the  meaning  of  the  Securities  Act.
"Warrant  Shares"  shall mean the shares of Common Stock received by the Holders
 ---------------
upon  the  exercise  of  this Warrant, including any such shares of Common Stock
transferred  to  any  transferee  of  such  Holder.
"Warrant"  shall  mean  this  Warrant  and  all  warrants  issued upon transfer,
 -------
division  or  combination  of,  or  in  substitution  for,  any  thereof.

SECTION 7.16     Other Defined Terms.
                 -------------------
     The  following  terms shall have the meanings defined for such terms in the
Sections  set  forth  below:
                Term                      Section
                ----                      -------
                "Company"                 Preamble
                "Registration  Rights
                Agreement"                    1.04
                "Subscription Form"        2.02(a)

SECTION  7.17     Other  Definitional  Provisions
                  -------------------------------
      (a)  The  words  "hereof",  "herein"  and "hereunder" and words of similar
import  when used in this Warrant shall refer to this Warrant as a whole and not
to  any  particular  provision of this Warrant, and Article, Section and Exhibit
references  are  to  this  Warrant  unless  otherwise  specified.
b.     The meanings given to terms defined herein shall be equally applicable to
both  the  singular  and  plural  forms  of  such  terms.

SECTION  7.18     Registration  Rights  Agreement.  This Warrant and the related
                  -------------------------------
Warrant  Shares  shall  each  be  considered  a  "Common  or  Common  Equivalent
Registrable  Security"  for purposes of the Registration Rights Agreement, dated
as  of  March 20, 1996 between the Company (as successor to BI and BCHI) and BDS
Two, Inc. (as successor to BDH Two, Inc.) (the "Registration Rights Agreement").
                                                ------------------- ---------
In connection with any request to register Warrant Shares under the Registration
Rights  Agreement,  the Holder of this Warrant shall not be required to exercise
this  Warrant  at  any time prior to the consummation of the sale of the Warrant
Shares  for  which  registration  has  been  sought pursuant to the Registration
Rights  Agreement.

Article  CCCLIV.

EXERCISE  OF  WARRANT

SECTION 7.13     EXERCISABILITY OF WARRANT.
                 --------------------------
       Subject  to Article III, at any time and from time to time from and after
the  Issuance  Date,  Holder may exercise this Warrant, on any Business Day, for
all  or  any  part  of  the number of shares of Common Stock issuable hereunder.

SECTION 7.14     MANNER OF EXERCISE
                 ------------------
       (b)  In order to exercise this Warrant, in whole or in part, Holder shall
deliver  to  the  Company  at  its principal executive offices at 180 East Broad
Street,  Columbus,  Ohio  43215, Attn:  General Counsel, (i) a written notice of
Holder's  election  to  exercise  this  Warrant,  which notice shall specify the
number  of  shares  of Common Stock to which the exercise shall relate, and (ii)
this  Warrant  and  (iii) any payments required under Sections 2.02(c) and 2.03.
Such  notice  shall  be  substantially  in  the  form  of  the subscription form
appearing  at  the  end  of this Warrant as Exhibit A (the "Subscription Form"),
duly  executed  by  Holder  or  its  agent  or  attorney.

Upon    receipt    by    the    Company    of    (i)   this    Warrant, (ii) the
Subscription  Form  with  the   appropriate    box    checked    thereon,    and
(iii) if, and to the extent  applicable,    the     payments    required   under
Sections 2.02(c) and 2.03, the Company shall issue the  number  of    shares  of
Common Stock as may be calculated pursuant to Section 2.02(c).
To  the  extent,  if any, Holder, in its sole discretion, has checked the box on
the  Subscription  Form  contemplating  a  cash  exercise  upon  payment  of the
Aggregate Exercise Price, then upon payment, by certified or official bank check
payable  to  the  order  of the Company, of the Aggregate Exercise Price for the
Warrant  Shares  to  be  purchased  pursuant to the exercise of the Warrant, the
Company  shall,  subject  to  compliance  by  the  Holder with the terms of this
Warrant, as promptly as practicable, execute or cause to be executed and deliver
or  cause  to  be delivered to Holder a certificate or certificates representing
the  aggregate  number  of  full  shares of Common Stock issuable upon such cash
exercise.  To the extent, if any, Holder, in its sole discretion has checked the
box  on  the  Subscription  Form by which Holder elects not to pay the Aggregate
Exercise  Price, the Company shall, subject to compliance by the Holder with the
terms  of  this  Warrant,  as  promptly  as  practicable, execute or cause to be
executed  and  deliver  or  cause  to  be  delivered  to Holder a certificate or
certificates  representing  the  aggregate number of full shares of Common Stock
having  an  aggregate  Fair Market Value equal to the difference between (i) the
aggregate Fair Market Value of the number of shares of Common Stock specified in
the  Subscription  Form and (ii) the Aggregate Exercise Price in respect of such
number  of shares.  For purposes of this Section 2.02(c), the Determination Date
shall  be  the  date on which notice is received by the Company pursuant to this
Section  2.02.
In  either  case,  the  stock  certificate or certificates so delivered shall be
registered  in  the  name of Holder or, subject to the restrictions described in
Article  IV  and  Article  VIII,  such  other name as shall be designated in the
Subscription  Form.
This  Warrant  shall  be  deemed  to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other Person
so  designated  to  be  named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the notice is received by
the  Company.
If  this  Warrant  shall  have been exercised in part, the Company shall, at the
time  of  delivery  of  the certificate or certificates representing the Warrant
Shares,  deliver  to  Holder  a  new  Warrant evidencing the rights of Holder to
receive the number of shares of Common Stock called for by this Warrant less the
number  of  shares  issued  pursuant to the aforementioned cash exercise of this
Warrant  or  less the relevant portion of this Warrant surrendered in connection
with  the  aforementioned  cashless  exercise of this Warrant, which new Warrant
shall  in all other respects be identical to this Warrant, or, at the request of
Holder,  appropriate  notation may be made on this Warrant and the same returned
to  Holder.  Notwithstanding  any  provision herein to the contrary, the Company
shall  not be required to register shares in the name of any Person who acquired
this Warrant (or part hereof) or any Warrant Shares otherwise than in accordance
with  this  Warrant.
SECTION  7.15     PAYMENT  OF  TAXES.
                  ------------------
      All  shares  of  Common  Stock  issuable upon the exercise of this Warrant
pursuant  to  the  terms  hereof  shall  be  validly  issued,  fully  paid  and
nonassessable  and without any preemptive rights.  Holder shall pay all expenses
in  connection  with,  and  all  documentary, stamp or similar issue or transfer
taxes,  if  any,  and all other taxes and other governmental charges that may be
imposed  with  respect to, the issue or delivery of this Warrant, and all shares
of  Common  Stock  issuable  upon  the  exercise  of  this  Warrant.
SECTION 7.16     FRACTIONAL SHARES.
                 ------------------
       The  Company  shall  not be required    to    issue    fractional  shares
of    Common   Stock    on    the   exercise   of   Warrants.  If  any  fraction
of      a    share   of   Common   Stock    would      be      issuable     upon
the  exercise  of  any  Warrant (or  specified  portion  thereof),  the  Company
shall pay to the Holder of the Warrant an amount  in  cash  equal  to    such
fraction  multiplied by the then Fair Market Value per share of Common  Stock.
For  the  purposes  of this Section 2.04, the  Determination Date shall be the
date on which notice is received by the Company pursuant to Section 2.02.

                      SECTION 7.17     CONTINUED VALIDITY.
                                       ------------------
     A  Holder  who  holds  Warrant  Shares  shall  continue to be entitled with
respect  to  such Warrant Shares to all rights, and subject with respect to such
Warrant  Shares  to  all  obligations,  to  which it would have been entitled or
subject,  respectively, as Holder under Articles IV, VI and VII of this Warrant.

Article  CCCLV.

EXPIRATION  OF  WARRANTS
SECTION  7.13     Expiration.  Subject  to Section 5.02, a Holder is entitled to
                  ----------
exercise  its  Warrants  to  purchase  Common Stock from the Company at any time
prior  to  the  Expiration  Date.

Article  CCCLVI.

TRANSFER,  DIVISION  AND  COMBINATION
SECTION  7.13     TRANSFER.
                  --------
     (a)  Subject to compliance with Article VI and subject, with respect to any
Holder  who  is  a  party  to  a  Management Stockholder's Agreement, to Section
4.01(b),  any  transfer of this Warrant and all rights hereunder, in whole or in
part,  shall be registered on the books of the Company to be maintained for such
purpose,  upon  surrender of this Warrant at the principal office of the Company
referred  to in Section 2.02, together with a written assignment of this Warrant
substantially  in  the  form  of Exhibit B hereto duly executed by Holder or its
agent  or  attorney and funds sufficient to pay any amounts described in Section
2.03  in  connection with the making of such transfer.  Upon such surrender and,
if required, such payment, the Company shall, subject to Article VI, execute and
deliver  a  new Warrant or Warrants in the name of the assignee or assignees and
in  the denomination specified in such instrument of assignment, and shall issue
to  the  assignor  a  new  Warrant evidencing the portion of this Warrant not so
assigned,  and  this  Warrant  shall  promptly  be  cancelled.  The  Warrant, if
properly  assigned  in  compliance  with  Article  VI,  may be exercised for the
receipt  of  Warrant Shares by a new Holder without having a new Warrant issued.
If  requested by the Company, a new Holder shall acknowledge in writing, in form
reasonably  satisfactory to the Company, such Holder's obligations as a "Holder"
under  such  Holder's  Warrant.
(b)  With  respect  to  any  Holder who is a party to a Management Stockholder's
Agreement,  except  as may be permitted pursuant to the Management Stockholder's
Agreement  or  pursuant  to  the  Sale  Participation  Agreement,  or  except as
otherwise  may be approved by the Committee in its sole discretion, the Warrants
held  by  any  such  Holder,  and  any interest or right therein or part thereof
(including,  without  limitation,  the  Warrant Shares), shall not be subject to
disposition  by  transfer,  alienation,  anticipation,  pledge,  encumbrance,
assignment  or  any  other  means,  whether  such  disposition  be  voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any  other  legal  or  equitable  proceedings  (including  bankruptcy).

SECTION 7.14     DIVISION AND COMBINATION.
                 ------------------------
      Subject  to  Section  4.01  and Article VI, this Warrant may be divided or
combined with other Warrants upon presentation hereof at the aforesaid office of
the  Company,  together  with  a  written  notice  specifying  the  names  and
denominations  in  which  new Warrants are to be issued, signed by Holder or its
agent or attorney.  Subject to compliance with Section 4.01 and with Article VI,
as  to  any  transfer  that may be involved in such division or combination, the
Company  shall execute and deliver a new Warrant or Warrants in exchange for the
Warrant  or  Warrants  to be divided or combined in accordance with such notice.

























































































SECTION 7.15     EXPENSES.
                 --------
     The Company shall prepare, issue and deliver, at the expense of Holder, the
new  Warrant  or  Warrants  under  this  Article  IV.
Article  CCCLVII.

ADJUSTMENTS;  SIGNIFICANT  TRANSACTIONS

SECTION 7.13     GENERAL.
                 -------
     In  the event that the outstanding shares of the stock subject to a Warrant
are,  from  time  to  time,  changed into or exchanged for a different number of
shares  of the Company or other securities of the Company or any other Person by
reason  of  a  merger,  consolidation, recapitalization, reclassification, stock
split,  stock  dividend,  combination  of  shares,  change  of control, or other
similar  event,  the  Committee may make an appropriate adjustment in the number
and  kind of shares or other consideration as to which such Warrant, or portions
thereof  then  unexercised,  shall  be  exercisable,  and may also appropriately
adjust  the  exercise price of the Warrant, and make such other revisions to the
Warrants  as  it  deems are equitably required.  Any such adjustment may, in the
discretion  of the Committee, be made prior to the date the event giving rise to
such  adjustment  occurs,  subject  to  the  occurrence of such event.  Any such
adjustment  made  by  the  Committee shall be final and binding upon Holder, the
Company  and  all  other  interested  persons.

SECTION  7.14     Significant  Transactions.  In its absolute discretion, and on
                  -------------------------
such  terms and conditions as it deems appropriate, coincident with or after the
issuance  of  any Warrant, the Committee may provide that such Warrant cannot be
exercised  after  the  merger  or  consolidation  of  the  Company  into another
corporation,  the  exchange  of  all  or  substantially all of the assets of the
Company  for  the  securities of another corporation, the acquisition by another
corporation  of  80%  or more of the Company's then outstanding shares of voting
stock  or  the recapitalization, reclassification, liquidation or dissolution of
the  Company,  and  if  the  Committee  so provides, it shall, on such terms and
conditions  as  it  deems  appropriate in its absolute discretion, also provide,
either  by  the  terms  of  such Warrant or by a resolution adopted prior to the
occurrence  of  such  merger,  consolidation,  exchange,  acquisition,
recapitalization,  reclassification,  liquidation or dissolution, that, for some
period  of time prior to such event, such Warrant shall be exercisable as to all
shares  subject  thereto,  notwithstanding  anything  to the contrary herein and
that,  upon the occurrence of such event, such Warrant shall terminate and be of
no  further  force  or  effect;  provided,  however, that the Committee may also
                                 --------   -------
provide,  in  its  absolute  discretion,  that  even if the Warrant shall remain
exercisable  after  any  such event, from and after such event, any such Warrant
shall  be  exercisable  only  for the kind and amount of securities and/or other
property,  or  the cash equivalent thereof, receivable as a result of such event
by  the  holder of a number of shares of stock for which such Warrant could have
been  exercised  immediately  prior  to  such  event.

Article  CCCLVIII.

RESTRICTIONS  ON  TRANSFERABILITY
                      SECTION 7.13     RESTRICTIVE LEGENDS
                                       -------------------
      (c)  Except as otherwise provided in this Article VI, each certificate for
Warrant  Shares  initially  issued  upon  the exercise of this Warrant, and each
certificate for Warrant Shares issued to any transferee of any such certificate,
shall  be  stamped  or  otherwise  imprinted  with a legend in substantially the
following  form:

     "THE  SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE  SECURITIES  ACT  OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY
NOT  BE TRANSFERRED, SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED
OR  OTHERWISE  DISPOSED  OF OR ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS
OF,  AND  ARE  OTHERWISE  RESTRICTED BY THE PROVISIONS OF, THE SECURITIES ACT OF
1933,  AS  AMENDED,  AND  THE  RULES  AND  REGULATIONS  THEREUNDER."

(b)     Each certificate for Warrant Shares held by any Holder who is a party to
a  Management  Stockholder's  Agreement  shall  be  stamped  or  otherwise
imprinted  with  a  legend  in  substantially  the  following  form:

     "THE  SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY  CONTAINED IN ARTICLE VI OF A CERTAIN WARRANT DATED NOVEMBER 24,
2001,  ORIGINALLY  ISSUED  BY  BORDEN  CHEMICAL,  INC.  (THE "WARRANT") AND OF A
CERTAIN  MANAGEMENT  STOCKHOLDER'S  AGREEMENT  BETWEEN BORDEN CHEMICAL, INC. (AS
SUCCESSOR  TO  BORDEN  CHEMICAL  HOLDINGS, INC.) AND THE HOLDER (THE "MANAGEMENT
STOCKHOLDER'S  AGREEMENT").  COPIES  OF THE FORM OF SAID WARRANT AND THE FORM OF
SAID MANAGEMENT STOCKHOLDER'S AGREEMENT ARE ON FILE WITH THE SECRETARY OF BORDEN
CHEMICAL,  INC.  THE  HOLDER  OF  THIS  CERTIFICATE,  BY  ACCEPTANCE  OF  THIS
CERTIFICATE,  AGREES  TO  BE  BOUND  BY  THE PROVISIONS OF SUCH WARRANT AND SUCH
MANAGEMENT  STOCKHOLDER'S  AGREEMENT."


SECTION 7.14     RESTRICTION ON TRANSFERS
                 ------------------------
      (c)  Subject to Section 6.02(b) below and Section 4.01 above, prior to any
Transfer  of  any  Warrants  or  any  Warrant Shares (other than a Transfer by a
Holder  to  the  Company),  the  Holder of such Warrants or Warrant Shares shall
deliver  notice  of such Transfer to the Company.  Upon the Company's receipt of
such  notice,  such  Holder  shall be entitled to Transfer such Warrants or such
Warrant  Shares  in  compliance  with the Securities Act and Section 4.01 above.
Each  certificate,  if  any,  evidencing  such  Warrant  Shares issued upon such
Transfer  shall  bear  the  applicable  restrictive  legend set forth in Section
6.01(a),  and  each  Warrant issued upon such Transfer shall bear the applicable
restrictive  legend set forth in Section 6.01(b) or Section 6.01(c), unless such
legend  is  not  required in order to ensure compliance with the Securities Act.
Notwithstanding any other provision of this Warrant, the restrictions imposed by
this  Article VI upon transferability of the Warrants and the Warrant Shares and
the  legend requirements of Section 6.01 to the extent related to the absence of
registration  under  the  Securities  Act  shall  terminate as to any particular
Warrant  or  Warrant  Shares  when  and so long as such security shall have been
effectively  registered  under  the  Securities  Act  and  disposed  of pursuant
thereto.  All  Warrants  issued  upon  registration  of  transfer,  division  or
combination of, or in substitution for, any Warrant or Warrants entitled to bear
such  legend  shall  have  a  similar  legend  endorsed  thereon.
Notwithstanding  anything  in  this  Warrant  to the contrary, in the event of a
Tender  Offer,  the  restrictive  legends referred to in paragraphs 6.01(a), and
6.01(b),  as  applicable, may be omitted in the discretion of the Committee from
any  Warrants  or  Warrant  Shares  sold  by a Holder to the maker of the Tender
Offer.

Article  CCCLIX.

LOSS  OR  MUTILATION

SECTION  7.13     LOSS  OR  MUTILATION.
                  --------------------
     Upon  receipt  by  the  Company  from  any  Holder  of  evidence reasonably
satisfactory  to  it  of  the  ownership  of and the loss, theft, destruction or
mutilation  of  this  Warrant and indemnity reasonably satisfactory to it and in
case  of  mutilation  upon  surrender and cancellation hereof, the Company shall
execute  and  deliver in lieu hereof a new Warrant of like tenor to such Holder;
provided,  in  the  case  of  mutilation, no indemnity shall be required if this
Warrant  in  identifiable  form  is surrendered to the Company for cancellation.

Article  CCCLX.

LIMITATION  OF  LIABILITY
SECTION 7.13     LIMITATION OF LIABILITY.
                 -----------------------
     No  provision  hereof,  in  the absence of affirmative action by the Holder
hereof  to  receive  shares  of  Common  Stock, and no enumeration herein of the
rights  or  privileges of the Holder hereof, shall give rise to any liability of
such  Holder  for  any  value  subsequently assigned to the Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by  creditors  of  the  Company.
Article  CCCLXI.

MISCELLANEOUS

SECTION  7.13     NONWAIVER.
                  ---------
     No  course  of  dealing  or  any  delay  or  failure  to exercise any right
hereunder  on  the  part  of the Holder hereof shall operate as a waiver of such
right  or  otherwise  prejudice  such  Holder's  rights,  powers  or  remedies.

SECTION  7.14     APPLICABILITY  OF  MANAGEMENT  STOCKHOLDER'S  AGREEMENT.
                  -------------------------------------------------------
     The  Warrants  and  the  shares of Common Stock issued upon exercise of the
Warrants  shall  be subject to all of the terms and provisions of the Management
Stockholder's  Agreement  and  the Sale Participation Agreement, in each case if
and to the extent the Holder is a party to one or both of such agreements.  With
respect to any Holder who is a party to a Management Stockholder's Agreement, in
the  event  of  any  conflict  between such Holder's Warrants and the Management
Stockholder's  Agreement  or  the Sale Participation Agreement, the terms of the
Management  Stockholder's  Agreement  or  the  Sale  Participation Agreement, as
applicable,  shall control.  In addition, (a) all references to the term "Stock"
and  "shares  of  Common  Stock"  in  the  relevant provisions of the Management
Stockholder's  Agreement  and  Sale  Participation  Agreement shall be deemed to
include  all  shares of Common Stock issuable upon exercise of the Warrants, (b)
all references to the term "Option" or "Options" or "option" or "options" in the
relevant  provisions  of  the  Management  Stockholder's  Agreement  and  Sale
Participation  Agreement  shall  be  deemed to include the Warrants, and (c) for
purposes  of the treatment of the Warrants and Warrant Shares under the relevant
provisions  of  the  Management  Stockholder's  Agreement,  the  terms  "Vesting
Reference  Date" and "Valuation Reference Date"  in the Management Stockholder's
Agreement  shall  have the same meaning with respect to the Warrants and Warrant
Shares  as  they have for the shares of Common Stock originally purchased by the
Holder  pursuant  to  the  Management  Stockholder's  Agreement.

SECTION  7.15     NOTICES.
                  -------
     All  notices, requests, claims, demands and other communications under this
Warrant shall be in writing and shall be deemed given if delivered personally or
sent  by  overnight  courier (providing proof of delivery) to the parties at the
following  addresses (or at such other address for a party as shall be specified
by  like  notice):

if  to  any  Holder,  at  its  last  known address appearing on the books of the
Company  and  maintained  for  such  purpose.
if  to  the  Company,  to:

                     Borden  Chemical,  Inc.
                     180  East  Broad  Street
                     Columbus,  Ohio  43215
                     Attn:  General  Counsel

SECTION  7.13     INTERPRETATION.
                  --------------
     The  table  of  contents  and  headings  contained  in this Warrant are for
reference  purposes  only  and  shall  not  affect  in  any  way  the meaning or
interpretation  of  this  Warrant.  Whenever  the words "include", "includes" or
"including" are used in this Warrant, they shall be deemed to be followed by the
words  "without  limitation".

SECTION  7.14     ENTIRE  AGREEMENT;  NO  THIRD-PARTY  BENEFICIARIES.
                  ---------------------------------------------------
     This  Warrant  and  the agreements referred to herein constitute the entire
agreement,  and  supersede all prior agreements and understandings, both written
and  oral,  between  the  parties  with  respect  to  the subject matter of this
Warrant.  This  Warrant is not intended to confer upon any Person other than the
parties  any  rights  or  remedies.

SECTION  7.15     SUCCESSORS  AND  ASSIGNS.
                  ------------------------
     Subject  to the provisions of Section 4.01 and Article VI, this Warrant and
the  rights  evidenced  hereby shall inure to the benefit of and be binding upon
the  successors  of  the  Company  and  the successors and assigns of the Holder
hereof.  The  provisions  of  this Warrant are intended to be for the benefit of
all  Holders  from time to time of this Warrant, and shall be enforceable by any
such  Holder.

SECTION  7.16     AMENDMENT.
                  ----------
     This  Warrant  and  all  other  Warrants  may be modified or amended or the
provisions hereof waived with the written consent of the Company and Holders who
hold Warrants exercisable for in excess of 50% of the aggregate number of shares
of  Common  Stock  then  receivable upon exercise of all Warrants whether or not
then exercisable; provided, that no such Warrant may be modified or amended in a
manner  which  is  adverse to the Holder or any of its successors or assigns, so
long  as  such  Person  holds  any Warrants or Warrant Shares, without the prior
written  consent  of  such  Person.

SECTION  7.17     SEVERABILITY.
                  ------------
     Wherever  possible,  each provision of this Warrant shall be interpreted in
such  manner  as  to  be  effective  and  valid under applicable law, but if any
provision  of  this  Warrant  shall be prohibited by or invalid under applicable
law,  such  provision  shall be ineffective to the extent of such prohibition or
invalidity,  without  invalidating  the  remainder  of  such  provision  or  the
remaining  provisions  of  this  Warrant.

SECTION  7.18     GOVERNING  LAW;  JURISDICTION.
                  -----------------------------
      THIS  WARRANT  SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS  OF  THE  STATE  OF NEW YORK, APPLICABLE TO CONTRACTS EXECUTED IN AND TO BE
PERFORMED  ENTIRELY  WITHIN  THAT STATE.  ANY SUIT, ACTION OR PROCEEDING AGAINST
THE HOLDER WITH RESPECT TO THIS WARRANT, OR ANY JUDGMENT ENTERED BY ANY COURT IN
RESPECT OF ANY THEREOF, MAY BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN
THE  STATE  OF  DELAWARE  (OR IF THE COMPANY REINCORPORATES IN ANOTHER STATE, IN
THAT  STATE)  OR  NEW YORK, AS THE COMPANY MAY ELECT IN ITS SOLE DISCRETION, AND
THE  HOLDER  HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR
THE PURPOSE OF ANY SUCH SUIT, ACTION, PROCEEDING OR JUDGMENT.  THE HOLDER HEREBY
IRREVOCABLY  WAIVES  ANY  OBJECTIONS  WHICH  HE MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO  THIS  WARRANT BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF
DELAWARE  (OR  IF THE COMPANY REINCORPORATES IN ANOTHER STATE, IN THAT STATE) OR
NEW  YORK,  AND  HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT,
ACTION  OR  PROCEEDING  BROUGHT  IN  ANY  SUCH  COURT  HAS  BEEN  BROUGHT IN ANY
INCONVENIENT  FORUM.  NO  SUIT,  ACTION  OR  PROCEEDING AGAINST THE COMPANY WITH
RESPECT  TO  THIS  WARRANT  MAY BE BROUGHT IN ANY COURT, DOMESTIC OR FOREIGN, OR
BEFORE  ANY  SIMILAR  DOMESTIC  OR  FOREIGN  AUTHORITY  OTHER THAN IN A COURT OF
COMPETENT  JURISDICTION  IN  THE  STATE  OF  DELAWARE  (OR  IF  THE  COMPANY
REINCORPORATES  IN  ANOTHER  STATE,  IN  THAT STATE) OR NEW YORK, AND THE HOLDER
HEREBY  IRREVOCABLY  WAIVES  ANY  RIGHT WHICH HE MAY OTHERWISE HAVE HAD TO BRING
SUCH  AN  ACTION  IN ANY OTHER COURT, DOMESTIC OR FOREIGN, OR BEFORE ANY SIMILAR
DOMESTIC  OR  FOREIGN AUTHORITY.  THE COMPANY HEREBY SUBMITS TO THE JURISDICTION
OF  SUCH  COURTS  FOR  THE  PURPOSE  OF  ANY  SUCH  SUIT,  ACTION OR PROCEEDING.


                           [Signatures on next page.]





















































































<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
and  delivered  as  of  the  date  first  written  above.

                                          BORDEN  CHEMICAL,  INC.
                                          By:
                                             ------------------------------
                                              Name:
                                              Title:



     AND, FOR THE LIMITED PURPOSE OF SECTION 9.02 of this Warrant, BDS Two, Inc.
has  caused this Warrant to be duly executed as of the date first above written.


                                          BDS  TWO,  INC.
                                          By:
                                             ------------------------------
                                              Name:
                                              Title:































































<PAGE>





                                                                       EXHIBIT A
                                                                       ---------
                                SUBSCRIPTION FORM
                 [To be executed only upon exercise of Warrant]

     The undersigned registered owner of this Warrant irrevocably exercises this
Warrant  for         shares of Common Stock of            , all on the terms and
             -------                          -----------
conditions  specified  in  this  Warrant  and


---
herewith  tenders  payment  of  the  Aggregate  Exercise Price for the number of
shares of Common Stock specified above to the order of             in the amount
                                                       -----------
of  $         in  accordance  with  the  terms  hereof;
      -------

     The undersigned registered owner of this Warrant irrevocably exercises this
Warrant  in respect of         shares of Common Stock of            , all on the
                       -------                           -----------
terms  and  conditions  specified  in  this  Warrant  and


---
elects  not  to  pay  the Aggregate Exercise Price with respect to the shares of
Common  Stock  specified  above  and,  in lieu thereof, elects to surrender this
Warrant  (or the relevant portion thereof) in exchange for such number of shares
of  Common  Stock  having an aggregate value equal to the difference between (x)
the  aggregate  Fair  Market  Value  of  the  number  of  shares of Common Stock
specified  above  and (y) the Aggregate Exercise Price in respect of such number
of  shares.





















































     The  undersigned  requests  that  certificates for [all] [          of] the
                                                               ----------
shares  of  Common  Stock  hereby received (and any securities or other property
issuable  upon  such  exercise)  be  issued  in  the  name  of  and delivered to
                                                                   whose address
------------------------------------------------------------------
is  __________________________________  [add  any additional names and addresses
together  with the number of shares of Common Stock (and any securities or other
property  issuable  upon  such  exercise) to be issued to such person or entity]
and,  if  such  shares  of  Common  Stock shall not include all of the shares of
Common  Stock  issuable  as provided in this Warrant, that a new Warrant of like
tenor  and date for the balance of the shares of Common Stock issuable hereunder
be  delivered  to  the  undersigned.

-------------------------------------
  (Name  of  Registered  Owner)
-------------------------------------
  (Signature  of  Registered  Owner)
-------------------------------------
  (Street  Address)
-------------------------------------
  (City)  (State)  (Zip  Code)

NOTICE:     The  signature on this subscription must correspond with the name as
written  upon  the  face  of  the  within  Warrant  in every particular, without
alteration  or  enlargement  or  any  change  whatsoever.




























































<PAGE>
                                                                       EXHIBIT B
                                                                       ---------

                                 ASSIGNMENT FORM
     FOR  VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells,  assigns and transfers unto the Assignee named below all of the rights of
the  undersigned  under  this  Warrant,  with respect to the number of shares of
Common  Stock,  adjusted  as  of  the date of this assignment as provided in the
Warrant,  set  forth  below:
                                     No.  of  Shares  of
Name  and  Address  of  Assignee     Common  Stock
--------------------------------     -------------






and  does  hereby  irrevocably  constitute  and  appoint
                                                         -----------------------
attorney-in-fact to register such transfer on  the  books  of
                                                              ------------------
maintained  for the purpose, with full power of substitution  in  the  premises.

Dated:                                               Print
       --------------------------------------------

Name:
       --------------------------------------------

Signature:
       --------------------------------------------

Witness:
       --------------------------------------------


NOTICE:     The  signature on this subscription must correspond with the name as
written  upon  the  face  of  the  within  Warrant  in every particular, without
alteration  or  enlargement  or  any  change  whatsoever.










































                                                                  Exhibit xxii




<PAGE>
                   FORM OF MANAGEMENT STOCKHOLDER'S AGREEMENT
                   ------------------------------------------


     This  Management Stockholder's Agreement (this "Agreement") is entered into
                                                     ---------
as  of  the  date  set  forth on the signature page hereof among BORDEN CHEMICAL
HOLDINGS,  INC.,  a  Delaware  corporation  (the "Company"), BORDEN, INC., a New
                                                  -------
Jersey  corporation, and certain of its affiliates (collectively, the "Parents")
                                                                       -------
and  the  individual whose name and address appears on the signature page hereof
(the "Purchaser" and, together with the Company and the Parents, the "Parties").
      ---------                                                       -------


                                    RECITALS
                                    --------

     This  Agreement  is  one  of  several  agreements  ("Other  Purchasers'
                                                          ------------------
Agreements") which have been, or which in the future will be, entered into among
the  Company, the Parents and other individuals who are or will be key employees
of  the  Company  or  one  of  its  subsidiaries  (collectively,  the  "Other
                                                                        -----
Purchasers").

     The  Parent  has  agreed  to  sell to the Purchaser the number of shares of
common  stock, par value $.01 per share (the "Common Stock"), of the Company set
                                              ------------
forth on the signature page hereof (the "Purchase Stock") at a purchase price of
                                         --------------
$[    ]  per  share (the "Purchase Price").  In addition, the Company will grant
                          --------------
to the Purchaser an option or options to purchase Common Stock ("Options") at an
                                                                 -------
exercise price of $[    ] per share of Common Stock pursuant to the terms of the
1996  Stock  Purchase  and  Option  Plan  for  Key  Employees of Borden Chemical
Holdings,  Inc. and Subsidiaries (the "Option Plan") and the Non-Qualified Stock
                                       -----------
Option  Agreement  attached  hereto  as  Exhibit  A.

                                    AGREEMENT
                                    ---------

     To  implement  the  foregoing and in consideration of the mutual agreements
contained  herein,  the  Parties  agree  as  follows:

1.     -Purchase of Stock; Issuance of Options. (a)  On or prior to the purchase
       ----------------------------------------
date  identified  on  the signature page hereof (or such later date to which the
Company  and  the  Purchaser agree in writing), (i) the Parents will deliver the
Purchase  Stock  and  the Purchaser shall pay the Parents the Purchase Price for
each share delivered and (ii) the Company will grant the Options described above
to  the  Purchaser  in  accordance with, and subject to the terms and conditions
contained  in,  the  Option  Plan  and the Non-Qualified Stock Option Agreement.

a.     The  Parties  shall  execute  and  deliver  to  each  other copies of the
Non-Qualified  Stock  Option  Agreement  concurrently  with  the issuance of the
Options.

2.     -Purchaser's  Representations,  Warranties  and  Agreements.  (a)  The
        -----------------------------------------------------------
Purchaser hereby represents and warrants that he is acquiring the Purchase Stock
and,  at  the time of exercise or other acquisition, all other Stock (as defined
in  Section 8) for investment for his own account and not with a view to, or for
resale  in  connection with, the distribution or other disposition thereof.  The
Purchaser  agrees  and  acknowledges  that  he will not, directly or indirectly,
offer,  transfer,  sell, assign, pledge, hypothecate or otherwise dispose of any
shares  of  the  Stock  unless  such  transfer,  sale,  assignment,  pledge,
hypothecation or other disposition complies with Section 3 of this Agreement and
(i)  the  transfer, sale, assignment, pledge, hypothecation or other disposition
is  pursuant  to an effective registration statement under the Securities Act of
1933, as amended, or the rules and regulations in effect thereunder (the "Act"),
                                                                          ---
and any applicable state securities law or (ii) counsel for the Purchaser (which
counsel  shall  be  acceptable  to the Company) shall have furnished the Company
with an opinion, satisfactory in form and substance to the Company, that no such
registration  is  required  because  of  the  availability  of an exemption from
registration  under  the  Act  and  any  applicable  state  securities  law.
Notwithstanding  the  foregoing, the Company acknowledges and agrees that any of
the  following transfers are deemed to be in compliance with the Act, applicable
state securities law and this Agreement and no opinion of counsel is required in
connection  therewith: (x) a transfer made pursuant to Section 4, 5 or 6 hereof,
(y) a transfer upon the death of the Purchaser to his executors, administrators,
testamentary trustees, legatees or beneficiaries (the "Purchaser's Estate") or a
                                                       ----------- ------
transfer  to  the  executors, administrators, testamentary trustees, legatees or
beneficiaries  of  a  person who has become a holder of Stock in accordance with
the terms  of  this Agreement, provided that it is expressly understood that any
                                --------
such  transferee  shall  be  bound by the provisions of this Agreement and (z) a
transfer  made after the Vesting Reference Date (as defined below) in compliance
with  the federal and state securities laws to a trust, custodianship or limited
partnership  the beneficiaries or limited partners of which may include only the
Purchaser,  his  spouse  or  his lineal descendants (a "Purchaser's Trust") or a
                                                        -----------------
transfer  made after the third anniversary of the Vesting Reference Date to such
a  trust  by  a  person  who has become a holder of Stock in accordance with the
terms  of  this Agreement, provided that such transfer is made expressly subject
                           --------
to  this  Agreement and that the transferee agrees in writing to be bound by the
terms  and  conditions  hereof.

     For  purposes  of this Agreement, the term "Valuation Reference Date" shall
                                                 ------------------------
mean [              , 2000] and the term "Vesting Reference Date" shall mean the
                                          ----------------------
date  set  forth  on  the  signature  page hereof as the Vesting Reference Date.

a)     The  certificate  (or certificates) representing the Stock shall bear the
following  legend:

"THE  SHARES  REPRESENTED  BY  THIS  CERTIFICATE  MAY  NOT BE TRANSFERRED, SOLD,
ASSIGNED,  PLEDGED,  HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER,
SALE,  ASSIGNMENT,  PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE
PROVISIONS  OF  THE  MANAGEMENT  STOCKHOLDER'S  AGREEMENT  AMONG BORDEN CHEMICAL
HOLDINGS, INC. ("THE COMPANY"), BORDEN, INC. AND THE PURCHASER NAMED ON THE FACE
HEREOF  (A  COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY).  EXCEPT
AS  OTHERWISE PROVIDED IN SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE  "ACT"),  AND ANY APPLICABLE STATE
SECURITIES  LAW OR (B) IF (I) THE COMPANY HAS BEEN FURNISHED WITH A SATISFACTORY
OPINION  OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF
THE  ACT  OR  THE  RULES AND REGULATIONS IN EFFECT THEREUNDER, AND IN COMPLIANCE
WITH APPLICABLE PROVISIONS OF STATE SECURITIES LAWS, AND (II) IF THE HOLDER IS A
CITIZEN  OR  RESIDENT OF ANY COUNTRY OTHER THAN THE UNITED STATES, OR THE HOLDER
DESIRES TO EFFECT ANY SUCH TRANSACTION IN ANY SUCH COUNTRY, THE COMPANY HAS BEEN
FURNISHED  WITH A SATISFACTORY OPINION OR OTHER ADVICE OF COUNSEL FOR THE HOLDER
THAT  SUCH  TRANSACTION  WILL  NOT  VIOLATE  THE  LAWS  OF  SUCH  COUNTRY."

b     The Purchaser acknowledges that he has been advised that (i) the Stock has
not  been  registered  under the Act or any state securities law, (ii) the Stock
must  be  held indefinitely and the Purchaser must continue to bear the economic
risk  of  the investment in the Stock unless it is subsequently registered under
the  Act  and  any  applicable  state  securities law, or an exemption from such
registration  is  available,  (iii) it is not anticipated that there will be any
public  market  for  the  Stock,  (iv) Rule 144 promulgated under the Act is not
currently  available with respect to sales of any securities of the Company, and
the Company has made no covenant to make such Rule available (except as provided
in Section 9(b)), (v) when and if shares of the Stock may be disposed of without
registration  in  reliance  on  Rule  144,  such disposition can be made only in
limited  amounts  in accordance with the terms and conditions of such Rule, (vi)
if  the  Rule  144  exemption is not available, public sale without registration
will  require compliance with Regulation A or some other exemption under the Act
and  applicable  state  securities  law,  (vii) a restrictive legend in the form
heretofore  set forth shall be placed on the certificates representing the Stock
and  (viii)  a  notation shall be made in the appropriate records of the Company
indicating  that  the  Stock  is  subject to restriction on transfer and, if the
Company  should  at  some  time  in  the  future  engage the services of a stock
transfer  agent,  appropriate  stop transfer restrictions will be issued to such
transfer  agent  with  respect  to  the  Stock.

c.     If  any shares of the Stock are to be disposed of in accordance with Rule
144  under the Act or otherwise, the Purchaser shall promptly notify the Company
of such intended disposition and shall deliver to the Company at or prior to the
time  of  such  disposition  such  documentation  as  the Company may reasonably
request  in connection with such sale and, in the case of a disposition pursuant
to Rule 144, shall deliver to the Company an executed copy of any notice on Form
144  required  to  be  filed  with  the  Securities  and  Exchange  Commission.

d.     The  Purchaser  agrees  that,  if  any shares of the capital stock of the
Company  are  offered  to  the  public  pursuant  to  an  effective registration
statement  under  the  Act  and  applicable  state  securities  law  (other than
registration  of  securities  issued under an employee plan), the Purchaser will
not  effect  any  public  sale  or  distribution  of any shares of the Stock not
covered  by  such  registration  statement within 7 days prior to, or within 180
days after, the effective date of such registration statement (or, if later, the
date  of  the  public  offering pursuant to such registration statement), unless
otherwise  agreed  to  in  writing  by  the  Company; provided that, if any such
                                                      --------
offering  of  shares of the capital stock of the Company is pursuant to a public
offering  through  an  underwriter  or underwriters, then the period of 180 days
referred  to  above  shall  be such longer or shorter period as the underwriters
shall  require  in  the underwriting agreement for such offering with respect to
public  sales  or  distributions  of  shares  of  the  Stock  by  the  Company.

e.     The  Purchaser  represents  and  warrants  that  (i)  he has received and
reviewed  a  Private  Placement  Memorandum(the  "Private Placement Memorandum")
                                                  ----------------------------
relating to the Stock and the documents referred to therein and (ii) he has been
given  the  opportunity to obtain any additional information or documents and to
ask  questions  and  receive  answers  about such documents, the Company and the
business  and  prospects of the Company which he deems necessary to evaluate the
merits  and  risks  related  to  his  investment  in the Stock and to verify the
information  contained  in  the Private Placement Memorandum and the information
received as indicated in this Section 2(f)(ii), and he has relied solely on such
information.

f.     The  Purchaser  further  represents  and  warrants that (i) his financial
condition  is  such  that he can afford to bear the economic risk of holding the
Stock  for an indefinite period of time and has adequate means for providing for
his  current  needs  and  personal contingencies, (ii) he can afford to suffer a
complete loss of his investment in the Stock, (iii) all information which he has
provided to the Company concerning himself and his financial position is correct
and complete as of the date of this Agreement, (iv) he understands and has taken
cognizance  of  all risk factors related to the purchase of the Stock, including
those  set  forth in the Private Placement Memorandum referred to above, and (v)
his  knowledge and experience in financial and business matters are such that he
is  capable  of  evaluating the merits and risks of his purchase of the Stock as
contemplated  by  this  Agreement.

3)     Restriction  on Transfer.  Except for transfers permitted by clauses (x),
       -------------------------
(y)  and  (z)  of  Section  2(a)  or  a  sale  of shares of Stock pursuant to an
effective  registration  statement under the Act and applicable state securities
law  filed  by  the Company or pursuant to the Sale Participation Agreement, the
Purchaser agrees that he will not transfer, sell, assign, pledge, hypothecate or
otherwise  dispose  of  any  shares  of the Stock at any time prior to the fifth
anniversary  of  the  Vesting Reference Date.  No transfer of any such shares in
violation  hereof  shall be made or recorded on the books of the Company and any
such  transfer  shall  be  void  and  of  no  effect.

4)     -Right  of First Refusal.  At any time after the fifth anniversary of the
        ------------------------
Vesting  Reference  Date,  if the Purchaser receives an Offer (as defined below)
which  the  Purchaser wishes to accept, then the Purchaser shall cause the Offer
to  be reduced to writing and shall notify the Company in writing of his wish to
accept  the Offer.  The Purchaser's notice shall contain an irrevocable offer to
sell  such  shares  of Stock to the Company (in the manner set forth below) at a
purchase  price  equal  to  the  price  contained  in, and on the same terms and
conditions  of,  the Offer, and shall be accompanied by a true copy of the Offer
(which  shall identify the third party who has made the Offer (the "Offeror") or
other  proposed  method  of  disposition).  At any time within 30 days after the
date  of the receipt by the Company of the Purchaser's notice, the Company shall
have  the  right  and  option  to  purchase,  or to arrange for a third party to
purchase, all of the shares of Stock covered by the Offer either (i) at the same
price  and  on  the  same terms and conditions as the Offer or (ii) if the Offer
includes  any  consideration  other  than  cash,  then at the sole option of the
Company,  at  the  equivalent all cash price, determined in good faith by a duly
authorized  compensation  committee  of, or representing, the Company's Board of
Directors  (the  "Compensation Committee"), by delivering a certified bank check
or  checks in the appropriate amount to the Purchaser at the principal office of
the  Company  against delivery of certificates or other instruments representing
the  shares  of the Stock so purchased, appropriately endorsed by the Purchaser.
If  at  the end of such 30 day period, the Company has not tendered the purchase
price  for  such  shares in the manner set forth above, the Purchaser may during
the  succeeding  30  day  period  sell  not less than all of the shares of Stock
covered  by  the Offer to the Offeror or in the manner of disposition identified
at  the  time  the  Offer  is delivered to the Company, as the case may be, at a
price  and  on  terms no less favorable to the Purchaser than those contained in
the  Offer.  Promptly after such sale, the Purchaser shall notify the Company of
the  consummation  thereof and shall furnish such evidence of the completion and
time  of  completion  of such sale and of the terms thereof as may reasonably be
requested by the Company.  If, at the end of 30 days following the expiration of
the  30  day period for the Company to purchase the Stock, the Purchaser has not
completed  the  sale  of  such  shares  of  the  Stock  as  aforesaid,  all  the
restrictions  on  sale, transfer or assignment contained in this Agreement shall
again  be  in  effect  with  respect  to  such  shares  of  the  Stock.

     For  purposes  of  this  Agreement, "Offer" shall mean a bona fide offer to
                                          -----
purchase any or all of the Purchaser's shares of Stock received by the Purchaser
from  an  Offeror,  and  shall include, without limitation, any proposed sale of
shares  of Stock by the Purchaser pursuant to a registration statement under the
Act and any applicable state securities law or under an available exemption from
registration  under  the  Act,  including  Rule  144 under the Act if it is then
available,  and  any  applicable  state  securities law; provided, that the term
                                                         --------
Offer  shall  not  include any proposed sale of shares pursuant to said Rule 144
(subject  to  such  rule  being available) after a Public Offering has occurred.

5)     -Purchaser's  Resale  of  Stock and Options to the Company Upon a Special
        ------------------------------------------------------------------------
Treatment  Event.  (a)  Except  as otherwise provided herein, if, on or prior to
  --------------
the  fifth  anniversary  of the Vesting Reference Date, (i) (A) the Purchaser is
still  in the employ of the Company or any subsidiary of the Company and (B) the
Purchaser  either  dies  or  becomes  permanently disabled or (ii) the Purchaser
retires  from  the Company or any of its subsidiaries at age 65 or over (or such
other  age  as  may be approved by the Compensation Committee) after having been
employed  by  the  Company  or  any of its subsidiaries for at least three years
after  the Vesting Reference Date (any event referred to in clause (i) or clause
(ii)  being  referred  to  herein  as  a  "Special  Treatment  Event"), then the
                                           -------------------------
Purchaser,  the  Purchaser's  Estate or a Purchaser's Trust, as the case may be,
shall  have  the  right,  for six months following the date of the occurrence of
such  Special Treatment Event, to (x) sell to the Company, and the Company shall
be  required  to  purchase, on one occasion, all or any portion of the shares of
Stock  then held by the Purchaser, the Purchaser's Estate and/or the Purchaser's
Trust,  as  the  case  may  be,  at  the  Special Treatment Repurchase Price, as
determined  in  accordance with Section 7, and (y) require the Company to pay to
the  Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the case may
be,  an  additional  amount  equal to the Option Excess Price, determined on the
basis  of  the Special Treatment Repurchase Price as provided in Section 8, with
respect  to  the  termination  of outstanding Options held by the Purchaser.  No
fewer  than  10  business  days  prior  to  the last day of the six month period
following  the  occurrence  of  a  Special  Treatment  Event, the Purchaser, the
Purchaser's  Estate and/or the Purchaser's Trust, as the case may be, shall send
written  notice  to  the Company of its intention to sell shares of Stock and to
terminate  such Options in exchange for the payment referred to in the preceding
sentence  (the  "Redemption  Notice").
                 ------------------

     For  purposes  of  this  Agreement, the Purchaser shall be deemed to have a
"permanent  disability"  if  the Purchaser is unable to engage in the activities
   -------------------
required  by  the Purchaser's job by reason of any medically determined physical
or  mental  impairment  which  can  be  expected to result in death or which has
lasted  or  can  be expected to last for a continuous period of not less than 12
months.

a)     The  completion  of  the purchase provided for in Section 5(a) shall take
place at the principal office of the Company on the tenth business day after the
giving of the Redemption Notice.  The Special Treatment Repurchase Price and any
payment with respect to the Options as described above shall be paid by delivery
to  the  Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the case
may be, of a certified bank check or checks in the appropriate amount payable to
the  order of the Purchaser, the Purchaser's Estate or the Purchaser's Trust, as
the  case  may  be,  against  delivery  of  certificates  or  other  instruments
representing  the  Stock  so  purchased and appropriate documents cancelling the
Options  so  terminated appropriately endorsed or executed by the Purchaser, the
Purchaser's  Estate  or  the  Purchaser's  Trust,  or his or its duly authorized
representative.

b)     Notwithstanding  anything  in  Section  5(a)  or 5(b) to the contrary and
subject  to  Section  11,  (i) if there exists and is continuing a default or an
event  of  default  on  the part of the Company or any subsidiary of the Company
under  any  loan,  guarantee  or  other agreement under which the Company or any
subsidiary  of the Company has borrowed money or such repurchase would result in
a default or an event of default on the part of the Company or any subsidiary of
the  Company  under  any  such  agreement  or  (ii) if a repurchase would not be
permitted  under  Section  170  of  the  General Corporation Law of the State of
Delaware  or would otherwise violate the General Corporation Law of the State of
Delaware  (each such occurrence referred to in clause (i) or (ii) above being an
"Event"), then the Company shall not be obligated to repurchase any of the Stock
 -----
or  the  Options  from  the Purchaser, the Purchaser's Estate or the Purchaser's
Trust,  as  the  case  may be, until the first business day which is 10 calendar
days  after  all  of  the foregoing Events have ceased to exist (the "Repurchase
                                                                      ----------
Eligibility  Date");  provided,  however, that (A) the number of shares of Stock
   --------------     --------   -------
subject  to repurchase under this Section 5(c) shall be that number of shares of
Stock, and (B) the number of Exercisable Option Shares (as defined in Section 8)
for  purposes  of calculating the Option Excess Price payable under this Section
5(c)  shall  be that number of Exercisable Option Shares, held by the Purchaser,
the  Purchaser's  Estate or a Purchaser's Trust, as the case may be, at the time
of  delivery  of  a  Redemption  Notice  in accordance with Section 5(a) hereof;
provided,  further,  that the Repurchase Calculation Date shall be determined in
     ---   -------
accordance  with  Section  7  as  of the Repurchase Eligibility Date (unless the
Special  Treatment  Repurchase  Price  would  be  greater  if  the  Repurchase
Calculation Date had been determined as if no Event had occurred, in which case,
solely  for  purposes  of this proviso, the Repurchase Calculation Date shall be
determined as if no Event had occurred).  All Options exercisable as of the date
of  a  Redemption  Notice  shall continue to be exercisable until the repurchase
pursuant  to  such  Redemption  Notice.

c)     Notwithstanding any other provision of this Section 5 to the contrary and
subject  to Section 11, the Purchaser, the Purchaser's Estate or the Purchaser's
Trust,  as  the  case  may  be,  shall have the right to withdraw any Redemption
Notice  which  has  been  pending  for  60  or  more days and which has remained
unsatisfied  because  of  the  provisions  of  Section  5(c).

6.     The  Company's Option to Repurchase Stock and Options of Purchaser.  (a)
       ------------------------------------------------------------------
If,  on or prior to the fifth anniversary of the Vesting Reference Date, (i) the
Purchaser's  active  employment  with  the  Company  (and/or, if applicable, its
subsidiaries)  is  voluntarily  or  involuntarily  terminated  for  any  reason
whatsoever, with or without cause, (ii) the beneficiaries of a Purchaser's Trust
shall  include  any person or entity other than the Purchaser, his spouse or his
lineal descendants, or (iii) the Purchaser shall effect a transfer of any of the
Stock  other  than as permitted in this Agreement (any of the foregoing, a "Call
                                                                            ----
Event"),  then  the  Company  shall have the right to purchase all, but not less
 ----
than all, of the shares of the Stock then held by the Purchaser or a Purchaser's
 --
Trust at the Ordinary Repurchase Price, as determined in accordance with Section
7;  provided,  however,  that  if  the  termination of employment results from a
    --------   -------
Special  Treatment Event, then, notwithstanding the foregoing, the Company shall
   --
have  the  right  to  purchase  all, but not less than all, of the shares of the
Stock then held by the Purchaser or a Purchaser's Trust but the Repurchase Price
(as  defined in Section 7) shall be the Special Treatment Repurchase Price.  The
Company shall have a period of 75 days from the date of a Call Event in which to
give  notice in writing to the Purchaser of the exercise of such election ("Call
                                                                            ----
Notice").  In  the  event  that  the  Company  exercises its right to repurchase
------
shares  of  the  Stock pursuant to this Section 6 and the Purchaser's employment
has  not  been  terminated  by  the  Company  For  Cause  (as  defined  in  the
Non-Qualified  Stock  Option  Agreement) or by the Purchaser without Good Reason
(as defined in the Non-Qualified Stock Option Agreement), then the Company shall
also  pay the Purchaser an amount equal to the Option Excess Price determined on
the  basis  of the Ordinary Repurchase Price or the Special Treatment Repurchase
Price,  as  the  case  may  be,  as  provided  in Section 8, with respect to the
termination  of  outstanding  Options  held  by  the  Purchaser.

a)     The  completion of any purchase pursuant to Section 6(a) shall take place
at  the  principal  office  of  the  Company on the tenth business day after the
giving  of  the  Call  Notice.  The  Ordinary  Repurchase  Price  or the Special
Treatment  Repurchase Price, as the case may be, and any payment with respect to
the  Options  as described above shall be paid by delivery to the Purchaser of a
certified bank check or checks in the appropriate amount payable to the order of
the Purchaser against delivery of certificates or other instruments representing
the  Stock  so  purchased  and  appropriate  documents cancelling the Options so
terminated,  appropriately  endorsed  or  executed  by  the  Purchaser  or  the
Purchaser's  Trust,  or  his  or  its  authorized  representative.

b)     Notwithstanding any other provision of this Section 6 to the contrary and
subject  to  Section  11,  if there exists and is continuing any Event, then the
Company  shall delay the repurchase of any of the Stock or the Options (pursuant
to  a  Call Notice timely given in accordance with Section 6(a) hereof) from the
Purchaser,  the Purchaser's Estate or the Purchaser's Trust, as the case may be,
until the Repurchase Eligibility Date; provided, however, that (i) the number of
                                       --------  -------
shares  of  Stock  subject  to  repurchase under this Section 6(c) shall be that
number  of shares of Stock, and (ii) the number of Exercisable Option Shares for
purposes  of calculating the Option Excess Price payable under this Section 6(c)
shall  be  that  number of Exercisable Option Shares, held by the Purchaser, the
Purchaser's  Estate  or  a Purchaser's Trust, as the case may be, at the time of
delivery  of  a  Call  Notice  in accordance with Section 6(a) hereof; provided,
                                                                       --------
further,  that the Repurchase Calculation Date shall be determined in accordance
with  Section  7 based on the Repurchase Eligibility Date (unless the applicable
Repurchase  Price  would  be greater if the Repurchase Calculation Date had been
determined  as  if  no Event had occurred, in which case, solely for purposes of
this proviso, the Repurchase Calculation Date shall be determined as if no Event
had  occurred),  and  provided, further, that if the Repurchase Eligibility Date
                      --------  -------
has  not occurred within 10 months of the date of the Call Notice, then the Call
Notice  shall  expire.  All  Options exercisable as of the date of a Call Notice
shall  continue  to  be  exercisable  until the repurchase pursuant to such Call
Notice.

7.     -Determination  of  Repurchase  Price.  (a)  The  Special  Treatment
        ------------------------------------
Repurchase  Price and the Ordinary Repurchase Price are hereinafter collectively
referred to as the "Repurchase Price."  The Repurchase Price shall be calculated
                    ----------------
on  the basis of the unaudited financial statements of the Company or the Market
Price  Per  Share  (as  defined in Section 7(f)) as of the last day of the month
preceding  the  later  of  (i)  the  month in which the event giving rise to the
repurchase  occurs  and  (ii) the month in which the Repurchase Eligibility Date
occurs (hereinafter called the "Repurchase Calculation Date").  The event giving
                                ---------------------------
rise  to  the repurchase shall be the death, permanent disability, retirement or
termination  of  employment,  as  the case may be, of the Purchaser, and not the
giving  of  any  notice  required  pursuant  to  Section  5  or  6.

a)(i)     Prior  to  a Public Offering (as defined in Section 7(e)), the Special
Treatment  Repurchase Price shall be a per share Repurchase Price equal to $7.50
(the  "Original  Per  Share Price") plus the amount, if any, by which the sum of
       --------------------------   ----
the  Modified Book Value Per Share (as defined in Section 7(d)) plus $2.17 as of
the  Repurchase  Calculation  Date  exceeds  the  Original  Per  Share  Price.

a)(ii)     After a Public Offering, the Special Treatment Repurchase Price shall
be  a  per share Repurchase Price equal to the Original Per Share Price plus the
                                                                        ----
amount,  if  any,  by  which  the  Market  Price  Per Share as of the Repurchase
Calculation  Date  exceeds  the  Original  Per  Share  Price.

a)(iii)     Prior to a Public Offering, the Ordinary Repurchase Price shall be a
per  share  Repurchase  Price  equal  to  the  lesser  of:

A.     the  sum  of  the  Modified  Book  Value  Per  Share  plus  $2.17;  and

B.     the  Original  Per Share Price plus (x) the Percentage (as defined below)
multiplied  by  (y)  the  amount,  if any, by which the sum of the Modified Book
Value  Per  Share  plus  $2.17 as of the Repurchase Calculation Date exceeds the
Original  Per  Share  Price.

a)(iv)     After a Public Offering, the Ordinary Repurchase Price shall be a per
share  Repurchase  Price  equal  to  the  lesser  of:

A.     the  Market  Price  Per  Share;  and

B.     the  Original  Per  Share Price plus (x) the Percentage multiplied by (y)
the  amount,  if  any,  by which the Market Price Per Share as of the Repurchase
Calculation  Date  exceeds  the  Original  Per  Share  Price.

     The  "Percentage"  shall  be  determined  as  follows:
           ----------

Repurchase Calculation Date                                Percentage
---------------------------                                 ----------

Vesting  Reference  Date  through  and  including  the  first anniversary of the
Vesting Reference Date                                          0%

After  the first anniversary of the Vesting Reference Date through and including
the second anniversary of the Vesting Reference Date           20%

After the second anniversary of the Vesting Reference Date through and including
the third anniversary of the Vesting Reference Date            40%

After  the third anniversary of the Vesting Reference Date through and including
the fourth anniversary of the Vesting Reference Date           60%

After the fourth anniversary of the Vesting Reference Date through and including
the fifth anniversary of the Vesting Reference Date            80%

After the fifth anniversary of the Vesting Reference Date     100%

  b.    For purposes of this Agreement, "Modified Book Value Per Share" shall be
                                          -----------------------------
                                the quotient of:

b)(i)     an  amount equal to (A) $355 million plus (B) the aggregate net income
                                               ----
of the Company attributable to the Common Stock from and after December 31, 1995
(as  decreased  by any net losses from and after the December 31, 1995) plus (C)
                                                                        ----
the  aggregate  dollar amount contributed to the Company after December 31, 1995
as  common  equity  by  the  shareholders of the Company minus (D) the aggregate
                                                         -----
dollar  amount of any dividends paid or stock repurchases made by the Company on
the  Common  Stock  after  December  31,  1995,

divided  by

b)(ii)     the  sum  of  the  number of shares of Common Stock then outstanding;

provided  that, if any outstanding stock options, other rights to acquire Common
--------
Stock,  or  securities  convertible into shares of Common Stock have a per share
exercise  price  less  than  such  quotient  (collectively,  the  "In-the-Money
                                                                   ------------
Options"),  then,  sequentially beginning with the In-the-Money Options with the
lowest  per  share  exercise price and until either (A) all In-the-Money Options
have  been  included  in  such  adjustment  of such quotient or (B) there are no
In-the-Money  Options  with a per share exercise price less than the quotient as
adjusted  that  have  not been included in such adjustment of such quotient, the
numerator  of  such quotient shall be increased by the aggregate exercise prices
of  such  In-the-Money  Options  and  the  denominator of such quotient shall be
increased  by the number of shares of Common Stock issuable upon the exercise of
such  In-the-Money  Options.

The  calculations  set  forth  in  clauses  (i)(B),  (i)(C)  and  (i)(D)  of the
immediately  preceding sentence shall be determined in accordance with generally
accepted  accounting  principles  applied  on  a basis consistent with any prior
periods  as  reflected  in the consolidated financial statements of the Company,
without  giving  effect  to  any adjustments required or permitted by Accounting
Principles  Board  Opinion  Nos.  16  and  17 with respect to assets acquired or
liabilities  assumed  in  the  acquisition  of  the  Company  (except  that  the
determination  of  gains  or  losses  on sales of assets and on foreign currency
translations  shall  be  computed in accordance with Accounting Principles Board
Opinion  Nos.  16  and  17).

c.     For  purposes of this Agreement, "Public Offering" shall mean the sale of
                                         ---------------
shares of Common Stock to the public subsequent to the date hereof pursuant to a
registration  statement  under  the Act which has been declared effective by the
Securities  and Exchange Commission (other than a registration statement on Form
S-8  or any other similar form) which results in an active trading market in the
Common Stock.  A "Qualified Public Offering" shall be deemed to have occurred if
                  -------------------------
there  has  been  a Public Offering and there exists an active trading market in
19%  or  more  of  the  Common  Stock.

d.     For  purposes  of this Agreement, "Market Price Per Share" shall mean the
                                          ----------------------
price  per share equal to the average of the last sale price of the Common Stock
on  the  Repurchase  Calculation Date on each exchange on which the Common Stock
may  at  the time be listed or, if there shall have been no sales on any of such
exchanges on the Repurchase Calculation Date, the average of the closing bid and
asked prices on each such exchange at the end of the Repurchase Calculation Date
or if there is no such bid and asked price on the Repurchase Calculation Date on
the next preceding date when such bid and asked price occurred or, if the Common
Stock  shall  not  be  so  listed,  the  average  of the closing sales prices as
reported  by  Nasdaq  at  the  end  of  the  Repurchase  Calculation Date in the
over-the-counter  market.  If  the  Common Stock is not so listed or reported by
Nasdaq,  then  the  Market  Price Per Share shall be the Modified Book Value Per
Share.

e.     In  determining  the  Repurchase  Price, appropriate adjustments shall be
made  for  any  future issuances of rights to acquire and securities convertible
into  Common  Stock  and  any  stock  dividends,  splits,  combinations,
recapitalizations or any other adjustment in the number of outstanding shares of
Common  Stock.

8.     -Stock Issued to Purchaser Upon Exercise of Stock Options; Termination of
        ------------------------------------------------------------------------
Options.  (a)  The  Company  may  from  time  to time grant to the Purchaser, in
addition  to  the  Options,  options under the Option Plan to purchase shares of
Common  Stock  at the Original Per Share Price or at a different option exercise
price.  For  purposes  of  this  Agreement,  "Stock"  shall mean and include all
                                              -----
Purchase  Stock,  all  shares  of  Common  Stock  issued to the Purchaser by the
Company  upon  exercise of the Options, all shares of Common Stock issued to the
Purchaser  by  the  Company upon exercise of any other stock options held by the
Purchaser  and any other Common Stock otherwise acquired by the Purchaser at any
time  when  this  Agreement  is  in  effect.

a.     All  outstanding Options and other options granted to the Purchaser under
the  Option  Plan or otherwise, whether or not then exercisable, shall terminate
automatically  (i) upon the payment by the Company to the Purchaser, pursuant to
the  provisions  of  Section 5 or 6 of this Agreement, of an amount equal to the
Option  Excess Price, (ii) upon the repurchase of Stock as provided in Section 5
or  6 of this Agreement if the Option Excess Price is zero or a negative number,
or  (iii)  without  payment  in  the  event  of a termination of the Purchaser's
employment  by  the  Company  For Cause or by the Purchaser without Good Reason.

     For  purposes  of  this  Agreement,  "Option  Excess  Price" shall mean the
                                           ---------------------
excess,  if  any,  of  the  Special  Treatment  Repurchase Price or the Ordinary
Repurchase  Price,  depending  on  which  Repurchase  Price  is  being  used  to
repurchase  the remainder of the Stock, over the Option Price (as defined in the
Option  Plan)  multiplied  by  the  number  of  Exercisable  Option  Shares.

     For  purposes of this Agreement, "Exercisable Option Shares" shall mean the
                                       -------------------------
shares  of Common Stock which, at the time of determination of the Option Excess
Price,  could  be  purchased  by  the Purchaser upon exercise of his outstanding
Options  or  other  options.

9.     -The  Representations,  Warranties  and Agreements of the Company and the
        ------------------------------------------------------------------------
Parents.  (a)  The  Company  represents  and  warrants to the Purchaser that (i)
this  Agreement  has been duly authorized, executed and delivered by the Company
and  (ii)  the  Purchase  Stock  is  duly  and  validly  issued,  fully paid and
nonassessable.  The Parents represent and warrant to the Purchaser that (i) this
Agreement  has  been  duly authorized, executed and delivered by the Parents and
(ii)  the  Parents  have  valid  title  to  the  Purchase  Stock.

a.     If  the  Company shall have engaged in a Public Offering, (i) the Company
shall  use  reasonable  efforts  to  register  the  Options  and the Stock to be
acquired  on  exercise  thereof  on  a  Form  S-8  Registration Statement or any
successor  to  Form  S-8  to the extent that such registration is then available
with  respect  to  such  Options  and Stock, (ii) the Company shall use its best
efforts  to  comply  with all state securities or "blue sky" laws which might be
applicable  to  the  sale  of  the  Stock and the issuance of the Options to the
Purchaser and (iii) the Company will file the reports required to be filed by it
under the Act and the Securities Exchange Act of 1934, as amended (the "Exchange
                                                                        --------
Act"),  and  the  rules  and  regulations adopted by the Securities and Exchange
---
Commission  ("SEC")  thereunder,  to  the  extent  required from time to time to
---
enable  the Purchaser to sell shares of Stock without registration under the Act
within the limitations of the exemptions provided by (A) Rule 144 under the Act,
as  such  Rule  may  be  amended  from  time to time, or (B) any similar rule or
regulation  hereafter adopted by the SEC.  Notwithstanding anything contained in
this  Section  9(b), the Company may deregister under Section 12 of the Exchange
Act  if it is then permitted to do so pursuant to the Exchange Act and the rules
and  regulations  thereunder.  Nothing  in  this Section 9(b) shall be deemed to
limit  in  any  manner  the  restrictions  on  sales  of Stock contained in this
Agreement.

10.     "Piggyback" Registration Rights.  (a)  Until the later of (i) the first
        -------------------------------
occurrence  of a Qualified Public Offering and (ii) the fifth anniversary of the
Vesting  Reference  Date,  the Purchaser hereby agrees to be bound by all of the
terms,  conditions  and  obligations  of  a  Registration  Rights Agreement (the
"Registration  Rights  Agreement"),  between the Company and the Parent, and, in
      --------------------------
the case of a Qualified Public Offering and subject to the limitations set forth
in  this  Section  10,  shall  have  all  of  the  rights  and privileges of the
Registration Rights Agreement, in each case as if the Purchaser were an original
party  (other  than  the Company) thereto; provided, however, that the Purchaser
                                           --------  -------
shall  not  have  any  rights  to  request  registration  under Section 3 of the
Registration  Rights  Agreement; and provided, further, that the Purchaser shall
                                     --------  -------
not  be  bound by any amendments to the Registration Rights Agreement unless the
Purchaser  consents thereto.  Notwithstanding anything to the contrary contained
in  the  Registration  Rights  Agreement, the Purchaser's rights and obligations
under  the Registration Rights Agreement shall be subject to the limitations and
additional  obligations  set  forth  in  this  Section  10.  All shares of Stock
purchased by the Purchaser pursuant to this Agreement and held by the Purchaser,
the  Purchaser's  Estate or a Purchaser's Trust, including shares purchased upon
the  exercise  of  Options,  shall  be  deemed  to be Registrable Securities (as
defined  in  the  Registration  Rights  Agreement).

a.     The Company will promptly notify the Purchaser in writing (a "Notice") of
                                                                     ------
any  proposed  registration  (a  "Proposed  Registration")  in connection with a
                                  ----------------------
Qualified Public Offering.  If within 15 days of the receipt by the Purchaser of
such  Notice, the Company receives from the Purchaser, the Purchaser's Estate or
the  Purchaser's  Trust  a  written  request (a "Request") to register shares of
                                                 -------
Stock  held  by  the  Purchaser, the Purchaser's Estate or the Purchaser's Trust
(which  Request  will  be  irrevocable  unless  otherwise  mutually agreed to in
writing by the Purchaser and the Company), shares of Stock will be so registered
as  provided  in  this  Section  10;  provided,  however,  that  for  each  such
                                      --------   -------
registration  statement  only  one  Request,  which  shall  be  executed  by the
Purchaser,  the Purchaser's Estate or the Purchaser's Trust, as the case may be,
may  be  submitted  for  all  Registrable  Securities held by the Purchaser, the
Purchaser's  Estate  and  the  Purchaser's  Trust.

b.     The  maximum  number of shares of Stock which will be registered pursuant
to  a  Request  will be the lowest of (i) the number of shares of Stock equal to
the sum of (x) the product of (A) the number of shares of Common Stock then held
by the Purchaser multiplied by (B) the Percentage, plus (y) all shares of Common
                 -------------                     ----
Stock  which  the  purchaser  is  then  entitled to acquire under an unexercised
Option  to  the  extent  then exercisable, (ii) the product of (A) the number of
shares  of Common Stock calculated under clause (i) above, multiplied by (B) the
                                                           -------------
quotient  of (x) the number of shares of Stock then proposed to be registered in
such  Proposed  Registration by the Parent, if any, divided by (y) the number of
                                                    ----------
shares of Stock then held by the Parent, including all shares of Stock which the
Parent  is  then  entitled to acquire upon conversion, exercise or exchange of a
security  that  is  convertible into, or exercisable or exchangeable for, Stock,
(iii)  the  maximum  number of shares of Stock which the Company can register in
the  Proposed Registration without adverse effect on the offering in the view of
the  managing  underwriters  (reduced pro rata with all Other Purchasers as more
fully  described  in  Section 10(d)) and (iv) the maximum number of shares which
the  Purchaser  (pro  rata  based  upon the aggregate number of shares of Common
Stock  the  Purchaser and all Other Purchasers have requested be registered) and
all  Other  Purchasers  are  permitted to register under the Registration Rights
Agreement.

c.     If  a  Proposed  Registration  involves  an underwritten offering and the
managing  underwriter  advises  the Company in writing that, in its opinion, the
number  of  shares  of  Common  Stock  requested  to be included in the Proposed
Registration  exceeds the number which can be sold in such offering, so as to be
likely  to  have  an  adverse effect on the price, timing or distribution of the
shares offered in such Qualified Public Offering as contemplated by the Company,
then  the  Company  will include in the Proposed Registration (i) first, 100% of
the  shares proposed to be sold by the Company and (ii) second, to the extent of
the number of shares requested to be included in such registration which, in the
opinion  of  such  managing  underwriter, can be sold without having the adverse
effect  referred to above, the number of shares which the Holders (as defined in
the Registration Rights Agreement), including, without limitation, the Purchaser
and  Other  Purchasers,  have  requested  to  be  included  in  the  Proposed
Registration,  such amount to be allocated pro rata among all requesting Holders
on  the  basis  of  the  relative number of shares then held by each such Holder
(provided  that any shares thereby allocated to any such Holder that exceed such
    -----
Holder's  request  will be reallocated among the remaining requesting Holders in
like  manner).

d.     Upon  delivering  a  Request  the  Purchaser  will,  if  requested by the
Company,  execute  and deliver a custody agreement and power of attorney in form
and substance satisfactory to the Company with respect to the shares of Stock to
be  registered  pursuant  to  this Section 10 (a "Custody Agreement and Power of
                                                  ------------------------------
Attorney").  The  Custody  Agreement  and  Power of Attorney will provide, among
   -----
other things, that the Purchaser will deliver to and deposit in custody with the
custodian  and  attorney-in-fact  named  therein  a  certificate or certificates
representing  such  shares  of  Stock  (duly endorsed in blank by the registered
owner  or  owners thereof or accompanied by duly executed stock powers in blank)
and  irrevocably  appoint said custodian and attorney-in-fact as the Purchaser's
agent  and  attorney-in-fact  with  full  power  and  authority to act under the
Custody  Agreement  and Power of Attorney on the Purchaser's behalf with respect
to  the  matters  specified  therein.

e.     If  a  Proposed  Registration  involves  an underwritten offering and the
Parent  enters  into lockup agreements pursuant to the terms of the underwriting
agreement,  then  the Purchaser, if such Purchaser exercises registration rights
pursuant  to  this  Section  10,  shall  enter  into  a  lockup  agreement  on
substantially  similar  terms  and  conditions.

f.     The  Purchaser  agrees  that he will execute such other agreements as the
Company  may  reasonably  request  to  further  evidence  the provisions of this
Section  10.

11.     Pro  Rata  Repurchases.  Notwithstanding  anything  to  the  contrary
        ----------------------
contained in Section 5, 6 or 7, if at any time consummation of all purchases and
payments  to  be  made  by  the Company pursuant to this Agreement and the Other
Purchasers'  Agreements  would  result  in an Event, then the Company shall make
purchases from, and payments to, the Purchaser and Other Purchasers pro rata (on
the  basis  of the proportion of the number of shares of Stock and the number of
Options  each  such  Purchaser  and  all  Other  Purchasers  have elected or are
required  to  sell to the Company) for the maximum number of shares of Stock and
shall  pay  the  Option Excess Price for the maximum number of Options permitted
without resulting in an Event (the "Maximum Repurchase Amount").  The provisions
                                    -------------------------
of  Section  5(c)  and  6(c)  shall  apply  in  their  entirety  to payments and
repurchases  with  respect  to Options and shares of Stock which may not be made
due  to  the  limits imposed by the Maximum Repurchase Amount under this Section
11.  Until  all  of  such  Stock  and  Options are purchased and paid for by the
Company,  the Purchaser and the Other Purchasers whose Stock and Options are not
purchased  in accordance with this Section 11 shall have priority, on a pro rata
basis,  over other purchases of Common Stock and Options by the Company pursuant
to  this  Agreement  and  Other  Purchasers'  Agreements.

12.     Rights  to Negotiate Repurchase Price.  Nothing in this Agreement shall
        -------------------------------------
be deemed to restrict or prohibit the Company from purchasing shares of Stock or
Options from the Purchaser, at any time, upon such terms and conditions, and for
such  price,  as may be mutually agreed upon between the Parties, whether or not
at  the  time  of such purchase circumstances exist which specifically grant the
Company  the  right  to  purchase, or the Purchaser the right to sell, shares of
Stock  or  the  Company  has the right to pay, or the Purchaser has the right to
receive,  the  Option  Excess  Price  under  the  terms  of  this  Agreement.

13.     Covenant Regarding 83(b) Election.  Except as the Company may otherwise
        ---------------------------------
agree in writing, the Purchaser hereby covenants and agrees that he will make an
election  provided  pursuant  to  Treasury Regulation 1.83-2 with respect to the
Stock,  including,  without  limitation,  the  Stock  to be acquired pursuant to
Section  1  and  the  Stock to be acquired upon each exercise of the Purchaser's
Options;  and  Purchaser  further  covenants and agrees that he will furnish the
Company  with copies of the forms of election the Purchaser files within 30 days
after  the  date  hereof,  and within 30 days after each exercise of Purchaser's
Options  and  with  evidence  that each such election has been filed in a timely
manner.

14.     Notice  of Change of Beneficiary.  Immediately prior to any transfer of
        --------------------------------
Stock  to  a  Purchaser's  Trust, the Purchaser shall provide the Company with a
copy  of the instruments creating the Purchaser's Trust and with the identity of
the  beneficiaries  of  the  Purchaser's  Trust.  The Purchaser shall notify the
Company  immediately  prior  to any change in the identity of any beneficiary of
the  Purchaser's  Trust.

15.     Expiration of Certain Provisions.  The provisions contained in Sections
        --------------------------------
4,  5  and  6  of  this Agreement and the portion of any other provision of this
Agreement  which  incorporates  the  provisions  of  Sections  4, 5 and 6, shall
terminate  and  be  of  no further force or effect with respect to any shares of
Stock  sold by the Purchaser (i) pursuant to an effective registration statement
filed by the Company pursuant to Section 10 hereof or (ii) pursuant to the terms
of the Sale Participation Agreement of even date herewith, between the Purchaser
and  the  Parent.

          The  provisions  contained  in Section 2(e), 3, 4, 5, 6 and 13 of this
Agreement,  and  the  portion  of  any  other provisions of this Agreement which
incorporate  the  provisions  of  such  Sections,  shall  terminate and be of no
further  force  or  effect  upon  the  consummation of a merger, reorganization,
business combination or liquidation of the Company, a sale of Common Stock owned
by  the  Parent  or  other transaction, but only if such merger, reorganization,
business  combination,  liquidation,  sale  of Common Stock or other transaction
results  in  KKR  Associates,  a  New  York  limited  partnership, Parent or any
affiliate  of either of them, no longer having the power (i) to elect a majority
of  the  Board  of  Directors  of  the  Company  or such other corporation which
succeeds  to  the  Company's  rights  and  obligations  pursuant to such merger,
reorganization,  business combination, liquidation or stock sale, or (ii) if the
resulting  entity  of  such  merger,  reorganization,  business  combination,
liquidation or stock sale is not a corporation, to select the general partner(s)
or  other  persons  or  entities  controlling the operations and business of the
resulting  entity  (a  "Change  of  Control").

16.     Recapitalizations,  etc.  The  provisions of this Agreement shall apply,
        ------------------------
to the full extent set forth herein with respect to the Stock or the Options, to
any  and  all  shares  of  capital  stock  of  the Company or any capital stock,
partnership  units  or  any other security evidencing ownership interests in any
successor  or  assign  of the Company (whether by merger, consolidation, sale of
assets  or  otherwise)  which  may  be issued in respect of, in exchange for, or
substitution  of,  the  Stock  or  the Options, by reason of any stock dividend,
split,  reverse  split,  combination,  recapitalization,  liquidation,
reclassification,  merger,  consolidation  or  otherwise.

17.     Purchaser's  Employment  by  the  Company.  Nothing  contained  in this
        -----------------------------------------
Agreement  or  in  any  other  agreement  entered  into  by  the Company and the
Purchaser  contemporaneously  with the execution of this Agreement (i) obligates
the  Company  or  any  subsidiary  of the Company to employ the Purchaser in any
capacity  whatsoever  or  (ii)  prohibits  or restricts the Company (or any such
subsidiary)  from  terminating  the  employment, if any, of the Purchaser at any
time  or  for  any  reason  whatsoever, with or without cause, and the Purchaser
hereby acknowledges and agrees that, except as may otherwise be specifically set
forth  in a written agreement or written arrangement with Purchaser, neither the
Company nor any other person has made any representations or promises whatsoever
to  the  Purchaser concerning the Purchaser's employment or continued employment
by  the  Company.

18.     Binding Effect.  The provisions of this Agreement shall be binding upon
        --------------
and  accrue  to  the  benefit  of  the Parties and their respective heirs, legal
representatives,  successors and assigns.  In the case of a transferee permitted
under  Section  2(a)  hereof,  such  transferee  shall  be  deemed the Purchaser
hereunder; provided, however, that no transferee (including, without limitation,
           --------  -------
transferees  referred  to  in Section 2(a) hereof) shall derive any rights under
this  Agreement  unless and until such transferee has delivered to the Company a
valid  undertaking  and  becomes  bound  by  the  terms  of  this  Agreement.

19.     Amendment.  This  Agreement may be amended only by a written instrument
        ---------
signed  by  the  Parties  hereto.

20.     Closing.  Except  as  otherwise  provided  herein,  the closing of each
        -------
purchase and sale of shares of Stock and the payment of the Option Excess Price,
if  any,  pursuant to this Agreement shall take place at the principal office of
the Company on the tenth business day following delivery of the notice by either
Party  to  the other of its exercise of the right to purchase or sell such Stock
hereunder  or  to  cause  the  payment  of  the  Option  Excess  Price,  if any.

21.     APPLICABLE  LAW;  CONSENT  TO  JURISDICTION;  WAIVERS.  THE LAWS OF THE
        -----------------------------------------------------
STATE  OF  DELAWARE SHALL GOVERN THE INTERPRETATION, VALIDITY AND PERFORMANCE OF
THE  TERMS  OF THIS AGREEMENT, REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER
PRINCIPLES  OF  CONFLICTS  OF  LAW.  ANY  SUIT, ACTION OR PROCEEDING AGAINST THE
PURCHASER  WITH  RESPECT TO THIS AGREEMENT, OR ANY JUDGMENT ENTERED BY ANY COURT
IN RESPECT OF ANY THEREOF, MAY BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION
IN  THE  STATE  OF  DELAWARE  OR  NEW YORK, AS THE COMPANY MAY ELECT IN ITS SOLE
DISCRETION,  AND  THE PURCHASER HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION
OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH SUIT, ACTION, PROCEEDING OR JUDGMENT.
BY  THE  EXECUTION  AND  DELIVERY  OF  THIS  AGREEMENT,  THE  PURCHASER APPOINTS
CORPORATION SERVICES COMPANY, AT ITS OFFICE IN WILMINGTON, DELAWARE OR NEW YORK,
NEW  YORK,  AS THE CASE MAY BE, AS HIS AGENT UPON WHICH PROCESS MAY BE SERVED IN
ANY  SUCH  SUIT,  ACTION  OR  PROCEEDING.  SERVICE  OF  PROCESS UPON SUCH AGENT,
TOGETHER  WITH  NOTICE  OF  SUCH  SERVICE  GIVEN  TO THE PURCHASER IN THE MANNER
PROVIDED  IN  SECTION  24, SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON HIM IN ANY SUIT, ACTION OR PROCEEDING.  NOTHING HEREIN SHALL IN ANY
WAY  BE  DEEMED  TO  LIMIT  THE  ABILITY OF THE COMPANY TO SERVE ANY SUCH WRITS,
PROCESS  OR  SUMMONSES  IN  ANY  OTHER  MANNER PERMITTED BY APPLICABLE LAW OR TO
OBTAIN  JURISDICTION OVER THE PURCHASER, IN SUCH OTHER JURISDICTIONS AND IN SUCH
MANNER, AS MAY BE PERMITTED BY APPLICABLE LAW.  THE PURCHASER HEREBY IRREVOCABLY
WAIVES  ANY  OBJECTIONS  WHICH HE MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE  OF  ANY  SUIT,  ACTION  OR  PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT  BROUGHT  IN  ANY  COURT  OF  COMPETENT  JURISDICTION  IN THE STATE OF
DELAWARE  OR  NEW YORK, AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY
SUCH  SUIT,  ACTION  OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
ANY  INCONVENIENT FORUM.  NO SUIT, ACTION OR PROCEEDING AGAINST THE COMPANY WITH
RESPECT  TO  THIS AGREEMENT MAY BE BROUGHT IN ANY COURT, DOMESTIC OR FOREIGN, OR
BEFORE  ANY  SIMILAR  DOMESTIC  OR  FOREIGN  AUTHORITY  OTHER THAN IN A COURT OF
COMPETENT  JURISDICTION  IN THE STATE OF DELAWARE OR NEW YORK, AND THE PURCHASER
HEREBY  IRREVOCABLY  WAIVES  ANY  RIGHT WHICH HE MAY OTHERWISE HAVE HAD TO BRING
SUCH  AN  ACTION  IN ANY OTHER COURT, DOMESTIC OR FOREIGN, OR BEFORE ANY SIMILAR
DOMESTIC  OR  FOREIGN AUTHORITY.  THE COMPANY HEREBY SUBMITS TO THE JURISDICTION
OF  SUCH  COURTS  FOR  THE  PURPOSE  OF  ANY  SUCH  SUIT,  ACTION OR PROCEEDING.

22.     Assignability  of Certain Rights by the Company.  The Company shall have
        -----------------------------------------------
the  right  to assign any or all of its rights or obligations to purchase shares
of  Stock  pursuant  to Sections 4, 5 and 6; provided, however, that the Company
                                             --------  -------
shall  remain  obligated  to  perform  its  obligations  notwithstanding  such
assignment  in  the event that such assignee fails to perform the obligations so
assigned  to  it.

23.     Miscellaneous.  In  this  Agreement  (i) all references to "dollars" or
        -------------
"$"  are  to  United States dollars and (ii) the word "or" is not exclusive.  If
any provision of this Agreement shall be declared illegal, void or unenforceable
by  any  court  of  competent  jurisdiction,  the  other provisions shall not be
affected,  but  shall  remain  in  full  force  and  effect.

24.     Notices.  All notices and other communications provided for herein shall
        -------
be  in  writing and shall be deemed to have been duly given if delivered by hand
(whether  by  overnight courier or otherwise) or sent by registered or certified
mail,  return  receipt  requested,  postage  prepaid, to the Party to whom it is
directed:

a.     If  to  the  Company,  to  it  at  the  following  address:

          Borden  Chemical  Holdings,  Inc.
          180  East  Broad  Street
          Columbus,  Ohio  43215
          Attention:  Chief  Executive  Officer

     with  copies  to:

          Kohlberg  Kravis  Roberts  &  Co.
          9  West  57th  Street
          New  York,  New  York  10019
          Attn:  Clifton  Robbins  and  Scott  Stuart

                                      -and-

          Simpson  Thacher  &  Bartlett
          425  Lexington  Avenue
          New  York,  New  York  10017
          Attn:  David  J.  Sorkin,  Esq.

b.     If  to  the  Purchaser,  to  him at the address set forth below under his
signature;

or  at  such  other  address  as  either party shall have specified by notice in
writing  to  the  other.

25.     Covenant  Not  to  Compete;  Confidential  Information.  (a)  In
        ------------------------------------------------------
consideration  of  the  Company entering into this Agreement with the Purchaser,
the  Purchaser  hereby agrees effective as of the Vesting Reference Date, for so
long  as the Purchaser is employed by the Company or one of its subsidiaries and
for  a  period  of  one  year  thereafter  (the  "Noncompete  Period"), that the
                                                  ------------------
Purchaser  shall  not, directly or indirectly, engage in the production, sale or
distribution  of any product produced, sold or distributed by the Company or its
subsidiaries  on the date hereof or during the Noncompete Period anywhere in the
world  in  which  the  Company  or its subsidiaries is doing business other than
through  the Purchaser's employment with the Company or any of its subsidiaries.
At the Company's option, the Noncompete Period may be extended for an additional
one  year period if (i) within nine months of the termination of the Purchaser's
employment,  the  Company  gives the Purchaser notice of such extension and (ii)
beginning  with  the first anniversary of such termination, the Company pays the
Purchaser  an  amount  equal  to  the Purchaser's base salary on the date of the
termination  of  his employment.  Such amount shall be paid in installments in a
manner  consistent with the then current salary payment policies of the Company.
For  purposes  of  this Agreement, the phrase "directly or indirectly engage in"
                                               --------------------------------
shall  include any direct or indirect ownership or profit participation interest
in such enterprise, whether as an owner, stockholder, partner, joint venturer of
otherwise,  and  shall  include  any  direct  or  indirect participation in such
enterprise  as  a  consultant,  licensor  of  technology  or  otherwise.

a.     The  Purchaser will not disclose or use at any time during the Noncompete
Period  (as  such  period  may  be  extended  pursuant  to  Section  25(a)), any
Confidential Information (as defined below) of which the Purchaser is or becomes
aware, whether or not such information is developed by him, except to the extent
that  such  disclosure  or  use  is  directly  related  to  and  required by the
Purchaser's  performance  of  duties,  if  any, assigned to the Purchaser by the
Company.  As  used  in this Agreement, the term "Confidential Information" means
                                                 ------------------------
information  that  is  not  generally  known  to  the  public  and that is used,
developed  or obtained by the Company or its subsidiaries in connection with its
business,  including  but  not  limited  to (i) products or services, (ii) fees,
costs  and  pricing structures, (iii) designs, (iv) computer software, including
operating  systems,  applications and program listings, (v) flow charts, manuals
and  documentation,  (vi)  data  bases,  (vii)  accounting and business methods,
(viii)  inventions,  devices,  new  developments, methods and processes, whether
patentable  or  unpatentable  and  whether  or  not  reduced  to  practice, (ix)
customers  and  clients  and  customer  or client lists, (x) other copyrightable
works,  (xi) all technology and trade secrets, and (xii) all similar and related
information  in  whatever  form.  Confidential  Information will not include any
information  that has been published in a form generally available to the public
prior  to  the  date the Purchaser proposes to disclose or use such information.
The  Purchaser  acknowledges  and agrees that all copyrights, works, inventions,
innovations,  improvements, developments, patents, trademarks and all similar or
related  information  which  relate to the actual or anticipated business of the
Company  and  its  subsidiaries  (including  its  predecessors)  and  conceived,
developed  or  made  by  the  Purchaser  while  employed  by  the Company or its
subsidiaries  belong  to  the  Company.  The  Purchaser will perform all actions
reasonably  requested  by  the  Company  (whether during or after the Noncompete
Period)  to  establish  and  confirm  such  ownership  at  the Company's expense
(including,  without  limitation,  assignments, consents, powers of attorney and
other  instruments).

b.     Notwithstanding  Sections  25(a)  and  (b)  above, if at any time a court
holds  that  the  restrictions  stated  in  such  Sections  are  unreasonable or
otherwise  unenforceable  under  circumstances  then existing, the Parties agree
that  the  maximum  period, scope or geographic area determined to be reasonable
under  such  circumstances  by  such  court  will  be substituted for the stated
period,  scope or area.  Because the Purchaser's services are unique and because
the Purchaser has had access to Confidential Information, the Parties agree that
money damages will be an inadequate remedy for any breach of this Agreement.  In
the  event  a  breach or threatened breach of this Agreement, the Company or its
successors  or assigns may, in addition to other rights and remedies existing in
their  favor,  apply  to  any  court  of  competent  jurisdiction  for  specific
performance  and/or  injunctive  relief  in  order  to  enforce,  or prevent any
violations  of,  the  provisions  hereof (without the posting of a bond or other
security).

c.     Notwithstanding the foregoing Sections 25(a), (b) and (c), the provisions
of any employment agreement in effect on the date hereof between the Company and
Purchaser  which  contains covenants relating to confidentiality and competition
shall  supersede  and  replace the provisions of Sections 25(a), (b) and (c) and
shall  be  deemed incorporated by reference in this Agreement in their entirety.

             [The remainder of this page intentionally left blank.]















































































<PAGE>
IN  WITNESS  WHEREOF, the Parties have executed this Agreement as of -----------
---, 200
         -.

                             BORDEN  CHEMICAL  HOLDINGS,  INC.

                             By
                                ---------------------------------
                                 Name:
                                 Title:


                             ------------------------------------
                              (Print  name  of  Purchaser)



                             ------------------------------------
                              (Signature  of  Purchaser)

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

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

                             ------------------------------------
                             (Address  of  Purchaser)

Number  of  Shares  of
  Purchase  Stock:           ------------------------------------

Purchase  Date:              ------------------------------------

Vesting  Reference  Date:    ------------------------------------


















































                                                                 Exhibit xxiii





<PAGE>
                      NON-QUALIFIED STOCK OPTION AGREEMENT
                      ------------------------------------


     THIS  AGREEMENT,  dated as of the Agreement Date indicated on the signature
page  hereof (this "Agreement") is made by and between BORDEN CHEMICAL HOLDINGS,
                    ---------
INC.,  a  Delaware corporation (the "Company"), and the undersigned, an employee
                                     -------
of  the  Company  or  a  Subsidiary  (as defined below) or Affiliate (as defined
below)  of  the  Company  (hereinafter  referred  to  as  "Optionee").
                                                           --------

     WHEREAS,  the  Company  wishes  to  afford  the Optionee the opportunity to
purchase  shares  of common stock, par value $.01 per share ("Common Stock"), of
                                                             --------------
the  Company;

     WHEREAS, the Company wishes to carry out the Plan (as hereinafter defined),
the  terms of which are hereby incorporated by reference and made a part of this
Agreement;  and

     WHEREAS,  the  Committee  (as hereinafter defined), appointed to administer
the  Plan, has determined that it would be to the advantage and best interest of
the Company and its stockholders to grant the Non-Qualified Options provided for
herein  to the Optionee as an incentive for increased efforts during his term of
office  with  the Company or its Subsidiaries or Affiliates, and has advised the
Company  thereof  and instructed the undersigned officers to issue said Options;

     NOW  THEREOF, in consideration of the mutual covenants herein contained and
other  good and valuable consideration, receipt of which is hereby acknowledged,
the  parties  do  hereby  agree  as  follows:



                                   DEFINITIONS
                                   -----------

     Whenever  the  following  terms are used in this Agreement, they shall have
the  meaning specified in the Plan or below unless the context clearly indicates
to the contrary.  Capitalized terms used but not defined herein shall be used as
defined  in  the  Plan.

"Affiliate" shall mean, with respect to the Company, any corporation directly or
 ---------
indirectly controlling, controlled by, or under common control with, the Company
or any other entity designated by the Board of Directors of the Company in which
the  Company  or  an  Affiliate  has  an  interest.

"Cause"  shall  mean (i) the Optionee's willful and continued failure to perform
 -----
the  Optionee's  duties  with  respect to the Company and its subsidiaries which
continues  beyond  ten  days  after a written demand for substantial performance
improvement  is  delivered  to the Optionee by the Company or (ii) misconduct by
the  Optionee involving (x) dishonesty or breach of trust in connection with the
Optionee's  employment  or  (y) conduct which would be a reasonable basis for an
indictment  of  the  Optionee  for a felony or for a misdemeanor involving moral
turpitude.

<PAGE>


"Change  of  Control"  shall  mean (i) a sale of all or substantially all of the
 -------------------
assets  of  the  Company  to a Person who is not an Affiliate of Kohlberg Kravis
Roberts  &  Co.,  L.P.  ("KKR"),  (ii)  a  sale  by KKR or any of its Affiliates
resulting  in  more  than 50% of the voting stock of the Company being held by a
Person  or  Group  that does not include KKR or any of its Affiliates or (iii) a
merger  or  consolidation  of  the  Company  into another Person which is not an
Affiliate  of  KKR.

"Code"  shall  mean  the  Internal  Revenue  Code  of  1986,  as  amended.
 ----

"Committee"  shall  mean the Compensation Committee of the Company, or any other
 ---------
committee duly authorized by the Board of Directors of the Company to administer
the  Plan  and  this  Agreement.

"Exercisable Option Shares"  shall mean the shares of Common Stock which, at the
 -------------------------
time  of  determination  of the Option Excess Price (as defined below), could be
purchased  by  the  Optionee  upon  exercise of this outstanding Option or other
options.

"Good  Reason"  shall  mean (i) a reduction in the Optionee's base salary, other
 ------------
than  a  reduction which is part of a general salary reduction program affecting
senior executives of the Company, or (ii) a material reduction by the Company of
any  provision  of the Optionee's employment agreement with the Company, if any,
including  any material reduction in the Optionee's duties and responsibilities.

"Group" shall mean two or more Persons acting together as a partnership, limited
 -----
partnership,  syndicate  or other group for the purpose of acquiring, holding or
disposing  of  securities  of  the  Company.

"Management  Stockholder's  Agreement"  shall  mean  a  management stockholder's
 ------------------------------------
agreement  in  form  and  substance satisfactory to the Company, which agreement
shall  be  substantially  similar  to the management stockholder's agreements to
which  the Company is a party as of the date hereof with certain stockholders of
the  Company,  unless  the  Company  shall  otherwise  determine  in  its  sole
discretion.

"Option  Excess  Price"  shall mean the excess, if any, of the Special Treatment
 ---------------------
Termination  Price  or  the Ordinary Termination Price, as the case may be, over
the exercise price of the Option, multiplied by the number of Exercisable Option
Shares.

"Optionee's  Estate" shall mean, after the death of the Optionee, the Optionee's
 ------------------
executors,  administrators,  testamentary  trustees,  legatees or beneficiaries.

"Options"  shall mean the non-qualified options to purchase Common Stock granted
 -------
under  this  Agreement.

"Other  Optionees"  shall mean other individuals who are or will be employees of
 ----------------
the Company or one of its Subsidiaries and who own options pursuant to the Plan.
Permanent  Disability
---------------------

          The  Optionee  shall be deemed to have a "Permanent Disability" if the
Optionee is unable to engage in the activities required by the Optionee's job by
reason  of  any  medically determined physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.  "Permanently Disabled" shall have
a  correlative  meaning.

"Person"  shall  mean  an  individual, partnership, corporation, business trust,
 ------
joint  stock  company,  trust,  unincorporated  association,  joint  venture,
governmental  authority  or  other  entity  of  whatever  nature.

"Plan"  shall  mean the 1996 Stock Purchase and Option Plan for Key Employees of
 ----
the  Company  and  its  Subsidiaries,  as  amended.

Pronouns.  The  masculine pronoun shall include the feminine and neuter, and the
--------
singular  the  plural,  where  the  context  so  indicates.

"Retirement"  shall  mean retirement at age 65 or over (or such other age as may
 ----------
be  approved  by  the  Board of Directors of the Company or the Committee) after
having  been  employed  by  the Company or a Subsidiary for at least three years
after  the  Vesting  Reference  Date.

"Secretary"  shall  mean  the  Secretary  of  the  Company.
 ---------

"Subsidiary"  shall  mean  any  corporation in an unbroken chain of corporations
 ----------
beginning  with  the  Company  if each of the corporations, or group of commonly
controlled  corporations,  other than the last corporation in the unbroken chain
then owns stock possessing 50% or more of the total combined voting power of all
classes  of  stock  in  one  of  the  other  corporations  in  such  chain.

Section  1.1     "Valuation  Reference  Date"  shall  mean  December  31,  1995.

2.          "Vesting  Reference  Date"  shall  mean  the  date  set forth on the
signature  page  hereof  as  the  Vesting  Reference  Date.




                                GRANT OF OPTIONS
                                ----------------

Grant  of  Options.  For  good and valuable consideration, on and as of the date
------------------
hereof  the Company irrevocably grants to the Optionee an Option to purchase any
--
part  or  all  of an aggregate of the number of shares of Common Stock set forth
with respect to each such Option on the signature page hereof upon the terms and
conditions  set  forth  in  this  Agreement.

Exercise Price.  The exercise price of the shares of stock covered by the Option
--------------
shall  be  the  price  per share set forth on the signature page hereof, without
commission  or  other  charge.

Consideration  to  the Company.  In consideration of the granting of this Option
------------------------------
by the Company, the Optionee agrees to render faithful and efficient services to
the  Company or a Subsidiary or Affiliate, with such duties and responsibilities
as  the Company shall from time to time prescribe.  Nothing in this Agreement or
in  the  Plan shall confer upon the Optionee any right to continue in the employ
of  the  Company  or  any  Subsidiary  or  Affiliate  or shall interfere with or
restrict  in  any  way  the  rights  of  the  Company  and  its  Subsidiaries or
Affiliates,  which are hereby expressly reserved, to terminate the employment of
the  Optionee  at  any  time  for  any reason whatsoever, with or without Cause.

Adjustments in Options.  Subject to Section 9 of the Plan, in the event that the
----------------------
outstanding  shares  of  the  stock subject to an Option are, from time to time,
changed  into  or  exchanged  for  a  different  number or kind of shares of the
Company or other securities of the Company by reason of a merger, consolidation,
recapitalization,  reclassification, stock split, stock dividend, combination of
shares,  or  otherwise,  the  Committee  shall make an appropriate and equitable
adjustment  in the number and kind of shares or other considerations as to which
such  Option,  or  portions thereof then unexercised, shall be exercisable.  Any
such  adjustment  made  by  the  Committee  shall  be final and binding upon the
Optionee,  the  Company  and  all  other  interested  persons.

Termination  of  Options  Upon  a  Special  Treatment  Event.
------------------------------------------------------------

a.     Except  as  otherwise  provided  herein,  if,  on  or  prior to the fifth
anniversary  of  the Vesting Reference Date, (i)(A) the Optionee is still in the
employ  of  the  Company  or  any Subsidiary of the Company and (B) the Optionee
either  dies  or  becomes  Permanently  Disabled  or  (ii)  the  Optionee elects
Retirement (any event referred to in clause (i) or clause (ii) being referred to
herein  as  a  "Special  Treatment  Event"), then the Optionee or the Optionee's
                -------------------------
Estate,  as  the case may be, shall have the right, for six months following the
date  of  the occurrence of such Special Treatment Event, to require the Company
to  pay  to the Optionee or the Optionee's Estate, as the case may be, an amount
equal  to  the  Option  Excess  Price,  determined  on  the basis of the Special
Treatment  Termination  Price  as  provided  in Section 2.7, with respect to the
termination  of  outstanding  Options  held  by  the Optionee.  No fewer than 10
business  days  prior  to  the  last  day  of the six month period following the
occurrence  of a Special Treatment Event, the Optionee or the Optionee's Estate,
as  the case may be, shall send written notice to the Company's Secretary of its
intention  to  terminate such Options in exchange for the payment referred to in
the  preceding  sentence  (the  "Optionee  Termination  Notice").
                                 -----------------------------

b.     The  Payment  provided  for  in  Section  2.5(a)  shall take place at the
principal  office  of  the Company on the tenth business day after the giving of
the  Optionee  Termination  Notice.  The Special Treatment Termination Price and
any  payment  with  respect  to  the Options as described above shall be paid by
delivery  to  the  Optionee  or  the Optionee's Estate, as the case may be, of a
check  or  checks in the appropriate amount payable to the order of the Optionee
or  the  Optionee's  Estate,  as  the case may be, against appropriate documents
canceling  the  Options  so terminated appropriately endorsed or executed by the
Optionee or the Optionee's Estate, or his or its duly authorized representative.

c.     Notwithstanding  anything in Section 2.5(a) or 2.5(b) to the contrary and
subject  to  Section  2.8, (i) if there exists and is continuing a default or an
event  of  default  on  the part of the Company or any Subsidiary of the Company
under  any  loan,  guarantee  or  other agreement under which the Company or any
Subsidiary  of  the  Company  has borrowed money or the termination of an Option
would  result  in a default or an event of default on the part of the Company or
any  Subsidiary of the Company under any such agreement or (ii) if a termination
would  not  be permitted under Section 170 of the General Corporation Law of the
State  of Delaware or would otherwise violate the General Corporation Law of the
State  of Delaware (each such occurrence referred to in clause (i) or (ii) above
being  an  "Event"), then the Company shall not be obligated to make payments to
            -----
the  Optionee  or the Optionee's Estate, as the case may be, with respect to the
termination  of  the  Options  until the first business day which is 10 calendar
days  after  all  of  the  foregoing  Events  have  ceased to exist (the "Option
                                                                          ------
Termination  Eligibility  Date");  provided,  however,  that  the  number  of
       -----------------------     --------   -------
Exercisable  Option  Shares  for purposes of calculating the Option Excess Price
payable  under  this  Section  2.5(c) shall be that number of Exercisable Option
Shares,  held  by  the Optionee or the Optionee's Estate, as the case may be, at
the  time  of  delivery  of  an  Optionee  Termination Notice in accordance with
Section  2.5(a)  hereof;  provided,  further,  that  the  Option  Termination
                          --------   -------
Calculation  Date  (as defined in Section 2.7) shall be determined in accordance
with  Section  2.6  as  of  the  Option Termination Eligibility Date (unless the
Special  Treatment  Termination Price would be greater if the Option Termination
Calculation Date has been determined as if no Event had occurred, in which case,
solely  for  purposes  of  this proviso, the Option Termination Calculation Date
shall  be  determined as if no Event had occurred).  All Options exercisable  as
of  the  date  of a Optionee Termination Notice shall continue to be exercisable
until  the  termination  pursuant  to  such  Optionee  Termination  Notice.

d.     Notwithstanding  any  other provision of this Section 2.5 to the contrary
and  subject  to Section 2.8, the Optionee or the Optionee's Estate, as the case
may  be,  shall have the right to withdraw any Optionee Termination Notice which
has  been pending for 60 or more days and which has remained unsatisfied because
of  the  provisions  of  Section  2.5(c).

The  Company's  Option  to  Terminate  Options  of  Optionee.
------------------------------------------------------------

e.     If,  on  or prior to the fifth anniversary of the Vesting Reference Date,
the  Optionee's  active  employment with the Company (and/or, if applicable, its
Subsidiaries)  is  voluntarily  or  involuntarily  terminated  for  any  reason
whatsoever,  with  or  without  Cause,  (a "Company Termination Event") then the
                                            -------------------------
Company shall have the right (the "Company Termination Right"), in the Company's
                                   -------------------------
sole  discretion,  to terminate the Options and pay the Optionee an amount equal
to  the  Option Excess Price determined on the basis of the Ordinary Termination
Price (as defined in Section 2.7) or the Special Treatment Termination Price, in
the  event  that  the termination of employment results from a Special Treatment
Event,  as  provided  in  Section  2.5,  with  respect  to  the  termination  of
outstanding Options held by the Optionee.  The Company shall have a period of 75
days  from  the  date  of a Company Termination Event in which to give notice in
writing  to  the Optionee of the exercise of such election ("Company Termination
                                                             -------------------
Notice").
 -----

f.     The  termination  and payment pursuant to Section 2.6(a) shall take place
at  the  principal  office  of  the  Company on the tenth business day after the
giving  of the Company Termination Notice.  Payment shall be made by delivery to
the Optionee of a check or checks in the appropriate amount payable to the order
of  the  Optionee.  From  and  after the time of such payment, the Options shall
immediately  be  terminated  and  shall no longer be outstanding or exercisable.

g.     Notwithstanding  any  other provision of this Section 2.6 to the contrary
and  subject  to  Section 2.8, if there exists and is continuing any Event, then
the  Company  may  delay  the termination of any of the Options until the Option
Termination  Eligibility Date; provided, however, that the number of Exercisable
                               --------  -------
Option  Shares for purposes of calculating the Option Excess Price payable under
this  Section  2.6(c) shall be that number of Exercisable Option Shares, held by
the  Optionee  or  the  Optionee's  Estate,  as  the case may be, at the time of
delivery  of  a  Company  Termination  Notice  in accordance with Section 2.6(a)
hereof; provided, further, that the Option Termination Calculation Date shall be
        --------  -------
determined  in  accordance  with  Section  2.7  based  on the Option Termination
Eligibility  Date  (unless  the applicable Termination Price would be greater if
the  Option  Termination Calculation Date had been determined as if no Event had
occurred,  in  which  case,  solely  for  purposes  of  this proviso, the Option
Termination  Calculation  Date shall be determined as if no Event had occurred).
All  Options  exercisable  as  of the date of a Company Termination Notice shall
continue  to  be  exercisable  until  the  termination  pursuant to such Company
Termination  Notice.


Determination  of  Termination  Price.
-------------------------------------

h.     The  Special  Treatment  Termination  Price  and the Ordinary Termination
Price  are hereinafter collectively referred to as the "Termination Price."  The
                                                        -----------------
Termination  Price  shall  be calculated on the basis of the unaudited financial
statements  of  the Company or the Market Price Per Share (as defined in Section
2.7(f)  as  of the last day of the month preceding the later of (i) the month in
which  the  event  giving  rise  to the termination occurs and (ii) the month in
which  the  Option  Termination  Eligibility Date occurs (hereinafter called the
"Option Termination Calculation Date"). The event giving rise to the termination
   ---------------------------------
shall  be  the  death,  permanent  disability,  retirement  or  termination  of
employment,  as  the  case  may  be,  of the Optionee, and not the giving of any
notice  required  pursuant  to  Section  2.5  or  2.6.

i.     The  "Special  Treatment  Termination  Price"  shall  be:
             --------------------------------------

i.     Prior  to  a  Public Offering (as defined in Section 2.7(e)), a per share
Termination  Price equal to $7.50 (the "Base Price") plus the amount, if any, by
which  the  sum  of  the  Modified  Book  Value Per Share (as defined in Section
2.7(d))  as  of  the  Option Termination Calculation Date plus $2.17 exceeds the
Base  Price.

ii.     After  Public  Offering, a per share Termination Price equal to the Base
Price  plus  the  amount,  if any, by which the Market Price Per Share as of the
Option  Termination  Calculation  Date  exceeds  the  Base  Price.

j.     The  "Ordinary  Termination  Price"  shall  be:
             ----------------------------

i.     Prior  to  a  Public Offering, a per share Termination Price equal to the
lesser  of:

(A)     the  sum  of  the  Modified  Book  Value  Per  Share  plus  $2.17;  and

(B)     the  Base Price plus (x) the Percentage (as defined below) multiplied by
(y) the amount, if any, by which the sum of the Modified Book Value Per Share as
of  the  Option  Termination Calculation Date plus $2.17 exceeds the Base Price.

ii.     After  a  Public  Offering,  a  per share Termination Price equal to the
lesser  of:
(i)                    (A)     the  Market  Price  Per  Share;  and
(ii)
(iii)                  (B)     the  Base  Price  plus  (x)  the Percentage (as
defined  below)  multiplied by (y) the amount, if any, by which the Market Price
Per  Share as of the Option Termination Calculation Date exceeds the Base Price.

iii.     The  "Percentage"  shall  be  determined  as  follows:


Option Termination Calculation Date                             Percentage
-----------------------------------                             ----------

Vesting  Reference  Date  through  and  including  the  first anniversary of the
          Vesting Reference Date                                    0%

After  the first anniversary of the Vesting Reference Date through and including
          the second anniversary of the Vesting Reference Date     20%

After the second anniversary of the Vesting Reference Date through and including
           the third anniversary of the Vesting Reference Date     40%

After  the third anniversary of the Vesting Reference Date through and including
          the fourth anniversary of the Vesting Reference Date     60%

After the fourth anniversary of the Vesting Reference Date through and including
           the fifth anniversary of the Vesting Reference Date     80%

After the fifth anniversary of the Vesting Reference Date         100%

k.     For  purposes  hereof,  "Modified  Book  Value  Per  Share"  shall be the
quotient  of:

i.     an  amount equal to (A) $355 million plus (B) the aggregate net income of
the  Company  attributable  to  the  Common  Stock  from and after the Valuation
Reference  Date  (as  decreased  by  any net losses from and after the Valuation
Reference  Date) plus (C) the aggregate dollar amount contributed to the Company
after  the  Valuation Reference Date as common equity by the shareholders of the
Company,  less  any  repurchase of common equity by the Company without purchase
accounting  adjustments  made  in  accordance with generally accepted accounting
principles  except  in the case of sale of assets minus (D) the aggregate dollar
amount  of  any  dividends  paid  by  the  Company on the Common Stock after the
Valuation  Reference  Date,

divided  by

ii.     the  sum  of  the  number  of  shares  of Common Stock then outstanding;
provided  that, if any outstanding stock options, other rights to acquire Common
Stock,  or  securities  convertible into shares of Common Stock have a per share
exercise  price  less  than  such  quotient  (collectively,  the  "In-the-Money
Options"),  then,  sequentially beginning with the In-the-Money Options with the
lowest  per  share  exercise price and until either (x) all In-the-Money Options
have  been  included  in  such  adjustment  of such quotient or (y) there are no
In-the-Money  Options  with a per share exercise price less than the quotient as
adjusted  that  have  not been included in such adjustment of such quotient, the
numerator  of  such  quotient shall be increased by the aggregate exercise price
of  such  In-the-Money  Options  and  the  denominator of such quotient shall be
increased  by the number of shares of Common Stock issuable upon the exercise of
such  In-the-Money  Options.

     The  calculations  set  forth  in  clauses (i)(B), (i)(C) and (i)(D) of the
immediately  preceding sentence shall be determined in accordance with generally
accepted  accounting  principles  applied  on  a basis consistent with any prior
periods  as  reflected  in the consolidated financial statements of the Company,
without  giving  effect  to  any adjustments required or permitted by Accounting
Principles  Board  Opinion  Nos.  16  and  17 with respect to assets acquired or
liabilities  assumed  in  the  acquisition  of  the  Company  (except  that  the
determination  of  gains  or  losses  on sales of assets and on foreign currency
translations  shall  be  computed in accordance with Accounting Principles Board
Opinion  Nos.  16  and  17).

l.     For  purposes  of  this  Grant,  "Public Offering" shall mean the sale of
                                         ---------------
shares of Common Stock to the public subsequent to the date hereof pursuant to a
registration  statement  under  the Act which has been declared effective by the
Securities  and Exchange Commission (other than a registration statement on Form
S-8  or any other similar form) which results in an active trading market in the
Common Stock.  A "Qualified Public Offering" shall be deemed to have occurred if
                  -------------------------
there  has  been  a Public Offering and there exists an active trading market in
19%  or  more  of  the  shares  of  Common  Stock.

m.     For purposes of this Grant, "Market Price Per Share" shall mean the price
                                    ----------------------
per share equal to the average of the last sale price of the Common Stock on the
Option  Termination  Calculation Date on each exchange on which the Common Stock
may  at  the time be listed or, if there shall have been no sales on any of such
exchanges on the Option Termination Calculation Date, the average of the closing
bid  and asked prices on each such exchange at the end of the Option Termination
Calculation  Date  or  if  there  is  no  such bid and asked price on the Option
Termination  Calculation Date on the next preceding date when such bid and asked
price  occurred  or,  if the Common Stock shall not be so listed, the average of
the  closing  sales  prices  as  reported  by  Nasdaq  at  the end of the Option
Termination  Calculation  Date  in  the  over-the-counter market.  If the Common
Stock  is  not  so listed or reported by Nasdaq, then the Market Price Per Share
shall  be  the  Modified  Book  Value  Per  Share.

n.     In  determining  the  Termination Price, appropriate adjustments shall be
made  for  any  future issuances of rights to acquire and securities convertible
into  Common  Stock  and  any  stock  dividends,  splits,  combinations,
recapitalizations or any other adjustment in the number of outstanding shares of
Common  Stock.

Pro  Rata  Terminations.
     Notwithstanding  anything to the contrary contained in Sections 2.5, 2.6 or
2.7,  if at any time consummation of all payments and terminations to be made by
the  Company  pursuant  hereto  and  pursuant  to  the terms of Other Optionees'
options  to  purchase  shares  of common stock of the Company would result in an
Event,  then the Company shall make payments to the Optionee and Other Optionees
pro  rata  (on  the  basis  of the proportion of the number of options each such
Optionee  and  all  Other  Optionees have elected or are required to sell to the
Company) for the Option Excess Price for the maximum number of options permitted
without  resulting  in  an  Event  (the  "Maximum  Termination  Amount").  The
provisions  of  Sections  2.5(c)  and  2.6(c)  shall  apply in their entirety to
payments  and  terminations with respect to Options which may not be made due to
the  limits  imposed  by  the Maximum Termination Amount under this Section 2.8.
Until  all  of  such  options  are  terminated  and paid for by the Company, the
Optionee  and  the Other Optionees whose options are terminated and paid for the
Company,  the  Optionee and the Other Optionees whose options are not terminated
in  accordance  with  this Section 2.8 shall have priority, on a pro rata basis,
over  other  terminations  of  options by the Company pursuant to this Grant and
Other  Optionees'  Grants.

Rights  to  Negotiate  Termination  Price.

     Nothing  in  this Grant shall be deemed to restrict or prohibit the Company
from  terminating  Options  at any time, upon such terms and conditions, and for
such  payment,  as  may  be  mutually  agreed  upon  between the Company and the
Optionee,  whether  or  not  at the time of such termination circumstances exist
which specifically grant the Company the right to terminate, or the Optionee has
the  right  to  receive,  the Option Excess Price under the terms of this Grant.

Expiration  of  Certain  Provisions.
-----------------------------------

     The provisions contained in Sections 2.5 and 2.6 hereof, and the portion of
any  other provisions hereof which incorporated the provisions of such Sections,
shall  terminate and be of no further force or effect upon the consummation of a
merger,  reorganization,  business combination or liquidation of the Company, or
a  sale  of  Common  Stock  owned by Borden, Inc., a New Jersey corporation (the
"Parent"),  but  only  if  such  merger,  reorganization,  business combination,
liquidation  or  sale  of  Common  Stock  results  in KKR Associates, a New York
limited partnership, Parent or any affiliate of either of them, no longer having
the  power  (i)  to elect a majority of the Board of Directors of the Company or
such  other  corporation  which succeeds to the Company's rights and obligations
pursuant  to  such  merger, reorganization, business combination, liquidation or
stock  sale,  or  (ii)  if  the resulting entity of such merger, reorganization,
business  combination, liquidation or stock sale is not a corporation, to select
the  general  partner(s),  managing  members  or  other  persons  or  entities
controlling  the  operations  and  business  of  the  resulting  entity.



<PAGE>
                            PERIOD OF EXERCISABILITY
                            ------------------------

Commencement  of  Exercisability.
--------------------------------

o.     Options  shall  become  exercisable  as  follows:

                                               Percentage  of  Option
Date  Option                                Shares  Granted  As  to  Which
Becomes  Exercisable                           Option  Is  Exercisable
--------------------                           ------------------------

After  the  first  anniversary
of  the  Vesting  Reference  Date                    20%

After  the  second  anniversary
of  the  Vesting  Reference  Date                    40%

After  the  third  anniversary
of  the  Vesting  Reference  Date                    60%

After  the  fourth  anniversary
of  the  Vesting  Reference  Date                    80%

After  the  fifth  anniversary
of  the  Vesting  Reference  Date                    100%

p.     Notwithstanding  the  foregoing,  each  Option  shall  become immediately
exercisable  as  to  100%  of  the shares of Common Stock subject to such Option
immediately prior to a Change of Control (but only to the extent such Option has
not  otherwise  terminated  or  become  exercisable).

q.     Notwithstanding  the  foregoing, no Option shall become exercisable as to
any additional shares of Common Stock following the termination of employment of
the  Optionee  for  any reason other than a termination of employment because of
death,  Permanent Disability or Retirement of the Optionee and any Option (other
than  as provided in the succeeding sentence) which is non-exercisable as of the
Optionee's  termination  of  employment  shall  immediately be canceled.  In the
event  of  a termination of employment because of death, Permanent Disability or
Retirement  of the Optionee, the Options shall immediately become exercisable as
to  all  shares  of  Common  Stock  subject  thereto.

Expiration  of  Options.
-----------------------

     Except  as  otherwise provided in Section 2.5 or 2.6 of this Agreement, the
Options  may  not  be exercised to any extent by the Optionee after the first to
occur  of  the  following  events:

r.     The  tenth  anniversary  of  the  Vesting  Reference  Date;  or

s.     The  first  anniversary  of  the  date  of  the Optionee's termination of
employment  by  reason  of  a  Special  Treatment  Event;  or

t.     The  first  business day which is fifteen calendar days after the earlier
of  (i)  75  days after termination of employment of the Optionee for any reason
other  than  for  Cause or without Good Reason or (ii) the delivery of notice by
the  Company  that  it does not intend to exercise its Company Termination Right
under Section 2.6; provided, however, that in any event the Options shall remain
                   --------  -------
exercisable  under  this  subsection  3.2(c)  until  at  least  45  days  after
termination  of  employment.  If  the  Company  does  not  exercise  its Company
Termination  Right and the Options are then exercisable pursuant to Section 3.1,
but the conditions to exercise contained in Section 4.2 have not been satisfied,
then  the committee in its absolute discretion may extend the expiration date of
such  Options  for  such period as the Committee shall determine in its absolute
discretion;  or

u.     The date the Option is terminated pursuant to Sections 2.6, 2.7 or 2.8 of
this  Agreement;  or

v.     The  date  of  an Optionee's termination of employment by the Company for
Cause  or  by  the  Optionee  without  Good  Reason;  or

w.     If  the  Committee  so  determines pursuant to Section 9 of the Plan, the
effective date of either the merger or consolidation of the Company into another
Person, or the exchange or acquisition by another Person of all or substantially
all of the Company's assets or 80% or more of its then outstanding voting stock,
or  the  recapitalization,  reclassification,  liquidation or dissolution of the
Company.  At  least  ten  (10)  days prior to the effective date of such merger,
consolidation,  exchange,  acquisition,  recapitalization,  reclassification,
liquidation or dissolution, the Committee shall give the Optionee notice of such
event  if  the  Option  has  then  neither  been  fully  exercised  nor  become
unexercisable  under  this  Section  3.2.

                               EXERCISE OF OPTION
                               ------------------

Person  Eligible  to  Exercise.
------------------------------

     Except  as  otherwise provided in Section 5.2 of this Agreement, during the
lifetime of the Optionee, only he may exercise an Option or any portion thereof.
After the death of the Optionee, any exercisable portion of an Option may, prior
to the time when an Option becomes unexercisable under Section 3.2, be exercised
by  his  personal  representative  or by any person empowered to do so under the
Optionee's  will  or under the then applicable laws of descent and distribution.


Partial  Exercise.
-----------------

     Any  exercisable  portion of an Option or the entire Option, if then wholly
exercisable,  may be exercised in whole or in part at any time prior to the time
when  the  Option  or  portion  thereof becomes unexercisable under Section 3.2;
provided, however, that any partial exercise shall be for whole shares of Common
    ----  -------
Stock  only.






Manner  of  Exercise.
--------------------

     An  Option,  or any exercisable portion thereof, may be exercised solely by
delivering to the Secretary or his office all of the following prior to the time
when  the  Option  or  such  portion  becomes  unexercisable  under Section 3.2:

x.     Notice  in  writing  signed  by  the  Optionee  or  the other person then
entitled  to  exercise the Option or portion thereof, stating that the Option or
portion  thereof is thereby exercised, such notice complying with all applicable
rules  established  by  the  Committee;

y.     Full  payment  (in  cash,  by  check or by a combination thereof) for the
shares  with  respect  to  which  such  Option  or portion thereof is exercised;

z.     A  bona fide written representation and agreement, in a form satisfactory
to  the  Committee,  signed  by  the  Optionee  or other person then entitled to
exercise  such  Option  or portion thereof, stating that the shares of stock are
being  acquired  for  his  own  account,  for investment and without any present
intention  of distributing or reselling said shares or any of them except as may
be  permitted under the Securities Act of 1933, as amended (the "Act"), and then
                                                                 ---
applicable  rules  and  regulations  thereunder,  and that the Optionee or other
person  then  entitled to exercise such Option or portion thereof will indemnify
the Company against and hold it free and harmless from any loss, damage, expense
or  liability resulting to the Company if any sale or distribution of the shares
by  such  person  is  contrary  to  the representation and agreement referred to
above;  provided,  however,  that the Committee may, in its absolute discretion,
        ---------  -------
take  whatever  additional actions it deems appropriate to ensure the observance
and  performance  of  such representation and agreement and to effect compliance
with  the  Act  and  any  other federal or state securities laws or regulations;

aa.     Full  payment  to the Company of all amounts which, under federal, state
or  local  law,  it  is  required  to  withhold  upon  exercise  of  the Option;

bb.     An executed Management Stockholder's Agreement or appropriate proof that
a  Management  Stockholder's  Agreement  has  been  previously  executed  by the
Optionee;  and

cc.     In  the  event the Option or portion thereof shall be exercised pursuant
to  Section  4.1  by  any person or persons other than the Optionee, appropriate
proof  of  the  right  of  such  person  or  persons  to  exercise  the  option.

     Without limiting the generality of the foregoing, the Committee may require
an  opinion  of  counsel  acceptable  to  it  to  the effect that any subsequent
transfer  of  shares acquired on exercise of an Option does not violate the Act,
and  may  issue  stop-transfer  orders covering such shares.  Share certificates
evidencing  stock  issued  on  exercise of this Option shall bear an appropriate
legend  referring  to  the provisions of subsection (c) above and the agreements
herein.  The  written representation and agreement referred to in subsection (c)
above  shall,  however,  not  be required if the shares to be issued pursuant to
such  exercise have been registered under the Act, and such registration is then
effective  in  respect  of  such  shares.



Conditions  to  Issuance  of  Stock  Certificates.
-------------------------------------------------

     The  shares  of  stock  deliverable  upon the exercise of an Option, or any
portion  thereof,  may  be  either  previously authorized but unissued shares or
issued shares which have then been reacquired by the Company.  Such shares shall
be  fully  paid  and  nonassessable.  The  certificate  or certificates for such
shares shall bear such legend or legends as the Committee shall, in its absolute
discretion, determine in accordance with the Plan, including any legend required
to  limit  or  restrict  transferability  of  the  shares  represented  by  such
certificate.  The  Company  shall  not  be  required  to  issue  or  deliver any
certificate  or  certificates for shares of stock purchased upon the exercise of
an  Option  or  portion  thereof  prior  to  fulfillment of all of the following
conditions:

dd.     The  obtaining  of approval or other clearance from any state or federal
governmental  agency  which  the  Committee  shall,  in its absolute discretion,
determine  to  be  necessary  or  advisable;  and

ee.     The  lapse  of  such reasonable period of time following the exercise of
the  Option  as  the  Committee  may  from  to  time  establish  for  reasons of
administrative  convenience;  and

ff.     Except as the Company may otherwise agree in writing, the Optionee shall
have made an election pursuant to Treasury Regulation 1.83-2 with respect to the
Common  Stock  to  be acquired upon such exercise of the Options, and shall have
delivered  to the Company copies of the forms of election the Optionee has filed
with  the  Internal  Revenue  Service  within  30 days after the exercise of the
Options,  with  evidence  that  each  such  election  has been filed in a timely
manner.

Rights  as  Stockholder.
-----------------------

     The  holder  of  an  Option  shall  not  be,  nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares purchasable
upon  the  exercise  of  the  Option  or  any  portion  thereof unless and until
certificates  representing  such shares shall have been issued by the Company to
such  holder.

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

Administration.
--------------

     The Committee shall have the power to interpret the Plan and this Agreement
and  to  adopt such rules for the administration, interpretation and application
of  the  Plan  as  are  consistent therewith and to interpret or revoke any such
rules.  All actions taken and all interpretations and determinations made by the
Committee  shall  be  final  and  binding upon the Optionee, the Company and all
other interested persons.  No member of the Committee shall be personally liable
for  any action, determination or interpretation made in good faith with respect
to  the Plan or the Options.  In its absolute discretion, the Board of Directors
may  at any time and from time to time exercise any and all rights and duties of
the  Committee  under  the  Plan  and  this  Agreement.



Options  Not  Transferable.
--------------------------

     Except  as provided in this Agreement, neither the Options nor any interest
or  right  therein  or  part thereof shall be liable for the debts, contracts or
engagements of the Optionee or his successors in interest or shall be subject to
disposition  by  transfer,  alienation,  anticipation,  pledge,  encumbrance,
assignment  or  any  other  means  whether  such  disposition  be  voluntary  or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any  other  legal  or  equitable  proceedings  (including  bankruptcy),  and any
attempted  disposition  thereof  shall  be  null  and  void  and  of  no effect.
Notwithstanding  the  foregoing,  the  following  transfers  are  permitted: (x)
transfers  upon  death  by  will  or  by  the  applicable  laws  of  descent and
distribution;  and  (y)  a  transfer  made  after  the Vesting Reference Date in
compliance  with the federal and state securities laws to a trust, custodianship
or  partnership,  the  beneficiaries of which may include only the Optionee, his
spouse  and/or  his  lineal descendants, provided that any such transfer is made
expressly subject to this Agreement and that the transferee agrees in writing to
be  bound  by  the  terms  and  conditions  hereof.

Optionee's  Employment  by  Company.
-----------------------------------

     Nothing  in  this  Grant  or in the Plan shall confer upon the Optionee any
right to continue in the employ of the Company or any Subsidiary or Affiliate or
shall  interfere  with  or restrict in any way the rights of the Company and its
Subsidiaries  or  Affiliates,  which are hereby expressly reserved, to terminate
the  employment  of  the Optionee at any time for any reason whatsoever, with or
without  Cause.
Shares  to  Be  Reserved.
-------------------------

     The  Company  shall at all times during the term of the Options reserve and
keep  available  such number of shares of stock as will be sufficient to satisfy
the  requirements  of  this  Agreement.

Notices.
-------

     Any  notice  to  be  given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to be
given  to the Optionee shall be addressed to him at the address indicated on the
signature  page  hereto.  By a notice given pursuant to this Section 5.5, either
party  may  hereafter  designate  a different address for notices to be given to
him.  Any  notice  which  is  required to be given to the Optionee shall, if the
Optionee is then deceased, be given to the Optionee's personal representative if
such  representative  has  previously  informed  the  Company  of his status and
address  by  written  notice under this Section 5.5.  Any notice shall have been
deemed  duly  given  when  enclosed  in  a  properly  sealed envelope or wrapper
addressed  as  aforesaid,  deposited  (with postage prepaid) in a post office or
branch  post  office  regularly  maintained by the United States Postal Service.

     Termination  of  Borden  Inc.  Stock  Options
     ---------------------------------------------

By  accepting  this grant, Employee consents to the termination and cancellation
of  all  stock  options,  stock appreciation rights, equity appreciation rights,
dividend  equivalent  rights,  performance units and other stock based grants or
similar  equity  based  compensation  received by the Employee prior to the date
hereof  from  Borden,  Inc.,  a  New  Jersey  corporation ("Borden"), (or any of
Borden's affiliates) such that Employee will have no further rights with respect
thereof.

Section  5.7     Titles.
                 ------

     Titles  are  provided herein for convenience only and are not to serve as a
basis  for  interpretation  or  construction  of  this  Agreement.

     Applicability  of  Plan  and  Management  Stockholder's  Agreement.
     ------------------------------------------------------------------

     The  Options  and  the  shares  of Common Stock issued to the Optionee upon
exercise  of  the Options shall be subject to all of the terms and provisions of
the Plan and the Management Stockholder's Agreement, to the extent applicable to
the  Options  and  such  shares.  In  the  event  of  any  conflict between this
Agreement  and  the  Plan, the terms of the Plan shall control.  In the event of
any conflict between this Agreement or the Plan and the Management Stockholder's
Agreement,  the  terms  of the Management Stockholder's Agreement shall control.

     Amendment.
     ---------

     This  Agreement  may  be  amended only by a writing executed by the parties
hereto  which  specifically  states  that  it  is  amending  this  Agreement.
     Governing  Law.
     --------------





     The laws of the State of Delaware shall govern the interpretation, validity
and  performance of the terms of this Agreement regardless of the law that might
be  applied  under  principles  of  conflicts  of  laws.

     Consent  to  Jurisdiction;  Waivers.
     -----------------------------------

     Any  suit,  action  or proceeding against the Optionee with respect to this
Agreement,  or  any judgment entered by any court in respect of any thereof, may
be  brought  in  any court of competent jurisdiction in the State of Delaware or
New  York,  as  the  Company  may elect in its sole discretion, and the Optionee
hereby  submits to the non-exclusive jurisdiction of such courts for the purpose
of  any  such  suit,  action,  proceeding  or  judgment.  The  Optionee  hereby
irrevocably  waives  any  objections  which  he may now or hereafter have to the
laying of the venue of any suit, action or proceeding arising out of or relating
to this Agreement brought in any court of competent jurisdiction in the State of
Delaware  or  New York, and hereby further irrevocably waives any claim that any
such  suit,  action  or proceeding brought in any such court has been brought in
any  inconvenient forum.  No suit, action or proceeding against the Company with
respect  to  this Agreement may be brought in any court, domestic or foreign, or
before  any  similar  domestic  or  foreign  authority  other than in a court of
competent  jurisdiction  in  the State of Delaware or New York, and the Optionee
hereby  irrevocably  waives  any  right which he may otherwise have had to bring
such  an  action  in any other court, domestic or foreign, or before any similar
domestic  or  foreign authority.  The Company hereby submits to the jurisdiction
of  such  courts  for  the  purpose  of  any  such  suit,  action or proceeding.














































































<PAGE>
IN  WITNESS  WHEREOF,  this  Agreement  has  been  executed and delivered by the
parties  hereto.


                                    BORDEN  CHEMICAL  HOLDINGS,  INC.



                                    By --------------------------------
                                        Title:






NAME  OF  OPTIONEE
(NO  SIGNATURE  REQUIRED):
--------------------------  --------------------------------------

ADDRESS  OF  OPTIONEE:

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

OPTIONEE'S  TAXPAYER  IDENTIFICATION  (SOCIAL  SECURITY)  NUMBER:
--------------------------  --------------------------------------

AGREEMENT  DATE:
--------------------------  --------------------------------------

AGGREGATE  NUMBER  OF  SHARES  OF  COMMON  STOCK  FOR  WHICH  THE  OPTION
GRANTED  HEREUNDER  IS  EXERCISABLE:
--------------------------  --------------------------------------

VESTING  REFERENCE  DATE:
--------------------------  --------------------------------------

EXERCISE  PRICE:
--------------------------  --------------------------------------













































<PAGE>
                                       38
                                TABLE OF CONTENTS
                                -----------------




ARTICLE  I   DEFINITIONS     20
                             Section  1.1  "Affiliate"
                             Section  1.2  "Cause"
                             Section  1.3  "Change  of  Control"
                             Section  1.4  "Code"
                             Section  1.5  "Committee"
                             Section  1.6  "Exercisable  Option  Shares
                             Section  1.7  "Good  Reason"
                             Section  1.8  "Group"
                             Section  1.9  "Management  Stockholder's
                                           Agreement"
                             Section  1.10  "Option  Excess  Price"
                             Section  1.11  "Optionee's  Estate
                             Section  1.12  "Options"
                             Section  1.13  "Other  Optionees"
                             Section  1.14  Permanent  Disability.
                             Section  1.15  "Person
                             Section  1.16  "Plan
                             Section  1.17  Pronouns
                             Section  1.18  "Retirement
                             Section  1.19  "Secretary"
                             Section  1.20  "Subsidiary"
                             Section  1.21  "Valuation  Reference Date"
                                            shall mean December 31, 1995
                             Section  1.22  "Vesting  Reference  Date"
                                            shall  mean the date set forth
                                            on the signature  page  hereof
                                            as the Vesting Reference Date
ARTICLE  II  GRANT  OF  OPTIONS     22
                             Section  2.1  Grant  of  Options
                             Section  2.2  Exercise  Price
                             Section  2.3  Consideration  to  the  Company
                             Section  2.4  Adjustments  in  Options.
                             Section  2.5  Termination  of  Options  Upon
                                           Special Treatment Event
                             Section  2.6  The Company's Option to Terminate
                                           Options of Optionee
                             Section  2.7  Determination of Termination Price

                             Section  2.8  Pro  Rata  Terminations
                             Section  2.9  Rights  to  Negotiate  Termination
                                           Price
                             Section  2.10 Expiration  of  Certain
                                           Provisions
ARTICLE  III  PERIOD  OF  EXERCISABILITY
                             Section  3.1  Commencement  of  Exercisability
                             Section  3.2  Expiration  of  Options
ARTICLE  IV  EXERCISE  OF  OPTION     28
                             Section  4.1  Person  Eligible  to  Exercise
                             Section  4.2  Partial  Exercise
                             Section  4.3  Manner  of  Exercise
                             Section  4.4  Conditions  to  Issuance  of
                                           Stock  Certificates
                             Section  4.5  Rights  as  Stockholder
ARTICLE  V  MISCELLANEOUS     29
                             Section  5.1  Administration
                             Section  5.2  Options  Not  Transferable
                             Section  5.3  Optionee's  Employment  by
                                           Company
                             Section  5.4  Shares  to  Be  Reserved
                             Section  5.5  Notices
                             Section 1.1   Termination of Borden Inc. Stock
                                           Options
                               By accepting this grant, Employee  consents to
                               the  termination  and cancellation of all stock
                               options, stock  appreciation  rights,  equity
                               appreciation  rights,  dividend equivalent
                               rights,  performance  units and other stock
                               based grants or similar equity based compensation
                               received  by  the  Employee  prior to the date
                               hereof from Borden, Inc.,  a New Jersey
                               corporation ("Borden"), (or any of Borden's
                               affiliates) such that  Employee  will  have  no
                               further rights with respect thereof.Section 5.7
                               Titles
                             Section  1.2  Applicability  of  Plan and
                                           Management Stockholder's
                                           Agreement
                             Section  1.3  Amendment
                             Section  1.4  Governing  Law
                             Section  1.5  Consent  to Jurisdiction; Waivers






















































































<PAGE>
                                                                   EXHIBIT  21
     BORDEN  CHEMICAL,  INC.,  CONSOLIDATED

     SUBSIDIARIES  OF  REGISTRANT  AS  OF  DECEMBER  31,  2001
     ---------------------------------------------------------

                                 The  percentage  of          State  or  other
                                 voting  securities           jurisdiction  of
                                 owned,  or  other            incorporation
Subsidiaries  of  Registrant:    basis  of  control           or organization
----------------                 -------------------          -----------------

BCP  Management,  Inc.                     100                    Delaware
    BCP  Finance  Corporation              100                    Delaware
BDS  Two,  Inc.                            100                    Delaware
Borden  Chemical  Canada,  Inc.            100                    Canada
Borden  Chemical  Foundry,  Inc.           100                    Delaware
    HA-International,  LLC                  75                    Pennsylvania
Borden  Chemical  Investments,  Inc.       100                    Delaware
Borden  Chemical  International,  Inc.     100                    Delaware
     Borden Chemical Australia (Pty.) Ltd. 100                    Australia
          Borden/AEP  Australia
            Superannuation  (Pty)  Limited 100                    Australia
Melamine  Chemicals,  Inc.                 100                    Delaware
     Borden  Chemical  Foreign Sales Corp.
        V. I., Inc.                        100                    US V.I.
Borden  Chemical  Philippines,  Inc.        98                    Philippines
Borden  Chemical  Holdings  (Panama), S.A. 100                    Panama
     Alba  Adesivos  Industria  E  Comercio
             Ltda.                         100                    Brazil
     Borden  Quimica  Industria e Comercio
             Ltda.                          99                    Brazil
     Borden  Chemical  (M.)  Sdn.  Bhd.    100                    Malaysia
     Borden  Chemical  Resinas,  Panama,
             S.R.L.                        100                    Panama
      Quimica  Borden  Argentina  S.A.     100                    Argentina
Borden  Chimie,  S.A.                       98                    France
Borden  International  Holdings,  Ltd.     100                    UK
     Borden  Chemical  GB,  Ltd.           100                    UK
     Borden  Chemical  U.K.  Limited       100                    UK
        Borden  Bray,  Ltd.                100                    Ireland
Borden  Chemical  Philippines,  Inc.        98                    Philippines
Compania  Quimica  Borden,  S.A.           100                    Panama
Quimica  Borden  Espana,  S.A.             100                    Spain
     Borden  Division  de  Consumo,  S.A.  100                    Spain
Gun  Ei  Borden  International  Resin  Co.
                         Ltd.                5                    Japan

NOTE:     The  above  subsidiaries  have  been included in Borden's Consolidated
Financial  Statements  on  a  consolidated  or equity basis as appropriate.  The
names of certain subsidiaries, active and inactive, included in the Consolidated
Financial Statements and of certain other subsidiaries not included therein, are
omitted  since  when  considered in the aggregate as a single subsidiary they do
not  constitute  a  significant  subsidiary.


<PAGE>





























                                                                 Exhibit 23(i)






                          INDEPENDENT AUDITORS' CONSENT



We  consent  to  the  incorporation  by  reference in Registration Statement No.
33-57577  of  Borden  Chemical,  Inc. (formerly Borden, Inc.) on Form S-3 of our
reports for Borden Chemical, Inc. dated February 22, 2002, except for the fourth
paragraph  of  Note  4 and the fourth paragraph of Note 20, both as to which the
date is March 22, 2002, and Borden Foods Holdings Corporation dated February 22,
2002, each appearing in this Annual Report on Form 10-K of Borden Chemical, Inc.
for  the  year  ended  December  31,  2001.



DELOITTE  &  TOUCHE  LLP
Columbus,  Ohio


March  28,  2002






































































BORDEN  FOODS  HOLDINGS  CORPORATION

CONSOLIDATED  FINANCIAL  STATEMENTS
AS  OF  DECEMBER  31,  2001  AND  2000
AND  FOR  EACH  OF  THE  THREE  YEARS
IN  THE  PERIOD  ENDED  DECEMBER  31,  2001

















































































                          INDEPENDENT AUDITORS' REPORT



To  the  Board  of  Directors
     And  Shareholder  of  Borden  Foods  Holdings  Corporation


We  have  audited  the  accompanying consolidated balance sheets of Borden Foods
Holdings Corporation and subsidiaries (a wholly owned subsidiary of Borden Foods
Holdings,  LLC)  as  of December 31, 2001 and 2000, and the related consolidated
statements  of  operations,  shareholder's equity and cash flows for each of the
three  years  in the period ended December 31, 2001.  These financial statements
are  the  responsibility  of the Company's management.  Our responsibility is to
express  an  opinion  on  these  financial  statements  based  on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to  obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

In  our  opinion,  such consolidated financial statements present fairly, in all
material  respects,  the financial position of Borden Foods Holdings Corporation
and  subsidiaries  at  December  31,  2001  and  2000,  and the results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted in
the  United  States  of  America.


DELOITTE  &  TOUCHE  LLP


Columbus,  Ohio
February  22,  2002








































<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
CONSOLIDATED  STATEMENTS  OF  OPERATIONS


BORDEN FOODS HOLDINGS CORPORATION
<S>                                                                <C>                        <C>         <C>
(In thousands, except per share and share amounts)                                     Year ended December 31,
                                                                        2001               2000            1999
--------------------------------------------------------------------------------------------------------------------


DISCONTINUED OPERATIONS (SEE NOTE 3):
Gain (loss) on sale of business, net of tax                        $   112,409       $    (5,058)   $    39,107
(Loss) income from operations, net of tax                              (12,904)          (25,730)         3,067
Cumulative effect of accounting change, net of tax                         -                 -           (2,806)
                                                                       --------           --------       -------

Net income (loss)                                                       99,505           (30,788)        39,368

Affiliate's share of income (see Note 5)                              (135,554)              (66)        (5,098)
                                                                      ---------           -------        -------

Net (loss) income applicable to common shares                      $   (36,049)      $   (30,854)    $   34,270
                                                                      =========          =========      ========

Per Share Data
-----------------
Basic and diluted (loss) earnings per common share
   before cumulative effect of accounting change                   $  (360,490)      $  (308,540)    $  370,760
Cumulative effect of accounting change per common share                   -                  -          (28,060)
                                                                     ---------        ----------       ---------
Basic and diluted (loss) earnings per common share                 $  (360,490)      $  (308,540)    $  342,700
                                                                     ==========       ==========       =========

Average number of common shares outstanding
  during the year                                                       100                100              100
--------------------------------------------------------------------------------------------------------------------
See accompanying Notes to the Consolidated Financial Statements.
</TABLE>















































<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
CONSOLIDATED  BALANCE  SHEETS


BORDEN FOODS HOLDINGS CORPORATION
<S>                                                                <C>            <C>
(In thousands)
                                                                                       December 31,
ASSETS                                                                  2001                         2000
--------------------------------------------------------------------------------------------------------------
  ASSETS
    Cash and equivalents                                        $       434,444              $       222,374
    Accounts receivable (less allowance for doubtful
      accounts of $0 and $787, respectively)                               -                          51,126
    Loans receivable from affiliates                                    176,685
    Net assets held for sale                                              9,749                          -
    Inventories:
      Finished and in-process goods                                         -                         46,531
      Raw materials and supplies                                            -                         28,608
    Deferred income taxes                                                 1,442                        9,584
    Other assets                                                         14,478                       15,704
                                                                       ---------                     -------
                                                                        636,798                      373,927

  PROPERTY AND EQUIPMENT
    Land                                                                    -                          9,586
    Buildings                                                               -                         43,362
    Machinery and equipment                                                 -                        224,937
                                                                        ---------                   ---------
                                                                            -                        277,885
    Less accumulated depreciation                                           -                        (88,062)
                                                                        ---------                     -------
                                                                            -                        189,823

  INTANGIBLES
    Goodwill                                                                -                         10,692
    Trademarks and other intangibles                                        -                        105,464
                                                                        ---------                   ---------
                                                                            -                        116,156
                                                                        ----------                  ---------

  TOTAL ASSETS                                                 $        636,798            $         679,906
                                                                       =========                     ========
See accompanying Notes to the Consolidated Financial Statements.
</TABLE>







































<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
CONSOLIDATED  BALANCE  SHEETS


BORDEN FOODS HOLDINGS CORPORATION
<S>                                                                         <C>               <C>
(In thousands, except per share and share amounts)
                                                                                  December 31,
LIABILITIES AND SHAREHOLDER'S EQUITY                                        2001             2000
----------------------------------------------------------------------------------------------------
  LIABILITIES
    Accounts and drafts payable                                      $      251            $ 39,823
    Accrued customer allowances                                              -               12,093
    Income tax payable                                                    1,142              30,209
    Deferred income taxes                                                    -                6,203
    Loans due to affiliates                                                  -                3,029
    Other liabilities                                                    12,463              68,137
                                                                        --------           ---------
                                                                         13,856             159,494

  COMMITMENTS AND CONTINGENCIES (SEE NOTE 13)

  SHAREHOLDER'S EQUITY
    Common stock - $0.01 par value; 100 shares
      authorized, issued, and outstanding                                   -                   -
    Paid in capital                                                      423,104            423,104
    Shareholder's investment in affiliates                               201,417             66,338
    (Accumulated deficit) retained earnings                               (1,579)            34,470
    Accumulated translation adjustments                                     -                (3,500)
                                                                        ---------            -------
                                                                         622,942            520,412
                                                                        ---------            -------

  TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY                         $   636,798          $ 679,906
                                                                         =========         =========
-----------------------------------------------------------------------------------------------------
See accompanying Notes to the Consolidated Financial Statements.
</TABLE>
















































<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS


BORDEN FOODS HOLDINGS CORPORATION
<S>                                                                <C>                        <C>        <C>
(In thousands)                                                                 Year ended December 31,
                                                                  2001              2000                 1999
--------------------------------------------------------------------------------------------------------------------

  CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES
    Net income (loss)                                       $    99,505       $   (30,788)         $   39,368
    Adjustments to reconcile net income (loss) to
     net cash from (used in) operating activities:
      Depreciation                                               14,056            27,599              17,614
      Amortization                                                1,503             3,606               3,754
      Deferred tax (benefit) expense                              1,940            (5,295)             19,387
      Gain on divestiture of businesses                         (87,604)           (4,848)            (46,938)
      Business realignment expense                                  -               5,737                 -
    Net change in assets and liabilities:
      Trade receivables                                          40,626             4,075              (7,862)
      Inventories                                                 6,282             3,016             (14,111)
      Trade payables                                            (17,072)           (7,035)             (8,989)
      Accrued customer allowances                                 2,707            (5,688)             (1,819)
      Current tax payable                                       (30,094)           (3,640)              6,183
      Other assets and liabilities                              (68,275)           15,312              (6,048)
                                                            -------------         ----------        ---------
                                                                (36,426)            2,051                 539
  CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
    Capital expenditures                                         (6,235)          (46,781)            (58,190)
    Proceeds from the sale of fixed assets.                       3,200               161               4,466
    Proceeds from the sale of businesses                        434,618                -               23,571
                                                               ----------         ---------           --------
                                                                431,583           (46,620)            (30,153)
                                                               ----------         ---------           --------

  CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES
    Net short-term debt payments                                   (369)             (346)             (6,178)
    Proceeds (repayment) of loans due to affiliates              (3,029)              516               2,513
    Loans receivable from affiliates                           (176,685)               -                    -
    Repayment of long-term debt                                  (2,529)              (16)                  -
    Repayment of capital lease obligations                           -                (36)                  -
    Distribution to affiliate                                      (475)                -                   -
                                                               ----------         --------             -------
                                                               (183,087)              118              (3,665)
  INCREASE (DECREASE) IN CASH AND EQUIVALENTS                   212,070           (44,451)            (33,279)

  CASH AND EQUIVALENTS AT BEGINNING
    OF YEAR                                                     222,374           266,825             300,104
                                                              -----------         ---------          ---------

  CASH AND EQUIVALENTS AT END
    OF YEAR                                                  $  434,444      $    222,374          $  266,825
                                                             ===========          ========           =========
--------------------------------------------------------------------------------------------------------------------

See accompanying Notes to the Consolidated Financial Statements.
</TABLE>



























<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS  (CONTINUED)


BORDEN FOODS HOLDINGS CORPORATION
<S>                                                       <C>                   <C>                  <C>
(In thousands)                                                             For the year ended December 31,
                                                          2001                  2000                1999
--------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

  Cash paid:
    Interest.                                          $    73          $       172           $      493
    Income taxes, net of refunds                         6,546               (1,268)             (25,264)
--------------------------------------------------------------------------------------------------------------------
See accompanying Notes to the Consolidated Financial Statements.
</TABLE>


































































<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED  STATEMENTS  OF  SHAREHOLDER'S  EQUITY


BORDEN FOODS HOLDINGS CORPORATION
<S>                                                   <C>              <C>              <C>               <C>
(In thousands)
-----------------------------------------------------------------------------------------------------------------------------------

                                                                  Shareholder's       Retained         Accumulated
                                                     Paid in       Investment         Earnings        Translation
                                                     Capital       in Affiliates      (Deficit)        Adjustments        Total
-----------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1998                  $      390,988   $     60,824     $   31,054       $    (8,106)      $   474,760
-----------------------------------------------------------------------------------------------------------------------------------

Net income                                                                          39,368                              39,368
Foreign currency translation adjustments                                                               4,696             4,696
Reclassification adjustment                                                                              282               282
COMPREHENSIVE INCOME                                                                                               $    44,346
                                                                                                                        =========
Affiliate's share of income                                           5,098         (5,098)                                 -
Increase in tax basis related to adjustment
  of purchase price allocation and other              14,829            350                                             15,179
-----------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1999                  $      405,817   $     66,272     $   65,324       $    (3,128)      $   534,285
-----------------------------------------------------------------------------------------------------------------------------------

Net loss                                                                           (30,788)                            (30,788)
Foreign currency translation adjustments                                                                (372)             (372)
                                                                                                                      ---------
COMPREHENSIVE INCOME                                                                                               $   (31,160)
                                                                                                                      =========
Affiliate's share of income                                              66           (66)                                -
Increase in tax basis related to adjustment
  of purchase price allocation                     17,287                                                               17,287
-----------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 2000                  $      423,104   $       66,338   $     34,470      $     (3,500)    $   520,412

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

Net income                                                                            99,505                            99,505
Foreign currency translation adjustments                                                                 3,500           3,500
                                                                                                                      --------
COMPREHENSIVE INCOME                                                                                               $   103,005
                                                                                                                      =========
Affiliate's share of income                                         135,554        (135,554)                                -
Distribution to affiliate                                              (475)                                              (475)
-----------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 2001                  $      423,104   $      201,417   $    (1,579)      $        -       $   622,942
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to the Consolidated Financial Statements.































BORDEN  FOODS  HOLDINGS  CORPORATION
NOTES  TO  THE  CONSOLIDATED  FINANCIAL  STATEMENTS
(Dollars  in  thousands)


1.  BACKGROUND  AND  BASIS  OF  PRESENTATION

In  1994,  Borden,  Inc.  ("Borden") entered into an agreement providing for the
acquisition  ("Acquisition")  of  all  of  Borden's  outstanding common stock by
affiliates  of  Kohlberg  Kravis  Roberts  &  Co.  ("KKR").  The Acquisition was
completed on March 14, 1995. On November 24, 2001, Borden merged with its wholly
owned  subsidiary, Borden Chemical, Inc. ("the Merger"). In conjunction with the
Merger,  Borden,  Inc.,  the  surviving  corporation, changed its name to Borden
Chemical,  Inc ("BCI"). BCI, a public registrant as a result of public debt that
was  outstanding  prior  to  the  Acquisition,  elected  not  to apply push down
accounting  in  its  consolidated  financial  statements  and,  as  such,  BCI's
consolidated  financial  statements are reported on BCI's historical cost basis.
The  accompanying  consolidated  financial  statements  have  been prepared on a
purchase accounting basis from the date of KKR's acquisition of BCI, and include
the  accounts  of  all  majority-owned  subsidiaries  including  Borden  Foods
Corporation  ("BFC")  and  BFC  Investments,  LP  (the  "Investment  LP").  All
significant  intercompany  transactions  have  been  eliminated.

In 1996, BCI, in a taxable transaction, sold certain food businesses and certain
trademarks  to  Borden  Foods  Holdings  Corporation  ("Foods  Holdings"  or the
"Company").  The purchase price was based on a third party valuation.  There was
no  change  in  the  book  basis  of assets and liabilities because the sale was
between  related  parties  and BCI's principal stockholders continued to control
the  Company.  Within  the  terms  of  the  sale,  Foods  Holdings  fully  and
unconditionally  guaranteed  obligations under BCI's Credit Agreement and all of
BCI's  publicly  held  debt  on a pari passu basis (see Note 8).  As a result of
this financial guarantee and in accordance with Regulation S-X rule 3-10, BCI is
required  to  include in its filings with the Securities and Exchange Commission
separate  financial  statements  for  Foods Holdings as if it were a registrant.

Foods Holdings, a wholly owned subsidiary of Borden Foods Holdings, LLC ("LLC"),
owns  approximately 98% of BFC.  The remaining interest in BFC is owned directly
by  the  LLC.  In  connection  with  the  formation  of  Foods Holdings, the LLC
transferred  notes to Foods Holdings in exchange for 100 shares of common stock.
Foods  Holdings  used  the notes to acquire a 98% interest in BFC.  LLC directly
contributed  cash  to  BFC  in  exchange  for  the remaining 2% interest in BFC.

In  a series of transactions in 1996 and 1997, BFC purchased a majority interest
in  Investment LP and LLC acquired the remaining minority interest in Investment
LP.  At  such  time,  Investment  LP transferred certain consideration to BCI in
exchange  for  Foods' trademarks.  The portion of BFC and Investment LP directly
owned  by  LLC  is  recorded  in  Shareholder's  Investment  in  Affiliates.

After  review  of  the  strategic  alternatives  for the Company, a decision was
reached  in  the second quarter of 2001 to exit the Food business.  Accordingly,
the  Company  is  reflected as a discontinued operation for all periods.  During
the third quarter of 2001, the Company completed the sales of essentially all of
its  business  operations  (see  note 3).  Prior to that time, the Company was a
leading producer and marketer of a variety of food products worldwide, including
pasta,  pasta  sauce,  bouillon,  dry  soups  and  shelf  stable  meals.






























2.  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

USE  OF  ESTIMATES - The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles in the United States of
America  requires  management  to make estimates and assumptions that affect the
reported  amounts  of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of  revenues and expenses during the reporting period.  Significant estimates in
the  accompanying financial statements are the accruals for consumer promotions,
reserves  for  expenses  on  businesses  sold,  allocation  of tax basis between
Investment  LP  and  the  Company,  litigation,  general  insurance liabilities,
employee  benefit  plan  liabilities  and  accrued  customer allowances.  Actual
results  could  differ  from  those  estimates.

CASH AND EQUIVALENTS - Cash and equivalents consist of highly liquid investments
purchased  with  an original maturity of three months or less.  Included in cash
equivalents  are  overnight  investments  with  BCI  (see  Note  6).

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

PROPERTY  AND  EQUIPMENT  - Property and equipment are stated at cost and, where
appropriate,  include capitalized interest during construction.  Depreciation is
recorded on the straight-line basis over useful lives ranging from 3 to 10 years
for  machinery and equipment and 30 years for buildings and improvements.  Major
renewals  and  betterments  are  capitalized.  Maintenance,  repairs  and  minor
renewals  are  expensed  when  incurred.

INTANGIBLES - The excess of purchase price over the value of net tangible assets
of  businesses  acquired  is  carried as intangibles in the consolidated balance
sheets.  Goodwill  is  amortized  on a straight-line basis over not more than 40
years,  while trademarks and patents are amortized on a straight-line basis over
the  shorter  of  their  legal  or useful lives.  As a result of the sale of the
Foods business, there was no accumulated amortization of intangibles at December
31,  2001.  Accumulated  amortization of intangibles was $21,230 at December 31,
2000.

INCOME  TAXES  -  Income  taxes  are accounted for using the liability method in
accordance  with  Statement  of  Financial Accounting Standards ("SFAS") No. 109
"Accounting  for Income Taxes".  Deferred income taxes are recorded to recognize
the  future  effects  of  temporary  differences  that  arise  between financial
statement  assets  and  liabilities  and  their  basis  for income tax reporting
purposes.  Taxes  related  to  foreign  operations  have  been  provided  for in
accordance  with  SFAS  No.  109.

COMPREHENSIVE  INCOME  -  The  2001  adjustments  represent  the  accumulated
translation  adjustment  recognized  in the 2001 net income on the sale of pasta
and  sauce  businesses located in Canada and the pasta business located in Italy
in  2001  and  the  sale  of  Denmark  Foods  in  1999.

CONCENTRATION  OF  CREDIT  RISK - Financial instruments that potentially subject
the  Company  to  concentrations of credit risk consist principally of temporary
cash investments. The Company places its temporary cash investments with BCI and
its  affiliates  as  short-term  interest  bearing  loans.

PER  SHARE  INFORMATION - Basic and diluted earnings or loss per common share is
computed by dividing net income or loss by the weighted average number of common
shares  outstanding  during  the  year.

RECLASSIFICATION  - Certain prior year amounts have been reclassified to conform
to  the  2001  presentation.



























3.  DISCONTINUED  OPERATIONS

During  the  second  quarter  of  2001,  the  Company  entered  into  definitive
agreements  to  sell  its pasta sauce, bouillon and dry soups businesses to H.J.
Heinz Company ("Heinz") and to sell seven pasta brands to American Italian Pasta
Company  ("AIPC").  The  Company  also  implemented a plan to sell its remaining
pasta brands and shelf stable meals businesses.  The measurement date applicable
to  each  of  these sales is May 31, 2001.  Estimated operating results from the
measurement  date  forward  are  included  in  the  table  below.

The Company completed the sales to Heinz and AIPC on July 16, 2001.  On July 30,
2001,  the Company sold its remaining pasta business to New World Pasta Company.
The Company completed the sale of its shelf stable meals business to Kraft Foods
Holdings,  Inc.  on  August  27,  2001.

                            PROCEEDS                         PRE-TAX  GAIN(LOSS)
                            --------                        --------------------
Sale  of  business                   434,618                      136,364
Write  down  of remaining assets & liabilities                    (15,181)
Transaction  reserves                                             (41,017)
Income  after  measurement  date                                    7,438
                                                                  --------
               Total                 434,618                       87,604
                                     =======                      --------


     Income  tax  benefit                                          24,805
                                                                   ------
     After  tax  gain                                             112,409
                                                                  =======

All  remaining  facilities,  equipment, and furniture of the Company were marked
down  to  fair  market  value and are included in net assets held for sale.  The
Company  recorded transaction reserves for severance, certain employee benefits,
selling and legal fees, transition services and contract terminations related to
discontinued  operations  at  the  time of such sales.  As of December 31, 2001,
reserves  of  $7,550  remained  in  other  liabilities.  Additionally, $4,205 of
incentive  compensation  remained  in  other  liabilities  at December 31, 2001.

These  businesses  generated  a pre-tax loss from operations of $20,604 from net
sales of $226,565 during the five months ended May 31, 2001, a pre-tax loss from
operations  of  $30,107  on net sales of $570,659 during the year ended December
31,  2000  and pre-tax income from operations of $6,286 on net sales of $547,934
during  the  year ended December 31, 1999.  The Company recognized an income tax
benefit  from  operations  of $7,700 and $4,377 for the years ended December 31,
2001 and 2000, respectively, and an income tax expense from operations of $3,219
for  the  year  ended  December  31,  1999.

During  the  period  from  December  1997  through  April 1999, the Company sold
certain  businesses  that were not considered to be aligned with its grain-based
meal  solution  strategy.  The  proceeds,  gains  and  taxes  related  to  these
divestitures  in  2000  and  1999  were  as  follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
      DIVESTED BUSINESS               PROCEEDS          PRE-TAX GAIN (LOSS)
      -----------------               --------          -------------------
<S>                                    <C>      <C>              <C>
                                      1999                 2000        1999
                                      ----                 ----        ----

Signature  Flavor                                    $    4,278
KLIM                            $    9,767                  570   $   34,549
China                                7,112                            10,838
Denmark  Foods                       6,692                             1,551
     Total                      $   23,571            $   4,848   $   46,938
                                  ---------           ----------------------

                                   Tax  Expense          (9,906)      (7,831)
                        After  Tax  Gain (Loss)       $  (5,058)  $   39,107
                                                         ===================
----------------------------------------------------------------------------
</TABLE>













The  Company  established  reserves  for  work force  reductions,  closure  of
facilities,  selling  and legal fees, contract terminations, transition services
and  other  costs related to the divestiture of these unaligned businesses.  The
Company  utilized  reserves of $1,628, $4,213 and $13,775 during the years ended
December 31, 2001, 2000 and 1999, respectively, for severance and the resolution
of  business and contractual obligations.  The Company reduced other liabilities
by  $4,848  during 2000 for lower than expected exit costs.   As of December 31,
2001,  reserves  related  to  the  divestiture  of  unaligned businesses of $269
remained in other liabilities.  Reserves for divestiture of unaligned businesses
and  recorded  in  other  liabilities were $10,958 and $1,897 as of December 31,
2000  and  December  31,  1999.


4.  BUSINESS  REALIGNMENT

In  2000,  the  Company  recorded  charges  of  $5,737  to implement a workforce
reduction  plan.  The  workforce  reduction  plan  was  put  into  place to take
advantage  of  the  efficiencies  generated  from  the  implementation  of
enterprise-wide  information  technology  systems  in  1999  and  work  process
redesign.  The  plan  was  expected to reduce ongoing general and administrative
expenses  and plant overhead costs.  Reserves primarily for severance of $34 and
$3,737  remained  in  other  liabilities  as  of  December  31,  2001  and 2000,
respectively.


5.  AFFILIATE'S  SHARE  OF  INCOME

In  accordance  with  Investment  LP's  limited  partnership  agreement with the
Company  and  LLC,  the first allocation of a trademark gain is to the Company's
priority  return,  which is a return of 10% per annum, cumulative and compounded
annually  on  the  Company's  net  capital contributions.  The allocation of the
remaining  gain,  computed on a tax basis, is 10% to the Company and 90% to LLC.
After  giving  effect  to  all  special allocations specified by the partnership
agreement,  net  income or loss shall be allocated to the partners in proportion
to  their  respective  percentage  interests.

LLC  was allocated an affiliate's share of income (see accompanying Consolidated
Statements  of  Operations)  of $135,554, $66 and $5,098 in 2001, 2000 and 1999,
respectively.


6.  RELATED  PARTIES

BCI  provides  certain  administrative services, such as rental of office space,
telephone  support  and  postage  to the Company at negotiated fees.  The amount
owed  by  the  Company  for  reimbursement  of  such  services was $242 and $211
December  31,  2001  and  2000,  respectively.

During  the  first  quarter  of  2000,  a  subsidiary  of  BCI  provided certain
administrative  services,  including  processing  of payroll, active and retiree
group  insurance claims, securing insurance coverage for catastrophic claims and
limited  information  systems support.  The subsidiary was sold to a third party
in  2000.  The  third  party continues to provide these services.  Subsequent to
the  sale  of  the subsidiary, fees for these services were no longer considered
affiliate  charges.

Eligible  U.S.  employees  were provided employee pension benefits under the BCI
domestic  pension plan and could participate in the BCI retirement savings plan.
The Company provided BCI with contributions for these benefits, certain of which
were  determined  by  BCI's  actuary.  The  Company's  portion  of these benefit
liabilities  was  considered to be an amount due to affiliate since BCI retained
the  legal obligation for these benefits.  The amounts determined by the actuary
and charged to the Company for the BCI pension plan were $952, $2,177 and $1,243
for  the years ended December 31, 2001, 2000 and 1999.  In addition, the Company
paid BCI $11,132 for its
























portion  of  the  pension  liability in 2001. There was no amount payable by the
Company for its portion of the net pension liability as of December 31, 2001. As
of  December  31,  2000,  this  amount  payable  was  $10,862.

In  2000,  BCI  charged  the  Company $4,039 for retiree postretirement benefits
associated  with  certain  sold  or closed plants.  As of December 31, 2000, the
Company  had  $10,797  of non-pension postretirement benefits charges due to BCI
recorded  in  other  liabilities.

In  the fourth quarter of 2001, subsequent to the sale of the Company's business
operations  (see  Note  3), the Company paid BCI $12,302 to assume the liability
for  payment  of  claims  made  under  essentially all of the Company's employee
benefit  plans.  Benefits covered by this agreement include the employee pension
benefits and retirement savings plan benefits mentioned above as well as retiree
medical  and  life  insurance  benefits  and any remaining claims made under the
Company's  medical  and  dental  benefit  plans.  As  of  December 31, 2001, the
Company  was owed $125 primarily from BCI for reimbursement of payments relating
to  group  insurance  and  worker's  compensation  made  by the Company on BCI's
behalf.


<TABLE>
<CAPTION>
The following summarizes the affiliate charges and reimbursements in 2001, 2000 and  1999:
------------------------------------------------------------------------------------------

                                            -------------------------------
                                                  Year ended December 31,

                                            2001          2000         1999
                                            -------------------------------
<S>                                    <C>           <C>           <C>
     Employee benefits                    $13,637      $ 8,086     $ 2,803
     Group and general insurance             -             626       4,732
     Administrative services                4,025        3,983      12,151
                                           -------     -------     -------
                                          $17,662      $12,695     $19,686
                                          =======      =======     =======
------------------------------------------------------------------------------------------
</TABLE>

Prior  to  the sale of the Company's business operations in the third quarter of
2001,  the  Company performed certain administrative services on behalf of other
BCI  affiliates.  These  services  included  customer  service,  purchasing  and
quality  assurance.  The  Company  charged these affiliates $281, $732, and $765
for  such  services in 2001, 2000 and 1999, respectively.  There were no amounts
outstanding  for these services at December 31, 2001.  At December 31, 2000, the
receivable  for  these  services  was  $146.

The Company invests cash with BCI.  The Company's investment balance was $78,550
and  $206,963  at  December  31,  2001  and  2000,  respectively.  The funds are
invested  overnight  earning a rate set by BCI that generally approximates money
market  rates.  The  Company also had $176,685 short-term loans outstanding that
were  issued  to  other affiliates of the Company's parent at December 31, 2001.
No  cash  was  invested with these affiliates at December 31, 2000.  The Company
earned  interest  income of $12,351 ($4,753 prior to the measurement date of May
31,  2001),  $15,001  and  $14,753  on  these  funds during 2001, 2000 and 1999,
respectively.  Amounts  receivable for interest were $5 and $789 at December 31,
2001  and  2000,  respectively.

BCI  continues  to  provide executive, financial and strategic management to the
Company  for  which  it  charges  an  annual  fee  of  $1,000.



























<PAGE>
7.  DEBT

Debt  outstanding  at  December  31,  2001  and 2000 consisted of the following:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------


                                                           2001                                   2000
                                                           ----                                   ----
<S>                                                  <C>              <C>                 <C>            <C>

                                                                       Due                              Due
                                                    Long-             within               Long-       within
                                                    term             one year              term       one year
Loans due to affiliates (see Note 8)              $  -              $   -              $     -      $   3,029
Foreign bank loans at 3%                             -                  -                   195            35
Industrial Revenue Bonds (non-interest bearing)      -                  -                 2,334           334
Total debt                                        $  -              $   -              $  2,529      $  3,398
                                                   ---------        ----------           -------      -------
-------------------------------------------------------------------------------------------------------------
</TABLE>

Interest  expense  totaled  $224,  $323  and  $190  for  2001,  2000  and  1999,
respectively.

8.  AFFILIATED  CREDIT  FACILITIES

In 1999, the Company borrowed funds from LLC for use in operations.  These loans
were  repaid  with interest to LLC in December 2001. At December 31, 2000, loans
payable  to  LLC  were $3,029 carrying a variable interest rate of approximately
7.25%.  Interest  payable  to  LLC  was  $328 as of December 31, 2000.  Interest
expense  on  these  loans  was  $151,  $216  and  $42  for  2001, 2000 and 1999,
respectively.

The  Company  has  fully  and unconditionally guaranteed obligations under BCI's
Credit  Agreement  and  all  of  BCI's publicly held debt on a pari passu basis.
BCI's  Credit  Agreement  provides  a  line of credit under a five-year revolver
maturing  July  13,  2002.  In  the third quarter of 2001, the credit agreement,
which  had  provided  credit of up to $803,400, was reduced by $553,400.  Of the
reduction,  $95,800  was in accordance with the credit agreement due to the sale
of all of Food's operations.  The remaining reduction was at BCI's election.  At
December  31,  2001  and  2000,  there  were no borrowings outstanding under the
Credit  Agreement  and  $89.0 and $95.0 in letters of credit, as of December 31,
2001  and  2000,  respectively.  BCI's outstanding public borrowings amounted to
approximately $532,497 and $530,530 at December 31, 2001 and 2000, respectively.
In  connection  with  the  guarantee,  the  Company charges BCI an annual fee of
$1,050.  As  an  affiliated  guarantor, the Company's liability shall not exceed
the  greater of its outstanding affiliated borrowings or 95% of its adjusted net
assets  while  BCI  or any other obligated parties have obligations outstanding.

The Credit Agreement, as amended, contains covenants that significantly limit or
prohibit,  among  other  things,  BCI  and  its  affiliated  guarantors  and its
subsidiaries'  ability  to  incur  indebtedness,  make  prepayments  of  certain
indebtedness,  pay  dividends,  engage  in  transactions with affiliates, create
liens,  make  changes  in  its  business or control of the Company, sell assets,
engage  in  mergers  and  consolidations,  and use proceeds from asset sales and
certain  debt  and equity issuances.  In addition, the Credit Agreement requires
that  BCI and its affiliate guarantors limit its capital expenditures to certain
specified amounts and maintain other financial ratios, including a minimum ratio
of  adjusted  EBITDA  (Earnings  Before  Interest,  Taxes,  Depreciation  and
Amortization)  to  interest expense and a maximum ratio of total debt to EBITDA.
























9.  LEASES

Prior to the sale of its business operations, the Company entered into operating
and  capital  lease  agreements  for  certain buildings, forklifts, vehicles and
manufacturing  equipment  and sublet office space from BCI, in the normal course
of  business.  All of the lease agreements under which the Company was obligated
were either assumed by the buyers of the Company's business operations (see Note
3)  or  terminated  during  2001 and the Company is not obligated for any future
lease  payments.

Total  rental  expense  for  operating  leases was $2,094, $2,869 and $4,214 for
2001,  2000 and 1999, respectively, which includes $1,340, $1,573 and $1,987 for
affiliated  leases.

10.  INCOME  TAXES

In 1996, BCI, in a taxable transaction, sold certain food businesses and certain
trademarks  to the Company.  There was no change in the book basis of the assets
and liabilities because the sale was between related parties and BCI's principal
stockholders  continue  to  control  the  Company.  Since  inception,  certain
adjustments  have  been  made  to  the initial capitalization and tax basis.  In
1998,  the  initial  capitalization  and  tax  basis was reallocated from BFC to
Investment  LP, both consolidated subsidiaries, resulting in additional domestic
tax  basis.  The  Company  recognized  additional  basis  in 1999 upon the legal
conveyance  of  Canadian  Foods assets from a subsidiary of BCI.  In 2000, BCI's
1996/1997 IRS audit settlement resulted in additional tax basis for the Company.
These  actions  increased deferred tax assets and Shareholder's Equity by $7,802
through  December  31, 2000 in accordance with Emerging Issues Task Force 94-10,
"Accounting  by  a  Company  for the Income Tax Effects of Transactions among or
with  Its  Shareholders  under  FASB  Statement  No.  109".

Income  tax  provision (benefit) for the years ended December 31, 2001, 2000 and
1999,  consisted  of  the  following:


<TABLE>
<CAPTION>

---------------------------------------------------
Current:                2001       2000      1999
                      ---------  --------  --------
<S>                   <C>        <C>       <C>
     Federal          $(37,884)  $ 9,735   $(7,567)
     State and local     3,798    (1,250)     (193)
     Foreign              (359)    2,339      (577)
                      ---------  --------  --------
                       (34,445)   10,824    (8,337)
Deferred:
     Federal             4,495    (5,077)   13,445
     State and local       325      (315)    3,468
     Foreign            (2,880)       97     2,474
                      ---------  --------  --------
                         1,940    (5,295)   19,387
                      ---------  --------  --------
                      $(32,505)  $ 5,529   $11,050
                      =======    =======   =======
---------------------------------------------------
</TABLE>

The  components  of  the  income  tax  provision  (benefit)  were  as  follows:

<TABLE>
<CAPTION>

----------------------------------------------------------
                              2001       2000      1999
                            ---------  --------  --------
<S>                           <C>        <C>       <C>
     Operations            $ (7,700)  $(4,377)  $  3,219
     Sale of Businesses     (24,805)    9,906      7,831
                           ---------  --------  --------
     Total                 $(32,505)  $ 5,529   $ 11,050
                            =======    =======   =======
---------------------------------------------------------
</TABLE>









The domestic and foreign components of income (loss) before income taxes were as
follows:
<TABLE>
<CAPTION>


----------------------------------------------------
                         2001       2000      1999
                     ----------  ---------  -------
<S>                     <C>         <C>        <C>
     Domestic        $  76,279   $(30,605)  $51,455
     Foreign            (9,279)     5,346     1,769
                     ----------  ---------  -------
     Total           $  67,000   $(25,259)  $53,224
                       =======    =======   =======
----------------------------------------------------
</TABLE>


The  following  table  reconciles  the maximum statutory U.S. Federal income tax
rate  multiplied  by  income  (loss)  before  taxes  to  the recorded income tax
expense:
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------
                                                                   2001       2000       1999
                                                               ----------  ---------  ---------
<S>                                                                <C>         <C>        <C>
    U.S. Federal income tax expense (benefit)                 $  23,449   $ (8,841)  $ 18,628
    State income tax expense (benefit), net of Federal            2,680     (1,010)     2,129
    Divestiture tax differential                                (58,566)     8,015    (10,474)
    Foreign rate differentials                                      379        351      1,278
    Other                                                          (447)     7,014       (511)
                                                              ----------  ---------  ---------
    Income tax  (benefit) expense                             $ (32,505)  $  5,529   $ 11,050
                                                               =========    ========   =======
---------------------------------------------------------------------------------------------------
</TABLE>


In  2000,  additional  income  taxes  were  provided  for  changes  in estimated
liabilities  on  divestitures  related  to open tax years and resulting from the
settlement  of  the  1996/1997  IRS  audit.  These  amounts  are  included  in
divestiture  tax  differential  and  other  in  the  above  reconciliation.

In  2001,  the  Company  recorded a Federal income tax receivable of $9,662 as a
result  of  settling  a 1998/1999 IRS Audit, a carryback of a 2000 net operating
loss  to  1998 and a carryback of 1998 Foreign tax credits to 1997.  A state tax
receivable of $570 relates to refunds resulting from the 2000/2001 net operating
losses.  A  Canadian  tax receivable of $1,020 was recorded for the carryback of
the  2001  net operating loss to tax years 1999 and 2000.  These receivables are
recorded  in  other  assets.





































Temporary differences, associated with the Company's assets and liabilities, are
shown  in the table below.  Deferred income tax assets and liabilities have been
recorded  at  December  31,  2001  and  2000  as  follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
ASSETS:                             2001      2000
                                  --------  --------
<S>                               <C>       <C>
Non-pension post-employment       $     -   $ 2,742
Coupon accrual                          -     1,991
Divestiture reserves                 (165)      740
Trademarks and other intangibles        -       582
Net operating losses - domestic    10,138     9,252
Net operating losses - foreign        588       599
Foreign tax credits                     -     5,795
AMT credit carryforward               192         -
Other                                 577     2,991
                                  --------  --------
Gross deferred tax assets          11,330    24,692

Valuation allowance                (9,888)     (599)
                                  --------  --------
                                    1,442    24,093
LIABILITIES:
Property and equipment                  -    17,557
Trademarks and other intangibles        -         -
Other                                   -     3,155
                                        -    20,712
                                  --------  --------

Net asset                         $ 1,442   $ 3,381
                                  ========= ========
------------------------------------------------------------------------------------
</TABLE>


The  Company recorded valuation allowances of $588 and $599 at December 31, 2001
and  2000,  respectively,  for  the  foreign  net operating losses, which expire
through  2003,  due  to  uncertainty  as  to  whether  the deferred tax asset is
realizable.  The  foreign  tax credits expire in 2003.  A valuation allowance of
$387  was  recorded  relating  to  AMT credits and other miscellaneous operating
deferred  taxes  not  anticipated  to  be  utilized  in  the  future.

The  Company  recorded  a  deferred  tax  asset of $1,442 with intent to carry a
portion  of the 2001 net operating loss of $28,965 forward to 2002.  A valuation
allowance of $8,913 was recorded for the balance of the 2001 net operating loss.
On  March  9, 2002, the President signed the "Job Creation and Worker Assistance
Act  of 2002" into law.  This law extends the carryback period from two years to
five  years for net operating losses arising in the 2001 and 2002 taxable years.
In  the  first  quarter  of  2002,  the Company intends to release the valuation
allowance and recognize the tax benefit of carrying back the balance of the 2001
net  operating  loss  to  1997.

11.  PENSION  AND  OTHER  RETIREMENT  BENEFITS

Most  employees  of  the  Company  participated  in foreign and domestic pension
plans.  For  most  salaried employees, benefits under these plans generally were
based on compensation and credited service.  For most hourly employees, benefits
under  these plans were based on specified amounts per year of credited service.

Pension benefits to eligible U.S. employees were provided under the BCI domestic
pension  plan  to which the Company contributed. This amount is considered to be
an  amount  due  to  affiliate  since BCI retains the legal obligation for these
benefits. In the fourth quarter of 2001, subsequent to the sale of the Company's
business  operations  (see  Note  3), the Company paid BCI $12,302 to assume the
liability  for  payment  of  claims  made under essentially all of the Company's
employee  benefit plans (see Note 6). In addition, the Company sold its Canadian
pension plan along with its remaining pasta business to New World Pasta Company.















12.  UNIT  INCENTIVE  PLAN

The  Company had a Unit Incentive Plan ("Incentive Plan") which provided for the
granting  of  options,  unit  appreciation  rights  ("UAR's),  units  and  other
unit-based  equity  interests  in  LLC  to  key  employees  of  the  Company and
associated  persons  at the discretion of the Board of Directors of the Company.

Prior  to  2001,  LLC  sold several different classes of equity units to certain
management  employees of the Company under the Incentive Plan.  The equity units
were  restricted  as to transfer and allowed for repurchase by LLC under certain
conditions.  The  Company  also  issued UAR's to unitholders and non-unitholders
under  the  Incentive  Plan.  The  UAR's,  among  other provisions, entitled the
holder to receive an amount in cash equal to the market price (as defined in the
UAR  agreement)  over  the  exercise  price.

In  the fourth quarter of 2001, subsequent to the sale of the Company's business
operations (see Note 3), LLC elected to repurchase all of the equity units.  The
Company  compensated  holders for the value of all the UAR's and cancelled these
units.  Therefore,  no  equity  units  or  UAR's  remain  outstanding  under the
Incentive  Plan  at  December  31,  2001.  The Company paid $1,424 to settle all
outstanding  UAR's.  Of  this  amount,  $974  was  accrued  prior  to  2001.


13.  COMMITMENTS  AND  CONTINGENCIES

Legal  Matters
--------------

The  Company is involved in certain legal proceedings arising through the normal
course  of  business.  Management  is  of the opinion that the final outcomes of
such  proceedings  should not have a significant impact on the Company's results
of  operations  or  financial  position.