SETTLEMENT AGREEMENT AND RELEASE

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



     This SETTLEMENT AGREEMENT AND RELEASE (the "SETTLEMENT AGREEMENT") is made

and entered into this 7th day of March, 2002, by and between Borden Chemical,

Inc. ("BCI") and BCP Management, Inc. ("BCPM"), each on behalf of themselves and

each of their present and former parents, subsidiaries, affiliates, divisions,

stockholders, partners, officers, directors, employees, agents and any of their

legal representatives (and the predecessors, heirs, executors, administrators,

successors and assigns of each of the foregoing).



                                    RECITALS

                                    --------



     WHEREAS, BCPM has asserted that BCI owes certain obligations under a Demand

Note dated November 30, 1987 (the "Demand Note"); and



     WHEREAS, BCI has already paid to BCPM $24,213,734.00 (the "Demand Note

Payment") pursuant to the Demand Note; and



     WHEREAS, BCI has asserted that BCPM owes BCI: 1) the sum of $1,869,835.00

related to a Rail Car Sublease Agreement made and entered into as of November

30, 1987 by and between Borden, Inc. (BCI's predecessor) and Borden Chemical and

Plastics Operating Limited Partnership (of which BCPM is a general partner) (the

"Rail Car Obligations"); 2) the sum of $648,514.33 in connection with the

obligations (the "Pension Obligations") of BCPM to reimburse BCI for payments

made by BCI on behalf of BCPM under the Borden Chemical Executive Supplemental

Pension Plan (the "ESPP"); 3) the sum of $82,029.00 in connection with

obligations owed to BCI relating to certain risk management costs, directors

fees, car lease payments, savings plan administration, travel, and other costs

(the "Miscellaneous Obligations"); and 4) the sum of $5,623,893 related to a

Utilities and Services Agreement (the "Utilities and



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Services Agreement") dated as of July 28, 2000 by and between BCI and Borden

Chemical and Plastics Operating Limited Partnership (the "Utilities and Services

Agreement Obligations") (collectively, the "BCPM Obligations"); and



     WHEREAS, BCI has asserted that the Demand Note Payment represents payment

in full under, and full satisfaction of, its obligations under the Demand Note

after giving effect to certain rights of set-off BCI has against BCPM as a

result of the BCPM Obligations and BCPM has contested the right of BCI to

set-off certain of the BCPM Obligations against BCI's obligations under the

Demand Note.



     NOW, THEREFORE, IT IS AGREED BY AND BETWEEN BCI and BCPM, AS FOLLOWS:



     1. The Rail Car Obligations, the Pension Obligations and the Miscellaneous

Obligations are valid and enforceable obligations of BCPM to BCI and are

currently due and owing.



     2. BCI has a valid and enforceable right to set-off the Rail Car

Obligations, the Pension Obligations and the Miscellaneous Obligations against

any amounts which BCPM claims are still due and owing under the Demand Note and,

if the parties were to litigate this issue, the most likely outcome would be a

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