-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DrswPeOPaSt16KMGsGoIQtbcmXEGmqKGCjPRvHivBM1yPXteWmlv4nMWh/fZ0hZY TG6zdCqcP0FoqZZI45OFIg== 0000950130-97-001711.txt : 19970416 0000950130-97-001711.hdr.sgml : 19970416 ACCESSION NUMBER: 0000950130-97-001711 CONFORMED SUBMISSION TYPE: 8-A12B PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19970415 SROS: NASD SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BORDEN CHEMICALS & PLASTICS LIMITED PARTNERSHIP /DE/ CENTRAL INDEX KEY: 0000821202 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS, MATERIALS, SYNTH RESINS & NONVULCAN ELASTOMERS [2821] IRS NUMBER: 311269627 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-A12B SEC ACT: 1934 Act SEC FILE NUMBER: 001-09699 FILM NUMBER: 97580963 BUSINESS ADDRESS: STREET 1: HIGHWAY 73 CITY: GEISMAR STATE: LA ZIP: 70734 BUSINESS PHONE: 5046736121 MAIL ADDRESS: STREET 1: PO BOX 427 CITY: GERSMAR STATE: LA ZIP: 70734 FORMER COMPANY: FORMER CONFORMED NAME: BORDEN CHEMICALS & PLASTICS LIMITED PARTNERSHIP DATE OF NAME CHANGE: 19920703 8-A12B 1 FORM 8-A ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM 8-A FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 Borden Chemicals and Plastics Limited Partnership - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 31-1269627 - --------------------------------------- ------------------ (State of incorporation or organization) (I.R.S. Employer Identification No.) Highway 73 Geismar, Louisiana 70734 - --------------------------------------- --------- (Address of principal executive offices) (Zip Code) Securities to be registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which to be so registered each class is to be registered - ------------------- ------------------------------ Rights to Purchase Units New York Stock Exchange Securities to be registered pursuant to Section 12(g) of the Act: (None) ================================================================================ Item 1. Description of Registrant's Securities to be Registered ------------------------------------------------------- On April 8, 1997, BCP Management, Inc., the general partner (the "General ------- Partner") of Borden Chemicals and Plastics Limited Partnership (the - ------- "Partnership") declared a distribution, to be made on April 21, 1997 (the ----------- "Record Date"), of (i) one common unit purchase right (a "Right") for each ----------- ----- outstanding common unit (a "Unit"; collectively, the "Units") of the Partnership ---- ----- and (ii) such number of Rights as most closely approximates 1/99th of the number of Units outstanding on the Record Date (in respect of the General Partner's interest in the Partnership). The distribution is payable to the record holders of Units on the Record Date and to the General Partner. Each Right entitles the holder to purchase from the Partnership one Unit at a price of $21.00 (the "Purchase Price"), subject to adjustment. The description and terms of the -------------- Rights are set forth in a Rights Agreement dated as of April 8, 1997 (the "Rights Agreement") between the Partnership and Harris Trust and Savings Bank, ---------------- as Rights Agent (the "Rights Agent"). ------------ Until the earlier to occur of (i) 10 days following a public announcement that a person or group of affiliated or associated persons (an "Acquiring --------- Person") have acquired beneficial ownership of 15% or more of the outstanding - ------ Units or (ii) 10 business days (or such later date as may be determined by action of the General Partner prior to such time as any person or group of affiliated persons becomes an Acquiring Person) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 15% or more of the outstanding Units (the earlier of such dates being called the "Distribution Date"), the Rights (other than those held by the ----------------- General Partner) will be evidenced, with respect to any of the certificates for Units outstanding as of the Record Date, by such certificates for Units together with a copy of a Summary of Rights which will be sent to each unitholder of record on the Record Date. The Rights Agreement provides that, until the Distribution Date (or earlier redemption or expiration of the Rights), the Rights will be transferred with and only with the Units (or in the case of the General Partner, with the transfer of the general partnership interest). A Right will be issued with each Unit issued after the date of the initial issuance of the Rights and, subject to certain exceptions, prior to the Distribution Date. Until the Distribution Date (or earlier redemption or expiration of the Rights), new certificates for Units issued after the Record Date upon transfer or new issuances of Units will contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any certificates for Units outstanding as of the Record Date, even without such notation or a copy of the Summary of Rights referred to above, will also constitute the transfer of the Rights associated with the Units represented by such certificate. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Right ----- Certificates") will be mailed to holders of record of the Units as of the close - ------------ of business on the Distribution Date and such separate Right Certificates alone will evidence the Rights. The Rights are not exercisable until the Distribution Date. The Rights will expire on the earliest to occur of (i) the effective date of the Merger described in the Agreement and Plan of Conversion, dated as of April 8, 1997, among the Partnership, the General Partner, Borden Chemicals and Plastics Operating Limited Partnership, BCP Chemicals and Plastics Inc., BCP Chemicals and Plastics GP Inc. and BCP Chemicals and Plastics L.P. and (ii) April 8, 2007 (the "Final ----- Expiration Date"), unless the Final Expiration Date is extended or unless the - --------------- Rights are earlier redeemed or exchanged by the Partnership, in each case as described below. The Purchase Price payable, and the number of Units or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a distribution in the form of Units, or a subdivision, combination or reclassification of the Units, (ii) upon the grant to holders of the Units of certain rights or warrants to subscribe for or purchase Units at a price, or securities convertible into Units with a conversion price, less than the then-current market price of the Units or (iii) upon the distribution to holders of the Units of evidences of indebtedness or assets (excluding regular periodic cash distributions or distributions payable in Units) or of subscription rights or warrants (other than those referred to above). In the event that any person or group of affiliated or associated persons becomes an Acquiring Person, proper provision shall be made so that each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter have the right to receive upon exercise of the Right at the then current exercise price of the Right, that number of Units having a market value of two times such exercise price. In the event that, after a person or group has become an Acquiring Person, the Partnership is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets or earning power are sold, proper provision will be made so that each holder of a Right (other than Rights beneficially owned by an Acquiring Person which will have become void) will thereafter have the right to receive, upon the exercise thereof of the Right at the then current exercise price of the Right, that number of shares of common stock, limited partnership interests or equivalent ownership interests of the person with whom the Partnership has engaged in the foregoing transaction which number of shares, limited partnership interests or equivalent ownership interests at the time of such transaction will have a market value of two times the exercise price of the Right. At any time after any person or group becomes an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanidng Units or the occurrence of an event described in the preceding paragraph, the General Partner on behalf of the Partnership may exchange the Rights (other than Rights owned by such person or group which will have become void), in whole or in part, at an exchange ratio of one Unit per Right (subject to adjustment). With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in such Purchase Price. No fractional Units will be issued (other than fractions, which may, at the election of the Partnership, be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash -2- will be made based on the market price of the Units on the last trading day prior to the date of exercise. At any time prior to the time an Acquiring Person becomes such, the General Partner on behalf of the Partnership may redeem the Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption Price"). The redemption of ---------------- the Rights may be made effective at such time, on such basis and with such conditions as the General Partner on behalf of the Partnership in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. For so long as Rights are then redeemable, the Partnership may, except with respect to the redemption price, amend the Rights in any manner. After the Rights are no longer redeemable the Partnership may, except with respect to the Redemption Price, amend the Rights in any manner that does not adversely affect the interests of holders of the Rights. Until a Right is exercised, the holder thereof, as such, will have no rights as a unitholder of the Partnership, including, without limitation, the right to vote or to receive distributions. This summary description of the Rights is qualified in its entirety by reference to the Rights Agreement, as amended from time to time, which is attached as an exhibit hereto and is hereby incorporated by reference herein. -3- Item 2. Exhibits. -------- 1. Rights Agreement, dated as of April 8, 1997, between the Partnership and Harris Trust and Savings Bank which includes the form of Right Certificate as Exhibit A and a Summary of Rights to Purchase Units as Exhibit B. 2. Agreement and Plan of Conversion, dated as of April 8, 1997 among the Partnership, the General Partner, Borden Chemicals and Plastics Operating Limited Partnership, BCP Chemicals and Plastics Inc., BCP Chemicals and Plastics GP Inc. and BCP Chemicals and Plastics L.P. 3. Press Release dated April 8, 1997. 4. Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of December 15, 1998, (previously filed as an exhibit to the joint Registration Statement on Form S-1 and Form S-3 of the Partnership, Borden, Inc. and Borden Delaware Holdings, Inc. (File No. 33-25371) and incorporated by reference herein). 5. First Amendment, dated as of April 8, 1997, to the Amended and Restated Agreement of Limited Partnership, dated as of December 15, 1988, of the Partnership, entered into by and among the General Partner and the limited partners of the Partnership. -4- SIGNATURE Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned thereunto duly authorized. BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP By: BCP Management, Inc., its general partner DATED: April 15, 1997 By: /s/ James O. Stevning -------------------------------- Name: James O. Stevning Title: Chief Financial Officer -5- EXHIBIT INDEX Exhibit No. Description - ---------- ----------- 1. Rights Agreement, dated as of April 8, 1997, between the Partnership and Harris Trust and Savings Bank which includes the form of Right Certificate as Exhibit A and a Summary of Rights to Purchase Units as Exhibit B. 2. Agreement and Plan of Conversion, dated as of April 8, 1997 among the Partnership, the General Partner, Borden Chemicals and Plastics Operating Limited Partnership, BCP Chemicals and Plastics Inc., BCP Chemicals and Plastics GP Inc. and BCP Chemicals and Plastics L.P. 3. Press Release dated April 8, 1997. 4. Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of December 15, 1998, (previously filed as an exhibit to the joint Registration Statement on Form S-1 and Form S-3 of the Partnership, Borden, Inc. and Borden Delaware Holdings, Inc. (File No. 33-25371) and incorporated by reference herein). 5. First Amendment, dated as of April 8, 1997, to the Amended and Restated Agreement of Limited Partnership, dated as of December 15, 1988, of the Partnership, entered into by and among the General Partner and the limited partners of the Partnership. -6- EX-1 2 RIGHTS AGREEMENT, DATED APRIL 8, 1997 CONFORMED COPY Exhibit 1 - -------------------------------------------------------------------------------- RIGHTS AGREEMENT BETWEEN BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP AND HARRIS TRUST AND SAVINGS BANK as Rights Agent Dated as of April 8, 1997 - --------------------------------------------------------------------------------
TABLE OF CONTENTS Page Section 1. Certain Definitions............................................................ 2 Section 2. Appointment of Rights Agent.................................................... 8 Section 3. Issue of Right Certificates.................................................... 8 Section 4. Form of Right Certificates..................................................... 11 Section 5. Countersignature and Registration.............................................. 11 Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates..................... 12 Section 7. Exercise of Rights, Purchase Price; Expiration Date of Rights.................. 13 Section 8. Cancellation and Destruction of Right Certificates............................. 15 Section 9. Availability of Units.......................................................... 16 Section 10. Units Record Date............................................................. 18 Section 11. Adjustment of Purchase Price, Number of Units and Number of Rights............ 18 Section 12. Certificate of Adjusted Purchase Price or Number of Units..................... 32 Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earnings Power......... 32 Section 14. Fractional Rights and Fractional Units........................................ 39 Section 15. Rights of Action.............................................................. 40 Section 16. Agreement of Right Holders.................................................... 41 Section 17. Right Certificate Holder Not Deemed a Holder of Units......................... 42 Section 18. Concerning the Rights Agent................................................... 42 Section 19. Merger or Consolidation or Change of Name of Rights Agent..................... 43 Section 20. Duties of Rights Agent........................................................ 44 Section 21. Change of Rights Agent........................................................ 48
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TABLE OF CONTENTS Page Section 22. Issuance of New Right Certificates............................................ 49 Section 23. Redemption.................................................................... 50 Section 24. Exchange...................................................................... 51 Section 25. Notice of Certain Events...................................................... 52 Section 26. Notices....................................................................... 54 Section 27. Supplements and Amendments.................................................... 54 Section 28. Successors.................................................................... 55 Section 29. Benefits of this Agreement.................................................... 55 Section 30. Partnership Action............................................................ 56 Section 31. Termination................................................................... 56 Section 32. Severability.................................................................. 56 Section 33. Governing Law................................................................. 56 Section 34. Counterparts.................................................................. 56 Section 35. Descriptive Headings.......................................................... 56
Exhibits Exhibit A - Form of Right Certificate Exhibit B - Summary of Rights to Purchase Units -ii- RIGHTS AGREEMENT ---------------- Agreement, dated as of April 8, 1997, between Borden Chemicals and Plastics Limited Partnership, a Delaware limited partnership (the "Partnership"), and Harris Trust and Savings Bank, an Illinois banking ----------- corporation (the "Rights Agent"). ------------ The Board of Directors of BCP Management Inc., as the general partner of the Partnership (the "General Partner"), has authorized the issuance --------------- and declared a distribution of (i) one common unit purchase right (a "Right") ----- for each Unit (as hereinafter defined) of the Partnership outstanding as of the close of business (as defined below) on April 21, 1997 (the "Record Date") and ----------- (ii) such number of Rights as shall most closely approximate 1/99th of the number of Units outstanding on the Record Date in respect of the General Partner's interest in the Partnership as of the Record Date, each Right representing the right to purchase one Unit (subject to adjustment) upon the terms and subject to the conditions herein set forth, and has further authorized and directed the issuance of (i) one Right (subject to adjustment as provided herein) with respect to each Unit that shall become outstanding between the Record Date and the earliest of the Distribution Date, the Redemption Date and the Final Expiration Date (as such terms are hereinafter defined) and (ii) such number of Rights (subject to adjustment as provided herein) as shall most closely approximate 1/99th of the number of Rights issued as a result of the Units that shall become outstanding between such dates pursuant to the immediately preceding clause (i) in respect of additional contributions to the Partnership by the General Partner; provided, however, that Rights may be issued -------- ------- with respect to Units that shall become outstanding after the Distribution Date and prior to the Redemption Date and the Final Expiration Date in accordance with Section 22. Accordingly, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: 2 Section 1. Certain Definitions. For purposes of this Agreement, ------------------- the following terms have the meaning indicated: (a) "Acquiring Person" shall mean any Person (as such term ---------------- is hereinafter defined) who or which shall be the Beneficial Owner (as such term is hereinafter defined) of 15% or more of the Units then outstanding, but shall not include an Exempt Person (as such term is hereinafter defined); provided, however, that if the General Partner -------- ------- determines in good faith that a Person who would otherwise be an "Acquiring Person" has become such inadvertently (including, without limitation, because (i) such Person was unaware that it beneficially owned a percentage of Units that would otherwise cause such Person to be a "Acquiring Person" or (ii) such Person was aware of the extent of its Beneficial Ownership of the Units but had no actual knowledge of the consequences of such Beneficial Ownership under this Rights Agreement) and without any intention of changing or influencing control of the Partnership, and such Person, as promptly as practicable divested or divests himself or itself of Beneficial Ownership of a sufficient number of Units so that such Person would no longer be an Acquiring Person, then such Person shall not be deemed to be or to have become an "Acquiring Person" for any purposes of this Agreement. Notwithstanding the foregoing, (i) if a Person would otherwise be deemed an Acquiring Person upon the adoption of this Agreement, such Person will not be deemed an Acquiring Person for any purposes of this Agreement unless and until such Person acquires Beneficial Ownership of any additional Units after the adoption of this Agreement, unless upon the consummation of the acquisition of such additional Units such Person does not beneficially own 15% or more of the Units then outstanding, and (ii) no Person shall become an "Acquiring Person" as the result of an 3 acquisition of Units by the Partnership which, by reducing the number of Units outstanding, increases the proportionate number of Units beneficially owned by such Person to 15% or more of the Units then outstanding, provided, however, that if a Person shall become the -------- ------- Beneficial Owner of 15% or more of the Units then outstanding by reason of such Unit acquisitions by the Partnership and thereafter become the Beneficial Owner of any additional Units, then such Person shall be deemed to be an "Acquiring Person" unless upon the consummation of the acquisition of such additional Units such Person does not own 15% or more of the Units then outstanding. The phrase "then outstanding", when ---------------- used with reference to a Person's Beneficial Ownership of securities (including without limitation Units) of the Partnership, shall mean the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding which such Person would be deemed to own beneficially hereunder. (b) "Affiliate" and "Associate" shall have the respective --------- --------- meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on the date of this Agreement. ------------ (c) "Agreement and Plan of Conversion" shall mean the -------------------------------- Agreement and Plan of Conversion dated as of April 8, 1997 among the Partnership, the General Partner, Borden Chemicals and Plastics Operating Limited Partnership, BCP Chemicals and Plastics Inc., BCP Chemicals and Plastics GP Inc. and BCP Chemicals and Plastics L.P., as amended. 4 (d) A Person shall be deemed the "Beneficial Owner" of, ---------------- shall be deemed to have "Beneficial Ownership" of and shall be deemed to -------------------- "beneficially own" any securities: ---------------- (i) which such Person or any of such Person's Affiliates or Associates is deemed to beneficially own, directly or indirectly within the meaning of Rule 13d-3 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement; (ii) which such Person or any of such Person's Affiliates or Associates has (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed -------- ------- the Beneficial Owner of, or to beneficially own, (x) securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase, (y) securities which such Person has a right to acquire on the exercise of Rights at any time prior to the time a Person becomes an Acquiring Person or (z) securities issuable upon exercise of Rights from and after the time a Person becomes an Acquiring Person if such Rights were acquired by such Person or any of such Person's Affiliates or Associates prior to the Distribution Date or pursuant to Section 3(a) or Section 22 hereof ("original Rights") or pursuant to Section 11(i) or --------------- Section 11(n) with respect to an adjustment to original Rights; or (B) the 5 right to vote pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be -------- ------- deemed the Beneficial Owner of, or to beneficially own, any security by reason of such agreement, arrangement or understanding if the agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) for the purpose of acquiring, holding, voting (except to the extent contemplated by the proviso to Section 1(c)(ii)(B)) or disposing of any securities of the Partnership. (e) "Business Day" shall mean any day other than a ------------ Saturday, a Sunday, or a day on which banking institutions in the State of New York, or the State in which the principal office of the Rights Agent is located, are authorized or obligated by law or executive order to close. (f) "close of business" on any given date shall mean 5:00 ----------------- P.M., New York City time, on such date; provided, however, that if such -------- ------- date is not a Business Day it shall mean 5:00 P.M., New York City time, on the next succeeding Business Day. 6 (g) "current market price" shall have the meaning set -------------------- forth in Section 11(d)(i). (h) "Current Value" shall have the meaning set forth ------------- in Section 11(a)(ii). (i) "Distribution Date" shall have the meaning set ----------------- forth in Section 3. (j) "Exchange Ratio" shall have the meaning set forth -------------- in Section 24(a). (k) "Exempt Person" shall mean the Partnership, the ------------- General Partner, any Subsidiary (as such term is hereinafter defined) of the Partnership, any Subsidiary or Affiliate of the General Partner, any employee benefit plan of the Partnership or the General Partner or of any Subsidiary of the Partnership or of any Subsidiary or Affiliate of the General Partner, or any entity or trustee holding Units for or pursuant to the terms of any such plan or for the purpose of funding any such plan or funding other employee benefits for employees of the Partnership or of any Subsidiary of the Partnership, in each case acting pursuant to Special Approval (as defined in the Partnership Agreement) of the board of directors of the General Partner. (l) "Final Expiration Date" shall have the meaning set --------------------- forth in Section 7. (m) "invalidation time" shall have the meaning set ----------------- forth in Section 11(a)(ii). (n) "New York Stock Exchange" shall mean the New York ----------------------- Stock Exchange, Inc. (o) "Partnership Agreement" shall mean the Amended and --------------------- Restated Agreement of Limited Partnership of the Partnership, dated as of December 15, 1988, as amended. (p) "Person" shall mean any individual, firm, ------ corporation or other entity, and shall include any successor (by merger or otherwise) of such entity. (q) "Principal Party" shall have the meaning set forth --------------- in Section 13. (r) "Purchase Price" shall have the meaning set forth -------------- in Section 4. 7 (s) "Redemption Date" shall have the meaning set forth --------------- in Section 7. (t) "Redemption Price" shall have the meaning set ---------------- forth in Section 23(a). (u) "Right Certificate" shall have the meaning set ----------------- forth in Section 3(a). (v) "Securities Act" shall mean the Securities Act of -------------- 1933, as amended. (w) "Spread" shall have the meaning set forth in ------ Section 11(a)(ii). (x) "Subsidiary" of any Person shall mean any ---------- corporation or other entity of which securities or other ownership interests having ordinary voting power sufficient to elect a majority of the board of directors or other persons performing similar functions are beneficially owned, directly or indirectly, by such Person, and any corporation or other entity that is otherwise controlled by such Person. (y) "Substitution Period" shall have the meaning set ------------------- forth in Section 11(a)(iii). (z) "Unit" when used with reference to the Partnership ---- shall mean a common limited partnership interest in the Partnership, as described in the Partnership Agreement. (aa) "Unit Acquisition Date" shall mean the first date --------------------- of public announcement (which for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the Partnership or an Acquiring Person that an Acquiring Person has become such or such earlier date as the General Partner shall become aware of the existence of an Acquiring Person. (ab) "Unit equivalent" shall have the meaning set forth --------------- in Section 11(a)(ii). Any determination required to be made by the General Partner of the Partnership for purposes of applying the definitions contained in this Section 1 shall be made solely by the General Partner in its good faith judgment, which determination shall be binding on the Rights Agent and the holders of the Rights. 8 Section 2. Appointment of Rights Agent. The Partnership --------------------------- hereby appoints the Rights Agent to act as agent for the Partnership and the holders of the Rights (who, (in addition to the General Partner) shall prior to the Distribution Date also be the holders of Units in accordance with Section 3 hereof) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Partnership may from time to time appoint such co-Rights Agents as it may deem necessary or desirable. Section 3. Issue of Right Certificates. (a) Until the earlier of --------------------------- (i) the tenth day after the Unit Acquisition Date or (ii) the tenth business day (or such later date as may be determined by action of the General Partner prior to such time as any Person becomes an Acquiring Person) after the date of the commencement by any Person (other than an Exempt Person) of, or of the first public announcement of the intention of such Person (other than an Exempt Person) to commence a tender or exchange offer the consummation of which would result in any Person becoming the Beneficial Owner of Units aggregating 15% or more of the Units then outstanding (including any such date which is after the date of this Agreement and prior to the issuance of the Rights; the earlier of such dates being herein referred to as the "Distribution Date"), (x) the Rights ----------------- (other than those held by the General Partner) will be evidenced (subject to the provisions of Section 3(b) hereof) by the certificates for Units registered in the names of the holders thereof and not by separate Right certificates, and (y) the Rights will be transferable only in connection with the transfer of Units (or the transfer of the General Partner's interest in the Partnership). As soon as practicable after the Distribution Date, the Partnership will prepare and execute, the Rights Agent will countersign, and the Partnership will send or cause to be sent (and the Rights Agent will, if requested, send) by first-class, insured, postage-prepaid mail, to (i) each record holder of Units as of the close of business on the 9 Distribution Date (other than any Acquiring Person or any Associate or Affiliate of an Acquiring Person), at the address of such holder shown on the records of the Partnership, a Right Certificate, in substantially the form of Exhibit A hereto (a "Right Certificate"), evidencing one Right (subject to adjustment as ----------------- provided herein) for each Unit so held and (ii) to the General Partner, at its address shown on the records of the Partnership, a Right Certificate evidencing the Rights (subject to adjustment as provided herein) in respect of the General Partner's interest in the Partnership. As of the Distribution Date, the Rights will be evidenced solely by such Right Certificates. Notwithstanding anything in this Agreement to the contrary, a Distribution Date shall not be deemed to have occurred solely as the result of the approval, execution or delivery of the Agreement and Plan of Conversion or the consummation of the Transactions (as defined in the Agreement and Plan of Conversion) contemplated thereby. Nothwithstanding anything to the contrary in this Agreement or the Partnership Agreement to the contrary, a subdivision or combination of the Units for purposes of Section 4.11(a) of the Partnership Agreement shall include the distribution of the Rights and any issuance of Units or any other securities of the Partnership upon the exericise of the Rights pursuant to this Agreement. (b) On the Record Date, or as soon as practicable thereafter, the Partnership will send a copy of a Summary of Rights to Purchase Units, in substantially the form of Exhibit B hereto (the "Summary of Rights"), ----------------- by first-class, postage-prepaid mail, to each record holder of Units as of the close of business on the Record Date (other than any Acquiring Person or any Associate or Affiliate of any Acquiring Person), at the address of such holder shown on the records of the Partnership. With respect to certificates for Units outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates registered in the names of the holders thereof together with the Summary of Rights. Until the Distribution Date (or the earlier of the Redemption Date or the Final Expiration Date), the surrender for transfer of any certificate for Units outstanding on the Record Date, with or without a copy of the Summary of Rights, shall also constitute the transfer of the Rights associated with the Units represented thereby. 10 (c) Certificates issued for Units (including, without limitation, upon transfer of outstanding Units, disposition of Units out of Units held in treasury or issuance or reissuance of Units out of authorized but unissued Units) after the Record Date but prior to the earliest of the Distribution Date, the Redemption Date or the Final Expiration Date shall have impressed on, printed on, written on or otherwise affixed to them the following legend: This certificate also evidences and entitles the holder hereof to certain rights as set forth in a Rights Agreement between Borden Chemicals and Plastics Limited Partnership and Harris Trust and Savings Bank dated as of April 8, 1997 as the same may be amended from time to time (the "Rights Agreement"), the terms of which ---------------- are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of Borden Chemicals and Plastics Limited Partnership. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. Borden Chemicals and Plastics Limited Partnership will mail to the holder of this certificate a copy of the Rights Agreement without charge after receipt of a written request therefor. Under certain circumstances, as set forth in the Rights ------------------------------------------------------- Agreement, Rights owned by or transferred to any Person who ----------------------------------------------------------- becomes an Acquiring Person (as defined in the Rights Agreement) ---------------------------------------------------------------- and certain transferees thereof will become null and void and ------------------------------------------------------------- will no longer be transferable. ------------------------------ With respect to such certificates containing the foregoing legend, until the Distribution Date, the Rights associated with the Units represented by such certificates shall be evidenced by such certificates alone, and the surrender for transfer of any such certificate, except as otherwise provided herein, shall also constitute the transfer of the Rights associated with the Units represented thereby. In the event that the Partnership purchases or otherwise acquires any Units after the Record Date but prior to the Distribution Date, any Rights associated with such Units shall be deemed cancelled and retired so that the Partnership shall not be entitled to exercise any Rights associated with the Units which are no longer outstanding. 11 Notwithstanding this paragraph (c), the omission of a legend shall not affect the enforceability of any part of this Agreement or the rights of any holder of the Rights. Section 4. Form of Right Certificates. The Right Certificates -------------------------- (and the forms of election to purchase Units and of assignment to be printed on the reverse thereof) shall be substantially in the form set forth in Exhibit A hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Partnership may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of the New York Stock Exchange or of any other stock exchange or automated quotation system on which the Rights may from time to time be listed, or to conform to usage. Subject to the provisions of Sections 11, 13 and 22 hereof, the Right Certificates shall entitle the holders thereof to purchase such number of Units as shall be set forth therein at the price per Unit set forth therein (the "Purchase Price"), but the number of such Units and the Purchase Price shall be -------------- subject to adjustment as provided herein. Section 5. Countersignature and Registration. (a) The Right --------------------------------- Certificates shall be executed on behalf of the Partnership by the Chairman of the Board of Directors, the President, any Vice President, the Treasurer or the Controller of the General Partner, either manually or by facsimile signature. The Right Certificates shall be manually countersigned by the Rights Agent and shall not be valid for any purpose unless countersigned. In case any officer of the General Partner who shall have signed any of the Right Certificates shall cease to be such officer of the General Partner before countersignature by the Rights Agent and issuance and delivery by the Partnership, such Right Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by the Partnership with the same force and effect as 12 though the Person who signed such Right Certificates had not ceased to be such officer of the General Partner; and any Right Certificate may be signed on behalf of the Partnership by any Person who, at the actual date of the execution of such Right Certificate, shall be a proper officer of the General Partner to sign such Right Certificate, although at the date of the execution of this Agreement any such Person was not such an officer. (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at an office or agency designated for such purpose, books for registration and transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the date of each of the Right Certificates. Section 6. Transfer, Split Up, Combination and Exchange of Right ----------------------------------------------------- Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a) - --------------------------------------------------------------------- Subject to the provisions of Sections 7(e), 11(a)(ii) and 14 hereof, at any time after the close of business on the Distribution Date, and prior to the close of business on the earlier of the Redemption Date or the Final Expiration Date, any Right Certificate or Right Certificates may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates, entitling the registered holder to purchase a like number of Units as the Right Certificate or Right Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Right Certificate or Right Certificates to be transferred, split up, combined or exchanged at the office or agency of the Rights Agent designated for such purpose. Thereupon the Rights Agent shall countersign and deliver to the Person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested. The Partnership may 13 require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates. (b) Subject to the provisions of Section 11(a)(ii) hereof, at any time after the Distribution Date and prior to the close of business on the earlier of the Redemption Date or the Final Expiration Date, upon receipt by the Partnership and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft or destruction, delivery of an indemnity bond reasonably satisfactory to them, and, at the Partnership's request, reimbursement to the Partnership and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Partnership will make and deliver a new Right Certificate of like tenor to the Rights Agent for delivery to the registered holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. Section 7. Exercise of Rights, Purchase Price; Expiration Date of ------------------------------------------------------ Rights. (a) Except as otherwise provided herein, the Rights shall become - ------ exercisable on the Distribution Date, and thereafter the registered holder of any Right Certificate may, subject to Section 11(a)(ii) hereof and except as otherwise provided herein, exercise the Rights evidenced thereby in whole or in part upon surrender of the Right Certificate, with the form of election to purchase on the reverse side thereof duly executed, to the Rights Agent at the office or agency of the Rights Agent designated for such purpose, together with payment of the Purchase Price for the Units as to which the Rights are exercised, at any time which is both after the Distribution Date and prior to the earliest of (i) the close of business on April 8, 2007 (the "Final ----- Expiration Date"), (ii) the time at which the Rights are redeemed as provided in - --------------- Section 23 hereof (the "Redemption Date"), (iii) the time at which such Rights --------------- are exchanged as provided in Section 14 24 hereof and (iv) immediately prior to the Effective Time of the Merger (as defined in the Agreement and Plan of Conversion). (b) The Purchase Price shall be initially $21.00 for each Unit purchasable upon the exercise of a Right. The Purchase Price and the number of Units or other securities or property to be acquired upon exercise of a Right shall be subject to adjustment from time to time as provided in Sections 11 and 13 hereof and shall be payable in lawful money of the United States of America in accordance with paragraph (c) of this Section 7. (c) Except as otherwise provided herein, upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase duly executed, accompanied by payment of the aggregate Purchase Price for the Units to be purchased and an amount equal to any applicable transfer tax required to be paid by the holder of such Right Certificate in accordance with Section 9 hereof, in cash or by certified check, cashier's check or money order payable to the order of the Partnership, the Rights Agent shall thereupon promptly (i) (A) requisition from any transfer agent of Units certificates for the number of Units to be purchased and the Partnership hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) requisition from the depositary agent depositary receipts representing interests in such number of units as are to be purchased (in which case certificates for the Units represented by such receipts shall be deposited by the transfer agent with the depositary agent, and the Partnership hereby directs the depositary agent to comply with such request), (ii) when appropriate, requisition from the Partnership the amount of cash to be paid in lieu of issuance of fractional Units in accordance with Section 14 hereof, (iii) promptly after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be 15 designated by such holder and (iv) when appropriate, after receipt, promptly deliver such cash to or upon the order of the registered holder of such Right Certificate. (d) Except as otherwise provided herein, in case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the exercisable Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of such Right Certificate or to his duly authorized assigns, subject to the provisions of Section 14 hereof. (e) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Partnership shall be obligated to undertake any action with respect to a registered holder of Rights upon the occurrence of any purported transfer or exercise of Rights pursuant to Section 6 hereof or this Section 7 unless such registered holder shall have (i) completed and signed the certificate contained in the form of assignment or election to purchase set forth on the reverse side of the Right Certificate surrendered for such transfer or exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) thereof as the Partnership shall reasonably request. Section 8. Cancellation and Destruction of Right Certificates. -------------------------------------------------- All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Partnership or to any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Partnership shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the Partnership otherwise than upon the exercise thereof. 16 The Rights Agent shall deliver all cancelled Right Certificates to the Partnership, or shall, at the written request of the Partnership, destroy such cancelled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Partnership. Section 9. Availability of Units. (a) The Partnership covenants --------------------- and agrees that it will cause to be authorized and kept available out of its authorized and unissued Units or out of Units held in its treasury, the number of Units that will be sufficient from time to time to permit the exercise in full of all outstanding Rights. (b) So long as the Units (and, following the time that a Person becomes an Acquiring Person, any other securities issuable upon the exercise of Rights) may be listed or admitted to trading on the New York Stock Exchange or listed on any other national securities exchange or quotation system, the Partnership shall use its best efforts to cause, from and after such time as the Rights become exercisable, all Units (or other securities) issued or reserved for such issuance pursuant to this Agreement to be listed or admitted to trading on the New York Stock Exchange or listed on any other exchange or quotation system upon official notice of issuance upon such exercise. (c) From and after such time as the Rights become exercisable, the Partnership shall use its best efforts, if then necessary to permit the issuance of Units (and following the time that a Person first becomes an Acquiring Person, any other securities) upon the exercise of Rights, to register and qualify such Units (and following the time that a Person first becomes an Acquiring Person, any other securities) under the Securities Act and any applicable state securities or "Blue Sky" laws (to the extent exemptions therefrom are not available), cause such registration statement and qualifications to become effective as soon as possible after such filing and keep such registration and qualifications effective until the earlier of the date as of which the 17 Rights are no longer exercisable for such securities and the Final Expiration Date. The Partnership may temporarily suspend, for a period of time not to exceed 90 days, the exercisability of the Rights in order to prepare and file a registration statement under the Securities Act and permit it to become effective. Upon any such suspension, the Partnership shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall have been obtained and until a registration statement under the Securities Act (if required) shall have been declared effective. (d) The Partnership covenants and agrees that it will take all such action as may be necessary to ensure that all Units (or other securities) delivered upon exercise of Rights shall, at the time of delivery of the certificates therefor (subject to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable. (e) The Partnership further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any Units (or other securities) upon the exercise of Rights. The Partnership shall not, however, be required to pay any transfer tax which may be payable in respect of any transfer or delivery of Right Certificates to a Person other than, or the issuance or delivery of certificates or depositary receipts for Units (or other securities) in a name other than that of, the registered holder of the Right Certificate evidencing Rights surrendered for exercise or to issue or deliver any certificates or depositary receipts for Units (or other securities) upon the exercise of any Rights until any such tax shall have been paid (any 18 such tax being payable by that holder of such Right Certificate at the time of surrender) or until it has been established to the Partnership's reasonable satisfaction that no such tax is due. Section 10. Units Record Date. Each Person in whose name any ----------------- certificate for Units is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Units represented thereby on, and such certificate shall be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made; provided, however, -------- ------- that if the date of such surrender and payment is a date upon which the transfer books of the Partnership are closed, such Person shall be deemed to have become the record holder of such Units on, and such certificate shall be dated, the next succeeding Business Day on which the transfer books of the Partnership are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a holder of a Unit for which the Rights shall be exercisable, including, without limitation, the right to vote or to receive distributions, and shall not be entitled to receive any notice of any proceedings of the Partnership, except as provided herein. Section 11. Adjustment of Purchase Price, Number of Units and ------------------------------------------------- Number of Rights. The Purchase Price, the number of Units or other securities or - ---------------- property purchasable upon exercise of each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11. (a) (i) In the event the Partnership shall at any time after the date of this Agreement (A) make a distribution on the Units payable in Units, (B) subdivide or split the outstanding Units, (C) combine the outstanding Units into a smaller number of Units or (D) issue any limited partnership interests in the Partnership in a 19 reclassification of the Units (including any such reclassification in connection with a consolidation or merger in which the Partnership is the continuing or surviving entity), except as otherwise provided in this Section 11(a), the Purchase Price in effect at the time of the record date for such distribution or of the effective date of such subdivision, combination or reclassification, and the number and kind of limited partnership interests (or other securities) issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of limited partnership interests (or other securities) which, if such Right had been exercised immediately prior to such date and at a time when the transfer books of the Partnership were open, the holder would have owned upon such exercise and been entitled to receive by virtue of such distribution, subdivision, combination or reclassification. (ii) Subject to Section 24 of this Agreement and except as otherwise provided in this Section 11(a)(ii), in the event any Person becomes an Acquiring Person, each holder of a Right shall thereafter have the right to receive, upon exercise thereof at a price equal to the then current Purchase Price multiplied by the number of Units for which a Right is then exercisable, in accordance with the terms of this Agreement, such number of Units as shall equal the result obtained by (x) multiplying the then current Purchase Price by the number of Units for which a Right is then exercisable and dividing that product by (y) 50% of the then current market price per Unit of the Units (determined pursuant to Section 11(d) hereof) on the date of the occurrence of such event; provided, however, that the -------- ------- Purchase Price and the number of Units so receivable upon exercise of a Right 20 shall thereafter be subject to further adjustment as appropriate in accordance with Section 11(f) hereof. Notwithstanding anything in this Agreement to the contrary, however, from and after the time (the "invalidation time") when any Person first becomes an ----------------- Acquiring Person, any Rights that are beneficially owned by (x) any Acquiring Person (or any Affiliate or Associate of any Acquiring Person), (y) a transferee of any Acquiring Person (or any such Affiliate or Associate) who becomes a transferee after the invalidation time or (z) a transferee of any Acquiring Person (or any such Affiliate or Associate) who became a transferee prior to or concurrently with the invalidation time pursuant to either (I) a transfer from the Acquiring Person to holders of its equity securities or to any Person with whom it has any continuing agreement, arrangement or understanding regarding the transferred Rights or (II) a transfer which the Partnership has determined is part of a plan, arrangement or understanding which has the purpose or effect of avoiding the provisions of this paragraph, and subsequent transferees of such Persons, shall be void without any further action and any holder of such Rights shall thereafter have no rights whatsoever with respect to such Rights under any provision of this Agreement. The Partnership shall use all reasonable efforts to ensure that the provisions of this Section 11(a)(ii) are complied with, but shall have no liability to any holder of Right Certificates or other Person as a result of its failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. From and after the invalidation time, no Right Certificate shall be issued pursuant to Section 3 or Section 6 hereof that represents Rights that are or have become void pursuant to the provisions of 21 this paragraph, and any Right Certificate delivered to the Rights Agent that represents Rights that are or have become void pursuant to the provisions of this paragraph shall be cancelled. From and after the occurrence of an event specified in Section 13(a) hereof, any Rights that theretofore have not been exercised pursuant to this Section 11(a)(ii) shall thereafter be exercisable only in accordance with Section 13 and not pursuant to this Section 11(a)(ii). In the event that there shall not be sufficient Units authorized but unissued to permit the exercise in full of the Rights in accordance with the foregoing subparagraphs (i) or (ii), the Partnership shall, to the extent permitted by applicable law and any material agreements then in effect to which the Partnership is a party (A) determine the excess of (1) the value of the Units issuable upon the exercise of a Right in accordance with the foregoing subparagraphs (i) and (ii) (the "Current Value") over (2) the then current Purchase ------------- Price multiplied by the number of Units for which a Right was exercisable immediately prior to the time that the Acquiring Person became such (such excess, the "Spread"), and (B) with ------ respect to each Right (other than Rights which have become void pursuant to Section 11(a)(ii)), make adequate provision to substitute for the Units issuable in accordance with subparagraph 5(i) or (ii) upon exercise of the Right and payment of the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) other equity securities of the Partnership (including, without limitation, limited partnership interests or fractions thereof which, by virtue of having distribution, voting and liquidation rights substantially comparable to those of the Units, are deemed in good faith by the Partnership to have substantially the same value as the Units 22 (such limited partnership interests or fractions thereof are hereinafter referred to as "Unit equivalents"), (4) debt ---------------- securities of the Partnership, (5) other assets, or (6) any combination of the foregoing, having a value which, when added to the value of the Units actually issued upon exercise of such Right, shall have an aggregate value equal to the Current Value (less the amount of any reduction in the Purchase Price), where such aggregate value has been determined by the Partnership upon the advice of a nationally recognized investment banking firm selected in good faith by the General Partner of the Partnership; provided, however, if the Partnership shall not make adequate -------- ------- provision to deliver value pursuant to clause (B) above within thirty (30) days following the date that the Acquiring Person became such (the "Section 11(a)(ii) Trigger Date"), then the ------------------------------ Partnership shall be obligated to deliver, to the extent permitted by applicable law and any material agreements then in effect to which the Partnership is a party, upon the surrender for exercise of a Right and without requiring payment of the Purchase Price, Units (to the extent available), and then, if necessary, cash, which Units and/or cash have an aggregate value equal to the Spread. If, upon the date any Person becomes an Acquiring Person, the Partnership shall determine in good faith that it is likely that sufficient additional Units could be authorized for issuance upon exercise in full of the Rights, then, if the Partnership so elects, the thirty (30) day period set forth above may be extended to the extent necessary, but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that the Partnership may seek approval from the holders of the Units for the authorization of such additional Units (such thirty (30) day period, as it may be extended, is herein called the 23 "Substitution Period"). To the extent that the Partnership ------------------- determines that some action need be taken pursuant to the second and/or third sentence of this Section 11(a)(iii), the Partnership (x) shall provide, subject to Section 11(a)(ii) hereof and the last sentence of this Section 11(a)(iii) hereof, that such action shall apply uniformly to all outstanding Rights and (y) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek any authorization of additional Units and/or to decide the appropriate form of distribution to be made pursuant to such second sentence and to determine the value thereof. In the event of any such suspension, the Partnership shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. For purposes of this Section 11(a)(iii), the value of the Units shall be the aggregate of the current market price per Unit for the Units (as determined pursuant to Section 11(d)(i)) on the Section 11(a)(ii) Trigger Date and the per unit or fractional value of any "Unit equivalent" shall be deemed to equal the current market price per Unit of the Units. The Partnership may, but shall not be required to, establish procedures to allocate the right to receive Units upon the exercise of the Rights among holders of Rights pursuant to this Section 11(a)(iii). (b) In case the Partnership shall fix a record date for the issuance of rights, options or warrants to all holders of Units entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Units or securities convertible into Units or Unit equivalents at a price per Unit or Unit equivalent (or having 24 a conversion price per Unit, if a security convertible into Units or Unit equivalents) less than the then current market price per Unit of the Units (determined pursuant to Section 11(d) hereof) on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Units and Unit equivalents outstanding on such record date plus the number of Units and Unit equivalents which the aggregate offering price of the total number of Units and/or Unit equivalents so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current market price, and the denominator of which shall be the number of Units and Unit equivalents outstanding on such record date plus the number of additional Units and/or Unit equivalents to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the General Partner of the Partnership, whose determination shall be described in a statement filed with the Rights Agent. Units and Unit equivalents owned by or held for the account of the Partnership shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such rights, options or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. 25 (c) In case the Partnership shall fix a record date for the making of a distribution to all holders of Units (including any such distribution made in connection with a consolidation or merger in which the Partnership is the continuing or surviving entity) of evidences of indebtedness or assets (other than a regular quarterly cash distribution or a distribution payable in Units) or subscription rights or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the then current market price per Unit (determined pursuant to Section 11(d) hereof) on such record date, less the fair market value (as determined in good faith by the General Partner of the Partnership, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to one Unit, and the denominator of which shall be such current market price per Unit (determined pursuant to Section 11(d) hereof) of the Units. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. (d) (i) Except as otherwise provided herein, for the purpose of any computation hereunder, the "current market price" of any security (a -------------------- "Security" for the purpose of this Section 11(d)(i)) on any date shall be deemed to be the average of the daily closing prices per unit or share, as applicable, of such Security for the 30 consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date; provided, however, that -------- ------- 26 in the event that the current market price per unit or share of the Security is determined during a period following the announcement by the issuer of such Security of (A) a distribution on such Security payable in units or shares of such Security or securities convertible into such units or shares, or (B) any subdivision, combination or reclassification of such Security, and prior to the expiration of 30 Trading Days after the ex-dividend or ex-distribution date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the current market price shall be appropriately adjusted to reflect the current market price per unit or share equivalent of such Security. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported by the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Security is not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Security is listed or admitted to trading or, if the Security is not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over- the-counter market, as reported by NASDAQ or such other system then in use, or, if on any such date the Security is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Security selected by the General Partner of the Partnership. The term "Trading ------- Day" shall mean a day on which the principal national securities --- exchange on 27 which the Security is listed or admitted to trading is open for the transaction of business or, if the Security is not listed or admitted to trading on any national securities exchange, a Business Day. If on any such date no such market maker is making a market in such Security, the fair value of such Security on such date as determined in good faith by the General Partner of the Partnership shall be used, such determination to be described in a statement filed with the Rights Agent. (e) No adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Purchase Price; provided, however, that any adjustments which by -------- ------- reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three years from the date of the transaction which requires such adjustment or (ii) the date of the expiration of the right to exercise any Rights. (f) If as a result of an adjustment made pursuant to Section 11(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any securities in the Partnership other than the Units, thereafter the Purchase Price and the number of such other securities so receivable upon exercise of a Right shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Units contained in Sections 11(a), 11(b), 11(c), 11(e), 11(h), 11(i) and 11(m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Units shall apply on like terms to any such other securities. 28 (g) All Rights originally issued by the Partnership subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of Units purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein. (h) Unless the Partnership shall have exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of Units (calculated to the nearest Unit) obtained by (i) multiplying (x) the number of Units covered by a Right immediately prior to such adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price. (i) The Partnership may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in substitution for any adjustment in the number of Units purchasable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of Units for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest whole Right) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Partnership shall make a public announcement of its election to adjust the number of 29 Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Right Certificates have been issued, shall be at least 10 days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Partnership may, as promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Partnership, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Partnership, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement. (j) Irrespective of any adjustment or change in the Purchase Price or the number of Units issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price and the number of Units which were expressed in the initial Right Certificates issued hereunder. (k) Before taking any action that would cause an adjustment reducing the Purchase Price below the then par value, if any, of the securities issuable upon exercise of the Rights, the Partnership shall take any action which may, in the opinion of its 30 counsel, be necessary in order that the Partnership may validly and legally issue fully paid Units or other such securities at such adjusted Purchase Price. (l) In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Partnership may elect to defer until the occurrence of such event the issuing to the holder of any Right exercised after such record date of the Units and other securities of the Partnership, if any, issuable upon such exercise over and above the Units and other securities of the Partnership, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Partnership shall deliver to -------- ------- such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional interests upon the occurrence of the event requiring such adjustment. (m) Anything in this Section 11 to the contrary notwithstanding, the Partnership shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that it in its sole discretion shall determine to be advisable in order that (i) any consolidation or subdivision of the Units, (ii) issuance wholly for cash of any Units at less than the current market price, (iii) issuance wholly for cash or Units or securities which by their terms are convertible into or exchangeable for Units, (iv) distributions on Units payable in Units or (v) issuance of rights, options or warrants referred to hereinabove in Section 11(b), hereafter made by the Partnership to holders of its Units shall not be taxable to such holders. 31 (n) Anything in this Agreement to the contrary notwithstanding, in the event that at any time after the date of this Agreement and prior to the Distribution Date, the Partnership shall (i) make a distribution on the Units payable in Units or (ii) effect a subdivision, combination or consolidation of the Units (by reclassification or otherwise than by payment of a distribution payable in Units) into a greater or lesser number of Units, then in any such case, the number of Rights associated with each Unit then outstanding, or issued or delivered thereafter, shall be proportionately adjusted so that the number of Rights thereafter associated with each Unit following any such event shall equal the result obtained by multiplying the number of Rights associated with each Unit immediately prior to such event by a fraction the numerator of which shall be the total number of Units outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of Units outstanding immediately following the occurrence of such event. (o) The Partnership agrees that, after the earlier of the Distribution Date or the Unit Acquisition Date, it will not, except as permitted by Sections 23, 24 or 27 hereof, take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or eliminate the benefits intended to be afforded by the Rights. Section 12. Certificate of Adjusted Purchase Price or Number of --------------------------------------------------- Units. Whenever an adjustment is made as provided in Section 11 or 13 hereof, - ----- the Partnership shall promptly (a) prepare a certificate setting forth such adjustment, and a brief statement of the facts accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent for the Units a copy of such certificate and (c) mail a brief summary thereof to each holder of a Right Certificate 32 in accordance with Section 25 hereof (if so required under Section 25 hereof). The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained, and shall not be obligated or responsible for calculating any adjustment, and shall not be deemed to have knowledge of any such adjustment unless and until it shall have received such certificate. Section 13. Consolidation, Merger or Sale or Transfer of Assets --------------------------------------------------- or Earnings Power. (a) Except pursuant to a transaction approved in advance by - ----------------- the General Partner, in the event, directly or indirectly, at any time after any Person has become an Acquiring Person, (i) the Partnership shall merge with and into any other Person, (ii) any Person shall consolidate with the Partnership, or any Person shall merge with and into the Partnership and the Partnership shall be the continuing or surviving corporation of such merger and, in connection with such merger, all or part of the Units shall be changed into or exchanged for common stock, limited partnership interests or other securities of any other Person (or of the Partnership) or cash or any other property, or (iii) the Partnership shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one or more transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Partnership and its Subsidiaries (taken as a whole) to any other Person (other than the Partnership or one or more of its wholly-owned Subsidiaries), then upon the first occurrence of such event, proper provision shall be made so that: (A) each holder of record of a Right (other than Rights which have become void pursuant to Section 11(a)(ii)) shall thereafter have the right to receive, upon the exercise thereof at a price equal to the then current Purchase Price multiplied by the number of Units for which a Right was exercisable (whether or not such Right was then exercisable) immediately prior to the time that any Person first became an Acquiring Person (each as subsequently adjusted thereafter pursuant 33 to Sections 11(a)(i), 11(b), 11(c), 11(h), 11(i) and 11(m)), in accordance with the terms of this Agreement, such number of validly issued, fully paid and non- assessable and freely tradeable shares of common stock, limited partnership interests or equivalent securities of the Principal Party (as defined herein) not subject to any liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then current Purchase Price by the number of Units for which a Right was exercisable immediately prior to the time that any Person first became an Acquiring Person (as subsequently adjusted thereafter pursuant to Sections 11(a)(i), 11(b), 11(c), 11(h), 11(i) and 11(m)) and (2) dividing that product by 50% of the then current market price of the common stock, limited partnership interests or equivalent securities of such Principal Party (determined pursuant to Section 11(d)(i) hereof) on the date of consummation of such consolidation, merger, sale or transfer; provided that the Purchase Price and the number of -------- shares of common stock, limited partnership interests or equivalent securities of such Principal Party issuable upon exercise of each Right shall be further adjusted as provided in Section 11(f) of this Agreement to reflect any events occurring in respect of such Principal Party after the date of the such consolidation, merger, sale or transfer; (B) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or transfer, all the obligations and duties of the Partnership pursuant to this Agreement; (C) the term "Partnership" shall thereafter be deemed to refer to such Principal Party; and (D) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its common stock, limited partnership interests or equivalent securities in accordance with Section 9 hereof) in connection with such consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its securities thereafter deliverable upon 34 the exercise of the Rights; provided that, upon the subsequent occurrence of any consolidation, merger, sale or transfer of assets or other extraordinary transaction in respect of such Principal Party, each holder of a Right shall thereupon be entitled to receive, upon exercise of a Right and payment of the Purchase Price as provided in this Section 13(a), such cash, units, rights, warrants and other property which such holder would have been entitled to receive had such holder, at the time of such transaction, owned the common stock, limited partnership interests or equivalent securities of the Principal Party receivable upon the exercise of a Right pursuant to this Section 13(a), and such Principal Party shall take such steps (including, but not limited to, reservation of common stock, limited partnership interests or equivalent securities) as may be necessary to permit the subsequent exercise of the Rights in accordance with the terms hereof for such cash, shares, rights, warrants and other property. (b) "Principal Party" shall mean --------------- (i) in the case of any transaction described in (i) or (ii) of the first sentence of Section 13(a) hereof: (A) the Person that is the issuer of the securities into which the Units are converted in such merger or consolidation, or, if there is more than one such issuer, the issuer the common stock, limited partnership interests or equivalent securities of which have the greatest aggregate market value of common stock, limited partnership interests or equivalent securities outstanding, or (B) if no securities are so issued, (x) the Person that is the other party to the merger, if such Person survives said merger, or, if there is more than one such Person, the Person the common stock, limited partnership interests or equivalent securities of which have the greatest aggregate market value of common stock, limited partnership interests or equivalent securities outstanding or (y) if the Person that is the other party to the merger does not survive the merger, the 35 Person that does survive the merger (including the Partnership if it survives) or (z) the Person resulting from the consolidation; and (ii) in the case of any transaction described in (iii) of the first sentence in Section 13(a) hereof, the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions, or, if each Person that is a party to such transaction or transactions receives the same portion of the assets or earning power so transferred or if the Person receiving the greatest portion of the assets or earning power cannot be determined, whichever of such Persons as is the issuer of common stock, limited partnership interests or equivalent securities having the greatest aggregate market value of common stock, limited partnership interests or equivalent securities outstanding; provided, however, that in any such case described in the foregoing clause (b)(i) or (b)(ii), if the common stock, limited partnership interests or equivalent securities of such Person are not at such time or have not been continuously over the preceding 12-month period registered under Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect Subsidiary of another Person the common stock, limited partnership interests or equivalent securities of which are and have been so registered, the term "Principal Party" shall refer to such other Person, or (2) if such Person is a Subsidiary, directly or indirectly, of more than one Person, the common stock, limited partnership interests or equivalent securities of all of which are and have been so registered, the term "Principal Party" shall refer to whichever of such Persons is the issuer of the common stock, limited partnership interests or equivalent securities having the greatest aggregate market value of common stock, limited partnership interests or equivalent securities outstanding, or (3) if such Person is owned, directly or indirectly, by a joint venture formed by two or more Persons that 36 are not owned, directly or indirectly, by the same Person, the rules set forth in clauses (1) and (2) above shall apply to each of the owners having an interest in the venture as if the Person owned by the joint venture was a Subsidiary of both or all of such joint venturers, and the Principal Party in each such case shall bear the obligations set forth in this Section 13 in the same ratio as its interest in such Person bears to the total of such interests. (c) The Partnership shall not consummate any consolidation, merger, sale or transfer referred to in Section 13(a) hereof unless prior thereto the Partnership and the Principal Party involved therein shall have executed and delivered to the Rights Agent an agreement confirming that the requirements of Sections 13(a) and (b) hereof shall promptly be performed in accordance with their terms and that such consolidation, merger, sale or transfer of assets shall not result in a default by the Principal Party under this Agreement as the same shall have been assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof and providing that, as soon as practicable after executing such agreement pursuant to this Section 13, the Principal Party will: (i) prepare and file a registration statement under the Securities Act, if necessary, with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, use its best efforts to cause such registration statement to become effective as soon as practicable after such filing and use its best efforts to cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the Final Expiration Date, and similarly comply with applicable state securities laws; (ii) use its best efforts, if the common stock, limited partnership interests or equivalent securities of the Principal Party shall be listed or admitted to 37 trading on the New York Stock Exchange or on another national securities exchange, to list or admit to trading (or continue the listing of) the Rights and the securities purchasable upon exercise of the Rights on the New York Stock Exchange or such securities exchange, or, if the common stock, limited partnership interests or equivalent securities of the Principal Party shall not be listed or admitted to trading on the New York Stock Exchange or a national securities exchange, to cause the Rights and the securities receivable upon exercise of the Rights to be reported by such other system then in use; (iii) deliver to holders of the Rights historical financial statements for the Principal Party which comply in all respects with the requirements for registration on Form 10 (or any successor form) under the Exchange Act; and (iv) obtain waivers of any rights of first refusal or preemptive rights in respect of the Units of the Principal Party subject to purchase upon exercise of outstanding Rights. (d) In case the Principal Party has provision in any of its authorized securities or in its certificate of incorporation or by-laws, partnership agreement or other instrument governing its corporate or partnership affairs, which provision would have the effect of (i) causing such Principal Party to issue (other than to holders of Rights pursuant to this Section 13), in connection with, or as a consequence of, the consummation of a transaction referred to in this Section 13, common stock, limited partnership interests or other securities of such Principal Party at less than the then current market price per unit thereof (determined pursuant to Section 11(d) hereof) or securities exercisable for, or convertible into, common stock, limited partnership interests or other securities of such Principal Party at less than such then current market price, or (ii) providing for any special payment, tax or similar provision in connection with the issuance 38 of the common stock, limited partnership interests or other securities of such Principal Party pursuant to the provisions of Section 13, then, in such event, the Partnership hereby agrees with each holder of Rights that it shall not consummate any such transaction unless prior thereto the Partnership and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing that the provision in question of such Principal Party shall have been cancelled, waived or amended, or that the authorized securities shall be redeemed, so that the applicable provision will have no effect in connection with, or as a consequence of, the consummation of the proposed transaction. (e) The Partnership covenants and agrees that it shall not, at any time after a Person first becomes an Acquiring Person, enter into any transaction of the type contemplated by (i) - (iii) of Section 13(a) hereof if (x) at the time of or immediately after such consolidation, merger, sale, transfer or other transaction there are any rights, warrants or other instruments or securities outstanding or agreements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights, (y) prior to, simultaneously with or immediately after such consolidation, merger, sale, transfer of other transaction, the security holders of the Person who constitutes, or would constitute, the Principal Party for purposes of Section 13(a) hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates or Associates or (z) the form or nature of organization of the Principal Party would preclude or limit the exercisability of the Rights. Section 14. Fractional Rights and Fractional Units. (a) The -------------------------------------- Partnership shall not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights (i.e. Right's to acquire less than one Unit). In lieu of such fractional Rights, there shall be paid to the registered holders of the Right Certificates with regard to which such 39 fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in use or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the General Partner of the Partnership. If on any such date no such market maker is making a market in the Rights, the fair value of the Rights on such date as determined in good faith by the General Partner of the Partnership shall be used. (b) The Partnership shall not be required to issue fractions of Units upon exercise of the Rights or to distribute certificates which evidence fractional Units. Interests in fractions of Units may, at the election of the Partnership, be evidenced by depositary receipts, pursuant to an appropriate agreement between the Partnership and a depositary selected by it; 40 provided, that such agreement shall provide that the holders of such depositary - -------- receipts shall have all the rights, privileges and preferences to which they are entitled as beneficial owners of the Units represented by such depositary receipts. In lieu of fractional Units or depositary receipts, the Partnership shall pay to the registered holders of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one Unit. For the purposes of this Section 14(b), the current market value of a Unit shall be the closing price of a Unit (as determined pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of such exercise. (c) The holder of a Right by the acceptance of the Right expressly waives his right to receive any fractional Rights or any fractional Units upon exercise of a Right (except as provided above). Section 15. Rights of Action. All rights of action ---------------- in respect of this Agreement, excepting the rights of action given to the Rights Agent under Section 18 hereof, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the Units); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Units), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the Units), on his own behalf and for his own benefit, may enforce, and may institute and maintain any suit, action or proceeding against the Partnership to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Right Certificate (or, prior to the Distribution Date, such Units) in the manner provided in such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this 41 Agreement and will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of, the obligations of any Person subject to this Agreement. Section 16. Agreement of Right Holders. Every holder of a Right, -------------------------- by accepting the same, consents and agrees with the Partnership and the Rights Agent and with every other holder of a Right that: (a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Units; (b) after the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the office or agency of the Rights Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer; and (c) the Partnership and the Rights Agent may deem and treat the Person in whose name the Right Certificate (or, prior to the Distribution Date, the associated certificate for Units) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificates or the associated certificates for Units made by anyone other than the Partnership or the Rights Agent) for all purposes whatsoever, and neither the Partnership nor the Rights Agent shall be affected by any notice to the contrary. Section 17. Right Certificate Holder Not Deemed a Holder of ----------------------------------------------- Units. No holder, as such, of any Right Certificate shall be entitled to vote, - ----- receive distributions or be deemed for any purpose the holder of the Unit or any other securities of the Partnership which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained 42 herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a holder of Units the Partnership or any right to vote or upon any matter submitted to holders of Units at any meeting thereof, or to give or withhold consent to any partnership action, or to receive notice of meetings or other actions affecting holders of Units (except as provided in this Agreement), or to receive distributions or subscription rights, or otherwise, until the Rights evidenced by such Right Certificate shall have been exercised in accordance with the provisions hereof. Section 18. Concerning the Rights Agent. (a) The Partnership --------------------------- agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Partnership also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability or expense, incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability arising therefrom, directly or indirectly. The indemnification provided for herein shall survive the expiration of the Rights, the termination of this Agreement and the resignation or removal of the Rights Agent. The costs and expenses of enforcing this right of indemnification shall also be paid by the Partnership. (b) The Rights Agent shall conclusively rely upon and be protected and incur no liability for, or in respect of any action taken, suffered or omitted by it in connection with, its administration of this Agreement in reliance upon any Right Certificate or Unit or for other 43 securities of the Partnership, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons, or otherwise upon the advice of counsel as set forth in Section 20 hereof. Section 19. Merger or Consolidation or Change of Name of Rights --------------------------------------------------- Agent. (a) Any corporation into which the Rights Agent or any successor Rights - ----- Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the securities transfer or corporate trust powers of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided, that such corporation would be -------- eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. (b) In case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned but not delivered the Rights 44 Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. Section 20. Duties of Rights Agent. The Rights Agent undertakes ---------------------- the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Partnership and the holders of Right Certificates, by their acceptance thereof, shall be bound: (a) Before the Rights Agent acts or refrains from acting, it may consult with legal counsel (who may be legal counsel for the Partnership), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion. (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Partnership prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board of Directors, the President, any Vice President, the Chief Financial Officer, the Treasurer, the Controller or the Secretary of the General Partner on behalf of the Partnership and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. 45 (c) The Rights Agent shall be liable hereunder to the Partnership and any other Person only for its own negligence, bad faith or wilful misconduct. (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Partnership only. (e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Partnership of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be responsible for any change in the exercisability of the Rights (including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights (including the manner, method or amount thereof) provided for in Sections 3, 11, 13, 23 and 24, or the ascertaining of the existence of facts that would require any such change or adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after receipt of a certificate furnished pursuant to Section 12, describing such change or adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Units or other securities to be issued pursuant to this Agreement or any Right Certificate or as to whether any Units or other securities will, when issued, be validly authorized and issued, fully paid and nonassessable. 46 (f) The Partnership agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement. (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any person reasonably believed by the Rights Agent to be one of the Chairman of the Board of Directors, the President, a Vice President, the Chief Financial Officer, the Treasurer, the Controller or the Secretary of the General Partner acting on behalf of the Partnership, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered by it in good faith in accordance with instructions of any such officer or for any delay in acting while waiting for those instructions. Any application by the Rights Agent for written instructions from the Partnership may, at the option of the Rights Agent, set forth in writing any action proposed to be taken or omitted by the Rights Agent under this Agreement and the date on and/or after which such action shall be taken or such omission shall be effective. The Rights Agent shall not be liable for any action taken by, or omission of, the Rights Agent in accordance with a proposal included in any such application on or after the date specified in such application (which date shall not be less than five Business Days after the date any officer of the General Partner on behalf of the Partnership actually receives such application, unless any such officer shall have consented in writing to an earlier date) unless, prior to taking any such action (or the effective date in the case of an omission), the Rights Agent shall have 47 received written instructions in response to such application specifying the action to be taken or omitted. (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Partnership or become pecuniarily interested in any transaction in which the Partnership may be interested, or contract with or lend money to the Partnership or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Partnership or for any other legal entity. (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Partnership resulting from any such act, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof. (j) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate contained in the form of assignment or the form of election to purchase set forth on the reverse thereof, as the case may be, has not been completed to certify the holder is not an Acquiring Person (or an Affiliate or Associate thereof), a Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the Partnership. (k) No provision of this Agreement shall require the Rights Agent to expend or risk or commit its own funds in the performance of any of its duties hereunder or in the 48 exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. (l) The Rights Agent shall not be required to take notice or be deemed to have notice of any fact, event or determination (including, without limitation, any dates or events defined in this Agreement or the designation of any Person as an Aquiring Person, Affiliate or Associate) under this Agreement unless and until the Rights Agent shall be specifically notified in writing by the Partnership of such fact, event or determination. Section 21. Change of Rights Agent. The Rights Agent or any ---------------------- successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days' notice in writing mailed to the Partnership and to the transfer agent of the Units by registered or certified mail, and, following the Distribution Date, to the holders of the Right Certificates by first-class mail. The Partnership may remove the Rights Agent or any successor Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to the transfer agent of the Units by registered or certified mail, and, following the Distribution Date, to the holders of the Right Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Partnership shall appoint a successor to the Rights Agent. If the Partnership shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Partnership), then the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. 49 Any successor Rights Agent, whether appointed by the Partnership or by such a court, shall be a corporation organized and doing business under the laws of the United States or any State thereof, which is authorized under such laws to exercise corporate trust or securities transfer powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment the Partnership shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Units, and, following the Distribution Date, mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. Section 22. Issuance of New Right Certificates. Notwithstanding ---------------------------------- any of the provisions of this Agreement or of the Rights to the contrary, the Partnership may, at its option, issue new Right Certificates evidencing Rights in such forms as may be approved by the General Partner on behalf of the Partnership to reflect any adjustment or change in the Purchase Price and the number or kind or class of limited partnership interests or other securities or property purchasable under the Right Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of Units following the 50 Distribution Date and prior to the earlier of the Redemption Date and the Final Expiration Date, the Partnership may with respect to Units so issued or sold pursuant to (i) any employee plan or arrangement, (ii) the exercise, conversion or exchange of securities, notes or debentures issued by the Partnership or (iii) a contractual obligation of the Partnership in each case existing prior to the Distribution Date, issue Rights Certificates representing the appropriate number of Rights in connection with such issuance or sale. Section 23. Redemption. (a) The General Partner of the ---------- Partnership may, at any time prior to such time as any Person first becomes an Acquiring Person, redeem all but not less than all the then outstanding Rights at a redemption price of $.01 per Right, appropriately adjusted to reflect any split, Unit distribution or similar transaction occurring after the date hereof (the redemption price being hereinafter referred to as the "Redemption Price"). ---------------- The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the General Partner in its sole discretion may establish. (b) Immediately upon the action of the General Partner ordering the redemption of the Rights pursuant to paragraph (a) of this Section 23 (or at such later time as the General Partner may establish for the effectiveness of such redemption), and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price. The Partnership shall promptly give public notice of any such redemption; provided, however, -------- ------- that the failure to give, or any defect in, any such notice shall not affect the validity of such redemption. Within 10 days after such action of the General Partner ordering the redemption of the Rights (or such later time as the General Partner may establish for the effectiveness of such redemption), the Partnership shall mail a notice of redemption to all the holders of the then outstanding Rights at 51 their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Units. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption shall state the method by which the payment of the Redemption Price will be made. Section 24. Exchange. (a) The General Partner on behalf of the -------- Partnership may, at its option, at any time after any Person first becomes an Acquiring Person, exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 11(a)(ii) hereof) for Units at an exchange ratio of one Unit per Right, (such exchange ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the General Partner on -------------- behalf of the Partnership shall not be empowered to effect such exchange at any time after (1) any Person (other than an Exempt Person), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of Units aggregating 50% or more of the Units then outstanding or (2) the occurrence of an event specified in Section 13(a) hereof. (b) Immediately upon the action of the General Partner on behalf of the Partnership ordering the exchange of any Rights pursuant to paragraph (a) of this Section 24 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of Units equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Partnership shall promptly give public notice of any such exchange; provided, -------- however, that the failure to give, or any defect in, such notice shall not - ------- affect the validity of such exchange. The Partnership shall promptly mail a notice of any such exchange to all of the 52 holders of the Rights so exchanged at their last addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the Units for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of Rights. (c) The Partnership shall not, in connection with any exchange pursuant to this Section 24, be required to issue fractions of Units or to distribute certificates which evidence fractional Units. In lieu of such fractional Units, the Partnership shall pay to the registered holders of the Right Certificates with regard to which such fractional Units would otherwise be issuable an amount in cash equal to the same fraction of the current market value of a whole Unit. For the purposes of this paragraph (c), the current market value of a whole Unit shall be the closing price of a Unit (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange pursuant to this Section 24. Section 25. Notice of Certain Events. (a) In case the Partnership ------------------------ shall at any time after the earlier of the Distribution Date or the Unit Acquisition Date propose (i) to declare or pay any distribution on the Units payable in Units or limited partnership interests of any other class to the holders of its Unit or to make any other distribution to the holders of its Units (other than regular periodic cash distributions), (ii) to offer to the holders of its Unit rights or warrants to subscribe for or to purchase any additional Units or limited partnership interests of any other class or any other securities, rights or options, (iii) to effect any reclassification or recapitalization 53 of its Units or to effect a subdivision, combination or consolidation of the Units, or (iv) to effect the liquidation, dissolution or winding up of the Partnership, then, in each such case, the Partnership shall give to each holder of a Right Certificate, in accordance with Section 26 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such unit distribution or distribution of rights or warrants, or the date on which such liquidation, dissolution or winding up is to take place and the date of participation therein by the holders of the Units, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least 10 days prior to the record date for determining holders of the Units for purposes of such action, and in the case of any such other action, at least 10 days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Units, whichever shall be the earlier. (b) In case any event described in Section 11(a)(ii) or Section 13 shall occur then the Partnership shall as soon as practicable thereafter give to each holder of a Right Certificate (or if occurring prior to the Distribution Date, the holders of the Units) in accordance with Section 26 hereof, a notice of the occurrence of such event, which notice shall describe such event and the consequences of such event to holders of Rights under Section 11(a)(ii) and Section 13 hereof. Section 26. Notices. Notices or demands authorized by this ------- Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Partnership shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: Borden Chemicals and Plastics Limited Partnership c/o BCP Management, Inc. 180 East Broad Street Columbus, Ohio 43215-3799 54 Attention: Secretary Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement to be given or made by the Partnership or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Partnership) as follows: Harris Trust and Savings Bank 311 West Monroe Street Chicago, Illinois 60606 Attention: Corporate Trust Division Notices or demands authorized by this Agreement to be given or made by the Partnership or the Rights Agent to the holder of any Right Certificate shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Partnership. Section 27. Supplements and Amendments. Except as provided in the -------------------------- penultimate sentence of this Section 27, for so long as the Rights are then redeemable, the Partnership may in its sole and absolute discretion, and the Rights Agent shall if the Partnership so directs, supplement or amend any provision of this Agreement in any respect without the approval of any holders of the Rights. At any time when the Rights are no longer redeemable, except as provided in the penultimate sentence of this Section 27, the Partnership may, and the Rights Agent shall, if the Partnership so directs, supplement or amend this Agreement without the approval of any holders of Rights Certificates in order to (i) cure any ambiguity, (ii) correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, (iii) shorten or lengthen any time period hereunder, or (iv) change or supplement the provisions hereunder in any manner which the Partnership may deem necessary or desirable; provided that no such supplement or -------- amendment shall adversely affect the interests of the holders 55 of Rights as such (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no such amendment may cause the rights again to become redeemable or cause the Agreement again to become amendable other than in accordance with this sentence. Notwithstanding anything contained in this Agreement to the contrary, no supplement or amendment shall be made which changes the Redemption Price. Upon the delivery of a certificate from an appropriate officer of the General Partner on behalf of the Partnership which states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or amendment. Section 28. Successors. All the covenants and provisions of this ---------- Agreement by or for the benefit of the Partnership or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. Section 29. Benefits of this Agreement. Nothing in this Agreement -------------------------- shall be construed to give to any Person other than the Partnership, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Units) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Partnership, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Units). Section 30. Partnership Action. Any action which the Partnership ------------------ is authorized or permitted to take pursuant to any provision of this Agreement shall be taken by the General Partner acting on behalf of the Partnership. Section 31. Termination. Notwithstanding anything in this ----------- Agreement to the contrary, this Agreement shall terminate and have no further force and effect at the Effective Time of the Merger (as defined in the Agreement and Plan of Conversion). 56 Section 32. Severability. If any term, provision, covenant or ------------ restriction of this Agreement or applicable to this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Section 33. Governing Law. This Agreement and each Right ------------- Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State, without regard to the principles of conflict of laws. Section 34. Counterparts. This Agreement may be executed in any ------------ number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Section 35. Descriptive Headings. Descriptive headings of the -------------------- several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. 57 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and attested, all as of the day and year first above written. Attest: BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP By: BCP Management Inc., its general partner By: /s/James O. Stevning By: /s/Joseph Saggese --------------------------------- ---------------------------- Name: James O. Stevning Name: Joseph Saggese Title: Chief Executive Officer Title: Chief Executive Officer Attest: HARRIS TRUST AND SAVINGS BANK By: /s/Lorraine Rodewald By: /s/Ray G. Rosenbaum - -------------------------------- --------------------------- Name: Lorraine Rodewald Name: Ray G. Rosenbaum Title: Assistant Vice President Title: Vice President Exhibit A --------- Form of Right Certificate Certificate No. R- ____ ___ Rights NOT EXERCISABLE AFTER APRIL 8, 2007 OR EARLIER IF REDEMPTION, EXCHANGE OR THE EFFECTIVE DATE OF THE MERGER OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE. Right Certificate BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP This certifies that ___________ or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Rights Agreement, dated as of April 8, 1997, as the same may be amended from time to time (the "Rights Agreement"), between Borden Chemicals and Plastics Limited ---------------- Partnership, a Delaware limited partnership (the "Partnership"), and Harris ----------- Trust and Savings Bank (the "Rights Agent"), to purchase from the Partnership at ------------ any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M., New York City time, on April 8, 2007 at the office or agency of the Rights Agent designated for such purpose, or of its successor as Rights Agent, one fully paid common limited partnership interest (a "Unit") of the Partnership, at a purchase price of $21.00 per Unit (the ---- "Purchase Price"), upon presentation and surrender of this Right Certificate -------------- with the Form of Election to Purchase duly executed. The number of Rights evidenced by this Rights Certificate (and the number of Units which may be purchased upon exercise hereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of April 8 1997, based on the Units as constituted at such date. As provided in the Rights Agreement, the Purchase Price, the number of (or other securities or property) which may be purchased upon the exercise of the Rights and the number of Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events. This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Partnership and the holders of the Right Certificates. Copies of the Rights Agreement are on file at the principal executive office of the Partnership and the above-mentioned office or agency of the Rights Agent. The Partnership will mail to the holder of this Right Certificate a copy of the Rights Agreement without charge after receipt of a written request therefor. A-1 This Right Certificate, with or without other Right Certificates, upon surrender at the office or agency of the Rights Agent designated for such purpose, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of Units as the Rights evidenced by the Right Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised. Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate (i) may be redeemed by the Partnership at a redemption price of $.01 per Right or (ii) may be exchanged in whole or in part for Units. No fractional Units will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which may, at the election of the Partnership, be evidenced by depositary receipts), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement. No holder of this Right Certificate, as such, shall be entitled to vote or receive distributions or be deemed for any purpose the holder of the Units or of any other securities of the Partnership which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a holder of Units of the Partnership or any right to vote upon any matter submitted to holders of Units at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement) or to receive distributions or subscription rights, or otherwise, until the Right or Rights evidenced by this Right certificate shall have been exercised as provided in the Rights Agreement. This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent. This Right Certificate shall be governed by and construed in accordance with the laws of the State of Delware without regard to principles of conflict of laws. A-2 WITNESS the facsimile signature of the proper officers of the Partnership and its corporate seal. ATTEST: BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP By ____________________ By: BCP Management Inc., its general partner By __________________ Countersigned: HARRIS TRUST AND SAVINGS BANK, as Rights Agent By _________________________ Authorized Signatory Dated as of _____________ A-3 Form of Reverse Side of Right Certificate FORM OF ASSIGNMENT ------------------ (To be executed by the registered holder if such holder desires to transfer the Right Certificate) FOR VALUE RECEIVED _________________________ hereby sells, assigns and transfer unto ___________________________ - ------------------------------------------------------------ (Please print name and address of transferee) - ------------------------------------------------------------ Rights represented by this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ___________________ Attorney, to transfer said Rights on the books of the within-named Partnership, with full power of substitution. Dated: _________________ ------------------------------ Signature Signature Guaranteed: Signatures must be guaranteed by a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States. - -------------------------------------------------------------------------------- (To be completed) The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not beneficially owned by, were not acquired by the undersigned from, and are not being assigned to, an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement). ------------------------------ Signature A-4 Form of Reverse Side of Right Certificate - continued FORM OF ELECTION TO PURCHASE ---------------------------- (To be executed if holder desires to exercise Rights represented by the Rights Certificate) To BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP: The undersigned hereby irrevocably elects to exercise __________________ Rights represented by this Right Certificate to purchase the Units (or other securities or property) issuable upon the exercise of such Rights and requests that certificates for such Units (or such other securities) be issued in the name of: - -------------------------------------------------------------- (Please print name and address) - -------------------------------------------------------------- If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered in the name of and delivery to: Please insert social security or other identifying number - -------------------------------------------------------------- (Please print name and address) - -------------------------------------------------------------- Dated: ____________________ ------------------------ Signature (Signature must conform to holder specified on Right Certificate) Signature Guaranteed: Signature must be guaranteed by a member of firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States. A-5 Form of Reverse Side of Right Certificate -- continued - -------------------------------------------------------------------------------- (To be completed) The undersigned certifies that the Rights evidenced by this Right Certificate are not beneficially owned by, and were not acquired by the undersigned from, an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) ---------------------- Signature - -------------------------------------------------------------------------------- NOTICE ------ The signature in the Form of Assignment or Form of Election to Purchase, as the case may be, must conform to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever. In the event the certification set forth above in the Form of Assignment or the Form of Election to Purchase, as the case may be, is not completed, such Assignment or Election to Purchase will not be honored. A-6 Exhibit B --------- UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE. SUMMARY OF RIGHTS TO PURCHASE UNITS On April 8, 1997, BCP Management, Inc., the general partner (the "General Partner") of Borden Chemicals and Plastics Limited Partnership (the --------------- "Partnership") declared a distribution, to be made on April 21, 1997 (the ----------- "Record Date"), of (i) one common unit purchase right (a "Right") for each ----------- ----- outstanding common unit (a "Unit"; collectively, the "Units") of the Partnership ---- ----- and (ii) such number of Rights as most closely approximates 1/99th of the number of Units outstanding on the Record Date (in respect of the General Partner's interest in the Partnership). The distribution is payable to the record holders of Units on the Record Date and to the General Partner. Each Right entitles the holder to purchase from the Partnership one Unit at a price of $21.00 (the "Purchase Price"), subject to adjustment. The description and terms of the -------------- Rights are set forth in a Rights Agreement dated as of April 8, 1997 (the "Rights Agreement") between the Partnership and Harris Trust and Savings Bank, ---------------- as Rights Agent (the "Rights Agent"). ------------ Until the earlier to occur of (i) 10 days following a public announcement that a person or group of affiliated or associated persons (an "Acquiring Person") have acquired beneficial ownership of 15% or more of the ---------------- outstanding Units or (ii) 10 business days (or such later date as may be determined by action of the General Partner prior to such time as any person or group of affiliated persons becomes an Acquiring Person) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 15% or more of the outstanding Units (the earlier of such dates being called the "Distribution Date"), the Rights (other ----------------- than those held by the General Partner) will be evidenced, with respect to any of the certificates for Units outstanding as of the Record Date, by such certificates for Units together with a copy of this Summary of Rights. The Rights Agreement provides that, until the Distribution Date (or earlier redemption or expiration of the Rights), the Rights will be transferred with and only with the Units (or in the case of the General Partner, with the transfer of the general partnership interest). A Right will be issued with each Unit issued after the date of the initial issuance of the Rights and, subject to certain exceptions, prior to the Distribution Date. Until the Distribution Date (or earlier redemption or expiration of the Rights), new certificates for Units issued after the Record Date upon transfer or new issuances of Units will contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any certificates for Units outstanding as of the Record Date, even without such notation or a copy of this Summary of Rights, will also constitute the transfer of the Rights associated with the Units represented by such certificate. As soon as practicable B-1 following the Distribution Date, separate certificates evidencing the Rights ("Right Certificates") will be mailed to holders of record of the Units as of ------------------ the close of business on the Distribution Date and such separate Right Certificates alone will evidence the Rights. The Rights are not exercisable until the Distribution Date. The Rights will expire on the earliest to occur of (i) the effective date of the Merger described in the Agreement and Plan of Conversion, dated as of April 8, 1997, among the Partnership, the General Partner, Borden Chemicals and Plastics Operating Limited Partnership, BCP Chemicals and Plastics Inc., BCP Chemicals and Plastics GP Inc. and BCP Chemicals and Plastics L.P. and (ii) April 8, 2007 (the "Final Expiration Date"), unless the Final Expiration Date is extended or --------------------- unless the Rights are earlier redeemed or exchanged by the Partnership, in each case as described below. The Purchase Price payable, and the number of Units or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a distribution in the form of Units, or a subdivision, combination or reclassification of the Units, (ii) upon the grant to holders of the Units of certain rights or warrants to subscribe for or purchase Units at a price, or securities convertible into Units with a conversion price, less than the then-current market price of the Units or (iii) upon the distribution to holders of the Units of evidences of indebtedness or assets (excluding regular periodic cash distributions or distributions payable in Units) or of subscription rights or warrants (other than those referred to above). In the event that any person or group of affiliated or associated persons becomes an Acquiring Person, proper provision shall be made so that each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter have the right to receive upon exercise of the Right at the then current exercise price of the Right, that number of Units having a market value of two times such exercise price. In the event that, after a person or group has become an Acquiring Person, the Partnership is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets or earning power are sold, proper provision will be made so that each holder of a Right (other than Rights beneficially owned by an Acquiring Person which will have become void) will thereafter have the right to receive, upon the exercise thereof of the Right at the then current exercise price of the Right, that number of shares of common stock, limited partnership interests or equivalent ownership interests of the person with whom the Partnership has engaged in the foregoing transaction which number of shares, limited partnership interests or equivalent ownership interests at the time of such transaction will have a market value of two times the exercise price of the Right. At any time after any person or group becomes an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding Units or the occurrence of an event described in the preceding paragraph, the General Partner on behalf of the Partnership may exchange the Rights (other than Rights owned by such person or group which will have become void), in whole or in part, at an exchange ratio of one Unit per Right (subject to adjustment). B-2 With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in such Purchase Price. No fractional Units will be issued (other than fractions, which may, at the election of the Partnership, be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash will be made based on the market price of the Units on the last trading day prior to the date of exercise. At any time prior to the time an Acquiring Person becomes such, the General Partner on behalf of the Partnership may redeem the Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption Price"). The ---------------- redemption of the Rights may be made effective at such time, on such basis and with such conditions as the General Partner on behalf of the Partnership in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. For so long as Rights are then redeemable, the Partnership may, except with respect to the redemption price, amend the Rights in any manner. After the Rights are no longer redeemable the Partnership may, except with respect to the Redemption Price, amend the Rights in any manner that does not adversely affect the interests of holders of the Rights. Until a Right is exercised, the holder thereof, as such, will have no rights as a holder of Units the Partnership, including, without limitation, the right to vote or to receive distributions. A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A copy of the Rights Agreement is available free of charge from the Partnership. This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, as the same may be amended from time to time, which is hereby incorporated herein by reference. B-3 EX-2 3 AGREEMENT AND PLAN OF CONVERSION Exhibit 2 CONFORMED COPY ================================================================================ AGREEMENT AND PLAN OF CONVERSION Dated as of April 8, 1997, Among BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP BCP MANAGEMENT INC. BCP CHEMICALS AND PLASTICS INC. BCP CHEMICALS AND PLASTICS GP INC. and BCP CHEMICALS AND PLASTICS L.P. ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I THE TRANSFER...................................... 3 SECTION 1.1 The Transfer.................................................................. 3 SECTION 1.2 Closing of the Transfer....................................................... 3 SECTION 1.3 Effect of the Transfer........................................................ 3 ARTICLE II THE CONTRIBUTION.................................... 3 SECTION 2.1 The Contribution.............................................................. 3 SECTION 2.2 Closing of the Contribution................................................... 3 SECTION 2.3 Effect of the Contribution.................................................... 4 ARTICLE III THE MERGER....................................... 4 SECTION 3.1 The Merger.................................................................... 4 SECTION 3.2 Closing....................................................................... 4 SECTION 3.3 Effective Time of the Merger.................................................. 4 SECTION 3.4 Effects of the Merger......................................................... 4 SECTION 3.5 Partnership Agreement......................................................... 4 ARTICLE IV EFFECT OF THE MERGER ON THE PARTNERSHIP INTERESTS OF THE CONSTITUENT ENTITIES.................................. 5 SECTION 4.1 Effect on Partnership Interests............................................... 5 SECTION 4.2 Unit Elections................................................................ 6 SECTION 4.3 Proration..................................................................... 7 SECTION 4.4 Exchange Ratio Definitions.................................................... 7 SECTION 4.5 Exchange of Certificates...................................................... 8 ARTICLE V THE BCPOP EXCHANGE................................... 10 SECTION 5.1 The BCPOP Exchange............................................................ 10 SECTION 5.2 Closing of the BCPOP Exchange................................................. 11
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Page ---- SECTION 5.3 Effect of the BCPOP Exchange.................................................. 11 ARTICLE VI REPRESENTATIONS AND WARRANTIES............................. 11 SECTION 6.1 Representations and Warranties of the Partnership and BCPOP................... 11 SECTION 6.2 Representations and Warranties of BCPM........................................ 13 SECTION 6.3 Representations and Warranties of the Corporation............................. 13 ARTICLE VII ADDITIONAL COVENANTS AND AGREEMENTS.......................... 15 SECTION 7.1 Preparation of the Registration Statement; Unitholder Meeting................. 15 SECTION 7.2 Employees; Benefits........................................................... 15 SECTION 7.3 Affiliates.................................................................... 16 SECTION 7.4 Fees and Expenses............................................................. 16 SECTION 7.5 Stock Exchange Listing........................................................ 16 SECTION 7.6 Certificate of Incorporation and By-laws of the Corporation................... 16 SECTION 7.7 Directors and Officers of the Corporation..................................... 16 SECTION 7.8 Indemnification............................................................... 16 ARTICLE VIII CONDITIONS TO THE TRANSACTIONS............................. 18 SECTION 8.1 Conditions to Each Party's Obligation to Effect the Transactions.............. 18 ARTICLE IX TERMINATION AND ABANDONMENT.............................. 21 SECTION 9.1 Termination and Abandonment................................................... 21 SECTION 9.2 Amendment..................................................................... 21 SECTION 9.3 Waiver........................................................................ 22 ARTICLE X MISCELLANEOUS..................................... 22 SECTION 10.1 Notices...................................................................... 22 SECTION 10.2 Further Assurances........................................................... 22 SECTION 10.3 No Rights, Etc............................................................... 23 SECTION 10.4 Entire Agreement............................................................. 23
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Page ---- SECTION 10.5 Governing Law................................................................ 23 SECTION 10.6 Headings..................................................................... 23 SECTION 10.7 Counterparts................................................................. 23
Exhibits - -------- Exhibit I Preferred Stock Summary Term Sheet Exhibit II Registration Rights Agreement -iii- AGREEMENT AND PLAN OF CONVERSION AGREEMENT AND PLAN OF CONVERSION, dated as of April 8, 1997, by and among Borden Chemicals and Plastics Limited Partnership, a Delaware limited partnership (the "Partnership"), Borden Chemicals and Plastics Operating Limited ----------- Partnership, a Delaware limited partnership ("BCPOP"), BCP Management, Inc., a ----- Delaware corporation ("BCPM"), BCP Chemicals and Plastics Inc., a Delaware ---- corporation (the "Corporation"), BCP Chemicals and Plastics GP Inc., a Delaware ----------- corporation ("BCP GP Inc."), and BCP Chemicals and Plastics L.P., a Delaware ----------- limited partnership ("BCP L.P."). -------- WHEREAS, the Partnership is a Delaware limited partnership subject to the terms of its Amended and Restated Agreement of Limited Partnership dated as of December 15, 1988, as amended (the "Partnership ----------- Agreement") and the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. - --------- Section 17-101 et. seq., as amended (the "Delaware Act"); ------------ WHEREAS, BCPOP is a Delaware limited partnership subject to the terms of its Amended and Restated Agreement of Limited Partnership dated as of November 30, 1987, as amended (the "BCPOP Partnership Agreement") and the --------------------------- Delaware Act; WHEREAS, BCPM is the sole general partner of the Partnership and BCPOP; WHEREAS, in connection with the Transactions (as hereinafter defined) BCPM has formed the Corporation, the Corporation has formed BCP GP Inc. and the Corporation and BCP GP Inc. have formed BCP L.P.; WHEREAS, the Corporation is the sole limited partner of BCP L.P. and BCP GP Inc. is a wholly-owned subsidiary of the Corporation and the sole general partner of BCP L.P.; WHEREAS, the Board of Directors of BCPM has by Special Approval (as defined in the Partnership Agreement) determined that it is fair and reasonable to and in the best interests of the Partnership, BCPOP and the holders of Common Units (as defined in the Partnership Agreement) of the Partnership (the "Units") that the Partnership's status as a "publicly-traded ----- partnership" within the meaning of Section 7704 of the Internal Revenue Code of 1986, as amended (the "Code"), be terminated through the transactions provided ---- for herein pursuant to which (i) BCPM will transfer (the "Transfer") its general -------- partner interest in the Partnership to the Corporation in exchange for shares of common stock, par value $.01 per share, of the Corporation (the "Common Stock"), (ii) immediately after the Transfer, the Corporation will ------------ contribute (the "Contribution") the general partner interest in the ------------ Partnership to BCP GP Inc., (iii) immediately after the Transfer and the Contribution, BCP L.P. will be merged (the "Merger") with and into the ------ Partnership, with the Partnership being the surviving entity in the Merger, and in connection with the Merger (A) the outstanding Units of the Partnership will be exchanged for either (I) upon the election of a holder of Units (a "Unitholder") pursuant to Sections 4.1(b) and 4.2 hereof, shares of cumulative ---------- exchangeable preferred stock, liquidation value $25 per share, of the Corporation having the terms set forth in Exhibit I hereto (the "Preferred --------- Stock") - ----- 2 in accordance with Section 4.2 and subject to proration as set forth in Section 4.3 hereof or (II) shares of Common Stock of the Corporation in accordance with Section 4.1(b) hereof, and in either case, immediately following the Merger the Units will remain outstanding and be owned in their entirety by the Corporation, (B) the general partner interest in the Partner will remain outstanding in accordance with Section 4.1(c) and (C) the general partner interest and the limited partner interest in BCP L.P. outstanding immediately prior to the Merger will be cancelled in accordance with Section 4.1(d) and (iv) immediately after the Merger, the general partner interest and the limited partner interest in BCPOP will be exchanged (the "BCPOP Exchange") so that -------------- (A) the Partner's limited partner interest in BCPOP will become a general partner interest therein and (B) BCPM's general partner interest in BCPOP will become a special limited partner interest in BCPOP which will be exchangeable (the "BCPOP LP Exchange") at BCPM's option into shares of Common ----------------- Stock of the Corporation pursuant to Section 5.1(c) hereof (the Transfer, the Contribution, the Merger, the BCPOP Exchange and the BCPOP LP Exchange are collectively referred to herein as the "Transactions"); ------------ WHEREAS, the Board of Directors of BCPM has by Special Approval determined that it is fair and reasonable to and in the best interests of the Partner, BCPOP and the Unitholders that upon consummation of the Transactions (and without regard to any Preferred Stock which may be issued in connection with the Transactions) (i) Unitholders shall be entitled to exchange the outstanding Units for up to 84% (or 36,750,000 shares) of the Common Stock of the Corporation which may be issued by the Corporation in connection with the Transactions and (ii) BCPM shall be entitled to exchange (A) its general partner interest in the Partner for 14.9899% (or 6,558,081 shares) of the Common Stock which may be issued by the Corporation in connection with the Transactions and (B) its general partner interest in BCPOP for a special limited partner interest in BCPOP convertible at BCPM's option into 1.0101% (or 441,919 shares) of the Common Stock which may be issued by the Corporation in connection with the Transactions, in each case pursuant to the terms of this Agreement. WHEREAS, as a result of the Transactions, the Partner will remain in existence with the Corporation as its limited partner and BCP GP Inc. as its general partner and BCPOP will remain in existence with the Partner as its general partner and BCPM as its special limited partner; and WHEREAS, the Transactions have been unanimously approved by (i) the Board of Directors of BCPM, acting on behalf of BCPM and on behalf of the Partner, (ii) all of the directors and the sole shareholder of the Corporation and (iii) all of the directors and the sole shareholder of BCP GP Inc. NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants, agreements and conditions contained herein the parties hereto hereby agree as follows: 3 ARTICLE I THE TRANSFER SECTION 1.1 The Transfer. Subject to the terms and conditions of ------------ this Agreement, immediately prior to the Effective Time of the Merger (as hereinafter defined), BCPM shall transfer all of its right, title and interest in its general partner interest in the Partnership to the Corporation in exchange for 6,558,081 shares of Common Stock of the Corporation; provided that if after the date of this Agreement and prior to the Effective Time of Merger, the Partnership shall issue any additional Units or shall subdivide, combine or reclassify the Units or enter into any transaction or agreement having a similar impact on the Units, the number of shares of Common Stock to which BCPM shall be entitled in connection with the Transfer shall be adjusted so that in all cases BCPM receives in the Transfer a number of shares of Common Stock equal to 14.9899% of the Common Stock which may be issued by the Corporation in connection with the Transactions (disregarding for these purposes any Preferred Stock which may be issued in connection with the Transactions). SECTION 1.2 Closing of the Transfer. Unless this Agreement shall ----------------------- have been terminated and the transactions herein contemplated shall have been abandoned pursuant to Section 9.1 and subject to the satisfaction or waiver of the conditions set forth in Article VIII, the closing of the Transfer will take place on the Closing Date (as hereinafter defined) immediately prior to the Closing of the Merger as set forth in Section 3.2. SECTION 1.3 Effect of the Transfer. Upon the closing of the ---------------------- Transfer, the Corporation shall be admitted as a general partner of the Partnership pursuant to the Partnership Agreement and the Delaware Act and immediately following such admission, BCPM shall withdraw as a general partner thereof and upon receipt of the Common Stock described in Section 1.1 BCPM shall thereafter no longer have any rights or liabilities of a partner of the Partnership under the Partnership Agreement or the Delaware Act. ARTICLE II THE CONTRIBUTION SECTION 2.1 The Contribution. Immediately after the Transfer and ---------------- prior to the Effective Time of the Merger, the Corporation shall contribute the general partner interest in the Partnership acquired from BCPM in connection with the Transfer to BCP GP Inc. SECTION 2.2 Closing of the Contribution. Unless this Agreement --------------------------- shall have been terminated and the transactions herein contemplated shall have been abandoned pursuant to Section 9.1 and subject to the satisfaction or waiver of the conditions set forth in Article VIII, the closing of the Contribution will take place on the Closing Date immediately after the Transfer and immediately prior to the Closing of the Merger as set forth in Section 3.2. 4 SECTION 2.3 Effect of the Contribution. Upon the closing of the ------------------------- Contribution, BCP GP Inc. shall be admitted as a general partner of the Partnership pursuant to the Partnership Agreement and the Delaware Act and, immediately following such admission, the Corporation shall withdraw as a general partner thereof. ARTICLE III THE MERGER SECTION 3.1 The Merger. Upon the terms and subject to the ---------- conditions set forth in this Agreement, and in accordance with the Delaware Act, BCP L.P. shall be merged with and into the Partnership at the Effective Time of the Merger. Upon the Effective Time of the Merger, the separate existence of BCP L.P. shall cease, and the Partnership shall continue as the surviving partnership and shall continue under the name "Borden Chemicals and Plastics Limited Partnership." SECTION 3.2 Closing. Unless this Agreement shall have been ------- terminated and the transactions herein contemplated shall have been abandoned pursuant to Section 9.1 and subject to the satisfaction or waiver of the conditions set forth in Article VIII, the closing of the Merger (the "Closing") ------- will take place at 10:00 a.m. on the business day after satisfaction or waiver of the conditions set forth in Article VIII (the "Closing Date"), at the offices ------------ of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, unless another date, time or place is agreed to in writing by the parties hereto. SECTION 3.3 Effective Time of the Merger. As soon as practicable ---------------------------- following the satisfaction or waiver of the conditions set forth in Article VIII, the parties shall file with the Secretary of State of the State of Delaware a certificate of merger (the "Certificate of Merger") executed in --------------------- accordance with the relevant provisions of the Delaware Act and shall make all other filings or recordings required under the Delaware Act. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, or at such other time as is permissible in accordance with the Delaware Act and as BCP L.P. and the Partnership shall agree should be specified in the Certificate of Merger (the time the Merger becomes effective being the "Effective Time of the Merger"). ---------------------------- SECTION 3.4 Effects of the Merger. The Merger shall have the --------------------- effects set forth in the applicable provisions of the Delaware Act. SECTION 3.5 Partnership Agreement. The Partnership Agreement of --------------------- the Partnership, as in effect immediately prior to the Effective Time of the Merger, shall be the Partnership Agreement of the Partnership following the Effective Time of the Merger unless and until amended thereafter in accordance with the terms thereof and applicable law. 5 ARTICLE IV EFFECT OF THE MERGER ON THE PARTNERSHIP INTERESTS OF THE CONSTITUENT ENTITIES SECTION 4.1 Effect on Partnership Interest. As of the Effective ------------------------------ Time of the Merger, by virtue of the Merger and without any action on the part of the Partnership, BCP L.P., any Unitholder or the holder of any limited partner interests in BCP L.P.: (a) Cancellation of Units held by the Partnership. Each Unit --------------------------------------------- that is owned by the Partnership or any of its subsidiaries shall automatically be cancelled and retired and shall cease to exist, and no Common Stock, Preferred Stock or other consideration shall be delivered or deliverable in exchange therefor. (b) Exchange of Units of the Partnership. Except as otherwise ------------------------------------ provided herein and subject to Section 4.3, each issued and outstanding Unit (other than Units cancelled pursuant to Section 4.1(a)) shall be exchanged for the following (the "Merger Consideration"): -------------------- (i) for each such Unit with respect to which an election to receive Preferred Stock has been effectively made and not revoked or lost, pursuant to Sections 4.2(c), (d) and (e) ("Electing Units"), that number of shares of Preferred Stock -------------- equal to the Exchange Ratio (as defined in Section 4.4); and (ii) for each such Unit other than Electing Units, one share of Common Stock, and in either case, immediately following the Merger the Units shall remain outstanding and be owned in their entirety by the Corporation. Notwithstanding the foregoing, the issuance of Preferred Stock in respect of Electing Units pursuant to Section 4.1(b)(i) is subject to at least an aggregate of $75,000,000 liquidation value of Preferred Stock being outstanding immediately after the Effective Time of the Merger. If after giving effect to the number of Electing Units, the amount of Preferred Stock that would be outstanding immediately after the Effective Time of the Merger is less than that amount, all of Units shall be exchanged for Common Stock pursuant to Section 4.1(b)(ii). (c) Treatment of General Partnership Interest in the ------------------------------------------------ Partnership. After the Effective Time of the Merger, the general ----------- partner interest in the Partnership shall remain outstanding as the general partner interest of the Partnership. (d) Cancellation and Retirement of Partnership Interests of ------------------------------------------------------- BCP L.P. As of the Effective Time of the Merger, the general partner -------- interest and the limited partner 6 interest in BCP L.P. issued and outstanding immediately prior to the Effective Time of the Merger shall automatically be cancelled and retired and shall cease to exist. SECTION 4.2 Unit Elections. (a) Each person who on or prior to -------------- the Election Date (as defined in Section 4.2(c)) is a record holder of Units will be entitled, with respect to all or any portion of its Units, to make an unconditional election (a "Preferred Stock Election") on or prior to such ------------------------ Election Date to receive Preferred Stock in respect of its Units on the basis hereinafter set forth. (b) Prior to the mailing of the Proxy Statement/Prospectus (as defined in Section 6.1(d)), the Partnership and the Corporation shall jointly appoint a bank or trust company to act as exchange agent (the "Exchange Agent") -------------- for the payment of the Merger Consideration. (c) The Partnership and the Corporation shall prepare a form of election (the "Form of Election") to be mailed with the Proxy ---------------- Statement/Prospectus to the record holders of Units as of the record date for the Unitholders Meeting (as defined in Section 7.1(b)), which Form of Election shall be used by each record holder of Units who wishes to elect to receive Preferred Stock for any or all Units held, subject to the provisions of Section 4.3 hereof, by such holder. The Partnership and the Corporation will use reasonable efforts to make the Form of Election and the Proxy Statement/Prospectus available to all persons who become holders of Units during the period between such record date and the Election Date referred to below. Any such holder's election to receive Preferred Stock shall have been properly made only if the Exchange Agent shall have received at its designated office, by 5:00 p.m., New York City time on the business day next preceding the date of the Unitholders Meeting (the "Election Date"), a Form of Election properly completed ------------- and signed and accompanied by certificates representing the Units to which such Form of Election relates, duly endorsed in blank or otherwise in form acceptable for transfer on the books of the Partnership (or by an appropriate guarantee of delivery of such certificates as set forth in such Form of Election from a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States, provided such certificates are in fact delivered to the Exchange Agent within five New York Stock Exchange trading days after the date of execution of such guarantee of delivery). (d) Any Form of Election may be revoked by the Unitholder submitting it to the Exchange Agent only by written notice received by the Exchange Agent prior to 5:00 p.m., New York City time on the Election Date. In addition, all Forms of Election shall automatically be revoked if the Exchange Agent is notified in writing by the Partnership and the Corporation that the Merger has been abandoned. If a Form of Election is revoked, the certificate or certificates (or guarantees of delivery, as appropriate) for the Units to which such Form of Election relates shall be promptly returned by the Exchange Agent to the Unitholder submitting the same. (e) The determination of the Exchange Agent shall be binding as to whether or not elections to receive Preferred Stock have been properly made or revoked pursuant to this Section 4.2 with respect to Units and as to when elections and revocations were received by it. If the Exchange Agent reasonably determines in good faith that any election to receive Preferred 7 Stock was not properly made with respect to Units, such Units shall be treated by the Exchange Agent as Units which were not Electing Units at the Effective Time of the Merger, and such Units shall be exchanged in the Merger for Common Stock pursuant to Section 4.1(b)(ii). The Exchange Agent shall also make all computations as to the allocation and the proration contemplated by Section 4.3, and any such computation shall be conclusive and binding on the holders of Units. The Exchange Agent may, with the mutual written agreement of the Partnership and the Corporation, make such rules as are consistent with this Section 4.2 for the implementation of the elections provided for herein as shall be necessary or desirable fully to effect such elections. SECTION 4.3 Proration. (a) Notwithstanding anything in this --------- Agreement to the contrary, the maximum aggregate number of Units to be exchanged for Preferred Stock at the Effective Time of the Merger (the "Preferred Stock --------------- Election Number") shall be equal to the number obtained by dividing 175,000,000 - --------------- by the Unit Price. (b) If the number of Electing Units exceeds the Preferred Stock Election Number, then each Electing Unit shall be exchanged for shares of Preferred Stock or for shares of Common Stock in accordance with the terms of Section 4.1(b) in the following manner: (i) A proration factor (the "Preferred Stock Proration Factor") -------------------------------- shall be determined by dividing the Preferred Stock Election Number by the total number of Electing Units. (ii) The number of Electing Units covered by each Preferred Stock Election to be exchanged for shares of Preferred Stock shall be determined by multiplying the Preferred Stock Proration Factor by the total number of Electing Units covered by such Preferred Stock Election. (iii) All Electing Units, other than those to be exchanged for shares of Preferred Stock in accordance with Section 4.3(b)(ii), shall be exchanged for Common Stock (on a consistent basis among unitholders who made the election referred to in Section 4.1(b)(i), pro rata to the number of Units as to which they made such election) as if such Units were not Electing Units in accordance with the terms of Section 4.1(b)(ii). (c) If the number of Electing Units is less than the Preferred Stock Election Number, then all Electing Units shall be exchanged for shares of Preferred Stock in accordance with the terms of Section 4.1(b)(i). SECTION 4.4 Exchange Ratio Definitions. (a) "Exchange Ratio" -------------------------- -------------- shall mean the Unit Price divided by $25, rounded to the nearest 1/100,000. (b) "Unit Price" shall mean the average of the daily averages of ---------- the high and low prices of the Units on the New York Stock Exchange (the "NYSE") ---- for the thirty consecutive NYSE trading days ending on the second business day prior to the date of the Unitholders Meeting. 8 SECTION 4.5 Exchange of Certificates. (a) Exchange Agent. As of ------------------------ -------------- or as soon as reasonably practicable after the Effective Time of the Merger, the Corporation shall deposit with the Exchange Agent, for the benefit of the holders of Units, for exchange in accordance with this Article IV, the Merger Consideration. (b) Exchange Procedures. As soon as practicable after the ------------------- Effective Time of the Merger, each holder of an outstanding certificate or certificates which prior thereto represented Units shall, upon surrender to the Exchange Agent of such certificate or certificates and acceptance thereof by the Exchange Agent, be entitled to a certificate or certificates representing the number of full shares of Common Stock, if any, and the number of full shares of Preferred Stock, if any, into which the number of Units previously represented by such certificate or certificates surrendered shall have become exchangeable pursuant to this Agreement. The Exchange Agent shall accept such certificates upon compliance with such reasonable terms and conditions as the Exchange Agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices. After the Effective Time of the Merger, there shall be no further transfer on the records of the Partnership or its transfer agent of certificates representing Units which have become exchangeable, in whole or in part, pursuant to this Agreement into the right to receive Common Stock or Preferred Stock, and if such certificates are presented to the Partnership for transfer, they shall be cancelled against delivery of certificates for Common Stock and Preferred Stock to be received in connection with the Merger. If any certificate for such Common Stock or Preferred Stock is to be issued in a name other than that in which the certificate for Units surrendered for exchange are registered, it shall be a condition of such exchange that the certificate so surrendered shall be properly endorsed, with signature guaranteed, or otherwise in proper form for transfer and that the person requesting such exchange shall pay to the Corporation or its transfer agent any transfer or other taxes required by reason of the issuance of certificates for such Common Stock or Preferred Stock in a name other than that of the registered holder of the certificate surrendered, or establish to the satisfaction of the Corporation or its transfer agent that such tax has been paid or is not applicable. Until surrendered as contemplated by this Section 4.5(b), each certificate for Units held by a Unitholder (other than the Corporation) shall be deemed at any time after the Effective Time of the Merger to represent only the right to receive upon such surrender the Merger Consideration as contemplated by Section 4.1. No interest will be paid or will accrue on any cash payable in lieu of any fractional shares of Common Stock or Preferred Stock. (c) Distributions with Respect to Unexchanged Units. No ----------------------------------------------- dividends or other distributions with respect to Common Stock or Preferred Stock with a record date after the Effective Time of the Merger shall be paid to the holder of any unsurrendered certificate for Units with respect to the shares of Common Stock or Preferred Stock represented thereby and no cash payment in lieu of fractional shares shall be paid to any such holder pursuant to Section 4.5(e) until the surrender of such certificate in accordance with this Article IV. Subject to the effect of applicable laws, following surrender of any such certificate, there shall be paid to the holder of the certificate representing whole shares of Common Stock or Preferred Stock issued in exchange therefor, without interest, (i) at the time of such surrender or as promptly after the sale of the Excess Shares (as defined in Section 4.5(e)) as practicable, the amount of any cash payable in lieu of a fractional share of Common Stock or Preferred Stock to which such holder is entitled pursuant to Section 4.5(e) and the proportionate amount of any dividends or other 9 distributions with a record date after the Effective Time of the Merger theretofore paid with respect to such whole shares of Common Stock or Preferred Stock, and (ii) at the appropriate payment date, the proportionate amount of any dividends or other distributions with a record date after the Effective Time of the Merger but prior to such surrender and a payment date subsequent to such surrender payable with respect to such whole shares of Common Stock or Preferred Stock. (d) No Further Ownership Rights in Units Exchanged. All shares ---------------------------------------------- of Common Stock and Preferred Stock issued upon the surrender for exchange of certificates representing Units in accordance with the terms of this Article IV (including any cash paid pursuant to Section 4.5(e)) shall be deemed to have been issued (and paid) in full satisfaction of all rights pertaining to the Units theretofore represented by such certificates. (e) No Fractional Units. Notwithstanding any other provision of ------------------- this Agreement, (i) no certificates or scrip representing fractional shares of Common Stock or Preferred Stock shall be issued in connection with the Merger, and such fractional share interests will not entitle the owner thereof to vote or to any rights of a stockholder of the Corporation after the Merger; and (ii) each holder of Units exchanged pursuant to the Merger who would otherwise have been entitled to receive a fraction of a share of Common Stock or Preferred Stock (after taking into account all shares of Common Stock or Preferred Stock delivered by such holder) shall receive, in lieu thereof, a cash payment (without interest) representing such holder's proportionate interest in the net proceeds from the sale by the Exchange Agent (following the deduction of applicable transaction costs), on behalf of all such holders, of the shares (the "Excess Shares") of Common Stock or Preferred Stock, as applicable, representing ------------- such fractions. Such sale shall be made as soon as practicable after the Effective Time of the Merger. (f) Termination of Exchange Fund. Any portion of the Merger ---------------------------- Consideration deposited with the Exchange Agent pursuant to this Section 4.5 (the "Exchange Fund") which remains undistributed to the holders of the ------------- certificates representing Units for six months after the Effective Time of the Merger shall be delivered to the Corporation, upon demand, and any holders of Units prior to the Merger who have not theretofore complied with this Article IV shall thereafter look only to the Corporation and only as general creditors thereof for payment of their claim for Common Stock, if any, Preferred Stock, if any, any cash in lieu of fractional shares of Common Stock and Preferred Stock and any dividends or distributions with respect to Common Stock or Preferred Stock to which such holders may be entitled. (g) No Liability. None of the Partnership, BCPM or the ------------ Corporation or the Exchange Agent shall be liable to any person in respect of any shares of Common Stock or Preferred Stock (or dividends or distributions with respect thereto) or cash from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any certificates representing Units shall not have been surrendered prior to one year after the Effective Time of the Merger (or immediately prior to such earlier date on which any cash in lieu of fractional shares of Common Stock or Preferred Stock or any dividends or distributions with respect to Common Stock or Preferred Stock in respect of such certificate would otherwise escheat to or become the property of any governmental entity), any such cash, dividends or distributions in respect of such certificate shall, to the extent permitted by applicable 10 law, become the property of the Corporation, free and clear of all claims or interest of any person previously entitled thereto. (h) Investment of Exchange Fund. The Exchange Agent shall --------------------------- invest any cash included in the Exchange Fund, as directed by the Corporation. Any interest and other income resulting from such investments shall be paid to the Corporation. ARTICLE V THE BCPOP EXCHANGE SECTION 5.1 The BCPOP Exchange. (a) Immediately after the ------------------ Effective Time of the Merger, (i) the limited partner interest in BCPOP held by the Partnership immediately prior to the BCPOP Exchange shall be exchanged for a general partner interest in BCPOP constituting a 98.9899% interest in each item of income, gain, loss, deduction or credit (calculated as set forth in the BCPOP Partnership Agreement) of BCPOP subject to the terms of the BCPOP Partnership Agreement and the Delaware Act and (ii) the general partner interest in BCPOP held by BCPM immediately prior to the BCPOP Exchange shall be exchanged for a special limited partner interest in BCPOP (the "BCPOP LP -------- Interest") constituting a 1.0101% interest in each item of income, gain, loss, - -------- deduction or credit (calculated as set forth in the BCPOP Partnership Agreement) of BCPOP subject to the terms of the BCPOP Partnership Agreement, the Delaware Act and the provisions of Sections 5.1(b) and (c) of this Agreement. (b) The exchange by BCPM of the general partner interest in BCPOP for a special limited partner interest in BCPOP shall be structured so that it does not result in a deemed distribution to BCPM in excess of its tax basis in BCPOP. In addition, from and after the Effective Time of the Merger, so long as the BCPOP LP Interest is held in whole or in part by BCPM or its affiliates, the Partnership and BCPOP shall not make and shall not permit to be made any adjustment, amendment or modification to the BCPOP LP Interest or take any other action that would result in a deemed distribution to BCPM in excess of its tax basis in BCPOP without the prior written consent of BCPM (which may be given or withheld in BCPM's sole discretion). (c) The BCPOP LP Interest shall be transferable in whole or in part by BCPM to its affiliates and shall be exchangeable in whole or in part at any time at the option of the holder thereof into 441,919 shares of Common Stock of the Corporation. The number of shares of Common Stock into which the BCPOP LP Interest shall be exchangeable shall be adjusted in the event of any dividend on the Common Stock in the form of Common Stock or any subdivision, combination or reclassification of the Common Stock or any exchange or conversion of the Common Stock into Common Stock, other securities of the Corporation or securities of any other entity or any event having a similar impact on the Common Stock so that the holder of the BCPOP LP Interest will be entitled after the occurrence of any such event to receive the aggregate number of shares of Common Stock or other securities which, if such BCPOP LP Interest had been converted into Common Stock immediately prior to such event, the holder would have owned upon such conversion and been entitled to receive by virtue of such 11 distribution, subdivision, combination, reclassification, exchange or conversion. BCPM and the Corporation shall, if BCPM so requests, enter into a more detailed exchange and anti-dilution agreement to effectuate the provisions of the preceding sentences. The Corporation shall at all times have authorized and available for issuance the number of shares of Common Stock or other securities into which the BCPOP LP Interest shall be exchangeable. (d) Upon the closing of the BCPOP Exchange, the BCPOP Partnership Agreement shall be amended, and each of the parties shall enter into such other agreements as are deemed necessary or advisable by counsel to BCPM, to effectuate the provisions of this Article V. SECTION 5.2 Closing of the BCPOP Exchange. Unless this Agreement ----------------------------- shall have been terminated and the transactions herein contemplated shall have been abandoned pursuant to Section 9.1 and subject to the satisfaction or waiver of the conditions set forth in Article VIII, the closing of the BCPOP Exchange will take place on the Closing Date immediately after the Closing of the Merger as set forth in Section 3.2. SECTION 5.3 Effect of the BCPOP Exchange. Upon the closing of ----------------------------- the BCPOP Exchange, the Partnership shall be admitted as a general partner of BCPOP and shall withdraw as a limited partner thereof and, similtaneously therewith, BCPM shall be admitted as a special limited partner of BCPOP and shall withdraw as a general partner thereof. ARTICLE VI REPRESENTATIONS AND WARRANTIES SECTION 6.1 Representations and Warranties of the Partnership and ----------------------------------------------------- BCPOP. Each of the Partnership and BCPOP represents and warrants to the other - ----- parties hereto that: (a) Organization and Good Standing of the Partnership and ----------------------------------------------------- BCPOP. Each of the Partnership and BCPOP is a limited partnership duly ----- formed, validly existing and in good standing under the laws of the State of Delaware. (b) Capitalization. The sole general partner of the Partnership -------------- is BCPM and there are issued and outstanding 36,750,000 Units of the Partnership. The sole general partner of BCPOP is BCPM and the sole limited partner of BCPOP is the Partnership. Other than the Rights under the Rights Agreement dated as of April 8, 1997 between the Partnership and Harris Trust and Savings Bank (the "Rights Agreement"), which Rights by their terms expire immediately ---------------- prior to the Effective Time of the Merger, there are no outstanding options, warrants or other agreements or commitments to which either the Partnership or BCPOP is a party or by which it is bound providing for the issuance of any additional securities of the Partnership or BCPOP. (c) Authorization. The execution, delivery and performance of ------------- this Agreement have been duly and validly authorized by all necessary partnership action on the part of 12 the Partnership and BCPOP other than the approval of the Transactions by the required vote of the Unitholders. This Agreement has been duly executed and delivered by the Partnership and BCPOP and is enforceable against the Partnership and BCPOP, respectively, in accordance with its terms. (d) Registration Statement; Other Information. The ----------------------------------------- Registration Statement on Form S-4 (the "Registration Statement") to be ---------------------- filed with the Securities and Exchange Commission (the "SEC"), including --- the Proxy Statement/Prospectus to be mailed to Unitholders in connection therewith (the "Proxy Statement/Prospectus"), and all other filings with -------------------------- the SEC by or on behalf of the Partnership or BCPOP pursuant to the Securities Act of 1933, as amended (the "Securities Act") and the -------------- Securities Exchange Act of 1934, as amended (the "Exchange Act") in ------------ connection with the Transactions will comply in all material respects with the Securities Act and the Exchange Act, as the case may be, and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. (e) Consents and Approvals; No Violation. Neither the ------------------------------------ execution and delivery of this Agreement by the Partnership and BCPOP nor the consummation of the transactions contemplated hereby will (i) conflict with or result in any breach of any provision of the Partnership Agreement or the BCPOP Partnership Agreement; (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any government or regulatory authority or body, except (A) pursuant to the Securities Act and the Exchange Act or the rules and requirements of any national securities exchange or the National Association of Securities Dealers, Inc., (B) the filing of (1) amendments or amendments and restatements of the certificate of limited partnership of each of the Partnership and BCPOP, and (2) the Certificate of Merger, pursuant to the Delaware Act, (C) filings under state securities laws or in connection with maintaining the good standing and qualification of the Corporation following the Effective Time, (D) filing of any premerger notification and report form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR --- filings"), if any or (E) where the failure to obtain such consent, ------- approval, authorization or permit, or to make such filing or notification, would not in the aggregate have a material adverse effect on the Partnership or BCPOP; (iii) result in a default (or give rise to any right of termination, unilateral modification or amendment, cancellation or acceleration) under any of the terms, conditions or provisions of any note, license, agreement or other instrument or obligation to which the Partnership or BCPOP is a party or by which the Partnership or BCPOP or any of their respective assets may be bound, except for such defaults (or rights of termination, unilateral modification or amendment, cancellation or acceleration) which in the aggregate would not have a material adverse effect on the Partnership or BCPOP; or (iv) violate any order, writ, injunction, decree, judgment, ordinance, statute, rule or regulation applicable to the Partnership or BCPOP or any of their respective properties or businesses, except for violations (other than of orders, writs, injunctions or decrees) which would not in the aggregate have a material adverse effect on the Partnership or BCPOP. SECTOPM 6.2 Representations and Warranties of BCPM. BCPM -------------------------------------- represents and warrants to the other parties hereto that: 13 (a) Organization and Good Standing. BCPM is a corporation duly ------------------------------ organized, validly existing and in good standing under the laws of the State of Delaware. (b) Authorization. The execution, delivery and performance of ------------- this Agreement have been duly and validly authorized by all necessary corporate action of BCPM. This Agreement has been duly executed and delivered by BCPM. (c) Consents and Approvals; No Violation. Neither the execution ------------------------------------ and delivery of this Agreement by BCPM nor the consummation of the transactions contemplated hereby will (i) conflict with or result in any breach of any provision of the charter and by-laws of BCPM or the Partnership Agreement; (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority or body, except (A) pursuant to the Securities Act and the Exchange Act or the rules and requirements of any national securities exchange or the National Association of Securities Dealers, Inc., (B) the filing of a (1) amendments or amendments and restatements of the certificate of limited partnershihp of each of the Partnership and BCPOP and (2) the Certificate of Merger pursuant to the Delaware Act, (C) filings under state securities laws or in connection with maintaining the good standing and qualification of the Corporation following the Effective Time, (D) HSR filings, if any or (E) where the failure to obtain such consent, approval, authorization or permit, or to make such filing or notification, would not in the aggregate have a material adverse effect on BCPM; (iii) result in a default (or give rise to any right of termination, unilateral modification or amendment, cancellation or acceleration) under any of the terms, conditions or provisions of any note, license, agreement or other instrument or obligation to which BCPM is a party or by which it or any of its assets may be bound, except for such defaults (or rights of termination, unilateral modification or amendment, cancellation or acceleration) which in the aggregate would not have a material adverse effect on BCPM; or (iv) violate any order, writ, injunction, decree, judgment, ordinance, statute, rule or regulation applicable to BCPM or any of its properties or businesses, except for violations (other than of orders, writs, injunctions or decrees) which would not in the aggregate have a material adverse effect on BCPM. (d) Ownership of Partnership Interests: Title. BCPM is the ----------------------------------------- owner of record and the beneficial owner of the general partnership interests in the Partnership and BCPOP (the "GP Interests") as disclosed ------------ in the Registration Statement. BCPM has not received any notice of any adverse claim to the ownership of any such GP Interests. On the Closing Date, BCPM shall have good and transferable title to the GP Interests, free and clear of all liens. SECTION 6.3 Representations and Warranties of the Corporation. ------------------------------------------------- The Corporation represents and warrants to the other parties that: (a) Organization and Good Standing of the Corporation, BCP GP --------------------------------------------------------- Inc. and BCP L.P.. Each of the Corporation, BCP GP Inc. and BCP L.P. is ----------------- duly organized or formed as the case may be validly existing and in good standing under the laws of the State of Delaware. (b) Capitalization. As of the date hereof, the authorized -------------- capital stock of the Corporation consists of 1,000 shares of Common Stock, par value $.01 per share, all of 14 which are currently issued and outstanding and owned by BCPM. The authorized capital stock of BCP GP Inc. consists of 1,000 shares of Common Stock, par value $.01 per share, all of which are issued and outstanding and owned by the Corporation. The sole general partner of BCP L.P. is BCP GP Inc. and the sole limited partner of BCP L.P. is the Corporation. Except as otherwise set forth in this Agreement, there are no outstanding options, warrants or other agreements or commitments to which any of the Corporation, BCP GP Inc. or BCP L.P. is a party or by which any of them is bound providing for the issuance of any additional securities of the Corporation, BCP GP Inc. or BCP L.P. (c) Authorization. The execution, delivery and performance of ------------- this Agreement has been duly and validly authorized by all necessary corporate action on the part of the Corporation and BCP GP Inc. and all necessary partnership action on the part of BCP L.P. This Agreement has been duly executed and delivered by the Corporation, BCP GP Inc. and BCP L.P. and is enforceable against each of them in accordance with its terms. (d) Registration Statement; Other Information. The ----------------------------------------- Registration Statement to be filed with the SEC, including the Proxy Statement/Prospectus, and all other filings with the SEC by or on behalf of the Corporation, BCP GP Inc. and BCP L.P. pursuant to the Securities Act and the Exchange Act in connection with the Transactions will comply in all material respects with the Securities Act and the Exchange Act, as the case may be, and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. (e) Consents and Approvals; No Violation. Neither the ------------------------------------ execution and delivery of this Agreement by the Corporation, BCP GP Inc. or BCP L.P. nor the consummation of the transactions contemplated hereby will (i) conflict with or result in any breach of any provision of the charter or by-laws of the Corporation or BCP GP Inc. or the Partnership Agreement of BCP L.P.; (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority or body, except (A) pursuant to the Securities Act and the Exchange Act or the rules and requirements of any national securities exchange or the National Association of Securities Dealers, Inc., (B) the filing of a (1) amendments or amendments and restatements of the certificate of limited partnership of each of the Partnership and BCPOP, and (2) the Certificate of Merger, pursuant to the Delaware Act, (C) filings under state securities laws or in connection with maintaining the good standing and qualification of the Corporation, BCP GP Inc. and BCP L.P. following the Effective Time, (D) HSR filings, if any, or (E) where the failure to obtain such consent, approval, authorization or permit, or to make such filing or notification, would not in the aggregate have a material adverse effect on the Corporation and its subsidiaries taken as a whole; (iii) result in a default (or give rise to any right of termination, unilateral modification or amendment, cancellation or acceleration) under any of the terms, conditions or provisions of any note, license, agreement or other instrument or obligation to which any of the Corporation, BCP GP Inc. or BCP L.P. is a party or by which they or any of their assets may be bound, except for such defaults (or rights of termination, unilateral modification or amendment, cancellation or acceleration) which in the aggregate would not have a 15 material adverse effect on the Corporation and its subsidiaries taken as a whole; or (iv) violate any order, writ, injunction, decree, judgment, ordinance, statute, rule or regulation applicable to the Corporation, BCP GP Inc. or BCP L.P. or any of their properties or businesses, except for violations (other than of orders, writs, injunctions or decrees) which would not in the aggregate have a material adverse effect on the Corporation and its subsidiaries taken as a whole. ARTICLE VII ADDITIONAL COVENANTS AND AGREEMENTS SECTION 7.1 Preparation of the Registration Statement; Unitholder ----------------------------------------------------- Meeting. (a) Promptly following the date of this Agreement, the Partnership and - ------- the Corporation shall prepare the Proxy Statement/Prospectus and shall prepare and file with the SEC the Registration Statement, in which the Proxy Statement/Prospectus will be included. Each of the Partnership and the Corporation shall use its reasonable best efforts to have the Registration Statement declared effective under the Securities Act as promptly as practicable after such filing. The Partnership and the Corporation will use their reasonable best efforts to cause the Proxy Statement/Prospectus to be mailed to the Unitholders as promptly as practicable after the Registration Statement is declared effective under the Securities Act. The Partnership and the Corporation shall also take any action required to be taken under any applicable state securities laws in connection with the registration and qualification of the Preferred Stock and the Common Stock. (b) The Partnership will, as promptly as practicable following the date of this Agreement duly call, give notice of, convene and hold a meeting of its Unitholders (the "Unitholders Meeting") for the purpose of approving this ------------------- Agreement, each of the Transactions and the other transactions contemplated by this Agreement, including without limitation, any related amendments to the Partnership Agreement and the BCPOP Partnership Agreement and the withdrawal of BCPM as the general partner of each of the Partnership and BCPOP, to the extent required by the Delaware Act, the Partnership Agreement and the BCPOP Partnership Agreement. The Partnership will use its reasonable best efforts to hold such meeting as soon as practicable after the date hereof. SECTION 7.2 Employees; Benefits. The parties hereto will enter ------------------- into, and will use their reasonable best efforts to cause Borden Inc. to enter into, an agreement on or prior to the Closing Date providing for (a) the transfer to the Corporation of certain employees of Borden, Inc. and its subsidiaries subject to the Corporation providing for a period of one year after the transfer (i) compensation and benefits comparable in the aggregate to the employees to that enjoyed by them immediately prior to the transfer and (ii) severance benefits on termination of an employee through no fault of the employee equal to those Borden, Inc. provides immediately prior to the transfer and (b) the participation in and allocation of liabilities and obligations under all employee compensation and benefit plans, programs, policies, agreements and arrangements (including, without limitation, (i) "employee benefit plans," as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended and (ii) equity-based arrangements) covering those individuals to be employed by the Corporation immediately after 16 the Merger as well as those individuals formerly employed in respect of the business of the Partnership and BCPOP or on leave therefrom. SECTION 7.3 Affiliates. Prior to the Closing Date BCPM shall ---------- deliver to the Corporation a letter identifying all persons who are, at the time the Transactions are submitted for approval to the Unitholders, "affiliates" of the Partnership for purposes of Rule 145 under the Securities Act. BCPM shall use its reasonable best efforts to cause each such person to deliver to the Corporation on or prior to the Closing Date executed affiliates' letters in customary form. SECTION 7.4 Fees and Expenses. Whether or not any of the ----------------- Transactions are consummated, all costs and expenses incurred by or on behalf of the Partnership in connection with this Agreement, the Transactions and the other transactions contemplated hereby shall be paid by the Partnership. SECTION 7.5 Stock Exchange Listing. The Corporation shall use ---------------------- its reasonable best efforts to cause the Preferred Stock and Common Stock to be issued in connection with the Transactions to be approved for listing on the New York Stock Exchange (the "NYSE"), subject to official notice of issuance, prior ---- to the Closing Date. The Partnership shall use its reasonable best efforts to delist the Units from the NYSE at or immediately after the Effective Time of the Merger. SECTION 7.6 Certificate of Incorporation and By-laws of the ----------------------------------------------- Corporation. The certificate of incorporation and by-laws of the Corporation at - ----------- the Effective Time of the Merger shall be the certificate of incorporation and by-laws of the Corporation thereafter until amended or modified in accordance with their terms and applicable law. SECTION 7.7 Directors and Officers of the Corporation. The ----------------------------------------- directors and officers of the Corporation at the Effective Time of the Merger shall be the directors and officers of the Corporation following the Merger, until the earlier of their resignation or removal or until their respective successors are duly elected or appointed and qualified, as the case may be. At the Effective Time of the Merger, the directors of the Corporation will be identical to the directors of BCPM, and the directors of the Corporation initially shall be divided among the three classes of directors of the Corporation in the manner determined by the Corporation. SECTION 7.8 Indemnification. (a) To the fullest extent permitted --------------- by applicable law, the Partnership and, from and after the Effective Time of the Merger, the Corporation agrees to indemnify, defend and hold harmless each person who is now, or has been at any time prior to the date of this Agreement or who becomes prior to the Effective Time of the Merger, an officer, director, partner, shareholder, agent or fiduciary of the Partnership, BCPOP, BCPM, the Corporation, BCP GP Inc. or BCP L.P. or an affiliate of any such persons (collectively, the "Indemnified Parties") against all losses, claims, damages, ------------------- costs, expenses, liabilities or judgments, or amounts arising out of or in connection with, any claim, action, suit, proceeding or investigation (a "Proceeding") based in whole or in part on such Indemnified Party acting in such ---------- capacity or on this Agreement, the Transactions or the other transactions contemplated by this Agreement, whether pertaining to any matter existing or occurring at or prior to the Effective Time of the Merger and whether asserted or claimed prior to, or at or after, the Effective Time of the Merger ("Indemnified Liabilities"); ----------------------- 17 and the Partnership and, after the Effective Time of the Merger, the Corporation will pay or reimburse expenses of any such Proceeding to each Indemnified Party as incurred. Without limiting the foregoing, in the event any such Proceeding is brought against any Indemnified Party (whether arising before or after the Effective Time of the Merger), (i) the Indemnified Parties may retain counsel satisfactory to them, (ii) the Partnership and, after the Effective Time of the Merger, the Corporation shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as statements therefor are received, and (iii) the Partnership and, after the Effective Time of the Merger, the Corporation will use all reasonable efforts to assist in the vigorous defense of any such matter, provided that neither the Partnership nor the Corporation shall be liable for any settlement of any claim effected without its written consent (which shall not be unreasonably withheld). Any Indemnified Party claiming indemnification under this Section 7.8(a), shall promptly notify the Partnership and, after the Effective Time of the Merger, the Corporation of any Proceeding (but the failure so to notify the Partnership or the Corporation, as the case may be, shall not relieve the Partnership or the Corporation from any liability which it may have under this Section 7.8(a) except to the extent such failure materially prejudices the indemnifying party). The Indemnified Parties as a group may retain only one law firm to represent them with respect to each such matter unless there is, under applicable standards of professional conduct, a conflict on any significant issue between the positions of any two or more Indemnified Parties. (b) To the fullest extent permitted by applicable law the Corporation agrees to indemnify, defend and hold harmless BCPM and its officers, directors, shareholder, agents and affiliates (the "BCPM Indemnitees") against ---------------- all losses, claims, damages, costs, expenses, liabilities or judgments, or amounts arising out of or in connection with, any claim, action, suit, proceeding or investigation (a "BCPM Proceeding") based in whole or in part on --------------- BCPM acting as the general partner of the Partnership and BCPOP prior to the Transfer and the other Transactions contemplated by this Agreement, whether pertaining to any matter existing or occurring at or prior to the Effective Time of the Merger and whether asserted or claimed prior to, or at or after, the Effective Time of the Merger ("BCPM Indemnified Liabilities"); and the ---------------------------- Corporation will pay or reimburse expenses of any such BCPM Proceeding to each BCPM Indemnitee as incurred. Without limiting the foregoing, in the event any such BCPM Proceeding is brought against any BCPM Indemnitee (whether arising before or after the Effective Time of the Merger), (i) the BCPM Indemnitees may retain counsel satisfactory to them, (ii) the Corporation shall pay all reasonable fees and expenses of such counsel for the BCPM Indemnitees promptly as statements therefor are received, and (iii) the Corporation will use all reasonable efforts to assist in the vigorous defense of any such matter, provided that the Corporation shall not be liable for any settlement of any claim effected without its written consent (which shall not be unreasonably withheld). Any BCPM Indemnitee claiming indemnification under this Section 7.8(c), shall promptly notify the Corporation of any BCPM Proceeding (but the failure so to notify the Corporation shall not relieve the Corporation from any liability which it may have under this Section 7.8(c) except to the extent such failure materially prejudices the Corporation). The BCPM Indemnitees as a group may retain only one law firm to represent them with respect to each such matter unless there is, under applicable standards of professional conduct, a conflict on any significant issue between the positions of any two or more BCPM Indemnitees. 18 (c) The provisions of this Section 7.8 are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party, each BCPM Indemnitee and their respective heirs, representatives, successors and assigns. ARTICLE VIII CONDITIONS TO THE TRANSACTIONS SECTION 8.1 Conditions to Each Party's Obligation to Effect the --------------------------------------------------- Transactions. The respective obligations of the parties to effect the ------------ Transactions shall be subject to the satisfaction, on or before the Closing Date, of each of the following conditions: (a) Representations and Warranties; Performance. The ------------------------------------------- representations and warranties of each of the other parties contained herein shall be true and correct in all material respects on the Closing Date with the same effect as though made at such time, except for those representations and warranties given at or as of a certain date which shall be true and correct in all material respects at or as of such date. Each of the other parties shall have performed in all material respects all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required by this Agreement to be performed or complied with by it at or prior to the Closing Date. (b) Litigation. No temporary restraining order, preliminary or ---------- permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of any of the Transactions shall be in effect, and there shall not be pending by any governmental entity or by any other person any suit, action or proceeding which has a reasonable likelihood, in the opinion of Simpson Thacher & Bartlett, of success challenging or seeking to restrain or prohibit the consummation of any of the Transactions or any of the other transactions contemplated by this Agreement or seeking to obtain from BCPM, the Partnership, the Corporation or any of their affiliates any damages that are material to any such party, (c) Unitholder Approval. The Transactions shall have been ------------------- approved and adopted at the Unitholders Meeting by Unitholders (other than affiliates of BCPM) who are record holders of more than 50% of the outstanding Units. (d) Regulatory Approval. All authorizations, consents and ------------------- permits required to execute and perform this Agreement and the Transactions shall have been obtained and be in full force and effect and any required statutory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have expired or been terminated, except those the failure to obtain would not have a material adverse effect on the parties or their ability to consummate the Transactions. (e) Registration Statement. The Registration Statement shall ---------------------- have become effective under the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order. 19 (f) Blue Sky Compliance. The Corporation shall have complied ------------------- with all material requirements of state securities or "blue sky" laws with respect to the issuance of the Preferred Stock and the Common Stock in connection with the Transactions. (g) NYSE Listing. The Preferred Stock and the Common Stock to ------------ be issued in connection with the Transactions shall have been approved for listing on the NYSE subject to official notice of issuance. (h) Special Approval. The Board of Directors of BCPM shall not ---------------- have withdrawn its Special Approval of the Transactions. (i) Fairness Opinion. The fairness opinion delivered to the ---------------- Board of Directors of BCPM by Wasserstein Perella & Co., Inc. and included as an exhibit to the Proxy Statement/Prospectus shall not have been rescinded or modified in any respect materially adverse to the Unitholders on or prior to the Closing Date. (j) Refinancing of BCPOP Notes. The outstanding 9 1/2% Notes --------------------------- due 2005 of BCPOP shall have been refinanced on terms acceptable to the Partnership, BCPOP and the Corporation and consistent with the transactions contemplated by this Agreement. (k) Amendment to BCPOP Partnership Agreement. The BCPOP ---------------------------------------- Partnership Agreement shall have been amended as set forth in Section 5.1(d). (l) Employee Benefits. The parties hereto and Borden, Inc. ----------------- shall have entered into the agreement referred to in Section 7.2. (m) Affiliate Letters. The Corporation shall have received the ----------------- letters referred to in Section 7.3. (n) Certificate of Incorporation and By-laws of the ----------------------------------------------- Corporation. The certificate of incorporation of the Corporation shall ----------- have been amended in order to authorize the number of shares of Common Stock and to authorize the number of shares and establish the terms of the Preferred Stock to be issued in connection with the Transactions and shall also have been amended to include, without limitation, provisions that (i) permit its board of directors to adopt, amend or repeal by- laws, (ii) authorize the issuance of preferred stock having such voting powers, designations, preferences, rights, qualifications or other restrictions as may be stated or expressed in a resolution or resolutions of the board of directors of the Corporation pursuant to Section 151 of the Delaware General Corporation Law (the "DGCL"), (iii) ---- require a classified board of directors with three classes of directors pursuant to Section 141 of the DGCL, (iv) limit directors liability to the fullest extent permitted under applicable law, (v) fix the minimum and maximum number of directors, (vi) permit vacancies on the board of directors to be filled only by persons designated by a majority of the remaining directors, (vii) eliminate to the greatest extent permitted by applicable law the ability of shareholders to call special meetings, (viii) prohibit action by shareholders by written consent, (ix) require the approval of 66 2/3% of the Common Stock voted at a meeting of shareholders to approve a merger, a 20 sale of substantially all of the assets of the Corporation or a similar transaction and (x) require the approval of 66 2/3% of the Common Stock voted at a meeting of shareholders to amend or repeal the provisions of the certificate of incorporation listed in items (ix) and (x). The by- laws of the Corporation shall have been amended to include, without limitation, provisions that (i) fix the minimum and maximum number of directors and permit the board of directors to determine the actual number of directors within those limits, (ii) permit vacancies on the board of directors to be filled by the other directors, (iii) limit the ability of shareholders to call special meetings, (iv) permit the board of directors to change the date of the annual meeting of shareholders, (v) require advance notice of nominations of persons for election to the board of directors (other than those proposed by the board of directors) and (vi) require advance notice of shareholder proposals of business to be considered at meetings of the shareholders. (o) Shareholder Rights Plan. The Corporation shall have ----------------------- entered into a shareholder rights agreement providing the holders of the Common Stock of the Corporation with rights which are substantially equivalent (to the extent practicable) to the Rights held by Unitholders under the Rights Agreement; provided that the exercise price of the rights to be issued thereunder shall be set at the time of the adoption of such agreement and may be different from the exercise price set forth in the Rights Agreement. Such shareholder rights agreement shall provide that no holder of Common Stock at the Effective Time of the Merger shall be an "acquiring person" or otherwise trigger the distribution or exercise of any rights or other securities under such agreement because of its ownership of Common Stock at such time or in connection with its receipt of any additional Common Stock in connection with the Transactions. (p) Registration Rights Agreement. BCPM and the Corporation ----------------------------- shall have entered into a registration rights agreement relating to the Common Stock of the Corporation held from time to time by BCPM and its affiliates substantially in the form of Exhibit II hereto. (q) Supply and Processing Agreements. BCPOP and Borden, Inc. -------------------------------- shall have entered into amendments to (i) the PVC Purchase Agreement, (ii) the Ammonia Purchase Agreement, (iii) the Urea Purchase Agreement, (iv) the Methanol Purchase Agreement, (v) the Formaldehyde Processing Agreement and (vi) the Urea-Formaldehyde Processing Agreement, in each case between BCPOP and Borden and dated as of November 30, 1987, as amended (collectively, the "Supply and Processing Agreements") -------------------------------- providing, inter alia, that the term of each such agreement shall be extended to November 30, 2007 and that each such agreement may be terminated in the sole discretion of Borden, Inc. if at any time a person or entity unaffiliated with Borden, Inc. acquires a majority of the outstanding Common Stock or voting rights of the Corporation or controls a majority of its board of directors. The amendments shall also make such other changes to the Supply and Processing Agreements as are necessary or advisable to make them consistent with the terms of the transactions contemplated by this Agreement. (r) Trademark License Agreement. The Partnership, BCPOP and --------------------------- Borden, Inc. shall have entered into an amendment to the Trademark License Agreement, dated as of 21 November 30, 1987 (the "Trademark License Agreement") providing, inter --------------------------- alia, that the Partnership, BCPOP and the Corporation shall be entitled to continue using the trademarks, trade names and other names referred to therein (including, without limitation, "Borden Chemicals and Plastics") pursuant to the terms of the Trademark License Agreement until the earlier of November 30, 2007 or the time at which any person or entity unaffiliated with Borden, Inc. acquires a majority of the outstanding Common Stock or voting rights of the Corporation or controls a majority of its board of directors. The amendment shall also make such other changes to the Trademark License Agreement as are necessary or advisable in order to make the Trademark License Agreement consistent with the terms of the transactions contemplated by this Agreement. (s) Patent and Know-How Agreement. The Partnership, BCPOP and ----------------------------- Borden, Inc. shall have entered into an amendment effecting such changes to the Patent and Know-How Agreement, dated as of November 30, 1987 (the "Patent and Know-How Agreement"), if any, as are necessary or advisable ----------------------------- in order to make the Patent and Know-How Agreement consistent with the terms of the transactions contemplated by this Agreement. (t) Deposit Agreement. The Partnership, BCPM, Borden, Inc. and ----------------- Harris Trust and Savings Bank (as successor depositary, the "Depositary") shall have entered into an amendment effecting such ---------- changes to the Amended and Restated Deposit Agreement, dated as of December 15, 1988 (the "Deposit Agreement"), if any, as are necessary or ----------------- advisable in order to make the Deposit Agreement consistent with the terms of the transactions contemplated by this Agreement, including, without limitation, such changes as are necessary to ensure that shares of Common Stock issued to the Depositary in exchange for Units are distributed to the beneficial owners of such Units held by the Depositary under the Deposit Agreement. (u) Changes in Applicable law. There shall have been no ------------------------- material change, in effect or pending, in applicable law, including with respect to the tax consequences of the Transactions to the Unitholders, the Partnership, BCPOP, BCPM, the Corporation or the shareholders of the Corporation. (v) Other Documentation. The parties hereto shall have entered ------------------- into such other arrangements and agreements in connection with the Transactions and the other transactions contemplated by this Agreement as they deem necessary or advisable. ARTICLE IX TERMINATION AND ABANDONMENT SECTION 9.1 Terminiation and Abandonment. This Agreement may be ---------------------------- terminated and the Transactions may be abandoned at any time prior to the Effective Time of the Merger, whether before or after approval by the Unitholders, at the discretion of BCPM. 22 SECTION 9.2 Amendment. This Agreement may not be amended except --------- by an instrument in writing signed on behalf of each of the parties hereto; provided, however, that after approval of the Transactions by the Unitholders, no amendment may be made which decreases the amount or changes the type of Merger Consideration to which the Unitholders are entitled under this Agreement or otherwise materially adversely affects the rights of the Unitholders without the further approval of the Unitholders. SECTION 9.3 Waiver. Any time prior to the Effective Time of the ------ Merger, whether before or after the Unitholders Meeting, any party hereto may waive compliance with any of the agreements of any other party or with any conditions to the obligations of such party; provided, however, that after approval of the Transactions by the Unitholders, no waiver may be given which materially adversely affects the rights of the Unitholders without the further approval of the Unitholders. Any agreement on the part of a party hereto to any such extension or waiver shall be valid if set forth in an instrument in writing signed on behalf of such party by a duly authorized officer. ARTICLE X MISCELLANEOUS SECTION 10.1 Notices. Any notices or other communications ------- required or permitted hereunder shall be sufficiently given if sent by telecopy or facsimile transmission (with hard copy to follow), registered or certified mail, postage prepaid, or Federal Express or similar overnight delivery services addressed, in the case of all parties at: Borden Chemicals and Plastics Limited Partnership c/o BCP Management, Inc. 180 East Broad Street Columbus, Ohio 43215-3799 Attention: General Counsel and Secretary Facsimile No.: (614) 225-4238 with required copies to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Attention: David J. Sorkin, Esq. Facsimile No.: (212) 455-2502 or such other address as shall be furnished in writing by any party to the others prior to the giving of the applicable notice or communication. SECTION 10.2 Further Assurances. Upon the terms and subject to ------------------ the conditions set forth in this Agreement, each of the parties agrees to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective, in the most expeditious manner practicable, the 23 Merger and the other Transactions contemplated by this Agreement and to satisfy the conditions to this Agreement. The parties will use their reasonable best efforts and cooperate with one another (i) in promptly determining whether any filings are required to be made or consents, approvals, waivers, licenses, permits or authorizations are required to be obtained (or, which if not obtained, would result in an event of default, termination or acceleration of any agreement or any put right under any agreement) under any applicable law or regulation or from any governmental authorities or third parties, including parties to loan agreements or other debt instruments, in connection with the Transactions contemplated by this Agreement and (ii) in promptly making any such filings, in furnishing information required in connection therewith and in timely seeking to obtain any such consents, approvals, permits or authorizations. SECTION 10.3 No Rights, Etc. Nothing in this Agreement express or -------------- implied is intended to confer upon any other person any rights or remedies under or by reason of this Agreement. SECTION 10.4 Entire Agreement. This Agreement constitutes the ---------------- entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties, with respect to the subject matter hereof. SECTION 10.5 Governing Law. This Agreement shall be governed by ------------- and construed in accordance with the laws of the State of Delaware, without regard to principles of conflict of laws. SECTION 10.6 Headings. The headings herein are for convenience of -------- reference only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. SECTION 10.7 Counterparts. This Agreement may be executed in two ------------ or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed by facsimile copies of the signature pages hereto. IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of Conversion to be duly executed as of the date first written above. BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP By: BCP Management, Inc., its General Partner By: /s/Joseph Saggese ------------------------------ Name: Joseph Saggese Title: Chief Financial Officer 24 BORDEN CHEMICAL AND PLASTICS OPERATING LIMITED PARTNERSHIP By: BCP Management, Inc., its General Partner By: /s/Joseph Saggese ------------------------------ Name: Joseph Saggese Title: Chief Executive Officer BCP MANAGEMENT, INC. By: /s/Joseph Saggese ------------------------------ Name: Joseph Saggese Title: Chief Executive Officer BCP CHEMICALS AND PLASTICS INC. By: /s/James O. Stevning ------------------------------ Name: James O. Stevning Title: Chief Financial Officer BCP CHEMICALS AND PLASTICS GP INC. By: /s/James O. Stevning ------------------------------ Name: James O. Stevning Title: Chief Financial Officer BCP CHEMICALS AND PLASTICS L.P. By: BCP Chemical and Plastics GP Inc., its General Partner By: /s/James O. Stevning ------------------------------ Name: James O. Stevning Title: Chief Financial Officer Exhibit I --------- PREFERRED STOCK SUMMARY TERM SHEET The following summarizes the material terms of the PREFERRED STOCK: TYPE OF SECURITY: Cumulative Exchangeable Preferred Stock, par value $.01 per share ("CEPS") ---- AMOUNT: $175 million LIQUIDATION VALUE: $25 per share DIVIDENDS: $2.38 per annum (9 1/2% per annum), payable quarterly TERM: Perpetual OPTIONAL Redeemable in whole or in part after year 5 REDEMPTION: at 104.75% of par (declining ratably to 100% of par after year 9) plus any accrued and unpaid dividends; provided that if redeemed in part, at least $75 million of the preferred stock must remain outstanding VOTING RIGHTS: None. In the event that 6 quarterly dividend payments on the preferred stock are in arrears, the holders will be entitled to elect 2 additional directors to the Corporation's board until all arrearages have been paid EXCHANGE PROVISIONS: Exchangeable into the Exchange Notes described below (on the basis of $1 of Exchange Notes for each $1 of liquidation value of the CEPS) at the Corporation's option, in whole or in part, on any dividend payment date after year 2; provided that if exchanged in part, at least $75 million of the preferred stock must remain outstanding RANKING: With respect to dividend rights and liquidation, senior to all classes of common and junior to all other classes of preferred stock outstanding at the date of issue 2 The following summarizes the material terms of the EXCHANGE NOTES: TYPE OF SECURITY: Unsecured Subordinated Notes COUPON: 9 1/2% per annum MATURITY DATE: 12 years from the issue date of the CEPS INTEREST PAYMENTS: Quarterly in arrears OPTIONAL Redeemable at the Corporation's option, in REDEMPTION: whole or in part, at any time after 5 years from the issue date of the CEPS at 104.75% of par (declining to 100% of par after 9 years from the issue date of the CEPS) plus accrued and unpaid interest; provided that if redeemed in part, at least $75 million of the notes must remain outstanding RANKING: Subordinated to all existing and future senior debt of the Corporation COVENANTS: Limitations on liens and inclusion of successor provisions with respect to mergers or sales of substantially all assets Exhibit II ---------- REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT, dated as of _______ __, 1997 (this "Agreement") between BCP Chemicals and Plastics Inc., a Delaware corporation --------- (the "Corporation") and BCP Management, Inc., a Delaware corporation ("BCPM"). ----------- ---- W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Corporation and BCPM are parties to an Agreement and Plan of Conversion dated as of April 8, 1997 among the Corporation, BCPM, Borden Chemicals and Plastics Limited Partnership (the "Partnership"), Borden Chemicals ----------- and Plastics Operating Limited Partnership, BCP Chemicals and Plastics GP Inc. and BCP Chemicals and Plastics L.P. (the "Agreement and Plan of Conversion") -------------------------------- pursuant to which, inter alia, the partnership interests in the Partnership will be exchanged for shares of Common Stock and Preferred Stock of the Corporation; WHEREAS, it is a condition to the closing of the Transactions under the Agreement and Plan of Conversion that the Corporation and BCPM shall have entered into this Agreement; WHEREAS, the Corporation has agreed to provide certain registration rights to BCPM as set forth herein. NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter set forth, the parties hereto agree as follows: SECTION 1. Definitions. ----------- "Affiliate" has the same meaning as in Rule 12b-2 promulgated --------- under the Exchange Act. "Common Stock" means the common stock, par value $.01 ------------ per share, of the Corporation. "Equity Security" means any (i) Common Stock, (ii) securities of --------------- the Corporation or of a Subsidiary convertible into or exchangeable for Common Stock, and (iii) options, rights, warrants and similar securities issued by the Corporation or a Subsidiary to acquire Common Stock. "Exchange Act" means the Securities Exchange Act of 1934, and the ------------ rules and regulations promulgated thereunder, as amended. "Holder" shall mean any holder of Registrable Securities. ------ 2 "Register," "registered" and "registration" shall refer to a -------- ---------- ------------ registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act and the declaration or ordering of effectiveness of such registration statement or document. "Registrable Securities" shall mean (i) any Equity Security held ---------------------- by BCPM that was issued to BCPM by the Corporation pursuant to, or otherwise acquired by BCPM in accordance with, the Transactions contemplated by the Agreement and Plan of Conversion (after giving effect to Section 14 hereof), (ii) any common stock issued as (or issuable upon the conversion or exercise of any warrant, right, option or other convertible security which is issued as) a dividend or other distribution with respect to, or in exchange for, or in replacement of, such Equity Security, and (iii) any common stock issued by way of a stock split of the Equity Security referred to in clauses (i) or (ii) above. For purposes of this Agreement, any Registrable Securities shall cease to be Registrable Securities when (w) a registration statement covering such Registrable Securities has been declared effective and such Registrable Securities have been disposed of pursuant to such effective registration statement, (x) such Registrable Securities shall have been distributed pursuant to Rule 144 (or any similar provision then in effect) under the Securities Act, (y) such Registrable Securities are sold by a person in a transaction in which the rights under the provisions of this Agreement are not assigned, or (z) such Registrable Securities shall cease to be outstanding. "Securities Act" means the Securities Act of 1933, and the rules -------------- and regulations promulgated thereunder, as amended. "SEC" means the Securities and Exchange Commission or any other --- federal agency at the time administering the Securities Act or the Exchange Act. "Subsidiary" has the same meaning as in Rule 12b-2 promulgated ---------- under the Exchange Act. Any other capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Agreement and Plan of Conversion. SECTION 2. Restrictive Legend. Each certificate representing ------------------ Registrable Securities shall, except as otherwise provided in this Section 2 or in Section 3, be stamped or otherwise imprinted with a legend substantially in the following form: "THIS SECURITY MAY BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF ONLY PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT." 3 A certificate shall not bear such legend if in the opinion of counsel satisfactory to the Corporation (it being agreed that Simpson Thacher & Bartlett shall be satisfactory) the securities being sold thereby may be publicly sold without registration under the Securities Act. SECTION 3. Notice of Proposed Transfer. Prior to any proposed --------------------------- transfer of any Registrable Securities (other than under the circumstances described in Section 4, 5 or 6), the Holder thereof shall give written notice to the Corporation of its intention to effect such transfer. Each such notice shall describe the manner of the proposed transfer and, if requested by the Corporation, shall be accompanied by an opinion of counsel satisfactory to the Corporation (it being agreed that Simpson Thacher & Bartlett shall be satisfactory) to the effect that the proposed transfer does not violate the terms of this Agreement and that the proposed transfer may be effected without registration under the Securities Act, whereupon the Holder of such security shall be entitled to transfer such security in accordance with the terms of its notice. Each certificate for Registrable Securities transferred as above provided shall bear the legend set forth in Section 2, except that such certificate shall not bear such legend if (i) such transfer is in accordance with the provisions of Rule 144, Rule 144A or Rule 145 (or any other rule permitting public sale without registration under the Securities Act) or (ii) the opinion of counsel referred to above is to the further effect that the transferee and any subsequent transferee (other than an Affiliate of the Corporation) would be entitled to transfer such securities in a public sale without registration under the Securities Act. The restrictions provided for in this Section 3 shall not apply to securities that are not required to bear the legend prescribed by Section 2 in accordance with the provisions of that Section. SECTION 4. Request for Registration. (a) At any time, and from ------------------------ time to time, on and after the Closing Date, the Holders of at least 25% of the then Registrable Securities (the "Initiating Holders") may request in a written ------------------ notice that the Corporation file a registration statement under the Securities Act (or a similar document pursuant to any other statute then in effect corresponding to the Securities Act) covering the registration of any or all Registrable Securities held by such Initiating Holders in the manner specified in such notice. Following receipt of any notice under this Section 4 the Corporation shall (x) within ten days notify all other Holders of such request in writing and (y) thereupon will, as expeditiously as possible, use its best efforts to cause to be registered under the Securities Act all Registrable Securities that the Initiating Holders and such other Holders have, within ten days after the Corporation has given such notice, requested be registered in accordance with the manner of disposition specified in such notice by the Initiating Holders; provided, however, that, notwithstanding anything to the -------- ------- contrary contained herein, the Corporation shall not be required to have any such registration statement be declared effective by the SEC prior to the six month anniversary of the Closing Date. (b) If the Initiating Holders intend to have the Registrable Securities distributed by means of an underwritten offering, the Corporation shall include such information in the written notice referred to in clause (x) of Section 4(a) above. In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwritten offering and the inclusion of such Holder's Registrable Securities in the underwritten offering (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided below. All 4 Holders proposing to distribute Registrable Securities through such underwritten offering shall enter into an underwriting agreement in customary form with the underwriter or underwriters. Such underwriter or underwriters shall be selected by a majority in interest of the Initiating Holders and shall be approved by the Corporation, which approval shall not be unreasonably withheld. No Holder shall be required to make any representations or warranties to or agreements with the Corporation or the underwriters other than representations, warranties or agreements regarding such Holder, the Registrable Securities of such Holder and such Holder's intended method of distribution and any other representations required by law or reasonably required by the underwriter. If any Holder of Registrable Securities disapproves of the terms of the underwriting, such Holder may elect to withdraw all its Registrable Securities by written notice to the Corporation, the managing underwriter and the Initiating Holders. The securities so withdrawn also shall be withdrawn from registration. (c) Notwithstanding any provision of this Agreement to the contrary, the Corporation shall not be required to effect a registration pursuant to this Section 4 during the period starting with the date of filing by the Corporation of, and ending on a date 180 days following the effective date of, (i) any registration statement requested under Section 4(a) or Section 6 or (ii) a registration statement pertaining to a public offering of securities for the account of the Corporation or on behalf of the selling stockholders under any other registration rights agreement, in each case which the Holders have been entitled to join pursuant to Section 5; provided that (x) the Corporation -------- shall actively employ in good faith all reasonable efforts to cause any such registration statement referred to in clause (i) or (ii) above to become effective as soon as possible and (y) with respect to any such registration statement involving an underwritten offering, the 180 day period referred to above may be reduced or waived in the discretion of the managing underwriter for such offering. In addition, if the Corporation is not a registrant entitled to use Form S-3 or any successor thereto in connection with a requested registration, the Corporation shall not be required to effect a registration pursuant to this Section 4 unless the Holders requesting registration are requesting registration of at least the lesser of 5% of the outstanding Common Stock of the Corporation or their entire holding of Common Stock. (d) A registration requested pursuant to this Section 4 shall not be deemed to have been effected pursuant this Section 4 for purposes of Section 9 unless (i) it has been declared effective by the SEC, (ii) it has remained effective for the period set forth in Section 7(a), and (iii) the offering of Registrable Securities pursuant to such registration is not subject to any stop order, injunction or other order or requirement of the SEC (other than any such stop order, injunction, or other requirement of the SEC prompted by any act or omission of Holders of Registrable Securities). (e) Subject to the following sentence, if a requested registration pursuant to this Section 4 involves an underwritten offering and the managing underwriter advises the Corporation in writing that, in its opinion, the number of securities requested to be included in such registration (including securities of the Corporation which are not Registrable Securities) exceeds the number that can be sold in such offering at a price reasonably related to the then current market value of such securities, the Corporation will include in such registration only the Registrable Securities requested to be included in such registration. In the event that the number of Registrable Securities requested to be included in such registration exceeds the number which, 5 in the opinion of such managing underwriter, may be sold at a price reasonably related to the then current market value of such securities, the number of such Registrable Securities to be included in such registration shall be allocated pro rata among all requesting Holders on the basis of the relative number of shares of Registrable Securities then held by each such Holder (provided that any shares hereby allocated to any such Holder that exceed such Holder's request shall be reallocated among the remaining requesting Holders in like manner). In the event that the number of Registrable Securities requested to be included in such registration is less than the number which, in the opinion of the managing underwriter, may be sold at a price reasonably related to the then current market value of such securities, the Corporation may include in such registration the securities the Corporation proposes to sell up to the number of securities that, in the opinion of the managing underwriter, may be sold at a price reasonably related to the then current market value of such securities. The Corporation will not include in any requested registration pursuant to this Section 4 any securities which are not Registrable Securities (other than securities of the Corporation) without the prior written consent of the holders of at least a majority of the Registrable Securities included in such registration. (f) If the Board of Directors of the Corporation, in its good faith judgment, determines that any registration of Registrable Securities should not be made or continued due to a valid need not to disclose confidential information or because it would materially interfere with any material financing, acquisition, corporate reorganization or merger or other transaction involving the Corporation (collectively, a "Valid Business Reason"), the --------------------- Corporation may postpone filing a registration statement relating to a request for registration under this Section 4 until such Valid Business Reason no longer exists, but in no event for more than three months from the date of the notice referred to below, and, in case any such registration statement has been filed the Corporation may, with respect to a registration effected pursuant to this Section 4, cause such registration statement to be withdrawn and its effectiveness terminated or may, with respect to a registration effected pursuant to this Section 4 or Section 6, postpone amending or supplementing such registration statement; and the Corporation shall give written notice (a "Delay ----- Notice") of its determination to postpone or withdraw a registration statement - ------ and of the fact that the Valid Business Reason for such postponement or withdrawal no longer exists, in each case, promptly after the occurrence thereof. Upon the request of any holder of Registrable Securities included or to be included in any such registration statement, the Corporation will disclose to such holder the nature of such Valid Business Reason in reasonable detail; provided, that such holder executes a confidentiality agreement reasonably - -------- satisfactory to the Corporation; provided, further, that any such -------- ------- confidentiality agreement shall terminate upon the public disclosure of such Valid Business Reason. Notwithstanding the foregoing provisions of this subparagraph (f), no registration statement filed and subsequently withdrawn by reason of any existing or anticipated Valid Business Reason as hereinabove provided shall count as one of the four registration statements effected pursuant to this Section 4 or Section 6 for purposes of Section 9 and the Corporation shall be entitled to serve only one Delay Notice (i) within any period of 270 consecutive days, if such Delay Notice relates to a request under Section 4(a) (or 180 consecutive days, if such Delay Notice relates to a request under Section 6) or (ii) with respect to any two consecutive registrations requested pursuant to this Section 4 or Section 6. SECTION 5. Incidental Registration. Subject to Section 10, if at ----------------------- any time the Corporation determines that it shall file a registration statement under the Securities Act (other 6 than a registration statement on a Form S-4 or S-8 or any successor or similar forms) on any form that also would permit the registration of the Registrable Securities and such filing is to be on its behalf and/or on behalf of selling holders of its securities for the general registration of its Common Stock to be sold for cash, the Corporation shall each such time promptly give each Holder written notice of such determination setting forth the date on which the Corporation proposes to file such registration statement, which date shall be no earlier than thirty days from the date of such notice, and advising each Holder of its right to have Registrable Securities included in such registration. Upon the written request of any Holder received by the Corporation no later than fifteen days after the date of the Corporation's notice, the Corporation shall use its best efforts to cause to be registered under the Securities Act all of the Registrable Securities that each such Holder has so requested to be registered; provided that if, at any time after giving written notice of its -------- intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Corporation shall determine for any reason not to proceed with the proposed registration of the securities to be sold by it, the Corporation may, at its election, give written notice of such determination to each Holder of Registrable Securities and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the registration expenses in connection therewith), without prejudice, however, to the rights of any Holder to request such registration to be effected as a registration under Section 4. If, in the written opinion of the managing underwriter (or, in the case of a non- underwritten offering, in the written opinion of the Corporation), the total amount of such securities to be so registered, including such Registrable Securities, will exceed the maximum amount of the Corporation's securities that can be marketed at a price reasonably related to the then current market value of such securities, then the Corporation shall include in such registration (i) first, all the securities the Corporation proposes to sell for its own account or is required to register on behalf of any third party exercising rights similar to those granted in Section 4(a) and without having the adverse effect referred to above, and (ii) second, to the extent that the number of securities which the Corporation proposes to sell for its own account pursuant to this Section 5 or is required to register on behalf of any third party exercising rights similar to those granted in Section 4(a) is less than the number of equity securities which the Corporation has been advised can be sold in such offering without having the adverse effect referred to above, all Registrable Securities requested to be included in such registration by the Holders pursuant to this Section 5 and all shares of Common Stock requested to be included by third parties exercising the rights similar to those granted in this Section 5; provided that if the number of Registrable Securities and other shares of Common - -------- Stock requested to be included in such registration by the Holders pursuant to this Section 5 and third parties exercising rights similar to those granted in this Section 5, together with the number of securities to be included in such registration pursuant to clause (i) of this Section 5, exceeds the number which the Corporation has been advised can be sold in such offering without having the adverse effect referred to above, the number of such Registerable Securities requested to be included in such registration by the Holders pursuant to this Section 5 shall be limited to such extent and shall be allocated pro rata among all such requesting Holders and third parties exercising rights similar to those granted in this Section 5 on the basis of the relative number of Registrable Securities each such Holder has requested to be included in such registration and the number of shares of Common Stock requested to be included in such registration by such third parties. 7 SECTION 6. Registration on Form S-3. If at any time any Holder ------------------------ requests in writing that the Corporation file a registration statement and the Corporation is a registrant entitled to use Form S-3 or any successor thereto, then the Corporation shall use its best efforts to register under the Securities Act on Form S-3 or any successor thereto, for public sale in accordance with the method of disposition specified in such request, including, without limitation, pursuant to Rule 415 under the Securities Act, the Registrable Securities specified in such request. Whenever the Corporation is required by this Section 6 to use its best efforts to effect the registration of Registrable Securities, each of the limitations, procedures and requirements of Section 4(b), (c), (e) and (f) (including but not limited to the requirement that the Corporation notify all Holders from whom a request has not been received and provide them with the opportunity to participate in the offering) shall apply to such registration. SECTION 7. Obligations of the Corporation. Whenever required ------------------------------ under Section 4 or Section 6 to use its best efforts to effect the registration of any Registrable Securities, the Corporation shall, as expeditiously as possible: (a) prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become and remain effective for the period of the distribution contemplated thereby determined as provided hereafter; (b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement, and furnish to the Holders of the Registrable Securities copies of any such amendments and supplements prior to their being used or filed with the SEC; (c) furnish to the Holders such numbers of copies of the registration statement and the prospectus included therein (including each preliminary prospectus and any amendments or supplements thereto in conformity with the requirements of the Securities Act) and such other documents and information as they may reasonably request and make available for inspection by the parties referred to in Section 7(d) below such financial and other information and books and records of the Corporation, and cause the officers, directors, employees, counsel and independent certified public accountants of the Corporation to respond to such inquiries, as shall be reasonably necessary, in the judgment of the respective counsel referred to in such Section, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; (d) provide (i) the Holders of the Registrable Securities to be included in such registration statement, (ii) the underwriters (which term, for purposes of this Agreement, shall include a person deemed to be an underwriter within the meaning of Section 2(11) of the Securities Act), if any, thereof, (iii) the sales or placement agent, if any, therefor, (iv) counsel for such underwriters or agent, and (v) not more than one counsel for all the Holders of such Registrable Securities the opportunity to participate in the preparation of 8 such registration statement, each prospectus included therein or filed with the SEC, and each amendment or supplement thereto; (e) use its best efforts to register or qualify the Registrable Securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions within the United States and Puerto Rico as shall be reasonably appropriate for the distribution of the Registrable Securities covered by the registration statement; provided, however, that the Corporation shall not be required -------- ------- in connection therewith or as a condition thereto to qualify to do business in or to file a general consent to service of process in any jurisdiction wherein it would not but for the requirements of this paragraph (e) be obligated to do so; and provided further that the -------- ------- Corporation shall not be required to qualify such Registrable Securities in any jurisdiction in which the securities regulatory authority requires that any Holder submit its Registrable Securities to the terms, provisions and restrictions of any escrow, lockup or similar agreement(s) for consent to sell Registrable Securities in such jurisdiction unless such Holder agrees to do so; (f) promptly notify the selling Holders of Registrable Securities, the sales or placement agent, if any, therefor and the managing underwriter or underwriters, if any, thereof and confirm such advice in writing, (i) when such registration statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such registration statement or any post-effective amendment, when the same has become effective, (ii) of any comments by the SEC or by any Blue Sky or securities commissioner or regulator of any state with respect thereto or any request by the SEC for amendments or supplements to such registration statement or prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of such registration statement or the initiation or threatening of any proceedings for that purpose, (iv) if at any time the representations and warranties of the Corporation contained in any underwriting agreement or other customary agreement cease to be true and correct in all material respects or (v) of the receipt by the Corporation of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (g) use its best efforts to obtain the withdrawal of any order suspending the effectiveness of such registration statement or any post-effective amendment thereto at the earliest practicable date; (h) promptly notify each Holder for whom such Registrable Securities are covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make, in light of the circumstances under which they were made, the statements therein not misleading, and at the request of any such Holder promptly prepare and furnish to such Holder a reasonable number of copies of a 9 supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make, in light of the circumstances under which they were made, the statements therein not misleading; (i) furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to Section 4 or Section 6, if the method of distribution is by means of an underwriting, on the date that the Registrable Securities are delivered to the underwriters for sale pursuant to such registration, or if such Registrable Securities are not being sold through underwriters, on the date that the registration statement with respect to such Registrable Securities becomes effective, (1) a signed opinion, dated such date, of the independent legal counsel representing the Corporation for the purpose of such registration, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the Holders making such request, as to such matters as such underwriters or the Holders holding a majority of the Registrable Securities included in such registration, as the case may be, may reasonably request and as would be customary in such a transaction; and (2) letters dated such date and the date the offering is priced from the independent certified public accountants of the Corporation, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the Holders making such request and, if such accountants refuse to deliver such letters to such Holders, then to the Corporation (i) stating that they are independent certified public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements and other financial data of the Corporation included in the registration statement or the prospectus, or any amendment or supplement thereto, comply as to form in all material respects with the applicable accounting requirements of the Securities Act and (ii) covering such other financial matters (including information as to the period ending not more than five (5) business days prior to the date of such letters) with respect to the registration in respect of which such letter is being given as such underwriters or the Holders holding a majority of the Registrable Securities included in such registration, as the case may be, may reasonably request and as would be customary in such a transaction; (j) enter into customary agreements (including if the method of distribution is by means of an underwriting, an underwriting agreement in customary form, including, without limitation, customary indemnification provisions consistent with Section 12) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities to be so included in the registration statement; (k) use its best efforts to obtain the consent or approval of each governmental agency or authority, whether federal, state or local, which may be required to effect registration or the offering or sale in connection therewith or to enable the selling Holder or Holders to offer, or to consummate the disposition of, their Registrable Securities; 10 (l) cooperate with the Holders of the Registrable Securities and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, which certificates shall be printed, lithographed or engraved, or produced by any combination of such methods, on steel engraved borders and which shall not bear any restrictive legends; and, in the case of an underwritten offering, enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request at least two business days prior to any sale of the Registrable Securities; (m) otherwise comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, but not later than eighteen months after the effective date of the registration statement, an earnings statement covering the period of at least twelve months beginning with the first full month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act; (n) use its best efforts to list the Registrable Securities covered by such registration statement with any securities exchange or quotation system on which the Common Stock of the Corporation is then listed or quoted; and (o) use its best efforts to make available the executive officers of the Corporation to participate with the Holders of Registrable Securities and any underwriters in any "road shows" or other selling efforts that may be reasonably requested by the Holders in connection with the methods of distribution for the Registrable Securities. For purposes of Sections 7(a) and 7(b), and with respect to (i) registration required pursuant to Section 4, (A) the period of distribution of Registrable Securities in a firm commitment underwritten public offering shall be deemed to extend until each underwriter has completed the distribution of all securities purchased by it and (B) the period of distribution of Registrable Securities in any other registration shall be deemed to extend until the earlier of the sale of all Registrable Securities covered thereby and nine months after the effective date thereof and (ii) registrations required pursuant to Section 6, the period of distribution of Registrable Securities in any registration (firm commitment underwritten or otherwise) shall be deemed to extend until the earlier of the sale of all Registrable Securities covered thereby and two years after the effective date thereof. Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Corporation of the happening of any event of the kind described in clause (h) of this Section 7, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by clause (h) of this Section 7, and, if so directed by the Corporation, such Holder will deliver to the Corporation (at the Corporation's expense) all copies, other than permanent file copies then in such Holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice; provided, however, that any period of time during which a Holder must -------- ------- 11 discontinue disposition of Registrable Securities shall not be included in the determination of a period of distribution for purposes of Section 7(a) and 7(b). SECTION 8. Furnish Information. It shall be a condition ------------------- precedent to the obligations of the Corporation to take any action pursuant to this Agreement that the Holders shall furnish to the Corporation such information regarding themselves, the Registrable Securities held by them, and the intended method of disposition of such securities as the Corporation shall reasonably request and as shall be required in connection with the action to be taken by the Corporation. SECTION 9. Expenses of Registration. All expenses incurred in ------------------------ connection with (i) each registration or attempted registration pursuant to Section 5, (ii) the first four registrations effected pursuant to Section 4 or 6 and (iii) any attempted registration (or partial registration deemed not to have been effected pursuant to Section 4 or 6 by operation of Sections 4(d) or (e)) occurring prior to the fourth registration effected pursuant to Section 4 or 6 of this Agreement, excluding underwriters' discounts and commissions and excluding the fees and disbursements of counsel selected pursuant to Section 15 hereof by the Holders of the Registrable Securities being registered to represent such Holders in connection with each such registration, but including without limitation all registration, filing and qualification fees, word processing, duplicating, printers' and accounting fees (including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance), fees of the National Association of Securities Dealers, Inc. (the "NASD") or listing fees, all fees and expenses of complying ---- with state securities or blue sky laws, fees and disbursements of counsel for the Corporation, any fees and disbursements of underwriters customarily paid by the issuers or sellers of securities, including liability insurance if the Corporation so desires or if the underwriters so require, and the reasonable fees and expenses of any special experts retained in connection with the requested registration and other reasonable out-of-pocket expenses of Holders, shall be paid by the Corporation. The foregoing provisions with respect to expenses shall in no way limit the rights of the Holders to request registration pursuant to Sections 4 and 6 or the number of registrations which may be requested thereunder. SECTION 10. Underwriting Requirements. In connection with any ------------------------- underwritten offering, the Corporation shall not be required under Section 5 to include Registrable Securities in such underwritten offering unless the Holders of such Registrable Securities accept the terms of the underwriting of such offering that have been reasonably agreed upon between the Corporation and the underwriters selected by the Corporation. SECTION 11. Rule 144 and Rule 144A Information. With a view to ---------------------------------- making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration, at all times, the Corporation agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act; 12 (ii) use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Corporation under the Securities Act and the Exchange Act; and (iii) furnish to each Holder of Registrable Securities forthwith upon request a written statement by the Corporation as to its compliance with the reporting requirements of such Rule 144 and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Corporation, and such other reports and documents so filed by the Corporation as such Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing such Holder to sell any Registrable Securities without registration. SECTION 12. Indemnification. In the event any Registrable --------------- Securities are included in a registration statement under this Agreement: (a) The Corporation shall indemnify and hold harmless each Holder, such Holder's directors and officers, and each person, if any, who controls such Holder or participating person within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or proceedings in respect thereof) arise out of or are based on any untrue or alleged untrue statement of a material fact contained in such registration statement, preliminary prospectus, final prospectus or amendments or supplements thereto or arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the indemnity agreement -------- ------- contained in this Section 12(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Corporation (which consent shall not be unreasonably withheld); provided further that the -------- ------- Corporation shall not be liable to any Holder, such Holder's directors and officers or controlling person in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in connection with such registration statement, preliminary prospectus, final prospectus or amendments or supplements thereto, in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, such Holder's directors and officers or controlling person; provided, further, that as to any preliminary -------- ------- prospectus or any final prospectus this indemnity agreement shall not inure to the benefit of any Holder, such Holder's directors and officers or controlling persons on account of any losses, claims, damages or liability arising from the sale of Common Stock to any person by such Holder if such Holder or its representatives failed to send or give a copy of the final prospectus or a prospectus supplement, as the case may be (excluding documents incorporated by reference therein), as the same may be amended or supplemented, to that 13 person within the time required by the Securities Act, and the untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact in such preliminary prospectus or final prospectus was corrected in the final prospectus or such prospectus supplement, as the case may be (excluding documents incorporated by reference therein), unless such failure resulted from non-compliance by the Corporation with Section 7(c). Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any such Holder, such Holder's directors and officers, participating person or controlling person, and shall survive the transfer of such securities by such Holder. (b) Each Holder requesting or joining in a registration severally and not jointly shall indemnify and hold harmless the Corporation, each of its directors and officers and each person, if any, who controls the Corporation within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Corporation to the Holders but only with reference to written information relating to such Holder furnished to the Corporation expressly for use in connection with such registration; provided, however, that the indemnity agreement contained -------- ------- in this Section 12(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided further that the liability of each -------- ------- Holder hereunder shall be limited to the proportion of any such loss, claim, damage, liability or expense that is equal to the proportion that the net proceeds from the sale of the shares sold by such Holder under such registration statement bears to the total net proceeds from the sale of all securities sold thereunder, but not in any event to exceed the net proceeds received by such Holder from the sale of Registrable Securities covered by such registration statement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such person (the "indemnified party") shall promptly notify ----------------- the person against whom such indemnity may be sought (the "indemnifying ------------ party") in writing and the indemnifying party, upon request of the ----- indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall 14 be reimbursed as they are incurred. Such firm shall be designated in writing by the Holders, in the case of parties indemnified pursuant to the second preceding paragraph, and by the Corporation, in the case of parties indemnified pursuant to the first preceding paragraph. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) If the indemnification provided for in the first or second paragraph of this Section 12 is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified party in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages or liabilities referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 12(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 12, no Holder shall be required to contribute any amount in excess of the amount of net proceeds received by such Holder from the sale of Registrable Securities covered 15 by such registration statement. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 12 are not exclusive and shall not limit any right or remedies that may otherwise be available to any indemnified party at law or in equity. SECTION 13. Lockup. Each Holder shall, in connection with any ------ registration of the Corporation's securities, upon the request of the Corporation or the underwriters managing any underwritten offering of such securities, agree in writing not to effect any sale, disposition or distribution of any Registrable Securities (other than that included in the registration) without the prior written consent of the managing underwriter for such period of time (not to exceed 180 days) from the effective date of such registration as the Corporation or the underwriters may specify; provided, however, that all -------- ------- executive officers and directors of the Corporation (other than executive officers and directors owning an aggregate of less than 1% of the outstanding Common Stock as of the effective date of such registration statement) shall also have agreed not to effect any sale, disposition or distribution of any Registrable Securities under the circumstances and pursuant to the terms set forth in this Section 13. SECTION 14. Transfer of Registration Rights. The registration ------------------------------- rights of any Holder under this Agreement with respect to the Registrable Securities may be transferred to any transferee of such Registrable Securities who acquires any Registrable Securities of any Holder; provided that such -------- registration rights may not be transferred to a holder of less than 1% of the outstanding Common Stock; provided, further, that (i) the transferring Holder -------- ------- shall give the Corporation written notice at or prior to the time of such transfer stating the name and address of the transferee and identifying the securities with respect to which the rights under this Agreement are being transferred, (ii) such transferee shall agree in writing, in form and substance reasonably satisfactory to the Corporation, to be bound as a Holder by the provisions of this Section, and (iii) immediately following such transfer the further disposition of such securities by such transferee is restricted under the Securities Act. SECTION 15. Selection of Counsel. In connection with any -------------------- registration of Registrable Securities pursuant to Sections 4, 5 and 6 hereof, the Holders of a majority of the Registrable Securities covered by any such registration may select one counsel to represent all Holders of Registrable Securities covered by such registration; provided, however, that in the event -------- ------- that the counsel selected as provided above is also acting as counsel to the Corporation in connection with such registration, the remaining Holders shall be entitled to select one additional counsel to represent all such remaining Holders. SECTION 16. Notices. All notices, requests, claims, demands and ------- other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly received if so given) by hand delivery, by mail (registered or certified mail, postage prepaid, return receipt requested) or by any courier service, such as Federal Express, providing proof of delivery. All communications hereunder shall be delivered to the respective parties at the following addresses: 16 if to the Corporation, to: BCP Chemicals and Plastics Inc. 180 East Broad Street Columbus, Ohio 43215-3799 Attention: General Counsel and Secretary Facsimile No.: (614) 225-4238 with a required copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 Attention: David J. Sorkin, Esq. Facsimile No.: (212) 455-2502 if to BCPM, to: BCP Management, Inc. 180 East Broad Street Columbus, Ohio 43215-3799 Attention: General Counsel and Secretary Facsimile No.: (614) 225-4238 with a required copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 Attention: David J. Sorkin, Esq. Facsimile No.: (212) 455-2502 If to a transferee of Registrable Securities: At the address set forth in the notice required to be delivered pursuant to Section 14 hereof. SECTION 17. Amendments; No Waivers. (a) Any provision of this ---------------------- Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by BCPM and the Corporation, or in the case of a waiver, by the party against whom the waiver is to be effective. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The 17 rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 18. Severability. If any term or other provision of this ------------ Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible. SECTION 19. Entire Agreement; Assignment. This Agreement and the ---------------------------- Agreement and Plan of Conversion and the agreements contemplated hereby and thereby constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede, except as set forth in any such agreements, all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement shall not be assigned by operation of law or otherwise, except that BCPM may assign all or any of its rights hereunder to the extent and as provided in Section 14. SECTION 20. Parties in Interest. This Agreement shall be binding ------------------- upon and inure solely to the benefit of each party hereto, and their successors and assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. SECTION 21. Governing Law. This Agreement 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 in the State of New York. All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in any New York state or federal court thereof. SECTION 22. Headings. The descriptive headings contained in this -------- Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 23. Counterparts. This Agreement may be executed and ------------ delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. SECTION 24. Effectiveness. This Agreement shall be effective as ------------- of the Closing Date (as defined in the Agreement and Plan of Conversion). 18 SECTION 25. Waiver of Jury Trial. BCPM and the Corporation each -------------------- hereby irrevocably waive all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the actions of BCPM or the Corporation in the negotiation, administration, performance and enforcement thereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above. BCP CHEMICALS AND PLASTICS INC. By:_______________________________________ Name: Title: BCP MANAGEMENT, INC. By:_______________________________________ Name: Title: EX-3 4 PRESS RELEASE DATED APRIL 8, 1997 Exhibit 3 FOR IMMEDIATE RELEASE Contact: April 8, 1997 Peter F. Loscocco 614/225-4127 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP ANNOUNCES PLANS FOR CONVERSION TO CORPORATE FORM, ADOPTS UNITHOLDERS RIGHTS PLAN COLUMBUS, OHIO (April 8, 1997) -- The board of directors of BCP Management, Inc., the general partner of Borden Chemicals and Plastics Limited Partnership (NYSE: BCU), today unanimously approved a plan to convert existing ownership interests in the partnership into shares of a newly formed corporation. The change would occur prior to December 31, 1997, when the partnership's exemption from income taxes expires. "Conversion to corporate form is the most beneficial move for our unitholders and our business going forward," said Joseph M. Saggese, chairman, president and chief executive officer of the general partner, BCP Management, Inc. "The board's independent committee and the full board of directors, based on the advice of outside financial advisors, reached this same conclusion after months of study." Under the proposed conversion plan, which is subject to unitholder approval, all unitholders will be entitled to exchange their existing ownership interests in the partnership for shares of common stock in the new corporation. As an alternative to the common stock, unitholders will have the option of exchanging some or all of their units for non-voting, 9.5 percent cumulative preferred stock. Up to $175 million of preferred stock will be issued. If unitholders elect to receive more than this total amount, preferred shares will be issued to electing unitholders on a pro-rata basis. Prior to any reduction resulting from unitholders electing to receive preferred stock instead of common stock, unitholders will receive 84 percent of the common stock in the corporation. BCP Management, Inc. will receive the remaining common stock in exchange for all of its interests as controlling general partner, including its incentive distributions. Both the common and preferred shares are planned to be listed on the New York Stock Exchange. It is expected that converting units to either common or preferred stock will generally be tax-free to unitholders. The conversion to corporate form is subject to, among other conditions, filing and clearance of a combined proxy statement and prospectus, and the approval of a majority of unitholders. The offering of common and preferred stock to be issued in connection with the conversion will be made only by means of a prospectus. A proxy statement and prospectus is expected to be issued to unitholders sometime during the summer. 2 Borden Chemicals and Plastics will continue to operate under the terms of its existing partnership agreement until the conversion is approved and implemented. In discussing the merits of the proposed conversion, Saggese said, "We believe corporate form will provide Borden Chemicals and Plastics and its investors with a number of benefits. First, the new corporation will realize a significant step-up from the current tax basis of the partnership, thereby reducing corporate taxes. Second, corporate form should allow a wider range of investors to own our securities. Third, it will simplify tax reporting for our investors. Fourth, the proposal offers a preferred stock for yield-conscious investors, and a common stock for investors more interested in growth. Finally, conversion to a corporation will enhance our financial flexibility to continue growing the business and creating value for our investors." Saggese also announced that the board of directors has unanimously adopted a unitholders rights plan, under existing terms of the partnership agreement In the event that any entity acquires 15 percent or more of the outstanding units, each holder of a right, other than the acquiring entity, will be entitled to receive, upon payment of the exercise price, that number of units having a market value equal to two times the exercise price. Each right, which is not presently exercisable, has an exercise price of $21. Distribution of the rights will be made on April 21, 1997 to unitholders of record at the close of business on that date. Details of the rights distribution will be contained in a mailing to all unitholders of record of the partnership. Borden Chemicals and Plastics Limited Partnership is a leading producer and marketer of polyvinyl chloride resins, methanol and derivatives, and nitrogen products. BCP Management, Inc. is a wholly owned subsidiary of Borden, Inc. EX-5 5 FIRST AMENDMENT, DATED APRIL 8, 1997 EXHIBIT 4 FIRST AMENDMENT This FIRST AMENDMENT, dated as of April 8, 1997 (this "Amendment"), to --------- the Amended and Restated Agreement of Limited Partnership, dated as of December 15, 1988 (the "Partnership Agreement"), of Borden Chemicals and Plastics Limited --------------------- Partnership, a Delaware limited partnership (the "Partnership"), is entered into ----------- by and among BCP Management, Inc., a Delaware corporation, as general partner of the Partnership, and those Persons listed in the books and records of the Partnership as limited partners of the Partnership. W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Partnership is a limited partnership formed pursuant to the provisions of the Delaware Revised Uniform Limited Partnership Act, 6 Del. ---- C. (S) 17-101, et seq., as amended (the "Act"), and the Partnership Agreement; - -- -- ---- --- WHEREAS, pursuant to Section 4.4 of the Partnership Agreement, the General Partner is authorized to cause the Partnership to issue any type of equity security the Partnership may lawfully issue for any Partnership purpose, at any time or from time to time, to the Partners or to other Persons for such consideration and on such terms and conditions as shall be established by the General Partner in its sole discretion, all without the approval of any Limited Partners; WHEREAS, pursuant to Sections 4.4(b) and 15.1 of the Partnership Agreement, the General Partner may, without the approval of the Limited Partners, amend the Partnership Agreement in any manner which it deems appropriate or necessary to provide for each such issuance; WHEREAS, the Board of Directors of the General Partner has determined that it is fair and reasonable and in the best interests of the Partnership and the holders of its Units that the Partnership enter into a Rights Agreement, substantially in the form of Exhibit A to this Amendment (the "Rights ------ Agreement"), providing for, inter alia, the issuance of rights to purchase Units - --------- ----- ---- of the Partnership; WHEREAS, the Rights Agreement and the issuance of rights to purchase Units thereunder have received the Special Approval of the Board of Directors of the general partner; and WHEREAS, the parties hereto wish to amend the Partnership Agreement to provide for the creation and issuance of rights to purchase Units and to reflect the provisions of the Rights Agreement. NOW, THEREFORE, in consideration of the covenants, conditions and agreements contained herein, and other good, sufficient and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby amend the Partnership Agreement as follows: 2 1. Defined Terms. Capitalized terms used but not defined herein ------------- shall have the meanings given to them in the Partnership Agreement 2. Amendments to the Partnership Agreement. The Partnership --------------------------------------- Agreement is hereby amended by inserting after Article XVII thereof a new Article XVIII to read in its entirety as follows: "Article XVIII Special Matters Concerning Rights to Purchase Units SECTION 18.1 Designation of Rights. At the direction of the General Partner, the Partnership shall issue a series of securities designated the "Rights to Purchase Units" (the "Rights"), each of which shall initially ------ represent the right to purchase one Common Unit of the Partnership upon the terms and subject to the conditions set forth in such Rights and in the Rights Agreement, dated as of April 8, 1997, between the Partnership and the Rights Agent named therein (the "Rights Agreement"), which is attached ---------------- hereto as Exhibit A. The precise number of Rights so designated shall be determined pursuant to the terms of the Rights Agreement. SECTION 18.2 Issuance of Rights; Terms and Conditions of Rights; Rights Agreement. The Rights shall be issued by the Partnership in accordance with the Rights Agreement, and the terms and conditions of the Rights, including, without limitation, those relating to (i) the distribution of the Rights, (ii) the exercise of the Rights and the prices (and any adjustments thereto) at which the Rights may be exercised, (iii) the number of Units or other securities or property (and any adjustments thereto) to be received upon exercise of the Rights, (iv) the transfer, redemption or exchange of the Rights, (v) the certification of the Rights, (vi) the termination of the Rights, and (vii) the rights and obligations of a holder of Rights, in each case shall be as set forth in the Rights Agreement, which is hereby incorporated by reference in its entirety into this Agreement. SECTION 18.3 Issuance of Units and Other Securities or Property. The Partnership shall at all times reserve and keep available out of its authorized but unissued Units, solely for the purpose of permitting the exercise of all of the outstanding Rights from time to time, the full number of Common Units which would then be issuable upon exercise of all of the outstanding Rights, and the Partnership shall issue or cause to be issued to the holders of the Rights such Common Units and other securities and/or property to be received by such holders upon the exercise of the Rights pursuant to the terms of the Rights Agreement." 3. No Other Amendments; Confirmation. Except as expressly amended, --------------------------------- modified and supplemented hereby, the provisions of the Partnership Agreement are and shall remain in full force and effect. 3 4. Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF ------------- THE PARTIES TO THE PARTNERSHIP AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. 5. Binding Effect. The covenants and agreements contained herein -------------- shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, legal representatives and permitted assigns. IN WITNESS WHEREOF, the General Partner has caused this Amendment to be duly executed and delivered by one of its proper and duly authorized officers as of the day and year first above written. BCP MANAGEMENT, INC. By: --------------------------- Name: Title: LIMITED PARTNERS: All Limited Partners now and hereafter admitted as limited partners of the Partnership, pursuant to Powers of Attorney and authorizations now and hereafter executed in favor of, and granted and delivered to, the General Partner: By: BCP Management, Inc. By: ------------------------ Name: Title: Exhibit A Rights Agreement -----END PRIVACY-ENHANCED MESSAGE-----