BORDEN INC, S-3, 1995-02-02

BORDEN INC
S-3, 1995-02-02
DAIRY PRODUCTS

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As filed with the Securities and Exchange Commission on February 2, 1995
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

Borden, Inc.
(Exact name of registrant as specified in its charter)
New Jersey 13-0511250
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
180 East Broad Street
Columbus, Ohio 43215
(614) 225-4000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

Allan L. Miller, Esq.
Senior Vice President, General Counsel & Secretary
180 East Broad Street
Columbus, Ohio 43215
(614) 225-4000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)

Copies to:
David J. Sorkin, Esq.
Simpson Thacher &
Bartlett
425 Lexington Avenue
New York, New York
10017
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/

CALCULATION OF REGISTRATION FEE
<TABLE><CAPTION>
Proposed
maximum Proposed
offering maximum
Title of each class Amount to price aggregate Amount of
of securities be per offering registrat
to be registered registered(1) share price(1) ion fee
<S> <C> <C> <C> <C>
Debt Securities,
Preferred Stock
and Depositary
Shares(2) . . . . . $2,000,000,000 (3) $2,000,000,000 $689,655.17
</TABLE>
(1) In U.S. dollars or the equivalent in foreign currency or currency units.
Estimated solely for purposes of calculating the registration fee.
(2) There are also being registered hereunder Depositary Shares, the number of
which has not yet been determined, to be evidenced by Depositary Receipts
issued pursuant to a Deposit Agreement. In the event the Registrant elects
to offer to the public fractional interests in the Preferred Stock
registered hereunder, Depositary Receipts will be distributed to those
persons purchasing such fractional interests and the Preferred Stock will
be issued to the Depositary under the Deposit Agreement.
(3) The maximum offering price per unit has been omitted pursuant to Securities
Act Release No. 6964. The registration fee has been calculated in
accordance with Regulation 457(o) under the Securities Act of 1933 and
reflects the offering price rather than the principal amount of any Debt
Securities issued at a discount.

The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file an amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section 8(a),
may determine.
<PAGE>

Subject to Completion, Dated February 2, 1995

PROSPECTUS

BORDEN, INC.

Debt Securities

Preferred Stock

Borden, Inc., a New Jersey corporation (the "Company"), may
offer from time to time (i) unsecured debt securities ("Debt
Securities") consisting of debentures, notes and/or other unsecured
evidences of indebtedness in one or more series or (ii) shares of
preferred stock ("Preferred Stock") in one or more series, which may
be issued in the form of depositary shares evidenced by depositary
receipts (the "Depositary Shares" and, together with the Debt
Securities and the Preferred Stock, the "Securities"), or any
combination of the foregoing, at an aggregate initial offering price
not to exceed $2 billion (or the equivalent thereof if Debt
Securities are denominated in one or more foreign currencies or
foreign currency units), at prices and on terms to be determined at
or prior to the time of sale.

Specific terms of the Securities in respect of which this
Prospectus is being delivered will be set forth in an accompanying
Prospectus Supplement ("Prospectus Supplement"), together with the
terms of the offering of the Securities, the initial offering price
and the net proceeds to the Company from the sale thereof. The
Prospectus Supplement will set forth, among other matters, the
following with respect to the particular Securities: (i) in the case
of Debt Securities, the specific designation, aggregate principal
amount, ranking as senior debt ("Senior Securities") or subordinated
debt ("Subordinated Securities"), authorized denominations, maturity,
rate or method of calculation of interest and dates for payment
thereof, any conversion, redemption, prepayment or sinking fund
provisions, and the currency, currencies or currency units in which
principal, premium, if any, or interest, if any, is payable and (ii)
in the case of Preferred Stock, the designation, number of shares,
liquidation preference and whether Preferred Stock will be
represented by Depositary Shares, initial public offering price,
dividend rate (or method of calculation thereof), dates on which
dividends shall be payable and dates from which dividends shall
accrue, any redemption or sinking fund provisions and any conversion
or exchange rights.
____________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
____________________

The Company may sell Securities directly to purchasers or through agents
designated from time to time by the Company or to or through one or more
underwriters. If any agents of the Company or any underwriters are
involved in the sale of Securities in respect of which this Prospectus is
being delivered, the names of such agents or underwriters and any
applicable commissions or discounts will be set forth in the accompanying
Prospectus Supplement.

The date of this Prospectus is __________, 1995.

<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS BE MADE TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE.
<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other
information with the Securities and Exchange Commission (the
"Commission"). The Company has filed with the Commission a registration
statement on Form S-3 (the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered hereby. This Prospectus, which constitutes a part of
the Registration Statement, does not contain all information set forth in
the Registration Statement and reference is hereby made to the
Registration Statement and the exhibits thereto for further information
with respect to the Company and the Securities offered hereby. Such
reports, proxy and information statements, Registration Statement and
exhibits and other information omitted from this Prospectus can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
and at its Regional Offices located at Seven World Trade Center, New York,
New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549. Such reports, proxy and
information statements and other information may also be inspected at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York,
New York 10005.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Annual Report of the Company on Form 10-K for the year ended December
31, 1993 (which incorporates by reference certain information from the
Company's Proxy Statement relating to the 1994 Annual Meeting of
Shareholders and the Company's 1993 Annual Report to Shareholders), the
Quarterly Reports of the Company on Form 10-Q for the quarterly periods
ended March 31, 1994, June 30, 1994 (as amended by the Form 10-Q/A
(Amendment No. 1)) and September 30, 1994 (as amended by the Form 10-Q/A
(Amendment No. 1)) and the Current Reports of the Company on Form 8-K
dated January 5, 1994, March 21, 1994, September 11, 1994 (two reports),
December 21, 1994, January 5, 1995, January 11, 1995 and January 30, 1995,
are incorporated by reference into this Prospectus. All documents filed
by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities contemplated hereby shall
be deemed to be incorporated by reference into this Prospectus and to
be made a part hereof from the respective dates of filing of such
documents. Any statement contained herein, or in a document incorporated
or deemed to be incorporated by reference herein, shall be deemed to be
modified or superseded for purposes of the Registration Statement and
this Prospectus to the extent that a statement contained herein or in
any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of the Registration
Statement or this Prospectus.

Copies of the above documents (other than exhibits to such documents
unless such exhibits are specifically incorporated by reference into such
documents) may be obtained upon written or oral request without charge
from the Company, 180 East Broad Street, Columbus, Ohio 43215 (telephone
number (614) 225-3395), Attention: Documents Mailing Department.

<PAGE>

THE COMPANY

The Company is engaged primarily in manufacturing, processing, purchasing
and distributing a broad range of products through three operating
sectors: Consumer Packaged Products, Dairy Products, and Packaging and
Industrial Products. Consumer Packaged Products is composed of niche
grocery, pasta products, International Foods products (including European
bakery products, international milk powder, Latin American dairy and
European grocery and pasta) and Diversified Products (including cheese
products, home and professional products and Cracker Jack brand products).
Dairy Products is composed of fluid milk, frozen desserts and cultured
products. Packaging and Industrial Products is composed of decorative
products (principally wallcoverings), adhesives and resins, and plastic
films and packaging and high-technology coatings.

The Company is a party to an Agreement and Plan of Merger, dated as of
September 23, 1994, as amended (the "Merger Agreement"), with Borden
Acquisition Corp. ("BAC") and Whitehall Associates, L.P., affiliates of
Kohlberg Kravis Roberts & Co., L.P. ("KKR"). Pursuant to the Merger
Agreement, following receipt of the approval of holders of 66 2/3% of the
outstanding shares of Common Stock, par value $.625 per share (the "Common
Stock"), of the Company, BAC will be merged with and into the Company,
with the Company as the surviving corporation (the "Merger"). KKR
controls a sufficient number of shares of Common Stock to approve the
Merger. The Merger currently is expected to be consummated, following
receipt of the requisite shareholder approval, in the first half of 1995.
A copy of the Merger Agreement is filed as an exhibit to the Registration
Statement and is incorporated herein by reference; the foregoing
description of the Merger Agreement is qualified in its entirety by such
reference.

The Company was incorporated in New Jersey on April 24, 1899 as the
successor to a business founded in 1857. The Company's principal
executive offices are located at 180 East Broad Street, Columbus, Ohio
43215 (telephone number 614-225-4000).

USE OF PROCEEDS

Except as set forth in the Prospectus Supplement for a specific offering
of Securities, the net proceeds from the sale of the Securities will be
applied by the Company for general corporate purposes.

RATIOS OF EARNINGS TO FIXED CHARGES AND OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS

The following table sets forth the ratios of earnings to fixed charges and
of earnings to combined fixed charges and preferred stock dividends for
the Company and its consolidated subsidiaries for the periods indicated.
December 31,

1993 1992 1991 1990 1989

Ratio of earnings to fixed * 1.1 3.1 3.5 1.2
charges . . . . . . . . . .
Ratio of earnings to
combined fixed charges and * 1.1 3.1 3.5 1.2
preferred stock dividends .

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

*For the year ended December 31, 1993, fixed charges and combined fixed
charges and preferred stock dividends exceeded earnings by approximately
$51.3 million.

For the purpose of each ratio, "earnings" consist of consolidated net
income plus taxes on income, plus fixed charges, excluding capitalized
interest and excluding preferred stock dividend requirements of majority-
owned subsidiaries and fifty-percent owned persons included in fixed
charges and not deducted in determining consolidated

3
<PAGE>

net income and less undistributed income of unconsolidated affiliates
carried on the equity basis. "Fixed charges" consist of interest, whether
expensed or capitalized, amortization of debt expense and discount or
premium relating to any indebtedness, whether expensed or capitalized,
that portion of rentals which is representative of interest and preferred
stock dividend requirements of majority-owned subsidiaries and fifty-
percent owned persons excluding items eliminated in consolidation.

DESCRIPTION OF DEBT SECURITIES

The Senior Securities are to be issued under an indenture to be dated as
of a date prior to the first issuance of Senior Securities, as
supplemented from time to time (the "Senior Indenture"), between the
Company and The Chase Manhattan Bank (National Association), as Trustee,
and the Subordinated Securities are to be issued under an indenture to be
dated as of a date prior to the first issuance of Subordinated Securities,
as supplemented from time to time (the "Subordinated Indenture"), between
the Company and The Bank of New York, as Trustee. The term "Trustee" as
used herein shall refer to either The Chase Manhattan Bank (National
Association) or The Bank of New York, as appropriate, for Senior
Securities or Subordinated Securities. The forms of Senior Indenture and
Subordinated Indenture (being referred to herein collectively as the
"Indentures" and individually as an "Indenture") are filed as exhibits to
the Registration Statement. The Indentures are subject to and governed by
the Trust Indenture Act of 1939, as amended. The statements made under
this heading relating to the Debt Securities and the Indentures are
summaries of the provisions thereof, do not purport to be complete and are
qualified in their entirety by reference to the Indentures, including the
definitions of certain terms therein. Certain capitalized terms used
below but not defined herein have the meanings ascribed to them in the
Indentures. Unless otherwise noted, section references below are to both
Indentures.

General

The Debt Securities will be direct, unsecured obligations of the Company.
The indebtedness represented by the Senior Securities will rank equally
with all other unsecured and unsubordinated indebtedness of the Company.
The indebtedness represented by the Subordinated Securities will be
subordinated in right of payment to the prior payment in full of the
Senior Indebtedness of the Company as described under "Subordination"
below. The Debt Securities may be issued in one or more series. The
particular terms of the Debt Securities being offered (the "Offered Debt
Securities"), any modifications of or additions to the general terms of
the Debt Securities as described herein that may be applicable in the case
of the Offered Debt Securities and any applicable federal income tax
considerations will be described in the Prospectus Supplement relating to
the Offered Debt Securities. Accordingly, for a description of the terms
of the Offered Debt Securities, reference must be made both to the
Prospectus Supplement relating thereto and the description of Debt
Securities set forth in this Prospectus.

The Indenture does not limit the aggregate principal amount of Debt
Securities or other unsecured indebtedness that may be issued or incurred
by the Company or any of its subsidiaries. Other unsecured indebtedness
of the Company or its subsidiaries may contain covenants, events of
default and other provisions which are different from or which are not
contained in the Debt Securities or certain series thereof. Also, unless
otherwise specified in the Prospectus Supplement relating to a series of
Offered Debt Securities, the terms of the Offered Debt Securities will not
afford holders of the Offered Debt Securities protection in the event of a
highly leveraged or other similar transaction involving the Company, or
any other transaction resulting in a decline in ratings on or credit
quality of the Debt Securities, that may adversely affect holders of
Offered Debt Securities.

Certain operations of the Company are conducted through its subsidiaries
and, therefore, the Company is dependent in part on the earnings and cash
flow of its subsidiaries to meet debt obligations, including obligations
under Debt Securities. The claims of holders of Debt Securities
effectively are subordinated to the claims of creditors of the Company's
subsidiaries to the extent of the Company's dependence on its
subsidiaries' earnings and cash flow.

The Prospectus Supplement for the Offered Debt Securities will set forth
the terms of such Debt Securities, which may include the following:

4
<PAGE>

(1) The title of such Debt Securities and whether they are Senior
Securities or Subordinated Securities.

(2) The aggregate principal amount of such Debt Securities and any limit
on the aggregate principal amount of Debt Securities of such series.

(3) The percentage of the principal amount at which such Debt Securities
will be issued and, if other than the principal amount thereof, the
portion of the principal amount thereof payable upon declaration of
acceleration of the Maturity thereof or the method by which such portion
shall be determined.

(4) The date or dates on which or periods during which the Debt
Securities of a series may be issued, and the date or dates, or the method
by which such date or dates will be determined, on which the principal of
(and premium, if any, on) such Debt Securities will be payable.

(5) The rate or rates at which such Debt Securities will bear interest,
if any, or the method by which such rate or rates shall be determined, the
date or dates from which such interest, if any, shall accrue or the method
by which such date or dates shall be determined, the interest payment
dates on which such interest will be payable and, in the case of
Registered Securities, the regular record dates, if any, for the interest
payable on such interest payment dates, and, in the case of floating rate
securities, the notice, if any, to Holders regarding the determination of
interest and the manner of giving such notice.

(6) The place or places, if any, in addition to or instead of the
corporate trust office of the applicable Trustee (in the case of
Registered Securities) or the principal London office of the applicable
Trustee (in the case of Bearer Securities), where the principal of (and
premium, if any) and interest on Debt Securities of the series shall be
payable; the extent to which, or the manner in which, any interest payable
on any Global Security on an interest payment date will be paid, and the
manner in which any principal of, or premium, if any, on, any Global
Security will be paid.

(7) The obligation, if any, of the Company to redeem, repay or purchase
Debt Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of the Holder and the period or periods within
which, or the dates on which, the prices at which and the terms and
conditions upon which Debt Securities of the series shall be redeemed,
repaid or purchased, in whole or in part, pursuant to such obligation.

(8) The period or periods within which, or the date or dates on which,
and the terms and conditions upon which Debt Securities may be converted
into or exchanged for securities of the Company or another corporation, if
any, in whole or in part, at the option of the Company or otherwise, and
any specific terms relating to the adjustment thereof.

(9) The period or periods within which, or the date or dates on which, the
price or prices at which, and the terms and conditions upon which Debt
Securities of the series may be redeemed, if any, in whole or in part, at
the option of the Company or otherwise.

(10) If the coin or currency in which the Debt Securities shall be
issuable is U.S. dollars, the denominations of such Debt Securities if
other than denominations of $1,000 and any integral multiple thereof.

(11) Whether the Debt Securities of the series are to be issued as
original issue discount securities ("Discount Securities") and the amount
of discount at which such Debt Securities may be issued and, if other than
the principal amount thereof, the portion of the principal amount of Debt
Securities of the series which shall be payable upon declaration of
acceleration of the Maturity thereof upon an Event of Default.

(12) In the case of Debt Securities which are Registered Securities
denominated and payable only in U.S. dollars, whether the provisions for
the defeasance of Debt Securities of such series will not be applicable
and, in the case of Debt Securities which are denominated in a foreign
currency or currencies or Bearer Securities, provisions, if any, for the
defeasance of Debt Securities of such series.

5
<PAGE>

(13) Whether Debt Securities of the series are to be issued as Registered
Securities or Bearer Securities or both, and, if Bearer Securities are
issued, whether any interest coupons appertaining thereto ("Coupons") will
be attached thereto, whether Bearer Securities of the series may be
exchanged for Registered Securities of the series and the circumstances
under which and the place or places at which any such exchanges, if
permitted, may be made.

(14) Whether provisions for payment of additional amounts or tax
redemptions shall apply and, if such provisions shall apply, such
provisions; and, if Bearer Securities of the series are to be issued, the
applicable procedures and certificates relating to the exchange of
temporary Global Securities for definitive Bearer Securities.

(15) If other than U.S. dollars, the currency, currencies or currency
units (the term "currency" as used herein will include currency units) in
which Debt Securities of the series shall be denominated or in which
payment of the principal of (and premium, if any) and interest on the Debt
Securities of the series may be made, and the particular provisions
applicable thereto.

(16) If the principal of (and premium, if any) or interest on Debt
Securities of the series are to be payable, at the election of the Company
or a Holder thereof, in a currency other than that in which the Debt
Securities are denominated or payable without such election, in addition
to or in lieu of the applicable provisions of the Indentures, the period
or periods within which and the terms and conditions upon which, such
election may be made and the time and the manner of determining the
exchange rate or rates between the currency or currencies in which the
Debt Securities are denominated or payable without such election and the
currency or currencies in which the Debt Securities are to be paid if such
election is made.

(17) The date as of which any Debt Securities of the series shall be
dated.

(18) If the amount of payments of principal of (and premium, if any) or
interest on the Debt Securities of the series may be determined with
reference to an index, including, but not limited to, an index based on a
currency or currencies other than that in which the Debt Securities are
denominated or payable, or any other type of index, the manner in which
such amounts shall be determined.

(19) If the Debt Securities of the series are denominated or payable in a
foreign currency, any other terms concerning the payment of principal of
(and premium, if any) or any interest on such Debt Securities (including
the currency or currencies of payment thereof).

(20) Any addition to, or modification or deletion of, any Events of
Default or covenants provided for with respect to Debt Securities of the
series.

(21) If Bearer Securities of the series are to be issued, (x) whether
interest in respect of any portion of a temporary Debt Security in global
form (representing all of the Outstanding Bearer Securities of the series)
payable in respect of any interest payment date prior to the exchange of
such temporary Debt Security for definitive Debt Securities of the series
shall be paid to any clearing organization with respect to the portion of
such temporary Debt Security held for its account and, in such event, the
terms and conditions (including any certification requirements) upon which
any such interest payment received by a clearing organization will be
credited to the Persons entitled to interest payable on such interest
payment date, and (y) the terms upon which interests in such temporary
Debt Security in global form may be exchanged for interests in a permanent
Global Security or for definitive Debt Securities of the series and the
terms upon which interests in a permanent Global Security, if any, may be
exchanged for definitive Debt Securities of the series.

(22) Whether the Debt Securities of the series shall be issued in whole
or in part in the form of one or more Global Securities and, in such case,
the depositary or any common depositary for such Global Securities; and if
the Debt Securities of the series are issuable only as Registered
Securities, the manner in which and the circumstances under which Global
Securities representing Debt Securities of the series may be exchanged for
Registered Securities in definitive form.

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<PAGE>

(23) Any other terms of the series.

Each Indenture provides that the aggregate principal amount of Debt
Securities that may be issued thereunder is unlimited. The Debt
Securities may be issued in one or more series thereunder, in each case as
authorized from time to time by the Board of Directors of the Company, or
any committee thereof or any duly authorized officer. (Section 3.01)

In the event that Discount Securities are issued, the federal income tax
consequences and other special considerations applicable to such Discount
Securities will be described in the Prospectus Supplement relating
thereto.

The general provisions of the Indentures do not contain any provisions
that would limit the ability of the Company to incur indebtedness or that
would afford holders of Debt Securities protection in the event of a
highly leveraged or similar transaction involving the Company. Reference
is made to the Prospectus Supplement related to the Offered Debt
Securities for information with respect to any deletions from,
modifications of or additions to the Events of Default or covenants of the
Company that are described below, including any addition of covenants or
other provisions providing event risk or similar protection.

All of the Debt Securities of a series need not be issued at the same
time, and may vary as to interest rate, maturity and other provisions and,
unless otherwise provided, a series may be reopened for issuance of
additional Debt Securities of such series. (Section 3.01)

Denominations, Registration and Transfer

Unless specified in the Prospectus Supplement, the Debt Securities of any
series shall be issuable only as Registered Securities in denominations of
$1,000 and any integral multiple thereof and shall be payable only in U.S.
dollars. (Section 3.02) The Indentures also provide that Debt Securities
of a series may be issuable in global form. See "Book-Entry Debt
Securities." Unless otherwise indicated in the Prospectus Supplement,
Bearer Securities will have Coupons attached. (Section 2.01)

Registered Securities of any series will be exchangeable for other
Registered Securities of the same series of like aggregate principal
amount and of like Stated Maturity and with like terms and conditions. If
so provided in the Prospectus Supplement, at the option of the Holder
thereof, to the extent permitted by law, any Bearer Security of any series
which by its terms is registrable as to principal and interest may be
exchanged for a Registered Security of such series of like aggregate
principal amount and of a like Stated Maturity and with like terms and
conditions, upon surrender of such Bearer Security at the corporate trust
office of the applicable Trustee or at any other office or agency of the
Company designated for the purpose of making any such exchanges. Subject
to certain exceptions, any Bearer Security issued with Coupons surrendered
for exchange must be surrendered with all unmatured Coupons and any
matured Coupons in default attached thereto. (Section 3.05)

Notwithstanding the foregoing, the exchange of Bearer Securities for
Registered Securities will be subject to the provisions of United States
income tax laws and regulations applicable to Debt Securities in effect at
the time of such exchange. (Section 3.05)

Except as otherwise specified in the Prospectus Supplement, in no event
may Registered Securities, including Registered Securities received in
exchange for Bearer Securities, be exchanged for Bearer Securities.
(Section 3.05)

Upon surrender for registration of transfer of any Registered Security of
any series at the office or agency of the Company maintained for such
purpose, the Company shall deliver, in the name of the designated
transferee, one or more new Registered Securities of the same series of
like aggregate principal amount of such denominations as are authorized
for Registered Securities of such series and of a like Stated Maturity and
with like terms and conditions. No service charge will be made for any
transfer or exchange of Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. (Section 3.05)

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<PAGE>

The Company shall not be required (i) to register, transfer or exchange
Debt Securities of any series during a period beginning at the opening of
business 15 days before the day of the transmission of a notice of
redemption of Debt Securities of such series selected for redemption and
ending at the close of business on the day of such transmission or (ii) to
register, transfer or exchange any Debt Security so selected for
redemption in whole or in part, except the unredeemed portion of any Debt
Security being redeemed in part. (Section 3.05)

Events of Default

Under the Indentures, "Event of Default" with respect to the Debt
Securities of any series means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law, pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body): (1) default in the payment of any
interest upon any Debt Security or any payment with respect to the
Coupons, if any, of such series when it becomes due and payable, and
continuance of such default for a period of 30 days; (2) default in the
payment of the principal of (and premium, if any, on) any Debt Security of
such series at its Maturity; (3) default in the deposit of any sinking
fund payment, when and as due by the terms of a Debt Security of such
series; (4) default in the performance, or breach of any covenant or
warranty in the applicable Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in the
applicable Indenture specifically dealt with or which expressly has been
included in the applicable Indenture solely for the benefit of Debt
Securities of a series other than such series), and continuance of such
default or breach for a period of 60 days after there has been given to
the Company by the applicable Trustee or to the Company and the applicable
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Debt Securities of such series, a written notice specifying
such default or breach and requiring it to be remedied; (5) certain events
of bankruptcy, insolvency or reorganization with respect to the Company;
or (6) any other Event of Default provided with respect to Debt Securities
of that series pursuant to the applicable Indenture. (Section 5.01)

Each Indenture requires the Company to file with the applicable Trustee,
annually, an officers' certificate as to the Company's compliance with all
conditions and covenants under the applicable Indenture. (Section 12.02)
Each Indenture provides that the applicable Trustee may withhold notice to
the Holders of a series of Debt Securities of any default (except payment
defaults on such Debt Securities) if it considers such withholding to be
in the interest of the Holders of such series of Debt Securities to do so.
(Section 6.02)

If an Event of Default with respect to Debt Securities of any series at
the time Outstanding occurs and is continuing, then in every case the
applicable Trustee or the Holders of not less than 25% in principal amount
of the Outstanding Debt Securities of such series may declare the
principal amount (or, if any Debt Securities of such series are Discount
Securities, such portion of the principal amount of such Discount
Securities as may be specified in the terms of such Discount Securities)
of all the Debt Securities of such series to be due and payable
immediately, by a notice in writing to the Company (and to the applicable
Trustee if given by Holders), and upon any such declaration such principal
amount (or specified amount) shall become immediately due and payable.
Upon payment of such amount in the currency in which such Debt Securities
are denominated (except as otherwise provided in the applicable Indenture
or the Prospectus Supplement), all obligations of the Company in respect
of the payment of principal of the Debt Securities of such series shall
terminate. (Section 5.02)

Subject to the provisions of each Indenture relating to the duties of the
applicable Trustee, in case an Event of Default with respect to Debt
Securities of a particular series shall occur and be continuing, the
applicable Trustee shall be under no obligation to exercise any of its
rights or powers under such Indenture at the request, order or direction
of any of the Holders of Debt Securities of that series, unless such
Holders shall have offered to the applicable Trustee reasonable indemnity
against the expenses and liabilities which might be incurred by it in
compliance with such request. (Section 5.07) Subject to such provisions
for the indemnification of the applicable Trustee, the Holders of a
majority in principal amount of the Outstanding Debt Securities of such
series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable
Trustee under such Indenture, or exercising any trust or power conferred
on the applicable Trustee with respect to the Debt Securities of that
series. (Section 5.12)

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<PAGE>

At any time after such a declaration of acceleration with respect to Debt
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the applicable Trustee as
provided in the Indentures, the Holders of a majority in principal amount
of the Outstanding Debt Securities of such series, by written notice to
the Company and the applicable Trustee, may rescind and annul such
declaration and its consequences if (1) the Company has paid or deposited
with the applicable Trustee a sum in the currency in which such Debt
Securities are denominated (except as otherwise provided in the applicable
Indenture or the Prospectus Supplement) sufficient to pay (A) all overdue
installments of interest on all Debt Securities or all overdue payments
with respect to any Coupons of such series, (B) the principal of (and
premium, if any, on) any Debt Securities of such series which have become
due otherwise than by such declaration of acceleration and interest
thereon at the rate or rates prescribed therefor in such Debt Securities;
(C) to the extent that payment of such interest is lawful, interest upon
overdue installments of interest on each Debt Security of such series or
upon overdue payments on any Coupons of such series at a rate established
for such series, and (D) all sums paid or advanced by the applicable
Trustee and the reasonable compensation, expenses, disbursements and
advances of the applicable Trustee, its agents and counsel; and (2) all
Events of Default with respect to Debt Securities of such series, other
than the nonpayment of the principal of Debt Securities of such series
which have become due solely by such declaration of acceleration, have
been cured or waived as provided in the Indentures. No such rescission
and waiver will affect any subsequent default or impair any right
consequent thereon. (Section 5.02)

Merger or Consolidation

Each Indenture provides that the Company may not consolidate with or merge
into any other corporation or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, unless (1) the
corporation formed by such consolidation or into which the Company is
merged or the Person which acquires by conveyance or transfer, or which
leases, the properties and assets of the Company substantially as an
entirety (the "successor corporation") is a corporation organized and
existing under the laws of the United States or any State or the District
of Columbia and expressly assumes by a supplemental indenture the due and
punctual payment of the principal of (and premium, if any) and interest on
all the Debt Securities and the performance of every covenant of the
Indentures on the part of the Company to be performed or observed; and (2)
immediately after giving effect to such transaction, no Event of Default,
and no event which, after notice or lapse of time, or both, would become
an Event of Default, shall have happened and be continuing. The
applicable Trustee may request, in accordance with the applicable
Indenture, an officers' certificate and an opinion of counsel stating that
such consolidation, merger, conveyance, transfer or lease and such
supplemental indenture comply with the applicable Indenture provisions and
that all conditions precedent therein provided for relating to such
transaction have been complied with. (Section 10.01)

Modification or Waiver

Without the consent of any Holders, the Company and the applicable
Trustee, at any time and from time to time, may modify the applicable
Indenture for any of the following purposes: (1) to evidence the
succession of another corporation to the Company and the assumption by
such successor of the covenants of the Company in the Indentures and in
the Debt Securities; (2) to add to the covenants of the Company, for the
benefit of the Holders of all or any series of Debt Securities and the
Coupons, if any, appertaining thereto (and if such covenants are to be for
the benefit of less than all series, stating that such covenants are
expressly being included solely for the benefit of such series), or to
surrender any right or power conferred in the Indentures upon the Company;
(3) to add any additional Events of Default (and if such Events of Default
are to be applicable to less than all series, stating that such Events of
Default are expressly being included solely to be applicable to such
series); (4) to add or change any of the provisions of the applicable
Indenture to such extent as shall be necessary to permit or facilitate the
issuance of Debt Securities of any series in bearer form, registrable or
not registrable, and with or without Coupons, to permit Bearer Securities
to be issued in exchange for Registered Securities, to permit Bearer
Securities to be issued in exchange for Bearer Securities of other
authorized denominations or to permit the issuance of Debt Securities of
any series in uncertificated form, provided that any such action shall not
materially adversely affect the interests of the Holders of Debt
Securities of any series or any related Coupons in any material respect;
(5) to change or eliminate any of the provisions of the applicable
Indenture, provided that any such change or elimination will become
effective

9
<PAGE>

only when there is no Outstanding Debt Security or Coupon of any series
created prior to such modification which is entitled to the benefit of
such provision and as to which such modification would apply; (6) to
secure the Debt Securities; (7) to supplement any of the provisions of the
applicable Indenture to such extent as is necessary to permit or
facilitate the defeasance and discharge of any series of Debt Securities,
provided that any such action will not materially adversely affect the
interests of the Holders of Debt Securities of such series or any other
series of Debt Securities or any related Coupons in any material respect;
(8) to establish the form or terms of Debt Securities and Coupons, if any,
of any series as permitted by the applicable Indenture; (9) to evidence
and provide for the acceptance of appointment thereunder by a successor
Trustee with respect to one or more series of Debt Securities and to add
to or change any of the provisions of the Indentures as is necessary to
provide for or facilitate the administration of the trusts thereunder by
more than one Trustee; or (10) to cure any ambiguity, to correct or
supplement any provision therein which may be defective or inconsistent
with any other provision therein, or to make any other provisions with
respect to matters or questions arising under the applicable Indenture
which will not be inconsistent with any provision of the applicable
Indenture, or to make any other change; provided such other provisions or
changes shall not materially adversely affect the interests of the Holders
of Outstanding Debt Securities or Coupons, if any, of any series created
prior to such modification in any material respect. (Section 11.01)

With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Debt Securities of each series affected by such
modification voting separately, the Company and the applicable Trustee may
modify the applicable Indenture for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the
applicable Indenture or of modifying in any manner the rights of the
Holders under the applicable Indenture of such Debt Securities; provided,
however, that no such modification may, without the consent of the Holder
of each Outstanding Debt Security of each such series affected thereby,
(1) change the Stated Maturity of the principal of, or any installment of
interest on, any Debt Security, or reduce the principal amount thereof or
the interest thereon or any premium payable upon redemption thereof, or
change the Stated Maturity of or reduce the amount of any payment to be
made with respect to any Coupon, or change the currency or currencies in
which the principal of (and premium, if any) or interest on such Debt
Security is denominated or payable, or reduce the amount of the principal
of a Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof, or adversely affect the right of
repayment or repurchase, if any, at the option of the Holder, or reduce
the amount of, or postpone the date fixed for, any payment under any
sinking fund or analogous provisions for any Debt Security, or impair the
right to institute suit for the enforcement of any payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or limit the obligation of the Company to maintain a
paying agency outside the United States for payments on Bearer Securities;
(2) reduce the percentage in principal amount of the Outstanding Debt
Securities of any series, the consent of whose Holders is required for any
supplemental indenture, or the consent of whose Holders is required for
any waiver of compliance with certain provisions of the Indentures or
certain defaults thereunder and their consequences provided for in the
Indentures; (3) modify any of the provisions of the applicable Indenture
relating to modifications and waivers of defaults and covenants, except to
increase any such percentage or to provide that certain other provisions
of the applicable Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Debt Security of each series
affected thereby; or (4) in the case of the Subordinated Indenture, modify
any of the provisions relating to the subordination of the Subordinated
Securities in a manner adverse to the Holders thereof. (Section 11.02)

A modification which changes or eliminates any covenant or other provision
of the applicable Indenture with respect to one or more particular series
of Debt Securities and Coupons, if any, or which modifies the rights of
the Holders of Debt Securities and Coupons of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights
under the applicable Indenture of the Holders of Debt Securities and
Coupons, if any, of any other series. (Section 11.02)

In the case of the Subordinated Indenture, no modification may adversely
affect the rights of any holder of Senior Indebtedness under the
subordination provisions of the Subordinated Indenture without the consent
of such holder. (Section 11.08 of the Subordinated Indenture)

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<PAGE>

The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may on behalf of the Holders of
all the Debt Securities of any such series waive any past default under
the applicable Indenture with respect to such series and its consequences,
except a default (1) in the payment of the principal of (or premium, if
any) or interest on any Debt Security of such series, or in the payment of
any sinking fund installment or analogous obligation with respect to the
Debt Securities of such series, or (2) in respect of a covenant or
provision hereof which pursuant to the second paragraph under
"Modification and Waiver" cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security of such series
affected. Upon any such waiver, such default will cease to exist, and any
Event of Default arising therefrom will be deemed to have been cured, for
every purpose of the Debt Securities of such series under the applicable
Indenture, but no such waiver will extend to any subsequent or other
default or impair any right consequent thereon. (Section 5.13)

The Company may omit in any particular instance to comply with certain
covenants in the Indentures (including, if so specified in the Prospectus
Supplement, any covenant not set forth in the Indentures but specified in
the Prospectus Supplement to be applicable to the Debt Securities of any
series, except as otherwise provided in the Prospectus Supplement) with
respect to the Debt Securities of any series if before the time for such
compliance the Holders of at least a majority in principal amount of the
Outstanding Debt Securities of such series either waive such compliance in
such instance or generally waive compliance with such provisions, but no
such waiver may extend to or affect any term, provision or condition
except to the extent expressly so waived, and, until such waiver becomes
effective, the obligations of the Company and the duties of the applicable
Trustee in respect of any such provision will remain in full force and
effect. (Section 12.09)

Subordination

Upon any distribution of assets of the Company upon the dissolution,
winding up, liquidation or reorganization of the Company, the payment of
the principal of (and premium, if any) and interest on the Subordinated
Securities will be subordinated to the extent provided in the Subordinated
Indenture in right of payment to the prior payment in full of all Senior
Indebtedness, including Senior Securities (Sections 16.01 and 16.02 of the
Subordinated Indenture), but the obligation of the Company to make payment
of principal (and premium, if any) or interest on the Subordinated
Securities will not otherwise be affected. (Section 16.02 of the
Subordinated Indenture) No payment on account of principal (or premium, if
any), sinking fund or interest may be made on the Subordinated Securities
at any time when there is a default in the payment of principal, premium,
if any, sinking fund or interest on Senior Indebtedness. (Section 16.03
of the Subordinated Indenture) In the event that, notwithstanding the
foregoing, any payment by the Company described in the foregoing sentence
is received by the Trustee under the Subordinated Indenture or the Holders
of any of the Subordinated Securities before all Senior Indebtedness is
paid in full, such payment or distribution shall be paid over to the
holders of such Senior Indebtedness or on their behalf for application to
the payment of all such Senior Indebtedness remaining unpaid until all
such Senior Indebtedness shall have been paid in full, after giving effect
to any concurrent payment or distribution to the holders of such Senior
Indebtedness. Subject to payment in full of Senior Indebtedness, the
Holders of the Subordinated Securities will be subrogated to the rights of
the holders of the Senior Indebtedness to the extent of payments made to
the holders of such Senior Indebtedness out of the distributive share of
the Subordinated Securities. (Section 16.02 of the Subordinated
Indenture)

By reason of such subordination, in the event of a distribution of assets
upon insolvency, certain general creditors of the Company may recover
more, ratably, than Holders of the Subordinated Securities. The
Subordinated Indenture provides that the subordination provisions thereof
shall not apply to money and securities held in trusts pursuant to the
satisfaction and discharge and the legal defeasance provisions of the
Subordinated Indenture. (Sections 4.02 and 15.02 of the Subordinated
Indenture)

If this Prospectus is being delivered in connection with the offering of a
series of Subordinated Securities, the accompanying Prospectus Supplement
or the information incorporated by reference will set forth the
approximate amount of Senior Indebtedness outstanding as of a recent date.

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<PAGE>

Discharge, Legal Defeasance and Covenant Defeasance

The applicable Indenture with respect to the Debt Securities of any series
may be discharged, subject to certain terms and conditions, when (1)
either (A) all Debt Securities and the Coupons, if any, of such series
have been delivered to the applicable Trustee for cancellation, or (B) all
Debt Securities and the Coupons, if any, of such series not theretofore
delivered to the applicable Trustee for cancellation (i) have become due
and payable, (ii) will become due and payable at their Stated Maturity
within one year, or (iii) are to be called for redemption within one year
under arrangements satisfactory to the applicable Trustee for the giving
of notice by the applicable Trustee, and the Company, in the case of (i),
(ii) or (iii) of subclause (B), has irrevocably deposited or caused to be
deposited with the applicable Trustee as trust funds in trust for such
purpose an amount in the currency in which such Debt Securities are
denominated sufficient to pay and discharge the entire indebtedness on
such Debt Securities for principal (and premium, if any) and interest to
the date of such deposit (in the case of Debt Securities which have become
due and payable) or to the Stated Maturity or Redemption Date, as the case
may be; provided, however, in the event a petition for relief under
applicable federal bankruptcy, insolvency or other similar law is filed
with respect to the Company within 91 days after the deposit and the
applicable Trustee is required to return the deposited money to the
Company, the obligations of the Company under the applicable Indenture
with respect to such Debt Securities will not be deemed terminated or
discharged; (2) the Company has paid or caused to be paid all other sums
payable under the applicable Indenture by the Company; (3) the Company has
delivered to the applicable Trustee an officers' certificate and an
opinion of counsel each stating that all conditions precedent therein
provided relating to the satisfaction and discharge of the applicable
Indenture with respect to such series have been complied with; (4) if the
Debt Securities of such series are then listed on any national securities
exchange, the Company shall have delivered to the applicable Trustee an
opinion of counsel or a letter or other document from such exchange to the
effect that the discharge of the Debt Securities of such series would not
cause such Debt Securities to be delisted; and (5) the Company has
delivered to the applicable Trustee an opinion of counsel or a ruling of
the Internal Revenue Service to the effect that Holders of the Debt
Securities of the series will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and discharge.
(Section 4.01)

If provision is made for the defeasance of Debt Securities of a series,
and if the Debt Securities of such series are Registered Securities and
denominated and payable only in U.S. dollars, then the provisions of each
Indenture relating to defeasance shall be applicable except as otherwise
specified in the Prospectus Supplement for Debt Securities of such series.
Defeasance provisions, if any, for Debt Securities denominated in a
foreign currency or currencies or for Bearer Securities may be specified
in the Prospectus Supplement. (Section 15.01)

At the Company's option, either (a) the Company shall be deemed to have
been Discharged (as defined below) from its obligations with respect to
Debt Securities of any series ("legal defeasance option") or (b) the
Company shall cease to be under any obligation to comply with certain
provisions of the Indentures relating to mergers and consolidations of the
Company, with respect to Debt Securities of any series (and, if so
specified, any other obligation of the Company or restrictive covenant
added for the benefit of such series) ("covenant defeasance option") at
any time after the applicable conditions set forth below have been
satisfied: (1) the Company shall have deposited or caused to be deposited
irrevocably with the applicable Trustee as trust funds in trust for, and
dedicated solely to, the benefit of the Holders of the Debt Securities of
such series (i) money in an amount, or (ii) U.S. Government Obligations
which through the payment of interest and principal in respect thereof in
accordance with their terms will provide, not later than one day before
the due date of any payment, money in an amount, or (iii) a combination of
(i) and (ii), sufficient, in the opinion (with respect to (i) and (ii)) of
a nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the applicable Trustee, to
pay and discharge each installment of principal (including any mandatory
sinking fund payments) of and premium, if any, and interest on, the
Outstanding Debt Securities of such series on the dates such installments
of interest or principal and premium are due; (2) such deposit shall not
cause the applicable Trustee with respect to the Debt Securities of that
series to have a conflicting interest with respect to the Debt Securities
of any series; (3) such deposit will not result in a breach or violation
of, or constitute a default under, the applicable Indenture or any other
agreement or instrument to which the Company is a party or by which it is
bound; (4) if the Debt Securities of such series are then listed on any
national securities exchange, the Company shall have delivered to the
applicable Trustee an opinion of counsel or a letter or other document
from such exchange to the effect that the Company's exercise of its legal

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<PAGE>

defeasance option or the covenant defeasance option, as the case may be,
would not cause such Debt Securities to be delisted; (5) no Event of
Default or event (including such deposit) which, with notice or lapse of
time or both, would become an Event of Default with respect to the Debt
Securities of such series shall have occurred and be continuing on the
date of such deposit and, with respect to the legal defeasance option
only, no Event of Default under the provisions of the Indentures relating
to certain events of bankruptcy or insolvency or event which with the
giving of notice or lapse of time, or both, would become an Event of
Default under such bankruptcy or insolvency provisions shall have occurred
and be continuing on the 91st day after such date; and (6) the Company
shall have delivered to the applicable Trustee an opinion of counsel or a
ruling of the Internal Revenue Service to the effect that the Holders of
the Debt Securities of such series will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit, defeasance or
Discharge. Notwithstanding the foregoing, if the Company exercises its
covenant defeasance option and an Event of Default under the provisions of
the Indentures relating to certain events of bankruptcy or insolvency or
event which with the giving of notice or lapse of time, or both, would
become an Event of Default under such bankruptcy or insolvency provisions
shall have occurred and be continuing on the 91st day after the date of
such deposit, the obligations of the Company referred to under the
definition of covenant defeasance option with respect to such Debt
Securities shall be reinstated. (Section 15.02)

Payment and Paying Agents

If Debt Securities of a series are issuable only as Registered Securities,
the Company will maintain in each Place of Payment for such series an
office or agency where Debt Securities of that series may be presented or
surrendered for payment, where Debt Securities of that series may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Debt Securities of that
series and the applicable Indenture may be served. If Debt Securities of
a series are issuable as Bearer Securities, the Company will maintain (A)
in the Borough of Manhattan, The City and State of New York, an office or
agency where any Registered Securities of that series may be presented or
surrendered for payment, where any Registered Securities of that series
may be surrendered for registration of transfer, where Debt Securities of
that series may be surrendered for exchange, where notices and demands to
or upon the Company in respect of the Debt Securities of that series and
the applicable Indenture may be served and where Bearer Securities of that
series and related Coupons may be presented or surrendered for payment in
the circumstances described in the following paragraph (and not
otherwise), (B) subject to any laws or regulations applicable thereto, in
a Place of Payment for that series which is located outside the United
States, an office or agency where Debt Securities of that series and
related Coupons may be presented and surrendered for payment (including
payment of any additional amounts payable on Debt Securities of that
series, if so provided in such series); provided, however, that if the
Debt Securities of that series are listed on The Stock Exchange of the
United Kingdom and the Republic of Ireland, the Luxembourg Stock Exchange
or any other stock exchange located outside the United States and such
stock exchange shall so require, the Company will maintain a Paying Agent
for the Debt Securities of that series in London, Luxembourg or any other
required city located outside the United States, as the case may be, so
long as the Debt Securities of that series are listed on such exchange,
and (C) subject to any laws or regulations applicable thereto, in a Place
of Payment for that series located outside the United States an office or
agency where any Registered Securities of that series may be surrendered
for registration of transfer, where Debt Securities of that series may be
surrendered for exchange and where notices and demands to or upon the
Company in respect of the Debt Securities of that series and the
applicable Indenture may be served. The Company will give prompt written
notice to the applicable Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish
the applicable Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the corporate
trust office of the applicable Trustee (in the case of Registered
Securities) and at the principal London office of the applicable Trustee
(in the case of Bearer Securities), and the Company has appointed the
applicable Trustee as its agent to receive all presentations, surrenders,
notices and demands. (Section 12.03)

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<PAGE>

of such series, if so provided in the Prospectus Supplement shall be made
at the office of the Company's Paying Agent in the Borough of Manhattan,
the City and State of New York, if (but only if) payment in U.S. dollars
of the full amount of such principal, premium, interest or additional
amounts, as the case may be, at all offices or agencies outside the United
States maintained for the purpose by the Company in accordance with the
applicable Indenture is illegal or effectively precluded by exchange
controls or other similar restrictions. (Section 12.03)

Book-Entry Debt Securities

The Debt Securities of a series may be issued in whole or in part in
global form that will be deposited with, or on behalf of, a depositary
identified in the Prospectus Supplement. Global securities may be issued
in either registered or bearer form and in either temporary or permanent
form (each a "Global Security"). Payments of principal of (premium, if
any) and interest on Debt Securities represented by a Global Security will
be made by the Company to the applicable Trustee and then by such Trustee
to the depositary.

The Company anticipates that any Global Securities will be deposited with,
or on behalf of, The Depository Trust Company, New York, New York ("DTC"),
that such Global Securities will be registered in the name of DTC's
nominee, and that the following provisions will apply to the depositary
arrangements with respect to any such Global Securities. Additional or
differing terms of the depositary arrangements will be described in the
Prospectus Supplement relating to a particular series of Debt Securities
issued in the form of Global Securities.

So long as DTC or its nominee is the registered owner of a Global
Security, DTC or its nominee, as the case may be, will be considered the
sole Holder of the Debt Securities represented by such Global Security for
all purposes under the applicable Indenture. Except as provided below,
owners of beneficial interests in a Global Security will not be entitled
to have Debt Securities represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery
of Debt Securities in certificated form and will not be considered the
owners or Holders thereof under the applicable Indenture. The laws of
some states require that certain purchasers of securities take physical
delivery of such securities in certificated form; accordingly, such laws
may limit the transferability of beneficial interests in a Global
Security.

If DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by the Company within 90 days, the
Company will issue individual Debt Securities in certificated form in
exchange for the Global Securities. In addition, the Company may at any
time, and in its sole discretion, determine not to have any Debt
Securities represented by one or more Global Securities and, in such
event, will issue individual Debt Securities in certificated form in
exchange for the relevant Global Securities. If Registered Securities of
any series shall have been issued in the form of one or more Global
Securities and if an Event of Default with respect to the Debt Securities
of such series shall have occurred and be continuing, the Company will
issue individual Debt Securities in certificated form in exchange for the
relevant Global Securities.

The following is based on information furnished by DTC:

DTC will act as securities depositary for the Debt Securities. The Debt
Securities will be issued as fully registered securities registered in the
name of Cede & Co. (DTC's partnership nominee). One fully registered Debt
Security certificate is issued with respect to each $150 million of
principal amount of the Debt Securities of a series, and an additional
certificate will be issued with respect to any remaining principal amount
of such series.

DTC is a limited-purpose trust company organized under the Banking Law of
the State of New York, a "banking organization" within the meaning of the
Banking Law of the State of New York, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. DTC holds securities
that its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and

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<PAGE>

by the New York Stock Exchange, Inc., the American Stock Exchange, Inc.
and the National Association of Securities Dealers, Inc. Access to the
DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.

Purchases of Debt Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Debt
Securities on DTC's records. The ownership interest of each actual
purchaser of each Debt Security ("Beneficial Owner") is in turn recorded
on the Direct and Indirect Participants' records. A Beneficial Owner does
not receive written confirmation from DTC of its purchase, but such
Beneficial Owner is expected to receive a written confirmation providing
details of the transaction, as well as periodic statements of its
holdings, from the Direct or Indirect Participant through which such
Beneficial Owner entered into the transaction. Transfers of ownership
interests in Debt Securities are accomplished by entries made on the books
of Participants acting on behalf of Beneficial Owners. Beneficial Owners
do not receive certificates representing their ownership interests in Debt
Securities, except in the event that use of the book-entry system for the
Debt Securities is discontinued.

To facilitate subsequent transfers, the Debt Securities are registered in
the name of DTC's partnership nominee, Cede & Co. The deposit of the Debt
Securities with DTC and their registration in the name of Cede & Co.
effects no change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Debt Securities; DTC records reflect only
the identity of the Direct Participants to whose accounts Debt Securities
are credited, which may or may not be the Beneficial Owners. The
Participants remain responsible for keeping account of their holdings on
behalf of their customers.

Delivery of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners are
governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.

Neither DTC nor Cede & Co. will consent or vote with respect to the Debt
Securities. Under its usual procedures, DTC mails a proxy (an "Omnibus
Proxy") to the issuer as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Debt Securities are credited on
the record date (identified on a list attached to the Omnibus Proxy).

Principal and interest payments on the Debt Securities will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on the
payable date in accordance with their respective holdings as shown on
DTC's records unless DTC has reason to believe that it will not receive
payment on the payable date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility
of such Participant and not of DTC, the Paying Agent or the Company,
subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal and interest to DTC is the
responsibility of the Company or the Paying Agent, disbursement of such
payments to Direct Participants is the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as securities depositary with
respect to the Debt Securities at any time by giving reasonable notice to
the Company or the Paying Agent. Under such circumstances, in the event
that a successor securities depositary is not appointed, Debt Security
certificates are required to be printed and delivered.

The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that
event, Debt Security certificates will be printed and delivered.

15
<PAGE>

The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that the Company believes
to be reliable, but the Company takes no responsibility for the accuracy
thereof.

Unless stated otherwise in the Prospectus Supplement, the underwriters or
agents with respect to a series of Debt Securities issued as Global
Securities will be Direct Participants in DTC.

None of the Company, any underwriter or agent, the applicable Trustee or
any applicable Paying Agent will have the responsibility or liability for
any aspect of the records relating to or payments made on account of
beneficial interests in a Global Security, or for maintaining, supervising
or reviewing any records relating to such beneficial interests.

The Trustees under the Indentures

Each of the Trustees, The Chase Manhattan Bank (National Association) and
The Bank of New York, maintains ordinary banking relationships with the
Company and the Company from time to time has, and may in the future,
obtain credit facilities and lines of credit from either or both of the
Trustees.

Certain Definitions

Set forth below is a summary of certain defined terms used in the
applicable Indenture. Reference is made to the applicable Indenture for
the full definition of all such terms.

"Discharged" means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under,
the Debt Securities of such series and to have satisfied all the
obligations under the applicable Indenture relating to the Debt Securities
of such series, except (i) the rights of Holders of Debt Securities of
such series to receive, from the trust fund described under "Discharge,
Legal Defeasance and Covenant Defeasance" above, payment of the principal
of (and premium, if any) and interest on such Debt Securities when such
payments are due, (ii) the Company's obligations with respect to the Debt
Securities of such series under the provisions relating to exchanges,
transfers and replacement of Debt Securities, the maintenance of an office
or agency of the Company and the defeasance trust fund and (iii) the
rights, powers, trusts, duties and immunities of the applicable Trustee
thereunder. (Section 15.02)

"Indebtedness" means (i) any liability of any Persons (a) for borrowed
money, or (b) evidenced by a bond, note, debenture or similar instrument
(including purchase money obligations but excluding trade payables), or
(c) for the payment of money relating to a lease that is required to be
classified as a capitalized lease obligation in accordance with generally
accepted accounting principles, or (d) preferred or preference stock of a
Subsidiary of the Company held by Persons other than the Company or a
Subsidiary of the Company; (ii) any liability of others described in the
preceding clause (i) that the Person has guaranteed, that is recourse to
such Person or that is otherwise its legal liability; and (iii) any
amendment, supplement, modification, deferral, renewal, extension or
refunding of any liability of the types referred to in clauses (i) and
(ii) above. (Section 1.01)

"Senior Indebtedness" means the principal of (and premium, if any) and
unpaid interest on (i) Indebtedness of the Company, whether outstanding on
the date of the Subordinated Indenture or thereafter created, incurred,
assumed or guaranteed, for money borrowed (other than the Indebtedness
evidenced by the Subordinated Securities), unless in the instrument
creating or evidencing the same or pursuant to which the same is
outstanding it is provided that such Indebtedness is not senior or prior
in right of payment to the Subordinated Securities or is pari passu or
subordinate by its terms in right of payment to the Subordinated
Securities, and (ii) renewals, extensions and modifications of any such
Indebtedness. (Section 16.01 of the Subordinated Indenture)

"Subsidiary" means any corporation of which at least a majority of the
outstanding stock having by the terms thereof ordinary voting power to
elect a majority of the directors of such corporation, irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason

16
<PAGE>

of the happening of any contingency, is at the time, directly or
indirectly, owned or controlled by the Company or by one or more
Subsidiaries thereof, or by the Company and one or more Subsidiaries.
(Section 1.01)

"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States for the payment of which its full faith
and credit is pledged, or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United
States the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States, which, in either case under
clauses (i) or (ii), are not callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt issued by a
bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of
any such U.S. Government Obligation held by such custodian for the account
of the holder of a depository receipt; provided that (except as required
by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the U.S. Government Obligation or
the specific payment of interest on or principal of the U.S. Government
Obligation evidenced by such depository receipt. (Section 15.02)

"Wholly Owned Subsidiary" means a Subsidiary of which all of the
outstanding voting stock (other than directors' qualifying shares) is at
the time, directly or indirectly, owned by the Company, or by one or more
Wholly Owned Subsidiaries of the Company or by the Company and one or more
Wholly Owned Subsidiaries. (Section 1.01)

DESCRIPTION OF PREFERRED STOCK

After giving effect to the Merger, the Company's capital stock will
consist of 300 million shares of Common Stock, par value $.01 per share,
and 100 million shares of Preferred Stock. The number of issued and
outstanding shares of Preferred Stock as of a then recent date will be set
forth in an accompanying Prospectus Supplement relating to any issuance of
shares of Preferred Stock. The following summary description of the
Preferred Stock of the Company does not purport to be complete and is
qualified in its entirety by reference to the form of the Company's
Restated Certificate of Incorporation, a copy of which is filed as an
exhibit to the Registration Statement, which will become effective in
connection with the consummation of the Merger (the "Post-Merger
Certificate of Incorporation"), and to the New Jersey Business Corporation
Act. A description of the Company's capital stock as in effect prior to
the consummation of the Merger is incorporated herein by reference. See
"Available Information."

Under the Post-Merger Certificate of Incorporation, the Company may issue,
in one or more classes or series, shares of its Preferred Stock, with such
powers, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions as shall be
designated in resolutions adopted by the Board of Directors or a duly
authorized committee thereof. The Preferred Stock will, when issued, be
fully paid and non-assessable and holders thereof will have no preemptive
rights.

The specific terms of any Preferred Stock being offered (the "Offered
Preferred Stock") will be described in the Prospectus Supplement relating
to such Offered Preferred Stock. The following summaries of certain
provisions of the Preferred Stock do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, the
Company's Restated Certificate of Incorporation as then in effect and the
amendment thereto relating to the particular class or series of Preferred
Stock. Reference is made to the Prospectus Supplement relating to the
Offered Preferred Stock offered thereby for specific terms, including:

(1) The designation of such Preferred Stock.

(2) The number of shares of such Preferred Stock offered, the liquidation
preference per share, whether such Preferred Stock will be represented by
Depositary Shares and the initial offering price of such Preferred Stock.

(3) The dividend rate(s), period(s) and/or payment date(s) or method(s)
of calculation thereof applicable to such Preferred Stock.

17
<PAGE>

(4) The date from which dividends on such Preferred Stock shall
accumulate, if applicable.

(5) The procedures for any auction and remarketing, if any, of such
Preferred Stock.

(6) The provision of a sinking fund, if any, for such Preferred Stock.

(7) The provision for redemption, if applicable, of such Preferred Stock.

(8) Any listing of such Preferred Stock on any securities exchange.

(9) The terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into or exchangeable for shares of other classes
or series of capital stock or property of the Company, and whether at the
option of the holder thereof or the Company.

(10) Whether such Preferred Stock will rank senior or junior to or on a
parity with any other class or series of Preferred Stock.

(11) The voting rights, if any, of such Preferred Stock.

(12) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.

(13) A discussion of federal income tax considerations applicable to such
Preferred Stock.

In addition, as described under "Description of Depositary Shares" and as
will be more fully set forth in the Prospectus Supplement relating to a
particular series of Preferred Shares, the Company, at its option, may
elect to offer Depositary Shares evidenced by depositary receipts, each
representing a fraction of a share of the particular class or series of
Preferred Stock issued and deposited with a depositary, in lieu of
offering full shares of such series of Preferred Shares.

Subject to the Company's Restated Certificate of Incorporation as then in
effect and to any limitations contained in any then outstanding Preferred
Stock, the Company may issue additional classes or series of Preferred
Stock, at any time or from time to time, with such powers, preferences and
relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, as the Board of
Directors or any duly authorized committee thereof shall determine, all
without further action of the shareholders, including holders of then
outstanding Preferred Stock, of the Company.

DESCRIPTION OF DEPOSITARY SHARES

General

The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In the event
such option is exercised, the Company will issue receipts for Depositary
Shares, each of which will represent a fraction (to be set forth in the
Prospectus Supplement relating to a particular class or series of
Preferred Stock) of a share of a particular class or series of Preferred
Stock as described below.

The shares of any class or series of Preferred Stock represented by
Depositary Shares will be deposited under a Deposit Agreement (the
"Deposit Agreement") between the Company and a bank or trust company
selected by the Company having its principal office in the United States
and having a combined capital and surplus of at least $50,000,000 (the
"Depositary"). Subject to the terms of the Deposit Agreement, each owner
of a Depositary Share will be entitled, in proportion to the applicable
fraction of a share of Preferred Stock represented by such Depositary
Share, to all the rights and preferences of the Preferred Stock
represented thereby (including dividend, voting and liquidation rights).

18
<PAGE>

The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement (the "Depositary Receipts"). Depositary
Receipts will be distributed to those persons purchasing the fractional
shares of the related class or series of Preferred Stock in accordance
with the terms of the offering described in the related Prospectus
Supplement. Copies of the forms of Deposit Agreement and Depositary
Receipt are filed as exhibits to the Registration Statement of which this
Prospectus is a part, and the following summary is qualified in its
entirety by reference to such exhibits.

Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary
Receipts but not in definitive form. Definitive Depositary Receipts will
be prepared thereafter without unreasonable delay, and temporary
Depositary Receipts will be exchangeable for definitive Depositary
Receipts at the Company's expense.

Dividends and Other Distributions

The Depositary will distribute all cash dividends or other cash
distributions received in respect of the related class or series of
Preferred Stock to the record holders of Depositary Shares relating to
such class or series of Preferred Stock in proportion to the number of
such Depositary Shares owned by such holders.

In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary
Shares entitled thereto, unless the Depositary determines that it is not
feasible to make such distribution, in which case the Depositary may, with
the approval of the Company, sell such property and distribute the net
proceeds from such sale to such holders.

Redemption of Depositary Shares

If a series of Preferred Stock represented by Depositary Shares is subject
to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in
part, of such series of Preferred Stock held by the Depositary. The
redemption price per Depositary Share will be equal to the applicable
fraction of the redemption price per share payable with respect to such
series of the Preferred Stock. Whenever the Company redeems shares of
Preferred Stock held by the Depositary, the Depositary will redeem as of
the same redemption date the number of Depositary Shares representing
shares of Preferred Stock so redeemed. If fewer than all Depositary
Shares are to be redeemed, the Depositary Shares to be redeemed will be
selected by lot or pro rata as may be determined by the Depositary.

Voting the Preferred Stock

Upon receipt of notice of any meeting at which the holders of the
Preferred Stock are entitled to vote, the Depositary will mail the
information contained in such notice of meeting to the record holders of
the Depositary Shares relating to such Preferred Stock. Each record
holder of such Depositary Shares on the record date (which will be the
same date as the record date for the Preferred Stock) will be entitled to
instruct the Depositary as to the exercise of the voting rights pertaining
to the amount of the class or series of Preferred Stock represented by
such holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote the amount of the Preferred Stock represented by such
Depositary Shares in accordance with such instructions, and the Company
will agree to take all reasonable action which may be deemed necessary by
the Depositary in order to enable the Depositary to do so. The Depositary
will abstain from voting shares of the Preferred Stock to the extent it
does not receive specific instructions from the holders of Depositary
Shares representing such Preferred Stock.

Amendment and Termination of the Deposit Agreement

The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which
materially and adversely alters the rights of the holders of Depositary
Shares will not be effective

19
<PAGE>

unless such amendment has been approved by the holders of at least a
majority of the Depositary Shares then outstanding.

Unless otherwise specified in the Prospectus Supplement relating to a
particular class or series of Preferred Stock, the Deposit Agreement may
be terminated by the Company or the Depositary only if (i) all outstanding
Depositary Shares have been redeemed or (ii) there has been a final
distribution in respect of the Preferred Stock in connection with any
liquidation, dissolution or winding up of the Company and such
distribution has been distributed to the holders of Depositary Receipts.

Charges of Depositary

The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The
Company will pay charges of the Depositary in connection with the initial
deposit of the related class or series of Preferred Stock. Holders of
Depositary Receipts will pay transfer and other taxes and governmental
charges in connection with the transfer, exchange, surrender or split-up
of Depositary Receipts and such other charges as are expressly provided in
the Deposit Agreement to be for their accounts.

Miscellaneous

The Depositary will forward all reports and communications from the
Company which are delivered to the Depositary and which the Company is
required to furnish to the holders of the Preferred Stock.

Neither the Depositary nor the Company will be liable if it is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. the obligations of the Company
and the Depositary under the Deposit Agreement will be limited to
performance in good faith of their duties thereunder and the Depositary
will not be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Shares or class or series of Preferred Stock
unless satisfactory indemnity is furnished. They may rely on written
advice of counsel or accountants, or information provided by persons
presenting Preferred Stock for deposit, holders of Depositary Shares or
other persons believed to be competent and on documents believed to be
genuine.

Resignation and Removal of Depositary

The Depositary may resign at any time be delivering to the Company notice
of its election to do so, and the Company may at any time remove the
Depositary, any such resignation or removal to take effect upon the
appointment of a successor Depositary, which successor Depositary must be
appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in
the United States and having a combined capital and surplus of at least
$50,000,000.

PLAN OF DISTRIBUTION

The Company may sell the Securities in and/or outside the United States:
(i) through underwriters or dealers; (ii) directly to a limited number of
purchasers or to a single purchaser; or (iii) through agents. The
Prospectus Supplement with respect to the Securities being offered (the
"Offered Securities") will set forth the terms of the offering of the
Offered Securities, including the name or names of any underwriters or
agents, the purchase price of the Offered Securities and the proceeds to
the Company from such sale, any delayed delivery arrangements, any
underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers. Any initial public
offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.

If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale. The Securities may be offered to the
public

20
<PAGE>

either through underwriting syndicates represented by one or more managing
underwriters or directly by one or more firms acting as underwriters. The
underwriter or underwriters with respect to a particular underwritten
offering of Securities to be named in the Prospectus Supplement relating
to such offering and, if an underwriting syndicate is used, the managing
underwriter or underwriters, will be set forth on the cover of such
Prospectus Supplement. Unless otherwise set forth in the Prospectus
Supplement relating thereto, the obligations of the underwriters to
purchase the Offered Securities will be subject to conditions precedent
and the underwriters will be obligated to purchase all the Offered
Securities if any are purchased.

If dealers are utilized in the sale of Offered Securities in respect of
which this Prospectus is delivered, the Company will sell such Offered
Securities to the dealers as principals. The dealers may then resell such
Offered Securities to the public at varying prices to be determined by
such dealers at the time of resale. The names of the dealers and the
terms of the transaction will be set forth in the Prospectus Supplement
relating thereto.

The Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the
offer or sale of the Offered Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement.

Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which the agents or underwriters may
be required to make in respect thereof. Agents and underwriters may be
customers of, may engage in transactions with, or perform services for,
the Company in the ordinary course of business.

LEGAL MATTERS

Certain legal matters in connection with the Securities offered hereby
will be passed upon for the Company by Allan L. Miller, Esq., Senior Vice
President, General Counsel and Secretary of the Company.

EXPERTS

The consolidated financial statements and schedules of the Company
incorporated in this Prospectus by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1993, have been
audited by Price Waterhouse LLP, independent accountants, as set forth in
their reports thereon included or incorporated by reference therein and
incorporated herein by reference. Such consolidated financial statements
and schedules are, and audited financial statements to be included in
subsequently filed documents will be, incorporated herein in reliance upon
the reports of Price Waterhouse LLP pertaining to such financial
statements (to the extent covered by consents filed with the Securities
and Exchange Commission) given upon the authority of such firm as experts
in accounting and auditing. With respect to the Annual Report on Form 10-
K for the year ended December 31, 1993, the report of Price Waterhouse LLP
contains an explanatory paragraph relating to the restatement and
reclassification of the 1992 consolidated financial statements as
described in note 3 to the financial statements.

21
<PAGE>

PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.Other Expenses of Issuance and Distribution.

The following table sets forth the expenses in connection with the
issuance and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are
estimates, except the SEC registration fee.

SEC registration fee $689.655.17
Legal fees and expenses 100,000.00
Printing and engraving 150,000.00
Fees of accountants 30,000.00
Fees of trustees 15,000.00
Blue sky fees and expenses 25,000.00
Miscellaneous 15,344.83
-------------
Total $1,025,000.00
=============

Item 15. Indemnification of Directors and Officers.

Section 14A:3-5 of the New Jersey Business Corporation Act (the "Act")
sets forth the extent to which officers and directors of the registrant
may be indemnified against any liabilities which they may incur in their
capacity as such. Section 14A:3-5 of the Act provides that no
indemnification shall be made if such person shall have been adjudged
liable to a corporation unless the court in which such proceeding was
brought determines upon application that the defendant, officers or
directors are fairly and reasonably entitled to indemnity for such
expenses despite such adjudication of liability. In any case, a
corporation must indemnify an officer or director against expenses
(including attorney's fees) to the extent that he has been successful on
the merits or otherwise or in defense of any claim or issue.

The Registrant's Restated Certificate of Incorporation and the
Registrant's by-laws, as amended, provide for the indemnification of
directors and officers of the Registrant against certain liabilities under
certain circumstances. Directors and officers of the Registrant may be
indemnified under insurance policies of the Registrant.

Section 7 of the form of underwriting agreement filed as Exhibit 1 to this
Registration Statement provides for indemnification of directors, officers
who sign the Registration Statement and controlling persons of the
Registrant by the underwriters, and for indemnification of each
underwriter and its controlling persons by the Registrant, against certain
liabilities. Similar provisions are contained in agreements entered into
between the Registrant and groups of underwriters on past occasions.

Items 16. Exhibits.

<TABLE><CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.1 Form of Underwriting Agreement for Debt Securities.

1.2 Form of Underwriting Agreement for Preferred Stock and Depositary
Shares.

2 Composite Conformed Agreement and Plan of Merger dated as of September
23, 1994, as amended, among the Registrant, Borden Acquisition Corp. and
Whitehall Associates, L.P.

3.1 Form of Restated Certificate of Incorporation of the Registrant.

3.2 Form of By-Laws of the Registrant.
</TABLE>

II-1
<PAGE>

<S> <C>
4.1 Form of Indenture between the Registrant and The Chase Manhattan Bank
(National Association), as trustee, relating to the Senior Securities.

4.2 Form of Indenture between the Registrant and The Bank of New York, as
trustee, relating to the Subordinated Securities.

4.3 Form of Deposit Agreement.

5 Opinion of Allan L. Miller, Esq.

12 Computation of Ratios of Earnings to Fixed Charges and Combined Fixed
Charges and Preferred Stock Dividends.

23.1 Consent of Price Waterhouse LLP.

23.2 Consent of Allan L. Miller, Esq. (included in the opinion filed as
Exhibit 5 hereto).

24 Powers of Attorney (included in the signature page of this Registration
Statement).

25.1 Statement of Eligibility of The Chase Manhattan Bank (National
Association) under the Trust Indenture Act of 1939 on Form T-1 relating to
the Senior Indenture.

25.2 Statement of Eligibility of The Bank of New York under the Trust
Indenture Act of 1939 on Form T-1 relating to the Subordinated Indenture.
</TABLE>
Item 17. Undertakings.

The undersigned Registrant hereby undertakes:

(a) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the Registration Statement is on Form S-3, Form S-8 or Form F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to section 13 or section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in
the Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

II-2
<PAGE>

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(b) (1) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of
1933 shall be deemed to be part of this Registration Statement as of the
time it was declared effective.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.

(c) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in this Registration Statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions referred
to in Item 15 of this Registration Statement, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in
the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Columbus, State of Ohio on
February 2, 1995.

BORDEN, INC.

By: /s/ Allan L. Miller
------------------------------------
Allan L. Miller, Senior Vice President,
General Counsel and Secretary

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on February 2, 1995 by
the following persons in the capacities indicated.

Each person signing below also hereby appoints Allan L. Miller and Ellen
G. Berndt, and each of them singly, his or her lawful attorney-in-fact
with full power to execute and file any amendments (including any post-
effective amendments) to the Registration Statement, and generally to do
all such things as such attorney-in-fact may deem appropriate to enable
Borden, Inc. to comply with the provisions of the Securities Act of 1933
and all requirements of the Securities and Exchange Commission.

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

/s/ C. Robert Kidder
-------------------------------- Chairman of the Board,
C. Robert Kidder Chief Executive Officer and Director

/s/ James C. Van Meter
-------------------------------- Executive Vice President and
James C. Van Meter Chief Financial Officer
(principal financial officer)

/s/ P. Michael Morton
-------------------------------- Vice President and General
P. Michael Morton Controller
(principal accounting officer)

/s/ Henry R. Kravis
-------------------------------- Director
Henry R. Kravis

/s/ George R. Roberts
-------------------------------- Director
George R. Roberts

/s/ Clifton S. Robbins
-------------------------------- Director
Clifton S. Robbins

/s/ Scott M. Stuart
-------------------------------- Director
Scott M. Stuart

II-4
<PAGE>

-------------------------------- Director
Alexander Navab

/s/ Frank J. Tasco
-------------------------------- Director
Frank J. Tasco

/s/ Wilbert J. LeMelle
-------------------------------- Director
Wilbert J. LeMelle

II-5
<PAGE>

EXHIBIT INDEX

Exhibit Description Page
------- ----------- ----

1.1 Form of Underwriting Agreement for Debt Securities.

1.2 Form of Underwriting Agreement for Preferred Stock
and Depositary Shares.
2 Composite Conformed Agreement and Plan of Merger
dated as of September 23, 1994, as amended, among
the Registrant, Borden Acquisition Corp. and
Whitehall Associates, L.P.

3.1 Form of Restated Certificate of Incorporation of
the Registrant.
3.2 Form of By-Laws of the Registrant.

4.1 Form of Indenture between the Registrant and The
Chase Manhattan Bank (National Association), as
trustee, relating to the Senior Securities.

4.2 Form of Indenture between the Registrant and The
Bank of New York, as trustee, relating to the
Subordinated Securities.
4.3 Form of Deposit Agreement.

5 Opinion of Allan L. Miller, Esq.
12 Computation of Ratios of Earnings to Fixed Charges
and Combined Fixed Charges and Preferred Stock
Dividends.

23.1 Consent of Price Waterhouse LLP.

23.2 Consent of Allan L. Miller, Esq. (included in the
opinion filed as Exhibit 5 hereto).
24 Powers of Attorney (included in the signature page
of this Registration Statement).

25.1 Statement of Eligibility of The Chase Manhattan
Bank (National Association) under the Trust
Indenture Act of 1939 on Form T-1 relating to the
Senior Indenture.
25.2 Statement of Eligibility of The Bank of New York
under the Trust Indenture Act of 1939 on Form T-1
relating to the Subordinated Indenture.

Exhibit 1.1

Borden, Inc.

Debt Securities

Underwriting Agreement

New York, New York

To the Representatives
named in Schedule I
hereto of the Under-
writers named in
Schedule II hereto

Dear Sirs:

Borden, Inc., a New Jersey corporation (the "Company"), proposes to
sell to the underwriters named in Schedule II hereto (the "Underwriters"), for
whom you are acting as representatives (the "Representatives"), the principal
amount of its securities identified in Schedule I hereto (the "Securities"), to
be issued under the indenture listed in Schedule I hereto (the "Indenture").
The Trustee for the Securities is listed in Schedule I hereto. If the firm or
firms listed in Schedule II hereto include only the firm or firms listed in
Schedule I hereto, then the terms "Underwriters" and "Representatives", as used
herein, shall each be deemed to refer to such firm or firms.

1. Representations and Warranties. The Company represents and
------------------------------
warrants to, and agrees with, each Underwriter that:

(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"), and has filed with the
Securities and Exchange Commission (the "Commission") one or more
registration statements on such Form (the file number or numbers of which
are set forth in Schedule I hereto), which have become effective, for the
registration under the Act of the Securities. Such registration statement
or statements, as amended at the date of this Agreement, meet the
requirements set forth in Rule 415(a)(1)(x) under the Act and comply in all
other material respects with said Rule. The Company proposes to file with
the Commission pursuant to Rule 424 under the Act a supplement to the form
of prospectus included in such registration statement or statements
relating to the Securities and the plan of distribution thereof and has
previously advised you of all further information (financial and other)
with respect to the Company to be set forth therein. Such registration
statement or statements, including the exhibits thereto, as amended at the
date of this Agreement, is hereinafter called

<PAGE>
2

the "Registration Statement"; such prospectus in the form in which it
appears in the Registration Statement is hereinafter called the "Basic
Prospectus"; and such supplemented form of prospectus, in the form in which
it shall be filed with the Commission pursuant to Rule 424 (including the
Basic Prospectus as so supplemented) is hereinafter called the "Final
Prospectus". Any preliminary form of the Final Prospectus which has
heretofore been filed pursuant to Rule 424 is hereinafter called the
"Preliminary Final Prospectus". Any reference herein to the Registration
Statement, the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which
were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the date of this Agreement, or the issue date
of the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be; and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Registration
Statement, the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus shall be deemed to refer to and include any document filed
pursuant to the Exchange Act after the date of this Agreement, or the issue
date of the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be, and deemed to be incorporated therein by
reference.

(b) As of the date hereof, when the Final Prospectus is first filed
pursuant to Rule 424 under the Act, when, prior to the Closing Date (as
hereinafter defined), any amendment to the Registration Statement becomes
effective (including the filing of any document incorporated by reference
in the Registration Statement), when any supplement to the Final Prospectus
is filed with the Commission and at the Closing Date, (i) the Registration
Statement, as amended as of any such time, and the Final Prospectus, as
amended or supplemented as of any such time, and the Indenture will comply
as to form in all material respects with the applicable requirements of the
Act, the Trust Indenture Act of 1939 (the "Trust Indenture Act") and the
Exchange Act and the respective rules thereunder, (ii) the Registration
Statement, as amended as of any such time, will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading and (iii) the Final Prospectus, as amended or supplemented as of
any such time, will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that as to clauses (ii) and (iii) above, the
-------- -------
Company makes no representations or warranties as to (i) that part of the
Registration Statement which shall

<PAGE>
3

constitute a Statement of Eligibility and Qualification (Form T-1) under
the Trust Indenture Act of a Trustee or (ii) the information contained in
or omitted from the Registration Statement or the Final Prospectus or any
amendment thereof or supplement thereto in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of any
Underwriter through the Representatives specifically for use in connection
with the preparation of the Registration Statement and the Final
Prospectus.

2. Purchase and Sale. Subject to the terms and conditions and in
-----------------
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at the purchase price set forth in
Schedule I hereto the principal amount of the Securities set forth opposite such
Underwriter's name in Schedule II hereto, except that, if Schedule I hereto
provides for the sale of the Securities pursuant to delayed delivery
arrangements, the respective principal amounts of the Securities to be purchased
by the Underwriters shall be as set forth in Schedule II hereto less the
respective amounts of Contract Securities (as defined below) determined as
provided below. The Securities to be purchased by the Underwriters are herein
sometimes called the "Underwriters' Securities" and the Securities to be
purchased pursuant to Delayed Delivery Contracts as hereinafter provided are
herein called "Contract Securities".

If so provided in Schedule I hereto, the Underwriters are authorized
to solicit offers to purchase the Securities from the Company pursuant to
delayed delivery contracts ("Delayed Delivery Contracts"), substantially in the
form of Schedule III hereto but with such changes therein as the Company may
authorize or approve. The Underwriters will endeavor to make such arrangements
and, as compensation therefor, the Company will pay to the Representatives, for
the account of the Underwriters, on the Closing Date, the percentage set forth
in Schedule I hereto of the principal amount of the Securities for which Delayed
Delivery Contracts are made. Delayed Delivery Contracts are to be with
institutional investors, including commercial and savings banks, insurance
companies, pension funds, investment companies and educational and charitable
institutions. The Company will enter into Delayed Delivery Contracts in all
cases where sales of Contract Securities arranged by the Underwriters have been
approved by the Company but, except as the Company may otherwise agree, each
such Delayed Delivery Contract must be for not less than the minimum principal
amount set forth in Schedule I hereto and the aggregate principal amount of
Contract Securities may not exceed the maximum aggregate principal amount set
forth in Schedule I hereto. The Underwriters will not have any responsibility
in respect of the validity or performance of Delayed Delivery Contracts. The
principal amount of the Securities to be purchased by each Underwriter as set
forth in

<PAGE>
4

Schedule II hereto shall be reduced by an amount which shall bear the same
proportion to the total principal amount of Contract Securities as the principal
amount of the Securities set forth opposite the name of such Underwriter bears
to the aggregate principal amount set forth in Schedule II hereto, except to the
extent that you determine that such reduction shall be otherwise than in such
proportion and so advise the Company in writing; provided, however, that the
-------- -------
total principal amount of the Securities to be purchased by all Underwriters
shall be the aggregate principal amount set forth in Schedule II hereto less the
aggregate principal amount of Contract Securities.

3. Delivery and Payment. Delivery of and payment for the
--------------------
Underwriters' Securities shall be made at the office, on the date and at the
time specified in Schedule I hereto (or such later date not later than five
business days after such specified date as the Representatives shall designate),
which date and time may be postponed by agreement between the Representatives
and the Company or as provided in Section 8 hereof (such date and time of
delivery and payment for the Underwriters' Securities being herein called the
"Closing Date"). Delivery of the Underwriters' Securities shall be made to the
Representatives for the respective accounts of the several Underwriters against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by certified or official bank
check or checks payable in New York Clearing House (next day) funds.
Certificates for the Underwriters' Securities shall be registered in such names
and in such denominations as the Representatives may request by written or
facsimile communication to the Company not less than three full business days in
advance of the Closing Date.

The Company agrees to have the Underwriters' Securities available for
inspection, checking and packaging by the Representatives in New York, New York,
not later than 1:00 PM on the business day prior to the Closing Date.

4. Agreements. The Company agrees with the several Underwriters
----------
that:

(a) Prior to the termination of the offering of the Securities, the
Company will not file any amendment of the Registration Statement or
supplement (including the Final Prospectus) to the Basic Prospectus unless
the Company has furnished you a copy for your review prior to filing and
will not file any such proposed amendment or supplement to which you
reasonably object. Subject to the foregoing sentence, the Company will
cause the Final Prospectus, properly completed, to be filed with the
Commission pursuant to the applicable paragraph of Rule 424(b) within the
time period prescribed and will provide evidence reasonably satisfactory to
the Representatives of such timely filing. The Company will promptly
advise the Representatives (i) when the Final Prospectus and any supplement
thereto shall

<PAGE>
5

have been filed with the Commission pursuant to Rule 424(b), (ii) when any
amendment to the Registration Statement relating to the Securities shall
have become effective, (iii) of any request by the Commission for any
amendment of the Registration Statement or amendment of or supplement to
the Final Prospectus or for any additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the institution or threatening of any
proceeding for that purpose and (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain as
soon as possible the withdrawal thereof.

(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Final Prospectus as then amended or supplemented would include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to
amend or supplement the Final Prospectus to comply with the Act or the
Exchange Act or the respective rules thereunder, the Company promptly will
prepare and file with the Commission, subject to the first sentence of
paragraph (a) of this Section 4, an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance.

(c) As soon as practicable, the Company will make generally available
to its security holders and to the Representatives an earnings statement or
statements of the Company and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.

(d) The Company will furnish to the Representatives and counsel for
the Underwriters, without charge, copies of the Registration Statement
(including exhibits thereto) and each amendment thereto which shall become
effective on or prior to the Closing Date and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Act, as many
copies of any Preliminary Final Prospectus and the Final Prospectus and any
amendments thereof and supplements thereto as the Representatives may
reasonably request. The Company will pay the expenses of printing or other
production of all documents relating to the offering.

(e) The Company will arrange for the qualification of the Securities
for sale under the laws of such jurisdictions

<PAGE>
6

as the Representatives may designate, will maintain such qualifications in
effect so long as required for the distribution of the Securities and will
arrange for the determination of the legality of the Securities for
purchase by institutional investors.

(f) Until the business day following the Closing Date, the Company
will not, without the consent of the Representatives, offer, sell or
contract to sell, or announce the offering of, any debt securities covered
by the Registration Statement or any other registration statement filed
under the Act.

5. Conditions to the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the Underwriters to purchase the Underwriters' Securities shall
be subject to the accuracy of the representations and warranties on the part of
the Company contained herein as of the date hereof, as of the date of the
effectiveness of any amendment to the Registration Statement filed prior to the
Closing Date (including the filing of any document incorporated by reference
therein) and as of the Closing Date, to the accuracy of the statements of the
Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the following
additional conditions:

(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been instituted or threatened; and
the Final Prospectus and any supplement thereto shall have been filed with
the Commission in the manner and within the time period required by Rule
424.

(b) The Company shall have furnished to the Representatives the
opinion of the General Counsel of the Company, dated the Closing Date, to
the effect that:

(i) each of the Company and its Significant Subsidiaries (as
defined in Rule 405 under the Act) has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the jurisdiction in which it is chartered or organized, with full
corporate power and authority to own its properties and conduct its
business as described in the Final Prospectus, and is duly qualified
to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction which requires such qualification
wherein it owns or leases properties or conducts business, except
where the failure to qualify would not have a material adverse effect
on the Company and its Significant Subsidiaries, taken as a whole;

<PAGE>
7

(ii) the Company's authorized equity capitalization is as set
forth in the Final Prospectus; the Securities conform to the
description thereof contained in the Final Prospectus;

(iii) the Indenture has been duly authorized, executed and
delivered; the Indenture has been duly qualified under the Trust
Indenture Act; and the Indenture constitutes a legal, valid and
binding instrument enforceable against the Company in accordance with
its terms, except as affected by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws relating
to or affecting creditors' rights generally from time to time in
effect and to general principles of equity; and the Securities have
been duly authorized and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to and
paid for by the Underwriters pursuant to this Agreement, in the case
of the Underwriters' Securities, or by the purchasers thereof pursuant
to Delayed Delivery Contracts, in the case of any Contract Securities,
will constitute legal, valid and binding obligations of the Company
entitled to the benefits of the Indenture, except as affected by
applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws relating to or affecting creditors' rights generally from
time to time in effect and to general principles of equity);

(iv) to the best knowledge of such counsel, there is no pending
or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries of a character required to be
disclosed in the Registration Statement which is not adequately
disclosed in the Final Prospectus, and there is no franchise, contract
or other document of a character required to be described in the
Registration Statement or Final Prospectus, or to be filed as an
exhibit to the Registration Statement, which is not described or filed
as required; and the statements included or incorporated in the Final
Prospectus describing any legal proceedings or material contracts or
agreements relating to the Company fairly summarize such matters;

<PAGE>
8

their respective effective or issue dates (other than the financial
statements and other financial and statistical information contained
therein as to which such counsel need express no opinion) complied as
to form in all material respects with the applicable requirements of
the Act and the Exchange Act and the respective rules thereunder; and
such counsel has no reason to believe that the Registration Statement,
or any amendment thereof, at the time it became effective and at the
date of this Agreement, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or
that the Final Prospectus, as amended or supplemented, includes any
untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;

(vi) this Agreement and any Delayed Delivery Contracts have
been duly authorized, executed and delivered by the Company;

(vii) no consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated herein or in any Delayed Delivery Contracts,
except such as have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the
Underwriters and such other approvals (specified in such opinion) as
have been obtained;

(viii) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof or of any Delayed Delivery
Contracts will conflict with, result in a breach of, or constitute a
default under (A) the charter or by-laws of the Company or (B) the
terms of any indenture or other agreement or instrument known to such
counsel and to which the Company or any of its subsidiaries is a party
or bound or (C) any order or regulation known to such counsel to be
applicable to the Company or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company or any of its
subsidiaries, except, in the case of clauses (B) and (C), for any such
conflict, breach or default which would not have, individually or in
the aggregate, have a material adverse effect on the Company and its
Significant Subsidiaries, taken as a whole; and

<PAGE>
9

(ix) no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.

In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of New Jersey or the United States, to the extent deemed proper and
specified in such opinion, upon the opinion of other counsel of good
standing believed to be reliable and who are satisfactory to counsel for
the Underwriters and (B) as to matters of fact, to the extent deemed
proper, on certificates of responsible officers of the Company and public
officials.

(c) The Representatives shall have received from counsel for the
Underwriters, such opinion or opinions, dated the Closing Date, with
respect to the issuance and sale of the Securities, the Indenture, any
Delayed Delivery Contracts, the Registration Statement, the Final
Prospectus and other related matters as the Representatives may reasonably
require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.

(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the Company,
dated the Closing Date, to the effect that the signers of such certificate
have carefully examined the Registration Statement, the Final Prospectus
and this Agreement and that:

(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date;

(ii) no stop order suspending the effectiveness of the
Registration Statement, as amended, has been issued and no proceedings
for that purpose have been instituted or, to the Company's knowledge,
threatened; and

(iii) since the date of the most recent financial statements
included in the Final Prospectus, there has been no material adverse
change in the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, whether or not arising
from transactions in the ordinary course of business, except as set
forth in or contemplated in the Final Prospectus.

<PAGE>
10

(e) The Company shall have furnished to the Representatives a letter
(as used in this paragraph, the "bring-down letter") of Price Waterhouse
LLP, or such other independent accountants acceptable to the
Representatives, addressed to the Underwriters and dated the Closing Date,
(i) confirming that they are independent public accountants with respect to
the Company within the meaning of the Act and are in compliance with the
applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date
of the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Final Prospectus, as of a date not more than
five days prior to the date of the bring-down letter), the conclusions and
findings of such firm with respect to the financial information and other
matters covered by its letter (the "initial letter") delivered to the
Representatives concurrently with the execution of this Agreement and (iii)
confirming in all material respects the conclusions and findings set forth
in the initial letter.

(f) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Final Prospectus, there shall
not have been (i) any change or decrease specified in the letter or letters
referred to in paragraph (e) of this Section 5 or (ii) any change, or any
development involving a prospective change, in or affecting the business or
properties of the Company and its subsidiaries the effect of which, in any
case referred to in clause (i) or (ii) above, is, in the judgment of the
Representatives, so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of the Securities
as contemplated by the Registration Statement and the Final Prospectus.

(g) Subsequent to the execution of this Agreement, there shall not
have been any decrease in the ratings of any of the Company's debt
securities by Moody's Investors Service, Inc. or Standard & Poor's
Corporation.

(h) If the Securities are to be listed on any stock exchange,
authorization therefor has been given, subject to official notice of
issuance and evidence of satisfactory distribution, or the Company has
filed a preliminary listing application and all required supporting
documents with respect to the Securities with such stock exchange and the
Company has no reason to believe that the Securities will not be authorized
for listing, subject to official notice of issuance and evidence of
satisfactory distribution.

(i) Prior to the Closing Date, the Company shall have furnished to
the Representatives such further information,

<PAGE>
11

certificates and documents as the Representatives may reasonably request.

(j) The Company shall have accepted Delayed Delivery Contracts in any
case where sales of Contract Securities arranged by the Underwriters have
been approved by the Company.

If any of the conditions specified in this Section 5 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancellation shall be given to the Company in writing or by telephone or
telegraph confirmed in writing.

6. Reimbursement of Underwriters' Expenses. If the sale of the
---------------------------------------
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 5 hereof is not satisfied,
because of any termination pursuant to Section 9 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.

7. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless each Underwriter and each person who controls any
Underwriter within the meaning of either the Act or the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for the
registration of the Securities as originally filed or in any amendment thereof,
or in the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or

<PAGE>
12

defending any such loss, claim, damage, liability or action; provided, however,
-------- -------
that (i) the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through the
Representatives specifically for use in connection with the preparation thereof,
and (ii) such indemnity with respect to the Basic Prospectus or any Preliminary
Final Prospectus shall not inure to the benefit of any Underwriter (or any
person controlling such Underwriter) from whom the person asserting any such
loss, claim, damage or liability purchased the Securities which are the subject
thereof if such person did not receive a copy of the Final Prospectus (or the
Final Prospectus as amended or supplemented), excluding documents incorporated
therein by reference, at or prior to the confirmation of the sale of such
Securities to such person in any case where such delivery is required by the Act
and the untrue statement or omission of a material fact contained in the Basic
Prospectus or any Preliminary Final Prospectus was corrected in the Final
Prospectus (or the Final Prospectus as amended or supplemented). This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.

(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the Representatives
specifically for use in the preparation of the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have.

(c) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 7. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
--------
however, that if the defendants in any such action
- -------

<PAGE>
13

include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel (in addition to local
counsel), approved by the Representatives in the case of paragraph (a) of this
Section 7, representing the indemnified parties under such paragraph (a) who are
parties to such action), (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; and except that, if clause (i)
or (iii) is applicable, such liability shall be only in respect of the counsel
(in addition to local counsel) referred to in such clause (i) or (iii).

(d) If the indemnification provided for in this Section 7 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 7(a) or 7(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Stock or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and the Underwriters on the
other with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds

<PAGE>
14

from the offering of the Stock purchased under this Agreement (before deducting
expenses) received by the Company, on the one hand, and the total underwriting
discounts and commissions received by the Underwriters with respect to the
shares of the Stock purchased under this Agreement, on the other hand, bear to
the total gross proceeds from the offering of the shares of the Stock under this
Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Underwriters, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 7(d) were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 7(d)
shall be deemed to include, for purposes of this Section 7(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Stock
underwritten by it and distributed to the public was offered to the public
exceeds the amount of any damages which such Underwriter has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(d) are several in proportion to their respective underwriting
obligations and not joint.

8. Default by an Underwriter. If any one or more Underwriters shall
-------------------------
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of the Securities
set forth opposite their names in Schedule II hereto bears to the aggregate
amount of the Securities set forth opposite the names of all the remaining
Underwriters) the Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event that the
-------- -------
aggregate

<PAGE>
15

amount of the Securities which the defaulting Underwriter or Underwriters agreed
but failed to purchase shall exceed 10% of the aggregate amount of the
Securities set forth in Schedule II hereto, the remaining Underwriters shall
have the right to purchase all, but shall not be under any obligation to
purchase any, of the Securities, and if such nondefaulting Underwriters do not
purchase all the Securities, this Agreement will terminate without liability to
any nondefaulting Underwriter or the Company. In the event of a default by any
Underwriter as set forth in this Section 8, the Closing Date shall be postponed
for such period, not exceeding seven days, as the Representatives shall
determine in order that the required changes in the Registration Statement and
the Final Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company and any nondefaulting Underwriter for
damages occasioned by its default hereunder.

9. Termination. This Agreement shall be subject to termination in
-----------
the absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Securities, if prior to such time (i)
trading in the Company's Common Stock shall have been suspended by the
Commission or the New York Stock Exchange or trading in securities generally on
the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange, (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities or
(iii) there shall have occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the judgment of the
Representatives, impracticable to market the Securities.

10. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Section 7 hereof,
and will survive delivery of and payment for the Securities. The provisions of
Sections 6 and 7 hereof shall survive the termination or cancellation of this
Agreement.

11. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telegraphed and confirmed to them, at the address specified in
Schedule I hereto; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at 180 East Broad Street, Columbus, Ohio 43215,
attention of the Chief Financial Officer.

<PAGE>
16

12. Counterparts. This Agreement may be executed in any number of
------------
counterparts, and by each of the parties hereto on separate counterparts, each
of which counterparts, when so executed and delivered, shall be deemed an
original, but all such counterparts taken together shall constitute one and the
same instrument.

13. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7 hereof, and no
other person will have any right or obligation hereunder.

14. Applicable Law. This Agreement will be governed by and construed
--------------
in accordance with the laws of the State of New York, without giving effect to
the conflicts of laws principles thereof.

If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.

Very truly yours,

Borden, Inc.

By: _______________________________
Name:
Title:

The foregoing Agreement is
hereby confirmed and accepted
as of the date specified in
Schedule I hereto.

By: [Representatives]

By: [Lead Manager or Underwriter]

By: ________________________
Name:
Title:

For themselves and the other
several Underwriters, if any,
named in Schedule II to the
foregoing Agreement.

<PAGE>

SCHEDULE I

Underwriting Agreement dated

Registration Statements No.

Representatives:

Indenture, Title, Purchase Price and Description of the Securities:

Indenture:

Title:

Trustee:

Principal amount and currency:

Purchase price and currency (include accrued interest or
amortization, if any):

Sinking fund provisions:

Redemption provisions:

Other provisions:

Closing Date, Time and Location:

Delayed Delivery Arrangements:

Fee:

Minimum principal amount of each contract:

Maximum aggregate principal amount of all contracts:

<PAGE>

SCHEDULE II

Principal Amount
of the Securities
Underwriter to be Purchased
----------- ------------------

Total..................... $___________
===========

<PAGE>

SCHEDULE III

Delayed Delivery Contract

, 19

[Insert name and address
of lead Representative]

Dear Sirs:

The undersigned hereby agrees to purchase from Borden, Inc. (the
"Company"), and the Company agrees to sell to the undersigned, on ________,
19__, (the "Delivery Date"), $_____ principal amount of the Company's
____________________ (the "Securities") offered by the Company's Prospectus
dated ________, 19__, and related Prospectus Supplement dated ________, 19__,
receipt of a copy of which is hereby acknowledged, at a purchase price of __% of
the principal amount thereof, plus [accrued interest] [amortization of original
issue discount], if any, thereon from _______, 19__, to the date of payment and
delivery, and on the further terms and conditions set forth in this contract.

Payment for the Securities to be purchased by the undersigned shall be
made on or before 11:00 A.M., New York City time, on the Delivery Date to or
upon the order of the Company in New York Clearing House (next day) funds, at
your office or at such other place as shall be agreed between the Company and
the undersigned, upon delivery to the undersigned of the Securities in
definitive fully registered form and in such authorized denominations and
registered in such names as the undersigned may request by written or
telegraphic communication addressed to the Company not less than five full
business days prior to the Delivery Date. If no request is received, the
Securities will be registered in the name of the undersigned and issued in a
denomination equal to the aggregate principal amount of the Securities to be
purchased by the undersigned on the Delivery Date.

The obligation of the undersigned to take delivery of and make payment
for the Securities on the Delivery Date, and the obligation of the Company to
sell and deliver the Securities on the Delivery Date, shall be subject to the
conditions (and neither party shall incur any liability by reason of the failure
thereof) that (1) the purchase of the Securities to be made by the undersigned,
which purchase the undersigned represents is not prohibited on the date hereof,
shall not on the Delivery Date be prohibited under the laws of the jurisdiction
to which the undersigned is subject, and (2) the Company, on or before the
Delivery Date, shall have sold to certain underwriters (the

<PAGE>
"Underwriters") such principal amount of the Securities as is to be sold to them
pursuant to the Underwriting Agreement referred to in the Prospectus and
Prospectus Supplement mentioned above. Promptly after completion of such sale
to the Underwriters, the Company will mail or deliver to the undersigned at its
address set forth below notice to such effect, accompanied by a copy of the
opinion of counsel for the Company delivered to the Underwriters in connection
therewith. The obligation of the undersigned to take delivery of and make
payment for the Securities, and the obligation of the Company to cause the
Securities to be sold and delivered, shall not be affected by the failure of any
purchaser to take delivery of and make payment for the Securities pursuant to
other contracts similar to this contract.

This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.

It is understood that acceptance of this contract and other similar
contracts is in the Company's sole discretion and, without limiting the
foregoing, need not be on a first come, first served basis. If this contract is
acceptable to the Company, it is required that the Company sign the form of
acceptance below and mail or deliver one of the counterparts hereof to the
undersigned at its address set forth below. This will become a binding contract
between the Company and the undersigned, as of the date first above written,
when such counterpart is so mailed or delivered.

This agreement shall be governed by and construed in accordance with
the laws of the State of New York.

Very truly yours,

__________________________________
(Name of Purchaser)

By________________________________
(Signature and Title of Officer)

__________________________________
(Address)

Accepted:

Borden, Inc.

By________________________
(Authorized Signature)

III - 2

Exhibit 1.2

Borden, Inc.

Preferred Stock
[If Depositary Shares are used, add the following--each share of which is to be
represented
by ______ Depositary Shares]

Underwriting Agreement

New York, New York

To the Representatives
named in Schedule I
hereto of the Under-
writers named in
Schedule II hereto

Dear Sirs:

Borden, Inc., a New Jersey corporation (the "Company"), proposes to
sell to the underwriters named in Schedule II hereto (the "Underwriters"), for
whom you are acting as representatives (the "Representatives"), _____ shares of
_____ Preferred Stock, $_____ stated value per share (the "Preferred Stock"), of
the Company [If Depositary Shares are used, add the following--, each share of
which is to be represented by _____ depositary shares (each a "Depositary Share"
and, collectively, the "Depositary Shares") pursuant to the Deposit Agreement,
dated as of ________, __, 1995, among the Company, ____________ and the holders
from time to time of receipts, each representing a Depositary Share (a
"Depositary Receipt")]. If the firm or firms listed in Schedule II hereto
include only the firm or firms listed in Schedule I hereto, then the terms
"Underwriters" and "Representatives", as used herein, shall each be deemed to
refer to such firm or firms.

1. Representations and Warranties. The Company represents and
------------------------------
warrants to, and agrees with, each Underwriter that:

<PAGE>
2

Rule. The Company proposes to file with the Commission pursuant to Rule
424 under the Act a supplement to the form of prospectus included in such
registration statement or statements relating to the [If no Depositary
Shares are used, add the following--Preferred Stock][If Depositary Shares
are used, add the following--Depositary Shares] and the plan of
distribution thereof and has previously advised you of all further
information (financial and other) with respect to the Company to be set
forth therein. Such registration statement or statements, including the
exhibits thereto, as amended at the date of this Agreement, is hereinafter
called the "Registration Statement"; such prospectus in the form in which
it appears in the Registration Statement is hereinafter called the "Basic
Prospectus"; and such supplemented form of prospectus, in the form in which
it shall be filed with the Commission pursuant to Rule 424 (including the
Basic Prospectus as so supplemented) is hereinafter called the "Final
Prospectus". Any preliminary form of the Final Prospectus which has
heretofore been filed pursuant to Rule 424 is hereinafter called the
"Preliminary Final Prospectus". Any reference herein to the Registration
Statement, the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which
were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the date of this Agreement, or the issue date
of the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be; and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Registration
Statement, the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus shall be deemed to refer to and include any document filed
pursuant to the Exchange Act after the date of this Agreement, or the issue
date of the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be, and deemed to be incorporated therein by
reference.

<PAGE>
3

an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and (iii) the Final Prospectus, as amended or supplemented
as of any such time, will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that as to clauses (ii) and (iii)
-------- -------
above, the Company makes no representations or warranties as to the
information contained in or omitted from the Registration Statement or the
Final Prospectus or any amendment thereof or supplement thereto in reliance
upon and in conformity with information furnished in writing to the Company
by or on behalf of any Underwriter through the Representatives specifically
for use in connection with the preparation of the Registration Statement
and the Final Prospectus.

2. Purchase and Sale. Subject to the terms and conditions and in
-----------------
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at the purchase price set forth in
Schedule I hereto the amount of Preferred Stock set forth opposite such
Underwriter's name in Schedule II hereto, except that, if Schedule I hereto
provides for the sale of Preferred Stock pursuant to delayed delivery
arrangements, the respective amounts of Preferred Stock to be purchased by the
Underwriters shall be as set forth in Schedule II hereto less the respective
amounts of Contract Securities (as defined below) determined as provided below.
Preferred Stock to be purchased by the Underwriters is herein sometimes called
the "Underwriters' Securities" and Preferred Stock to be purchased pursuant to
Delayed Delivery Contracts as hereinafter provided are herein called "Contract
Securities".

If so provided in Schedule I hereto, the Underwriters are authorized
to solicit offers to purchase Preferred Stock from the Company pursuant to
delayed delivery contracts ("Delayed Delivery Contracts"), substantially in the
form of Schedule III hereto but with such changes therein as the Company may
authorize or approve. The Underwriters will endeavor to make such arrangements
and, as compensation therefor, the Company will pay to the Representatives, for
the account of the Underwriters, on the Closing Date, the percentage set forth
in Schedule I hereto of the amount of Preferred Stock for which Delayed Delivery
Contracts are made. Delayed Delivery Contracts are to be with institutional
investors, including commercial and savings banks, insurance companies, pension
funds, investment companies and educational and charitable institutions. The
Company will enter into Delayed Delivery Contracts in all cases where sales of
Contract Securities arranged by the Underwriters have been approved by the
Company but, except as the Company may otherwise agree, each such Delayed
Delivery Contract must be for not less

<PAGE>
4

than the minimum amount set forth in Schedule I hereto and the aggregate amount
of Contract Securities may not exceed the maximum aggregate amount set forth in
Schedule I hereto. The Underwriters will not have any responsibility in respect
of the validity or performance of Delayed Delivery Contracts. The amount of
Preferred Stock to be purchased by each Underwriter as set forth in Schedule II
hereto shall be reduced by an amount which shall bear the same proportion to the
total amount of Contract Securities as the amount of Preferred Stock set forth
opposite the name of such Underwriter bears to the aggregate amount set forth in
Schedule II hereto, except to the extent that you determine that such reduction
shall be otherwise than in such proportion and so advise the Company in writing;
provided, however, that the total amount of Preferred Stock to be purchased by
- -------- -------
all Underwriters shall be the aggregate amount set forth in Schedule II hereto
less the aggregate amount of Contract Securities.

3. Delivery and Payment. Delivery of and payment for the Preferred
--------------------
Stock shall be made at the office, on the date and at the time specified in
Schedule I hereto (or such later date not later than five business days after
such specified date as the Representatives shall designate), which date and time
may be postponed by agreement between the Representatives and the Company or as
provided in Section 8 hereof (such date and time of delivery and payment for the
Preferred Stock being herein called the "Closing Date"). Delivery of the
Preferred Stock shall be made to the Representatives for the respective accounts
of the several Underwriters against payment by the several Underwriters through
the Representatives of the purchase price thereof to or upon the order of the
Company by certified or official bank check or checks payable in New York
Clearing House (next day) funds. [If Depositary Shares are used, add the
following--Pursuant to the Deposit Agreement, the Representatives, on behalf of
the Underwriters, will deposit the shares of Preferred Stock represented by such
certificates with the Depositary in exchange for the Depositary Receipts, which
the Depositary will issue in definitive form, representing the Depositary
Shares.] Certificates for the Preferred Stock [If Depositary Shares are used,
add the following--and the Depositary Receipts] shall be registered in such
names and in such denominations as the Representatives may request by written or
facsimile communication to the Company [If Depositary Shares are used, add the
following--and the Depositary] not less than three full business days in advance
of the Closing Date.

The Company agrees to have the Preferred Stock available for
inspection, checking and packaging by the Representatives in New York, New York,
not later than 1:00 PM on the business day prior to the Closing Date.

4. Agreements. The Company agrees with the several Underwriters
----------
that:

<PAGE>
5

(a) Prior to the termination of the offering of the [If no Depositary
Shares are used, add the following--Preferred Stock][If Depositary Shares
are used, add the following--Depositary Shares], the Company will not file
any amendment of the Registration Statement or supplement (including the
Final Prospectus) to the Basic Prospectus unless the Company has furnished
you a copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object. Subject
to the foregoing sentence, the Company will cause the Final Prospectus,
properly completed, to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period prescribed and
will provide evidence reasonably satisfactory to the Representatives of
such timely filing. The Company will promptly advise the Representatives
(i) when the Final Prospectus and any supplement thereto shall have been
filed with the Commission pursuant to Rule 424(b), (ii) when any amendment
to the Registration Statement relating to the [If no Depositary Shares are
used, add the following--Preferred Stock][If Depositary Shares are used,
add the following--Depositary Shares] shall have become effective, (iii) of
any request by the Commission for any amendment of the Registration
Statement or amendment of or supplement to the Final Prospectus or for any
additional information, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (v) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the [If no Depositary Shares are used,
add the following--Preferred Stock][If Depositary Shares are used, add the
following--Depositary Shares] for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. The Company
will use its best efforts to prevent the issuance of any such stop order
and, if issued, to obtain as soon as possible the withdrawal thereof.

(b) If, at any time when a prospectus relating to the [If no
Depositary Shares are used, add the following--Preferred Stock][If
Depositary Shares are used, add the following--Depositary Shares] is
required to be delivered under the Act, any event occurs as a result of
which the Final Prospectus as then amended or supplemented would include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to
amend or supplement the Final Prospectus to comply with the Act or the
Exchange Act or the respective rules thereunder, the Company promptly will
prepare and file with the Commission, subject to the first sentence of
paragraph (a) of this Section 4, an amendment or supplement which will

<PAGE>
6

correct such statement or omission or an amendment which will effect such
compliance.

(e) The Company will arrange for the qualification of the [If no
Depositary Shares are used, add the following--Preferred Stock][If
Depositary Shares are used, add the following--Depositary Shares] for sale
under the laws of such jurisdictions as the Representatives may designate,
will maintain such qualifications in effect so long as required for the
distribution of the [If no Depositary Shares are used, add the following--
Preferred Stock][If Depositary Shares are used, add the following--
Depositary Shares] and will arrange for the determination of the legality
of the [If no Depositary Shares are used, add the following--Preferred
Stock][If Depositary Shares are used, add the following--Depositary Shares]
for purchase by institutional investors.

(f) Until the business day following the Closing Date, the Company
will not, without the consent of the Representatives, offer, sell or
contract to sell, or announce the offering of, any preferred stock covered
by the Registration Statement or any other registration statement filed
under the Act.

5. Conditions to the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the Underwriters to purchase the Preferred Stock shall be subject
to the accuracy of the representations and warranties on the part of the Company
contained herein as of the date hereof, as of the date of the effectiveness of
any amendment to the Registration Statement filed prior to the Closing Date
(including the filing of any document incorporated by reference therein) and as
of the Closing Date, to the accuracy of the statements of the Company made in
any certificates pursuant to

<PAGE>
7

the provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:

(b) The Company shall have furnished to the Representatives the
opinion of the General Counsel of the Company, dated the Closing Date, to
the effect that:

(i) each of the Company and its Significant Subsidiaries (as
defined in Rule 405 under the Act) has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of New Jersey, with full corporate power and authority to
own its properties and conduct its business as described in the Final
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns or
leases properties or conducts business, except where the failure to
qualify would not have a material adverse effect on the Company and
its Significant Subsidiaries, taken as a whole;

(ii) the Company's authorized equity capitalization is as set
forth in the Final Prospectus; the Preferred Stock [If Depositary
Shares are used, add the following--, the Depositary Shares], the
Deposit Agreement and the Depositary Receipts conform to the
descriptions thereof contained in the Final Prospectus; and the
Preferred Stock is not subject to preemptive or similar rights arising
by operation of law;

(iii) [If Depositary Shares are used, add the following--the
Deposit Agreement has been duly authorized, executed and delivered by
the Company and, assuming the due authorization, execution and
delivery by the Depositary, constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as affected by applicable
bankruptcy, reorganization, insolvency, moratorium or other similar
laws relating to or affecting creditors' rights generally from time to
time in effect and to general principals of equity;] the Preferred
Stock has been duly authorized by the Company and, when issued and
delivered to and paid for by the Underwriters in accordance with this
Agreement, in the case of the Underwriters' Securities, or by the

<PAGE>
8

purchasers thereof in accordance with Delayed Delivery Contracts, in
the case of Contract Securities, will be validly issued, fully paid
and nonassessable [If Depositary Shares are used, add the following--;
the Depositary Shares representing the Preferred Stock have been duly
authorized by the Company; and assuming the due execution by the
Depositary of the Deposit Agreement and the execution by the
Depositary and, if required by the Deposit Agreement, the Registrar
for the Depositary Shares of the Depositary Receipts in accordance
with the terms of the Deposit Agreement and upon the deposit by or on
behalf of the Underwriters of the Preferred Stock with the Depositary
pursuant to the Depositary Agreement, the Depositary Shares will
represent legal and valid interests in the Preferred Stock, and the
Depositary Receipts will constitute valid evidence of such interests
in the Preferred Stock and will be entitled to the benefits of the
Deposit Agreement;]

(v) the Registration Statement and any amendments thereto have
become effective under the Act; to the best knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement, as amended, has been issued, no proceedings for that
purpose have been instituted or threatened, and the Registration
Statement, the Final Prospectus and each amendment thereof or
supplement thereto as of their respective effective or issue dates
(other than the financial statements and other financial and
statistical information contained therein as to which such counsel
need express no opinion) complied as to form in all material respects
with the applicable requirements of the Act and the Exchange Act and
the respective rules thereunder; and such counsel has no reason to
believe that the Registration Statement, or any amendment thereof, at
the time it became effective

<PAGE>
9

and at the date of this Agreement, contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Final Prospectus, as amended or supplemented,
includes any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;

(vi) this Agreement and any Delayed Delivery Contracts have
been duly authorized, executed and delivered by the Company;

(vii) no consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated herein [If Depositary Shares are used, add
the following--, in the Deposit Agreement] or in any Delayed Delivery
Contracts, except such as have been obtained under the Act and such as
may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Preferred Stock
[If Depositary Shares are used, add the following--and the Depositary
Shares, respectively] by the Underwriters and such other approvals
(specified in such opinion) as have been obtained;

(viii) neither the issue and sale of the Preferred Stock nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof [If Depositary Shares are used,
add the following--, or of the Deposit Agreement] or of any Delayed
Delivery Contracts will conflict with, result in a breach of, or
constitute a default under (A) the charter or by-laws of the Company
or (B) the terms of any indenture or other agreement or instrument
known to such counsel and to which the Company or any of its
subsidiaries is a party or bound or (C) any order or regulation known
to such counsel to be applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company
or any of its subsidiaries, except, in the case of clauses (B) and
(C), for any such conflict, breach or default which would not have,
individually or in the aggregate, a material adverse affect on the
Company and its Significant Subsidiaries, taken as a whole; and

(ix) no holders of securities of the Company have rights to the
registration of the Preferred Stock [If Depositary Shares are used,
add the following--or

<PAGE>
10

the Depositary Shares] under the Registration Statement.

(c) The Representatives shall have received from counsel for the
Underwriters, such opinion or opinions, dated the Closing Date, with
respect to the issuance and sale of the Preferred Stock [If Depositary
Shares are used, add the following--and the Depositary Shares,
respectively], any Delayed Delivery Contracts, [If Depositary Shares are
used, add the following--the Deposit Agreement,] the Registration
Statement, the Final Prospectus and other related matters as the
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.

<PAGE>
11

business, except as set forth in or contemplated in the Final
Prospectus.

(f) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Final Prospectus, there shall
not have been (i) any change or decrease specified in the letter or letters
referred to in paragraph (e) of this Section 5 or (ii) any change, or any
development involving a prospective change, in or affecting the business or
properties of the Company and its subsidiaries the effect of which, in any
case referred to in clause (i) or (ii) above, is, in the judgment of the
Representatives, so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of the [If no
Depositary Shares are used, add the following--Preferred Stock][If
Depositary Shares are used, add the following--Depositary Shares] as
contemplated by the Registration Statement and the Final Prospectus.

(g) If the [If no Depositary Shares are used, add the following--
Preferred Stock is][If Depositary Shares are used, add the following--
Depositary Shares are] to be listed on any stock exchange, authorization
therefor has been given, subject to official notice of issuance and
evidence of satisfactory distribution, or the Company has filed a
preliminary listing application and all required supporting documents with
respect to the [If no Depositary Shares are used, add the following--
Preferred Stock][If Depositary Shares are used, add the following--
Depositary Shares] with such stock exchange and the Company has no reason
to believe that the [If no Depositary Shares are used, add the following--
Preferred Stock][If Depositary Shares are used,

<PAGE>
12

add the following--Depositary Shares] will not be authorized for listing,
subject to official notice of issuance and evidence of satisfactory
distribution.

(h) Prior to the Closing Date, the Company shall have furnished to
the Representatives such further information, certificates and documents as
the Representatives may reasonably request.

(i) The Company shall have accepted Delayed Delivery Contracts in any
case where sales of Contract Securities arranged by the Underwriters have
been approved by the Company.

6. Reimbursement of Underwriters' Expenses. If the sale of the
---------------------------------------
Preferred Stock provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth in Section 5 hereof is not
satisfied, because of any termination pursuant to Section 9 hereof or because of
any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Preferred Stock [If
Depositary Shares are used, add the following--and the Depositary Shares,
respectively].

<PAGE>
13

Prospectus or the Final Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that (i) the Company will
-------- -------
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through the Representatives specifically for use in
connection with the preparation thereof, and (ii) such indemnity with respect to
the Basic Prospectus or any Preliminary Final Prospectus shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter) from
whom the person asserting any such loss, claim, damage or liability purchased
the [If no Depositary Shares are used, add the following--Preferred Stock][If
Depositary Shares are used, add the following--Depositary Shares] which are the
subject thereof if such person did not receive a copy of the Final Prospectus
(or the Final Prospectus as amended or supplemented), excluding documents
incorporated therein by reference, at or prior to the confirmation of the sale
of such [If no Depositary Shares are used, add the following--Preferred
Stock][If Depositary Shares are used, add the following--Depositary Shares] to
such person in any case where such delivery is required by the Act and the
untrue statement or omission of a material fact contained in the Basic
Prospectus or any Preliminary Final Prospectus was corrected in the Final
Prospectus (or the Final Prospectus as amended or supplemented). This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.

<PAGE>
14

notify the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 7. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
--------
however, that if the defendants in any such action include both the indemnified
- -------
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel), approved by the
Representatives in the case of paragraph (a) of this Section 7, representing the
indemnified parties under such paragraph (a) who are parties to such action),
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall be only in respect of the counsel (in addition to local
counsel) referred to in such clause (i) or (iii).

<PAGE>
15

Company on the one hand and the Underwriters on the other from the offering of
the Stock or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other with respect to such offering shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Stock purchased under this Agreement (before deducting expenses)
received by the Company, on the one hand, and the total underwriting discounts
and commissions received by the Underwriters with respect to the shares of the
Stock purchased under this Agreement, on the other hand, bear to the total gross
proceeds from the offering of the shares of the Stock under this Agreement, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 7(d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 7(d) shall be
deemed to include, for purposes of this Section 7(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Stock
underwritten by it and distributed to the public was offered to the public
exceeds the amount of any damages which such Underwriter has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(d) are several in proportion to their respective underwriting
obligations and not joint.

<PAGE>
16

8. Default by an Underwriter. If any one or more Underwriters shall
-------------------------
fail to purchase and pay for any of the Preferred Stock agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Preferred Stock
set forth opposite their names in Schedule II hereto bears to the aggregate
amount of Preferred Stock set forth opposite the names of all the remaining
Underwriters) the Preferred Stock which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
-------- -------
that the aggregate amount of Preferred Stock which the defaulting Underwriter or
Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Preferred Stock set forth in Schedule II hereto, the remaining
Underwriters shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Preferred Stock, and if such nondefaulting
Underwriters do not purchase all the Preferred Stock, this Agreement will
terminate without liability to any nondefaulting Underwriter or the Company. In
the event of a default by any Underwriter as set forth in this Section 8, the
Closing Date shall be postponed for such period, not exceeding seven days, as
the Representatives shall determine in order that the required changes in the
Registration Statement and the Final Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company and any
nondefaulting Underwriter for damages occasioned by its default hereunder.

9. Termination. This Agreement shall be subject to termination in
-----------
the absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Preferred Stock, if prior to such time
(i) trading in the Company's Common Stock shall have been suspended by the
Commission or the New York Stock Exchange or trading in securities generally on
the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange, (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities or
(iii) there shall have occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the judgment of the
Representatives, impracticable to market the [If no Depositary Shares are used,
add the following--Preferred Stock][If Depositary Shares are used, add the
following--Depositary Shares].

<PAGE>
17

remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Section 7 hereof, and will survive delivery
of and payment for the Preferred Stock. The provisions of Sections 6 and 7
hereof shall survive the termination or cancellation of this Agreement.

<PAGE>
18

Very truly yours,

Borden, Inc.

By: _______________________________
Name:
Title:

The foregoing Agreement is
hereby confirmed and accepted
as of the date specified in
Schedule I hereto.

By: [Representatives]

By: [Lead Manager or Underwriter]

By: ________________________
Name:
Title:

For themselves and the other
several Underwriters, if any,
named in Schedule II to the
foregoing Agreement.

<PAGE>

SCHEDULE I

Underwriting Agreement dated

Registration Statements No.

Representatives:

Title, Purchase Price and Description of Securities:

Title:

Amount:

Purchase price and currency:

Redemption provisions:

Other provisions:

Closing Date, Time and Location:

Delayed Delivery Arrangements:

Fee:

Minimum amount of each contract:

Maximum aggregate amount of all contracts:

<PAGE>

SCHEDULE II

Amount
of Preferred Stock
Underwriter to be Purchased
----------- --------------------

Total ................................. $___________
===========

<PAGE>

SCHEDULE III

Delayed Delivery Contract

, 19

[Insert name and address
of lead Representative]

Dear Sirs:

The undersigned hereby agrees to purchase from Borden, Inc. (the
"Company"), and the Company agrees to sell to the undersigned, on ________,
19__, (the "Delivery Date"), _______ shares of the Company's
____________________ (the "Preferred Stock") [If Depositary Shares are used, add
the following--, which are to be deposited with ___________________ (the
"Depositary") pursuant to a Deposit Agreement, dated as of __________ __, 1995,
between the Company and the Depositary (the "Deposit Agreement"), in exchange
for depositary shares, each representing a one-______ interest in a share of
Preferred Stock (the "Depositary Shares")]. The [If no Depositary Shares are
used, add the following--Preferred Stock is][If Depositary Shares are used, add
the following--Depositary Shares are] offered by the Company's Prospectus dated
________, 19__, and related Prospectus Supplement dated ________, 19__, receipt
of a copy of which is hereby acknowledged, at a purchase price of $_________ per
share of Preferred Stock, and on the further terms and conditions set forth in
this contract.

Payment for the Preferred Stock to be purchased by the undersigned
shall be made on or before 11:00 A.M., New York City time, on the Delivery Date
to or upon the order of the Company in New York Clearing House (next day) funds,
at your office or at such other place as shall be agreed between the Company and
the undersigned.

[If no Depositary Shares are used, add the following--On the Delivery
Date, the Company will deliver to the undersigned the Preferred Stock in
definitive fully registered form and in such authorized amounts and registered
in such names as the undersigned may request by written or telegraphic
communication addressed to the Company not less than five full business days
prior to the Delivery Date. If no request is received, the Preferred Stock will
be registered in the name of the undersigned and issued in a single
certificate.]

[If Depositary Shares are used, add the following--On the Delivery
Date, the Company will deliver to the undersigned a certificate representing
shares of Preferred Stock in definitive form registered in the name of the
undersigned. Pursuant to the

<PAGE>
Deposit Agreement, the undersigned will deposit the shares of Preferred Stock
represented by such certificate with the Depositary in exchange for the
Depositary Shares, which the Depositary will issue in definitive form registered
in such name or names as the undersigned may request by written or telegraphic
communication addressed to the Company and the Depositary not less than five
full business days prior to the Delivery Date. If no request is received, the
Depositary Shares will be registered in the name of the undersigned and issued
in a single certificate.]

The obligation of the undersigned to take delivery of and make payment
for the Preferred Stock on the Delivery Date, and the obligation of the Company
to sell and deliver the Preferred Stock on the Delivery Date, shall be subject
to the conditions (and neither party shall incur any liability by reason of the
failure thereof) that (1) the purchase of the Preferred Stock to be made by the
undersigned, which purchase the undersigned represents is not prohibited on the
date hereof, shall not on the Delivery Date be prohibited under the laws of the
jurisdiction to which the undersigned is subject, and (2) the Company, on or
before the Delivery Date, shall have sold to certain underwriters (the
"Underwriters") such amount of the Preferred Stock as is to be sold to them
pursuant to the Underwriting Agreement referred to in the Prospectus and
Prospectus Supplement mentioned above. Promptly after completion of such sale
to the Underwriters, the Company will mail or deliver to the undersigned at its
address set forth below notice to such effect, accompanied by a copy of the
opinion of counsel for the Company delivered to the Underwriters in connection
therewith. The obligation of the undersigned to take delivery of and make
payment for the Preferred Stock, and the obligation of the Company to cause the
Preferred Stock to be sold and delivered, shall not be affected by the failure
of any purchaser to take delivery of and make payment for the Preferred Stock
pursuant to other contracts similar to this contract.

III-2

<PAGE>
This agreement shall be governed by and construed in accordance with
the laws of the State of New York.

Very truly yours,

__________________________________
(Name of Purchaser)

By________________________________
(Signature and Title of Officer)

__________________________________
(Address)

Accepted:

Borden, Inc.

By________________________
(Authorized Signature)

III-3

Exhibit 2

COMPOSITE CONFORMED COPY

____________________________________________________________

AGREEMENT AND PLAN OF MERGER

AMONG

WHITEHALL ASSOCIATES, L.P.,

BORDEN ACQUISITION CORP.

AND

BORDEN, INC.

DATED AS OF

SEPTEMBER 23, 1994*

____________________________________________________________

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

* As amended by the amendments thereto dated as of November 15, 1994,
December 6, 1994 and January 4, 1995.

<PAGE>

AGREEMENT

TABLE OF CONTENTS
-----------------
Page
----

ARTICLE 1

THE EXCHANGE OFFER . . . . . . . . . . . . . 3

Section 1.1 The Exchange Offer . . . . . . . . . . . . . . . . . . . 3
Section 1.2 Company Action . . . . . . . . . . . . . . . . . . . . . 7
Section 1.3 Board of Directors; Section 14(f) . . . . . . . . . . . . 10

ARTICLE 2

PLAN OF MERGER . . . . . . . . . . . . . . 12

Section 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.3 Effective Time . . . . . . . . . . . . . . . . . . . . . 13
Section 2.4 Effects of the Merger . . . . . . . . . . . . . . . . . . 14
Section 2.5 Restatement of Surviving Corporation's
Certificate of Incorporation and By-Laws . . . . . . . 14
Section 2.6 Directors . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.7 Officers . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.8 Preparation of Proxy Statement;
Shareholder Meeting . . . . . . . . . . . . . . . . . . 15
Section 2.9 Merger Without Meeting of Shareholders . . . . . . . . . 18

ARTICLE 3

EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS . . . . . . . . . 18

Section 3.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . 18
Section 3.2 Company Stock Options and Related Matters . . . . . . . . 20
Section 3.3 Exchange of Certificates . . . . . . . . . . . . . . . . 22

ARTICLE 4

REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 28

Section 4.1 Representations and Warranties of the
Company . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.2 Representations and Warranties of
Purchaser and Parent . . . . . . . . . . . . . . . . . 52
Section 4.3 Representations and Warranties of Parent . . . . . . . . 65

ARTICLE 5

COVENANTS . . . . . . . . . . . . . . . 67

Section 5.1 Conduct of Business of the Company . . . . . . . . . . . 67
Section 5.2 Conduct of Business of Purchaser . . . . . . . . . . . . 74
Section 5.3 No Solicitation . . . . . . . . . . . . . . . . . . . . . 74
Section 5.4 Access to Information . . . . . . . . . . . . . . . . . . 76

-i-

<PAGE>

Page
----

Section 5.5 Notification . . . . . . . . . . . . . . . . . . . . . . 78
Section 5.6 Best Efforts . . . . . . . . . . . . . . . . . . . . . . 78
Section 5.7 Certain Filings, Consents and
Arrangements . . . . . . . . . . . . . . . . . . . . . 79
Section 5.8 Public Announcements . . . . . . . . . . . . . . . . . . 80
Section 5.9 Antitrust Filings and Divestitures . . . . . . . . . . . 80
Section 5.10 Employee Benefits . . . . . . . . . . . . . . . . . . . 81
Section 5.11 Indemnification and Insurance . . . . . . . . . . . . . 84
Section 5.12 Redemption of Series B Preferred Stock . . . . . . . . . 86
Section 5.13 Certain Agreements . . . . . . . . . . . . . . . . . . . 86
Section 5.14 Redemption of Rights. . . . . . . . . . . . . . . . . . 87
Section 5.15 Affiliates and Certain Stockholders. . . . . . . . . . . 88
Section 5.16 Proxy Solicitation For Shareholders'
Meeting . . . . . . . . . . . . . . . . . . . . . . . 89

ARTICLE 6

CONDITIONS TO CONSUMMATION OF THE MERGER . . . . . . . 89

Section 6.1 Conditions to Each Party's Obligations to
Effect the Merger . . . . . . . . . . . . . . . . . . . 89
Section 6.2 Conditions to Obligation of the Company . . . . . . . . . 90
Section 6.3 Conditions to Obligations of Purchaser and
Parent to Effect the Merger . . . . . . . . . . . . . . 91

ARTICLE 7

TERMINATION; AMENDMENT; WAIVER . . . . . . . . . . 92

Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . 92
Section 7.2 Effect of Termination . . . . . . . . . . . . . . . . . . 97
Section 7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 7.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . 97

ARTICLE 8

MISCELLANEOUS . . . . . . . . . . . . . . 98

Section 8.1 Non-Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . 98
Section 8.2 Entire Agreement; Assignment . . . . . . . . . . . . . . 98
Section 8.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . 99
Section 8.4 Definitions . . . . . . . . . . . . . . . . . . . . . . . 103
Section 8.5 Gains and Transfer Taxes . . . . . . . . . . . . . . . . 104
Section 8.6 Interpretation . . . . . . . . . . . . . . . . . . . . . 104
Section 8.7 Parties in Interest . . . . . . . . . . . . . . . . . . . 104
Section 8.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 8.9 Non-Recourse . . . . . . . . . . . . . . . . . . . . . . 106
Section 8.10 Governing Law . . . . . . . . . . . . . . . . . . . . . 107
Section 8.11 Enforcement . . . . . . . . . . . . . . . . . . . . . . 107
Section 8.12 Descriptive Headings . . . . . . . . . . . . . . . . . . 108
Section 8.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . 108
Section 8.14 Severability . . . . . . . . . . . . . . . . . . . . . . 108

-ii-

<PAGE>

Page
----

ANNEX A -- Conditions to the Offer

EXHIBIT A -- Restated Certificate of Incorporation of
Surviving Corporation

EXHIBIT B -- Affiliate Letter

-iii-

<PAGE>

AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 23, 1994*
AMONG BORDEN ACQUISITION CORP.,
A NEW JERSEY CORPORATION ("PURCHASER"),
WHITEHALL ASSOCIATES, L.P., A DELAWARE LIMITED
PARTNERSHIP ("PARENT"), AND BORDEN, INC.,
A NEW JERSEY CORPORATION (THE "COMPANY").

WHEREAS, Parent and the Company have entered into a letter agreement,

dated as of September 11, 1994, setting forth, among other things, the intention

of Parent and the Company to enter into this agreement and to consummate the

transactions contemplated hereby;

WHEREAS the respective Boards of Directors of Purchaser and the

Company have approved the acquisition of the Company by Purchaser;

WHEREAS, in furtherance thereof, it is proposed that Purchaser will

commence an exchange offer (the "Offer") to exchange shares of common stock, par

value $.01 per share ("Holdings Common Stock"), of RJR Nabisco Holdings Corp., a

Delaware Corporation ("Holdings"), owned by Parent for all of the issued and

outstanding shares of common stock, par value $.625 per share (the "Common

Stock"), of the Company (the "Shares") in accordance with the terms provided

herein;

WHEREAS, the Board of Directors of the Company has approved the making

of the Offer and recommended its acceptance by the Company's stockholders;

WHEREAS, also in furtherance of such acquisition, the respective

Boards of Directors of Purchaser and the Company have

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

* As amended by the amendments thereto dated as of November 15, 1994,
December 6, 1994 and January 4, 1995.

<PAGE>
2

determined that the merger of Purchaser with and into the Company (the

"Merger"), on the terms and subject to the conditions set forth in this

Agreement, would be fair to and in the best interests of their respective

shareholders, and such Boards of Directors have approved such Merger;

WHEREAS, Parent and Purchaser are unwilling to enter into this

Agreement unless the Company, contemporaneously with the execution and delivery

of this Agreement, grants to Purchaser a right (the "Conditional Purchase

Right") to purchase up to 28,138,000 shares of Common Stock (or such other

number of Shares as is equal to 19.9% of the Company's outstanding Shares on the

date hereof) (the "Option Shares"), in exchange for the number of whole shares

of Holdings Common Stock as set forth in the Conditional Purchase/Stock Option

Agreement, dated as of the date hereof (the "Conditional Purchase/Stock Option

Agreement"), among Purchaser, Parent and the Company; and in order to induce

Parent and Purchaser to enter into this Agreement, the Company has agreed to

grant Purchaser the Conditional Purchase Right and to execute and deliver the

Conditional Purchase/Stock Option Agreement;

WHEREAS, it is presently contemplated that the right of Purchaser to

purchase shares of Common Stock pursuant to the Offer and the right of Purchaser

to exercise the Conditional Purchase Right granted in the Conditional

Purchase/Stock Option Agreement will be assigned to Parent (or a direct or

indirect wholly owned subsidiary of Parent);

<PAGE>
3

WHEREAS, Purchaser, Parent and the Company desire to make certain

representations, warranties, covenants and agreements in connection with the

Offer and the Merger and also to prescribe various conditions to the Offer and

the Merger; and

NOW, THEREFORE, in consideration of the foregoing and the respective

representations, warranties, covenants and agreements set forth herein, and

intending to be legally bound hereby, Parent, Purchaser and the Company hereby

agree as follows:

ARTICLE 1

THE EXCHANGE OFFER

Section 1.1 The Exchange Offer. (a) Provided that (i) this
------------------

Agreement shall not have been terminated in accordance with Section 7.1 and (ii)

none of the events set forth in Annex A hereto shall have occurred or be

existing, Parent shall cause Purchaser to commence, and Purchaser shall

commence, the Offer as soon as reasonably practicable following the

effectiveness of a registration statement on Form S-4 relating to the Offer

(together with all amendments and supplements thereto, the "Form S-4") under the

Securities Act of 1933, as amended (the "Securities Act"). Each Share accepted

by Purchaser in accordance with the Offer shall be converted into the right to

receive from Purchaser that number of fully paid and nonassessable shares of

Holdings Common Stock equal to the Exchange Ratio. The "Exchange Ratio" shall

mean the quotient (rounded to the nearest 1/100,000) obtained by dividing (i)

$14.25 by (ii) the average of the average of the high and low

<PAGE>
4

sales prices of Holdings Common Stock as reported on the New York Stock Exchange

Composite Tape on each of the ten full consecutive trading days ending

immediately prior to the ten business day period ending on the date of

expiration of the Offer (the "Valuation Period"); provided that the Exchange

Ratio shall not be less than 1.78125 or greater than 2.375; and provided,

further, that, unless the Offer is extended past 12:00 Midnight, New York City

time, on Friday, January 20, 1995, the Exchange Ratio shall be 2.29146. For

purposes of the preceding sentence, a full trading day is a day on which the

NYSE is open for trading and does not close prior to its scheduled closing time

for such day).The obligations of Purchaser to consummate the Offer and to accept

for exchange the Shares tendered pursuant to the Offer shall be subject only to

the conditions set forth in Annex A hereto and, without the written consent of

the Company, Purchaser shall not decrease the number of Shares being sought in

the Offer, change the form of consideration payable in the Offer (other than by

adding consideration), add additional conditions to the Offer or make any other

change in the terms or conditions of the Offer which is adverse to the holders

of Shares, it being agreed that a waiver by Purchaser of any condition in whole

or in part at any time and from time to time in its discretion shall not be

deemed to be materially adverse to any holder of Shares; provided that if

Purchaser shall have exercised the Conditional Purchase Right in whole or in

part prior to the termination of the Offer, Purchaser shall not be permitted to

waive the Minimum Condition (as defined herein). Purchaser agrees that upon the

<PAGE>
5

request of the Company (and without limiting the number of times that Purchaser

may extend the Offer, or the total number of days for which the Offer may be

extended), Purchaser shall extend the Offer, one or more times, for an aggregate

of not more than twenty business days.

The Offer shall be made by means of an offering circular/prospectus

and related letter of transmittal (the "Letter of Transmittal") (collectively,

the "Offering Circular"). Purchaser expressly reserves the right to increase

the number of shares of Holdings Common Stock to be exchanged for each share of

Common Stock in the Offer. Upon the terms and subject to the conditions of the

Offer, Purchaser will accept (and Parent will cause Purchaser to accept) for

exchange any and all Shares which are validly tendered and not properly

withdrawn on or prior to the expiration of the Offer. Purchaser may, at any

time, transfer or assign to Parent or to one or more corporations directly or

indirectly wholly owned by Parent the right to purchase all or any portion of

the Shares tendered pursuant to the Offer, but any such transfer or assignment

shall not relieve Purchaser of its obligations under the Offer or materially

prejudice the rights of tendering shareholders to receive shares of Holdings

Common Stock for Shares validly tendered and not properly withdrawn and accepted

for exchange. In the event that Purchaser assigns the right to purchase all or

any portion of the Shares tendered pursuant to the Offer or an affiliate of

Purchaser purchases Shares under the Conditional Purchase/Stock Option

Agreement, then for purposes of any provision of this

<PAGE>
6

Agreement which is predicated upon Purchaser holding or owning a specified

number or percentage of Shares, the number of Shares held or owned by Purchaser

shall be deemed to include all Shares purchased by any affiliate or affiliates

pursuant to the transactions contemplated hereby or by the Conditional

Purchase/Stock Option Agreement.

(b) Promptly after the date hereof, in accordance with Rule 14d-2(e)

under the Securities Exchange Act of 1934, as amended (together with the rules

and regulations thereunder, the "Exchange Act"), Parent, pursuant to its

Registration Rights Agreement with Holdings dated July 15, 1990 (the "1990

Registration Rights Agreement") and, if applicable, its Registration Rights

Agreement with Holdings dated February 9, 1989 (the "1989 Registration Rights

Agreement"), shall request that Holdings promptly prepare and file with the

Securities and Exchange Commission (the "SEC") the Form S-4 covering the

registration of the Holdings Common Stock to be exchanged in the Offer and that

will be issued in the Merger, as well as all other information and exhibits

required by law with respect to the registration and offering of the Holdings

Common Stock (the "Offering Materials"). Not later than the date of

commencement of the Offer (which shall be the date that the definitive Offering

Circular is first published, sent or given to shareholders of the Company),

Purchaser shall file with the SEC a Tender Offer Statement on Schedule 14D-1

(together with all amendments and supplements thereto, the "Schedule 14D-1")

with respect to the Offer. The Schedule 14D-1 shall contain (included

<PAGE>
7

as an exhibit) or shall incorporate by reference the Offering Circular (or

portions thereof) and forms of the summary advertisement, as well as all other

information and exhibits required by law. Parent and Purchaser each agrees

promptly to correct any information in the Offering Materials and the Schedule

14D-1 (together the "Offer Documents") that shall be or have become false or

misleading in any material respect and Parent and Purchaser each further agrees

to request Holdings to take all steps necessary to cause the Offer Documents as

so corrected to be filed with the SEC and disseminated to holders of Shares, in

each case as and to the extent required by applicable federal securities laws.

The Company and its counsel shall be given an opportunity to review each of the

Offer Documents prior to its being filed with the SEC. Parent and Purchaser

agree to provide the Company and its counsel in writing with any written

comments Parent and Purchaser or their respective counsel may receive from the

SEC with respect to the Offer Documents promptly after the receipt of such

comments.

Section 1.2 Company Action. (a) The Company hereby approves of and
--------------

consents to the Offer and represents and warrants that (x) its Board of

Directors, at a meeting duly called and held, has (i) determined that this

Agreement and the Conditional Purchase/Stock Option Agreement and the

transactions contemplated hereby, including the Offer and the Merger, and

thereby, taken together, are fair to the shareholders of the Company, and has

resolved to recommend that holders of Shares (A) accept the Offer, (B) tender

their Shares thereunder to Purchaser and, if

<PAGE>
8

required by applicable law, and (C) approve and adopt this Agreement and Plan of

Merger (collectively, the "Recommendations") and (ii) approved this Agreement

and the Conditional Purchase/Stock Option Agreement and the transactions

contemplated hereby and thereby, and that such approval constitutes approval of

this Agreement and the Conditional Purchase/Stock Option Agreement and the

transactions contemplated hereby and thereby for purposes of Sections 14A:10A-4

and 14A:10A-5 of the New Jersey Business Corporation Act (the "NJBCA") and

Article VIII of the Company's Restated Certificate of Incorporation (the

"Charter") and renders inapplicable the "Change in Control" provisions of the 8-

3/8% Sinking Fund Debentures due 2016, the "Change in Control" provisions of the

Medium Term Notes, Series A, the "Change in Control" provisions of the 9-7/8%

Notes due 1997, Paragraph 4.1 of the letter dated November 20, 1987 from the

Company to Wachovia Bank and Trust Company, N.A. with respect to a $20 million

line of credit for Borden Chemical & Plastics Operating Limited Partnership

("BCPO") and Section 6.5 of the ESOP Loan Agreement dated as of February 6, 1989

between the Company and First National Bank of Boston and (y) Lazard Freres and

Co. and CS First Boston Corporation have delivered to the Board of Directors of

the Company their respective written opinions to the effect that the

consideration to be received by holders of Shares pursuant to each of the Offer

and the Merger is fair to such holders from a financial point of view. The

Company hereby consents to the inclusion in the Offer Documents of the

Recommendations, provided that they have not

<PAGE>
9

theretofore been withdrawn as permitted pursuant to Section 1.2(b) or 5.3

herein.

(b) The Company hereby agrees to file with the SEC contemporaneously

with the commencement of the Offer, and distribute contemporaneously with the

Offering Circular to its shareholders, a Tender Offer

Solicitation/Recommendation Statement on Schedule 14D-9 (together with all

amendments and supplements thereto, the "Schedule 14D-9") containing the

Recommendations. The Company further agrees, subject to clause (iii) of the

proviso to the first sentence in Section 5.3, not to change the Recommendations

unless (i) the second proviso in the definition of Exchange Ratio is not

applicable and (ii) the average of the average of the high and the low sales

prices of the Holdings Common Stock as reported on the New York Stock Exchange

Composite Tape for the Valuation Period is less than the price per share that

would yield an Exchange Ratio of 2.375 or less without giving effect to the

first proviso in the definition of Exchange Ratio. The Company will not have

any right to terminate this Agreement as a result of any such change in the

Recommendations and notwithstanding any such change in the Recommendations, the

Company will continue to be bound by its representations and warranties and

covenants contained herein (except representations and warranties and covenants

with respect to the Recommendations), including, without limitation, those with

respect to the Rights Agreement (as hereinafter defined), antitrust approvals

and divestitures (assuming that following receipt of such approvals Purchaser

purchases at least 28,138,000

<PAGE>
10

Shares), Article VIII of the Charter and Sections 14A:10A-4 and 14A:10A-5 of the

NJBCA. The Company, Parent and Purchaser each agrees promptly to correct any

information provided by it for use in the Schedule 14D-9 that shall have become

false or misleading in any material respect, and the Company further agrees to

take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed

with the SEC and disseminated to holders of Shares, in each case as and to the

extent required by applicable federal securities laws. To the knowledge of the

Company after due inquiry, all the directors of the Company intend to tender

their Shares pursuant to the Offer or to vote their Shares in favor of approval

and adoption of the Merger and this Agreement at the shareholders' meeting

referred to in Section 2.8. Parent and Purchaser and their counsel shall be

given an opportunity to review the Schedule 14D-9 prior to its being filed with

the SEC.

Company shall promptly furnish Purchaser with mailing labels, security position

listings and any available listing or computer file containing the names and

addresses of the record holders of shares of Common Stock as of a recent date

and shall furnish Purchaser with such information and assistance (including,

without limitation, updated lists of shareholders, mailing labels and lists of

securities positions) as Purchaser or its agents may reasonably request in

communicating the Offer to the record and beneficial holders of Shares.

Section 1.3 Board of Directors; Section 14(f). (a) If requested by
---------------------------------

Parent, the Company shall, following the

<PAGE>
11

acceptance for exchange of the Shares to be exchanged pursuant to the Offer

and/or the purchase of the Option Shares in accordance with the Conditional

Purchase/Stock Option Agreement, and from time to time thereafter, take all

actions necessary to cause the Applicable Percentage (as defined below) of

directors (and of members of each committee of the Board of Directors) (rounded

in each case to the next highest director or member) of the Company selected by

Parent to consist of persons designated or elected by Parent (whether, at the

election of the Company, by means of increasing the size of the board of

directors or seeking the resignation of directors and causing Parent's designees

to be elected). The "Applicable Percentage" means the ratio of (i) the total

voting power of all Shares accepted for exchange pursuant to the Offer and/or

purchased in accordance with the Conditional Purchase/Stock Option Agreement to

(ii) the total voting power of the outstanding voting securities of the Company,

rounded to the nearest whole number and expressed as a percentage; provided that

if Purchaser has acquired at least 28,138,000 Shares the Applicable Percentage

shall not be less than 33-1/3%.

(b) The Company's obligations to cause designees of Parent to be

elected or appointed to the Board of Directors of the Company shall be subject

to Section 14(f) of the Exchange Act, and Rule 14f-1 promulgated thereunder.

The Company shall promptly take all actions required pursuant to Section 14(f)

and Rule 14f-1 in order to fulfill its obligations under this Section 1.3, and

shall include in the Schedule 14D-9 such information with respect to the Company

and its officers and directors as is

<PAGE>
12

required under Section 14(f) and Rule 14f-1. Parent and Purchaser will supply

to the Company any information with respect to any of them and their nominees,

officers, directors and affiliates required by Section 14(f) and Rule 14f-1.

pursuant to this Section and prior to the Effective Time (as hereinafter

defined), any amendment by the Company or termination by the Company of this

Agreement or the Conditional Purchase/Stock Option Agreement, extension by the

Company for the performance or waiver of the obligations, conditions or other

acts of Parent or Purchaser or waiver by the Company of its rights hereunder or

thereunder, will require the concurrence of a majority of directors of the

Company then in office who are not affiliated with Parent or Purchaser or

selected by Parent for appointment or election to the board of directors of the

Company in accordance with Section 1.3(a) hereof (the "Independent Directors").

ARTICLE 2

PLAN OF MERGER

Section 2.1 The Merger. At the Effective Time (as defined herein)
----------

and on the terms and subject to the conditions set forth in this Agreement, and

in accordance with the NJBCA, Purchaser shall be merged with and into the

Company. Upon the Effective Time, the separate existence of Purchaser shall

cease, and the Company shall continue as the surviving corporation (the

"Surviving Corporation") and shall continue under the name "Borden, Inc." The

manner and basis of converting the shares of

<PAGE>
13

Purchaser and the Company into shares of the Surviving Corporation or into or of

any other corporation or, in whole or in part, into cash shall be as provided

for in Article 3 of this Agreement.

Section 2.2 Closing. Unless this Agreement shall have been
-------

terminated and the transactions herein contemplated shall have been abandoned

pursuant to Section 7.1 and subject to the satisfaction or waiver of the

conditions set forth in Article 6, the closing of the Merger (the "Closing")

will take place at 10:00 a.m. on the second Business Day after satisfaction of

the conditions set forth in Section 6.1 (or as soon as practicable thereafter

following satisfaction or waiver of the conditions set forth in Sections 6.2 and

6.3) (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 2.3 Effective Time. As promptly as practicable following the
--------------

satisfaction or waiver of the conditions to the Merger set forth in Article 6,

the parties shall file a certificate of merger or other appropriate documents

(in any such case, the "Certificate of Merger"), executed in accordance with the

relevant provisions of the NJBCA, and shall make all other filings or recordings

required under the NJBCA in connection with the Merger. 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 New Jersey, or at such later time as is

permissible in accordance with the NJBCA and as

<PAGE>
14

Purchaser and the Company shall agree should be specified in the Certificate of

Merger (the time the Merger becomes effective being the "Effective Time").

Section 2.4 Effects of the Merger. The Merger shall have the effects
---------------------

set forth in Section 14A:10-6 of the NJBCA (or any successor provision).

Without limiting the generality of the foregoing, and subject thereto, at the

Effective Time, all the properties, rights, privileges, powers, immunities,

purposes and franchises of the Company and Purchaser shall vest in the Surviving

Corporation, and all debts, liabilities, obligations and duties of the Company

and Purchaser shall become debts, liabilities, obligations and duties of the

Surviving Corporation.

Section 2.5 Restatement of Surviving Corporation's Certificate of
-----------------------------------------------------

Incorporation and By-Laws. (a) The Charter, as in effect immediately prior to
- -------------------------

the Effective Time, shall be restated so as to read in its entirety in the form

set forth as Exhibit A hereto, and, as so restated, until thereafter and further

amended or restated as provided therein and under the NJBCA, it shall be the

restated certificate of incorporation of the Surviving Corporation.

(b) The By-laws of Purchaser as in effect at the Effective Time shall

be the By-laws of the Surviving Corporation until thereafter changed or amended

as provided therein or by applicable law.

Section 2.6 Directors. The directors of Purchaser at the Effective
---------

Time shall be the directors of the Surviving Corporation, each to hold office in

accordance with the Restated

<PAGE>
15

Certificate of Incorporation and By-laws of the Surviving Corporation and until

the earlier of his or her resignation or removal or until his or her successor

is duly elected and qualified, as the case may be.

Section 2.7 Officers. The officers of the Company at the Effective
--------

Time shall be the officers of the Surviving Corporation, each to hold office in

accordance with the Certificate of Incorporation and By-laws of the Surviving

Corporation and until the earlier of his or her resignation or removal or until

his or her respective successor is duly appointed and qualified, as the case may

be.

Section 2.8 Preparation of Proxy Statement; Shareholder Meeting. (a)
---------------------------------------------------

If approval of the Company's shareholders is required by applicable law in order

to consummate the Merger, provided that the Minimum Condition is satisfied

without being reduced or waived, following the acceptance for exchange of Shares

pursuant to the Offer, the Company, acting through its Board of Directors,

shall, in accordance with applicable law, as soon as practicable following the

expiration or termination of the Offer: (a) duly call, give notice of, convene

and, subject to Section 5.16, hold a special meeting of its shareholders (the

"Shareholders' Meeting") for the purpose of considering and taking action upon

this Agreement and the Merger and prepare and file with the SEC a proxy

statement (such proxy statement as amended or supplemented from time to time,

the "Proxy Statement"), and (b) use its best efforts (i) to obtain and furnish

the information required to be included by it in the

<PAGE>
16

Proxy Statement and, after consultation with Parent and Purchaser, respond

promptly to any comments made by the SEC with respect to the Proxy Statement and

any preliminary version thereof and cause the Proxy Statement to be mailed to

its stockholders at the earliest practicable time following the expiration or

termination of the Offer and (ii) to obtain the necessary approval by its

shareholders of this Agreement and the transactions contemplated hereby,

including the Merger.

(b) Subject to the Company's right, pursuant to Section 1.2(b)

hereof, to withdraw or modify the Recommendations, the Company shall include in

the Proxy Statement the recommendation of its Board of Directors that holders of

Shares vote in favor of the approval and adoption of this Agreement and the

transactions contemplated hereby, including the Merger.

Company agrees that (i) its obligations pursuant to Section 2.8(a) hereof

(including, without limitation, the obligation to submit the Agreement and the

Merger to a vote of its shareholders) shall not be affected by the withdrawal or

modification of the Recommendations (but there shall be no obligation of the

Board of Directors of the Company to continue the Recommendation that

shareholders approve and adopt the Agreement and the Merger) and (ii) (A) if the

Merger is not approved by the shareholders of the Company following the

acceptance for exchange of Shares pursuant to the Offer or the purchase of

Shares pursuant to the Conditional Purchase/Stock Option Agreement or (B) if the

Merger is not submitted to the

<PAGE>
17

shareholders of the Company but Purchaser has acquired at least 28,138,000

Shares, the approval of the transactions contemplated by this Agreement,

including the Offer and the Merger, by the Board of Directors of the Company

shall constitute, solely for the purposes of Sections 14A:10A-4 and 14A:10A-5 of

the NJBCA and, to the extent that there are no Continuing Directors (as defined

in the Charter), Article VIII of the Charter, an approval of any future

"Business Combination" (as defined in Section 14A:10A-3 of the NJBCA and Article

VIII of the Charter) between the Company and Parent or any affiliate thereof,

provided that (x) such "Business Combination" is approved by a majority of the

Independent Directors and (y) if appropriate, the Company shall have received

the opinion of an investment banking firm selected by the Independent Directors

that such "Business Combination" is fair to the Company's shareholders from a

financial point of view (an "Excepted Future Transaction").

(d) At the Shareholders' Meeting, each of Parent and Purchaser will

vote, or cause to be voted, all Shares acquired in the Offer or otherwise

beneficially owned by it or any of its respective subsidiaries in favor of the

approval and adoption of this Agreement and the transactions contemplated

hereby, including the Merger.

(e) The information provided and to be provided by Purchaser and the

Company, respectively, for use in the Proxy Statement shall, at the date it is

first mailed to shareholders of the Company and on the date of the Shareholders'

Meeting, be true and correct in all material respects and shall not omit to

<PAGE>
18

state any material fact required to be stated therein or necessary in order to

make such information not misleading, and the Company and Purchaser each agree

to correct any information provided by it for use in the Proxy Statement which

shall have become false or misleading.

Section 2.9 Merger Without Meeting of Shareholders. Notwithstanding
--------------------------------------

the foregoing, in the event that Parent and Purchaser, or any other direct or

indirect subsidiary of Parent shall acquire at least 90% of the outstanding

Shares, the parties hereto agree to take all necessary or appropriate action to

cause the Merger to become effective as soon as practicable after the expiration

of the Offer without a meeting of shareholders of the Company, in accordance

with Section 14A:10-5.1 of the NJBCA.

ARTICLE 3

EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS

Section 3.1 Effect on Capital Stock. At the Effective Time, by
-----------------------

virtue of the Merger and without any action on the part of the holder of any

shares of Common Stock or any shares of capital stock of Purchaser:

(a) Common Stock of Purchaser. Each share of common stock of
-------------------------

Purchaser issued and outstanding immediately prior to the Effective Time shall

be converted into a number of shares of common stock, par value $.01 per share,

of the Surviving Corporation equal to one one-thousandth of the total number of

outstanding shares of Common Stock immediately prior to the

<PAGE>
19

Merger, which shall be all of the issued and outstanding capital stock of the

Surviving Corporation.

(b) Cancellation of Treasury Stock and Purchaser-Owned or
-----------------------------------------------------

Parent-Owned Common Stock. Each share of Common Stock that is owned by the
- -------------------------

Company or by any subsidiary of the Company and each share of Common Stock that

is owned by Parent, KKR Partners II, L.P., Purchaser or any other subsidiary of

Parent shall automatically be cancelled and retired and shall cease to exist,

and no cash, Holdings Common Stock or other consideration shall be delivered or

deliverable in exchange therefor.

each issued and outstanding share of Common Stock shall be converted into the

right to receive that number of fully paid and nonassessable shares of Holdings

Common Stock equal to the Final Exchange Ratio (as defined herein). The

aggregate amount of Holdings Common Stock which a holder of Common Stock is

entitled to receive with respect to each such share of Common Stock shall be

hereinafter referred to as the "Merger Consideration". The "Final Exchange

Ratio" shall equal that number of fully paid and nonassessable shares of

Holdings Common Stock that was delivered by the Purchaser with respect to each

share of Common Stock that was validly tendered and not properly withdrawn and

accepted for exchange pursuant to the terms of the Offer.

(d) Cancellation and Retirement of Common Stock. All shares of
-------------------------------------------

Common Stock (other than shares referred to in Section 3.1(b)) issued and

outstanding immediately prior to the Effective

<PAGE>
20

Time shall no longer be outstanding and shall automatically be cancelled and

retired and shall cease to exist, and each holder of a certificate representing

any such shares of Common Stock shall cease to have any rights with respect

thereto, except the right to receive, upon surrender of such certificate to the

Exchange Agent (as defined herein) and acceptance thereof in accordance with

Section 3.3, the Merger Consideration (and/or any cash in lieu of fractional

shares of Holdings Common Stock to be issued or paid in consideration therefor).

Section 3.2 Company Stock Options and Related Matters. (a) As of
-----------------------------------------

the Effective Time, each holder of a then outstanding option to purchase Common

Stock (an "Option") shall receive with respect to each share subject to such

Option an amount in cash equal to the excess, if any, of (i) the product of the

Final Exchange Ratio and the average of the average of the high and the low

sales prices of Holdings Common Stock as reported on each of the ten consecutive

trading days immediately preceding the Effective Time over (ii) the per share

exercise price of such Option, and the Company shall cause the surrender and

cancellation of each Option (and any related stock appreciation right) with

respect to which a payment by the Company is made. With respect to Options not

so surrendered and cancelled, such Options shall, if not previously terminated

or expired in accordance with their terms, terminate upon the grantee leaving

the Company except upon such grantee's death, Disability or retirement at or

after age sixty-five (or such earlier age as the Purchaser may expressly agree)

and except that, to the extent

<PAGE>
21

provided under any such existing Option, if the grantee is terminated by the

Company without Cause within two years following a Change in Control of the

Company, the grantee shall have a period of ninety days following such

termination within which to exercise such Option. The terms Disability, Change

in Control and Cause for this purpose shall have the meanings set forth in the

plans pursuant to which the Options were granted. No employee who has been

previously granted an Option or stock appreciation right shall be approved for

retirement for purposes of any plan or agreement under which such Option or

right has been granted without the express consent of the Purchaser. The

Purchaser and the Company agree to continue to discuss the manner in which

outstanding stock options shall be treated after the Merger.

(b) In addition to the foregoing, the Company shall take all steps

necessary so that no participant in any employee plans, programs or arrangements

of the Company shall have any right to acquire or receive any Common Stock or

other equity interest in the Company on or after the Effective Time other than

in connection with the exercise of Options outstanding on the date hereof which

have not been cancelled pursuant to Section 3.2(a). On or prior to the

Effective Time, the Company shall amend each of its (and cause the amendment of

each of its affiliate's) qualified defined contribution plans to eliminate any

investment in Common Stock after the Effective Time.

cause an amendment of each of its employee plans,

<PAGE>
22

programs and arrangements pursuant to which an employee may be entitled to

receive Common Stock (each a "Stock Plan") to provide that any employee entitled

to receive Common Stock in respect of previously deferred bonuses or

compensation shall receive instead cash equal to the product of (i) the Final

Exchange Ratio multiplied by the average of the average of the high and the low

closing sales prices of Holdings Common Stock as reported on each of the ten

consecutive trading days immediately preceding the Effective Time and (ii) the

number of shares of Common Stock so deferred, plus interest equal to the rate

otherwise credited on deferred amounts under the applicable plans or if no such

rate is credited the prime rate established by Chemical Bank from time to time

on such deferred bonuses or compensation from the Effective Time to the date of

distribution.

(d) Subject to the terms of any Company Plan, any Merger

Consideration paid in respect of restricted shares of Common Stock held by any

employee or former employee of the Company or any of its affiliates shall remain

restricted and subject to the same terms and conditions imposed on such

restricted shares.

Section 3.3 Exchange of Certificates. (a) Exchange Agent. At or
------------------------ --------------

prior to the Effective Time, Purchaser shall deposit with or for the account of

a bank or trust company designated by Parent, which shall be reasonably

satisfactory to the Company (the "Exchange Agent"), for the benefit of the

holders of shares of Common Stock, for exchange in accordance with this Article

3, the Merger Consideration in respect of each

<PAGE>
23

Share outstanding immediately prior to the Effective Time, except the shares of

Common Stock referred to in Section 3.1 (b) (the "Aggregate Merger

Consideration").

(b) Exchange Procedures. As soon as reasonably practicable after the
-------------------

Effective Time, Purchaser will instruct the Exchange Agent to mail to each

holder of record immediately prior to the Effective Time (other than holders

referred to in Section 3.1(b)) of a certificate or certificates which

represented shares of Company Stock (the "Certificates") (i) a letter of

transmittal (which shall specify that delivery shall be effected, and risk of

loss and title to the Certificates shall pass, only upon proper delivery of the

Certificates to the Exchange Agent and shall be in such form and have such other

provisions as Parent or Purchaser may reasonably specify) (the "Merger Letter of

Transmittal") and (ii) instructions for use in effecting the surrender of the

Certificates in exchange for Holdings Common Stock. Upon surrender to the

Exchange Agent of Certificates, together with such Merger Letter of Transmittal

duly executed and any other required documents, and acceptance thereof by the

Exchange Agent, each holder of a Certificate shall be entitled to a certificate

or certificates representing the number of full shares of Holdings Common Stock

into which the aggregate number of shares of Common Stock previously represented

by such Certificate surrendered shall have been converted 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

<PAGE>
24

exchange thereof in accordance with normal exchange practices. After the

Effective Time, there shall be no further transfer on the books and records of

the Company or its transfer agent of Certificates and if such Certificates are

presented to the Company for transfer, they shall be cancelled against delivery

of certificates for Holdings Common Stock as herein provided. If any

certificate for such Holdings Common Stock is to be issued in a name other than

that in which the Certificate surrendered for exchange is 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 Purchaser or

its transfer agent any transfer or other taxes required by reason of the

issuance of certificates for such Holdings Common Stock in a name other than

that of the registered holder of the Certificate surrendered, or establish to

the satisfaction of Purchaser or its transfer agent that such tax has been paid

or is not applicable. Until surrendered as contemplated by this Section 3.3(b),

each Certificate (other than certificates referred to in Section 3.1(b) shall be

deemed at any time after the Effective Time to represent only the right to

receive upon such surrender the Merger Consideration as contemplated by Section

3.1.

fractional shares of Holdings Common Stock shall be issued upon the surrender

for exchange of Certificates, and such fractional share interests will not

entitle the owner

<PAGE>
25

thereof to vote or to any rights of a stockholder of Holdings; and (ii)

notwithstanding any other provision of this Agreement, each holder of shares of

Common Stock exchanged pursuant to the Merger who would otherwise have been

entitled to receive a fraction of a share of Holdings Common Stock (after taking

into account all shares of Common 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 of third parties other

than the Exchange Agent, the Company, the Purchaser or affiliates of any of the

foregoing), on behalf of all such holders, of the shares (the "Excess Shares")

of Holdings Common Stock representing all such fractions. Such sale shall be

made as soon as practicable after the Effective Time.

(d) Distributions with Respect to Unexchanged Shares. No dividends
------------------------------------------------

or other distributions with respect to Holdings Common Stock with a record date

after the Effective Time shall be paid to the holder of any unsurrendered

Certificate for shares of Common Stock with respect to the shares of Holdings

Common Stock represented thereby, and no cash payment in lieu of fractional

shares shall be paid to any such holder pursuant to Section 3.3(c), until the

surrender of such Certificate in accordance with this Article 3. Subject to the

effect of applicable laws, following surrender of any such Certificate, there

shall be delivered to the holder of such Certificate a certificate representing

whole shares of Holdings Common Stock issued in

<PAGE>
26

exchange therefor and, without interest, (i) at the time of such surrender or as

promptly after the sale of the Excess Shares as practicable, the amount of any

cash payable in lieu of a fractional share of Holdings Common Stock to which

such holder is entitled pursuant to Section 3.3(c) and the amount of dividends

or other distributions with a record date after the Effective Time theretofore

paid with respect to such whole shares of Holdings Common Stock and (ii) at the

appropriate payment date, the amount of dividends or other distributions payable

with respect to such whole shares of Holdings Common Stock with a record date

after the Effective Time but prior to such surrender and a payment date

subsequent to such surrender. In no event shall the persons entitled to receive

such dividends or other distributions be entitled to receive interest on such

dividends or other distributions.

(e) No Further Ownership Rights in Common Stock. All shares of
-------------------------------------------

Holdings Common Stock delivered and cash paid upon the surrender for exchange of

Certificates which represented shares of Common Stock in accordance with the

terms of this Article 3 (including any cash paid pursuant to Section 3.3(d))

shall be deemed to have been delivered (and paid) in full satisfaction of all

rights pertaining to the shares of Common Stock theretofore represented by such

Certificates, subject, however, to the Surviving Corporation's obligation, with

respect to shares of Common Stock, to pay any dividends or make any other

distributions with a record date prior to the Effective Time which may have been

declared or made by the Company on such

<PAGE>
27

shares of Common Stock prior to the date of this Agreement and which remain

unpaid at the Effective Time.

(f) Termination of Exchange Fund. Any portion of the Merger
----------------------------

Consideration deposited with the Exchange Agent pursuant to this Article 3 (the

"Exchange Fund") which remains undistributed to the holders of the certificates

representing shares of Common Stock for nine months after the Effective Time

shall be delivered to Parent, upon demand, and any holders of shares of Common

Stock who have not theretofore complied with this Article 3 shall thereafter

look only to Parent and only as general creditors thereof for payment of their

claim for Holdings Common Stock (or any security or consideration into which

Holdings Common Stock is converted) and any cash in lieu of fractional shares of

Holdings Common Stock and shall look only to Parent and only as general

creditors thereof for payment of any dividends or distributions with respect to

Holdings Common Stock to which such holders may be entitled.

(g) No Liability. None of Parent, Purchaser, Holdings, the Company
------------

or the Exchange Agent shall be liable to any person in respect of any shares of

Holdings Common 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

which represented shares of Common Stock shall not have been surrendered prior

to five years after the Effective Time (or immediately prior to such earlier

date on which any shares of Holdings Common Stock, any cash in lieu of

fractional

<PAGE>
28

shares of Holdings Common Stock or any dividends or distributions with respect

to Holdings Common Stock in respect of such Certificate would otherwise escheat

to or become the property of any Governmental Entity (as defined herein)), any

such shares, cash, dividends or distributions in respect of such certificate

shall, to the extent permitted by applicable law, become the property of the

Parent, 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 Parent, on a daily basis.

Any interest and other income resulting from such investments shall be paid to

Parent.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

Section 4.1 Representations and Warranties of the Company. The
---------------------------------------------

Company represents and warrants to Parent and Purchaser as follows:

(a) Organization, Standing and Corporate Power. Each of the Company
------------------------------------------

and each of its Significant Subsidiaries (as defined herein) is duly

organized, validly existing and in good standing under the laws of the

jurisdiction in which it is incorporated and has the requisite corporate or

partnership power and authority to carry on its business as now being

conducted, except for failures which, in the aggregate, would not have a

Material Adverse Effect (as defined herein) with respect to the Company.

Each of the

<PAGE>
29

Company and each of its Significant Subsidiaries is duly qualified or

licensed to do business and is in good standing as a foreign corporation in

each jurisdiction in which the nature of its business or the ownership or

leasing of its properties makes such qualification or licensing necessary,

other than in such jurisdictions where the failure to be so qualified or

licensed (individually or in the aggregate) is not reasonably likely to

have a Material Adverse Effect with respect to the Company. Complete and

correct copies of the Charter and By-laws of the Company are included

within the SEC Documents (as defined herein).

(b) Subsidiaries. All the outstanding shares of capital stock of
------------

each of the significant subsidiaries (as defined in Rule 1-02 of Regulation

S-X of the SEC) of the Company, (the "Significant Subsidiaries"; which term

shall include T.M.I. Associates, L.P. ("TMI")) which is a corporation have

been validly issued and are fully paid and nonassessable and all

outstanding shares of capital stock of each Significant Subsidiary owned

(of record and beneficially) by the Company, by another Significant

Subsidiary of the Company or by the Company and another such Significant

Subsidiary are owned, free and clear of all pledges, claims, options,

rights of first refusal, liens, charges, encumbrances and security

interests of any kind or nature whatsoever (collectively, "Liens"), except

for such rights of first refusal, claims, options, charges and encumbrances

as would not in the aggregate have a Material

<PAGE>
30

Adverse Effect with respect to the Company. Except as set forth in Section

4.1(b) of the disclosure schedule delivered to Parent by the Company at the

time of execution of this Agreement (the "Disclosure Schedule"), all

ownership interests of each Significant Subsidiary which is not a

corporation and which is held (of record and beneficially) by the Company,

by another Significant Subsidiary of the Company or by the Company and

another such Significant Subsidiary have been validly issued and are owned,

free and clear of all Liens, except for such rights of first refusal,

claims, options, charges and encumbrances as would not in the aggregate

have a Material Adverse Effect with respect to the Company.

consists of (i) 480,000,000 shares of Common Stock and (ii) 10,000,000

shares of preferred stock, without par value ("Preferred Stock"). As of

the date hereof, there are (i) 141,515,502 shares of Common Stock issued

and outstanding (including the shares of Common Stock held by the trust

created under the Supplemental Benefit Trust Agreement dated December 9,

1993); (ii) 53,465,136 shares of Common Stock held in the treasury of the

Company; (iii) 7,357,473 shares of Common Stock issuable upon exercise of

outstanding Options (of which 1,408,326 shares, with an average exercise

price of $12.31, are exercisable at prices of $14.25 or less);

(iv) 4,779,200 shares of Common Stock reserved for issuance upon exercise

of authorized but

<PAGE>
31

unissued Options; (v) 45,031 shares of Common Stock reserved for issuance

upon conversion of Preferred Stock designated as Preferred Stock-Series B

("Series B Preferred Stock"), 45,031 shares of which are issuable upon

conversion of all outstanding shares of Series B Preferred Stock; (vi)

6,000,000 shares of Common Stock reserved for issuance upon exercise of the

Company's Lynx Equity Units (the "Lynx Equity Units"), 5,950,000 shares of

which are issuable upon exercise of all outstanding Lynx Equity Units;

(vii) 475,000 shares of Preferred Stock designated as Preferred Stock-

Series A ("Series A Preferred Stock"), none of which are issued or

outstanding; (viii) 688,700 shares of Series B Preferred Stock, of which

6,822 shares are issued and outstanding; and (ix) 2,400,000 shares of

Preferred Stock designated as Series C Junior Participating Preferred Stock

("Series C Preferred Stock") reserved for issuance upon the exercise of the

rights (the "Rights") distributed to the holders of shares of Common Stock

pursuant to the Rights Agreement, dated as of January 28, 1986 between the

Company and The Bank of New York, as Rights Agent (the "Rights Agreement"),

as amended as of November 29, 1988, May 22, 1991, September 11, 1994 and

the date hereof, none of which are issued or outstanding. Except as set

forth above, no shares of capital stock or other equity securities of the

Company are issued, reserved for issuance or outstanding. All outstanding

shares of capital stock of the Company are, and all shares which may be

issued pursuant to the Stock

<PAGE>
32

Plans will be, when issued, duly authorized, validly issued, fully paid and

nonassessable and not subject to preemptive rights. Except for the Series

B Preferred Stock, the Rights and the Lynx Equity Units, there are no

outstanding bonds, debentures, notes or other indebtedness or other

securities of the Company having the right to vote (or convertible into, or

exchangeable for, securities having the right to vote) on any matters on

which shareholders of the Company may vote. Except for the Series B

Preferred Stock, the Rights and the Lynx Equity Units, there are no

outstanding securities, options, warrants, calls, rights, commitments,

agreements, arrangements or undertakings of any kind to which the Company

or any of its Significant Subsidiaries is a party or by which any of them

is bound obligating the Company or any of its Significant Subsidiaries to

issue, deliver or sell, or cause to be issued, delivered or sold,

additional shares of capital stock or other equity or voting securities of

the Company or of any of its Significant Subsidiaries or obligating the

Company or any of its Significant Subsidiaries to issue, grant, extend or

enter into any such security, option, warrant, call, right, commitment,

agreement, arrangement or undertaking. The only outstanding indebtedness

for borrowed money of the Company and its subsidiaries having (x) a

principal amount of $25,000,000 or more and (y) a maturity of one year or

longer is listed on Section 4.1(c) of the Disclosure Schedule. Other than

the Lynx Equity Units, the Stock Options and the

<PAGE>
33

Rights there are no outstanding contractual obligations, commitments,

understandings or arrangements of the Company or any of its Significant

Subsidiaries to repurchase, redeem or otherwise acquire or make any payment

in respect of any shares of capital stock of the Company or any of its

Significant Subsidiaries. Except with respect to the Lynx Equity Units,

there are no agreements or arrangements to which the Company or any of its

subsidiaries is a party pursuant to which the Company is or could be

required to register shares of Common Stock or other securities under the

Securities Act.

(d) Authority; Noncontravention. The Company has the requisite
---------------------------

corporate power and authority to enter into this Agreement and the

Conditional Purchase/Stock Option Agreement, and, subject to the Company

Shareholder Approval (as defined herein) with respect to the Merger, to

consummate the transactions contemplated hereby and thereby. The execution

and delivery of this Agreement and the Conditional Purchase/Stock Option

Agreement by the Company and the consummation by the Company of the

transactions contemplated hereby and thereby have been duly authorized by

all necessary corporate and shareholder action on the part of the Company,

subject, in the case of the Merger, to the Company Shareholder Approval.

Each of this Agreement and the Conditional Purchase/Stock Option Agreement

has been duly executed and delivered by the Company and constitutes a valid

and binding obligation of the Company, enforceable

<PAGE>
34

against the Company in accordance with its terms subject to the effects of

bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium

and other similar laws relating to or affecting creditors' rights

generally, general equitable principles (whether considered in a proceeding

in equity or at law) and an implied covenant of good faith and fair

dealing. Except as set forth in Section 4.1(d) of the Disclosure Schedule,

the execution and delivery of this Agreement and the Conditional

Purchase/Stock Option Agreement do not, and the consummation of the

transactions contemplated by this Agreement and the Conditional

Purchase/Stock Option Agreement and compliance with the provisions hereof

and thereof will not, conflict with, or result in any breach or violation

of or default (with or without notice or lapse of time or both) under, or

give rise to a right of termination, cancellation or acceleration of any

obligation or a right to require the purchase or repurchase or give rise to

a loss of a material benefit under, or result in the creation of any Lien

upon, any of the properties, indebtedness or assets of the Company or any

of its Significant Subsidiaries under (i) the Charter or By-laws of the

Company or the comparable governing or organizational documents of any of

its Significant Subsidiaries, (ii) any loan or credit agreement (other than

the credit agreement dated August 16, 1994 between Citibank, N.A., as

administrative agent, and the Company and the credit agreement dated August

16, 1994 between Citibank,

<PAGE>
35

N.A., as administrative agent, and T.M. Investors Limited Partnership),

note, bond, mortgage, indenture, lease or other agreement, instrument,

permit, concession, franchise or license to which the Company or any of its

subsidiaries is a party or by which any of their respective properties or

assets is bound or (iii) except for the governmental filings and other

matters referred to in the following sentence, any judgment, order, decree,

statute, law, ordinance, rule, regulation or arbitration award applicable

to the Company or any of its subsidiaries or their respective properties or

assets, other than, in the case of clauses (ii) and (iii) above, any such

conflicts, breaches, violations, defaults, rights, losses or Liens that

individually or in the aggregate would not have a Material Adverse Effect

with respect to the Company. No consent, approval, order or authorization

of, or registration, declaration or filing with, or notice to, any Federal,

national, state or local government or any court, administrative agency or

commission or other governmental authority or agency, domestic or foreign

(a "Governmental Entity"), is required by or with respect to the Company or

any of its Significant Subsidiaries in connection with the execution and

delivery of this Agreement or the Conditional Purchase/Stock Option

Agreement by the Company or the consummation by the Company of the

transactions contemplated hereby or thereby, except for (i) the filing of a

premerger notification and report form by the Company under the

Hart-Scott-Rodino Antitrust

<PAGE>
36

Improvements Act of 1976, as amended (the "HSR Act") and the applicable

requirements, if any, of any relevant foreign jurisdictions, (ii) the

filing with the SEC of (x) the Offer Documents and the Schedule 14D-9,

(y) the Proxy Statement and (z) such reports under the Exchange Act as may

be required by law in connection with this Agreement, the Conditional

Purchase/Stock Option Agreement and the transactions contemplated hereby or

thereby, (iii) the filing of the Certificate of Merger with the Secretary

of State of the State of New Jersey and appropriate documents with the

relevant authorities of other states in which the Company is qualified to

do business, (iv) filings, consents and approvals under Environmental Laws

(as defined herein) of jurisdictions in which the Company transacts

business, (v) such reports or filings under the securities laws of the

various states or the securities laws of non-U.S. jurisdictions in

connection with the Offer and the Merger as may be required by law in

connection with this Agreement, the Conditional Purchase/Stock Option

Agreement and the transactions contemplated hereby or thereby, and (vi)

such other consents, approvals, orders, authorizations, registrations,

declarations, filings or notices as are set forth in Section 4.1(d) of the

Disclosure Schedule.

(e) SEC Documents. The Company has filed all required reports,
-------------

schedules, forms, statements and other documents with the SEC since January

1, 1990, and the Company has delivered or made available to Purchaser all

reports,

<PAGE>
37

schedules, forms, statements and other documents filed with the SEC since

such date (collectively, and in each case including all exhibits and

schedules thereto and documents incorporated by reference therein, the "SEC

Documents"). As of their respective dates, the SEC Documents complied in

all material respects with the requirements of the Securities Act or the

Exchange Act, as the case may be, and the rules and regulations of the SEC

promulgated thereunder applicable to such SEC Documents, and none of the

SEC Documents (including any and all financial statements included

therein), except to the extent revised or superseded by a subsequent filing

with the SEC, as of such dates contained any untrue statement of a material

fact or omitted to state a material fact required to be stated therein or

necessary in order to make the statements therein, in light of the

circumstances under which they were made, not misleading. The consolidated

financial statements of the Company included in all SEC Documents filed

since January 1, 1994 (the "SEC Financial Statements") comply as to form in

all material respects with applicable accounting requirements and the

published rules and regulations of the SEC with respect thereto, have been

prepared in accordance with generally accepted accounting principles

(except, in the case of unaudited consolidated quarterly statements, as

permitted by Form 10-Q of the SEC) applied on a consistent basis during the

periods involved (except as may be indicated in the notes thereto) and

fairly present the

<PAGE>
38

consolidated financial position of the Company and its consolidated

subsidiaries as of the dates thereof and the consolidated results of their

operations and cash flows for the periods then ended (subject, in the case

of unaudited quarterly statements, to normal year-end audit adjustments).

(f) Information Supplied. Neither the Schedule 14D-9, nor any of the
--------------------

information supplied by the Company for inclusion in the Offer Documents,

shall, at the respective times such Schedule 14D-9, the Offer Documents or

any amendments or supplements thereto are filed with the SEC or are first

published, sent or given to shareholders, as the case may be, contain any

untrue statement of a material fact or omit to state any material fact

required to be stated therein or necessary in order to make the statements

therein, in the light of the circumstances under which they were made, not

misleading. The Proxy Statement shall not, at the date the Proxy Statement

(or any amendment thereof or supplement thereto) is first mailed to

shareholders and at the time of the Shareholders Meeting and at the

Effective Time, be false or misleading with respect to any material fact,

or omit to state any material fact required to be stated therein or

necessary in order to make the statements made therein, in the light of the

circumstances under which they are made, not misleading or necessary to

correct any statement in any earlier communication with respect to the

solicitation of proxies for the Shareholders Meeting which has become false

or misleading. The Schedule 14D-9 and the

<PAGE>
39

Proxy Statement and information statement will comply in all material

respects as to form with the requirements of the Exchange Act and the rules

and regulations thereunder. Notwithstanding the foregoing, the Company

makes no representation or warranty (i) with respect to any information

supplied by Parent, the Purchaser or Holdings or any of their

representatives which is contained in any of the Offer Documents, the

Schedule 14D-9 or the Proxy Statement or (ii) with respect to the Proxy

Statement, to the extent that (A) on the date the Proxy Statement is first

mailed to shareholders, a majority of the board of directors of the Company

shall have been designated or elected by Parent or (B) if on such date of

first mailing a majority of such board shall not have been designated or

elected by Parent, between the date the Proxy Statement is first mailed to

shareholders and at the time of the Shareholders Meeting or at the

Effective Time, a majority of the board of directors of the Company shall

have been designated or elected by Parent and subsequent to such time the

Proxy Statement shall have become false or misleading with respect to any

material fact.

(g) Absence of Certain Changes or Events. Except as disclosed in the
------------------------------------

SEC Documents or in Section 4.1(g) of the Disclosure Schedule, since the

date of the most recent audited financial statements included in such SEC

Documents, the Company has conducted its business only in the ordinary

course consistent with past practice, and there is not and

<PAGE>
40

has not been any change in the business, financial condition or results of

operations of the Company or any of its subsidiaries which has had, or

would reasonably be expected to have, a Material Adverse Effect with

respect to the Company.

(h) Benefit Plans. (i) Section 4.1(h) of the Disclosure Schedule
-------------

contains a true and complete list of each "employee benefit plan" (within

the meaning of section 3(3) of the Employee Retirement Income Security Act

of 1974, as amended ("ERISA"), (including, without limitation,

multiemployer plans within the meaning of ERISA section 3(37)), stock

purchase, stock option, severance, employment, change-in-control, fringe

benefit, collective bargaining, bonus, incentive, deferred compensation and

all other employee benefit plans, agreements, programs, policies or other

arrangements, whether or not subject to ERISA (including any funding

mechanism therefor now in effect or required in the future as a result of

the transactions contemplated by this Agreement, the Conditional

Purchase/Stock Option Agreement or otherwise), under which any employee or

former employee of the Company or any of its affiliates has any present or

future right to benefits or under which the Company or any of its

affiliates has any present or future liability. All such plans,

agreements, programs, policies and arrangements shall be collectively

referred to as the "Company Plans".

<PAGE>
41

(ii) With respect to each Company Plan, the Company has delivered

to Purchaser a current, accurate and complete copy (or, to the extent no

such copy exists, an accurate description) thereof and, to the extent

applicable, any related trust agreement, annuity contract or other funding

instrument; except where the failure to deliver the documents as set forth

above, individually or in combination with the breach of any other

representation contained herein, would not reasonably be expected to have a

Material Adverse Effect.

(iii) (1) Each Company Plan has been established and administered

in all material respects in accordance with its terms, and in compliance

with the applicable provisions of ERISA, the Internal Revenue Code of 1986,

as amended (the "Code"), and other applicable laws, rules and regulations;

(2) each Company Plan which is intended to be qualified within the meaning

of Code section 401(a) is so qualified and has received a favorable

determination letter as to its qualification and nothing has occurred,

whether by action or failure to act, which would cause the loss of such

qualification.

(iv) Except to the extent that the inaccuracy of any of the

following (or the circumstances giving rise to such inaccuracy)

individually or in combination with the breach of any other representation

contained herein, would not reasonably be expected to have a Material

Adverse Effect: (1) with respect to any Company Plan, no actions,

<PAGE>
42

suits or claims (other than routine claims for benefits in the ordinary

course) are pending or threatened and the Company will promptly notify

Purchaser in writing of any pending or threatened claims arising between

the date hereof and the Effective Time; (2) no event has occurred and no

condition exists with respect to a Company Plan that would subject the

Company or any of its affiliates, either directly or by reason of their

affiliation with any member of their respective Controlled Groups (defined

as any organization which is a member of a controlled group of

organizations within the meaning of Code section 414(b), (c), (m) or (o)),

to any tax, fine, penalty or other liability imposed by ERISA, the Code or

other applicable laws, rules and regulations; (3) for each Company Plan

with respect to which a Form 5500 has been filed, no material change has

occurred with respect to the matters covered by the most recent Form 5500

since the date thereof; (4) except as disclosed on Section 4.1(h) of the

Disclosure Schedule, each Company Plan may be amended or terminated without

obligation or liability (other than those obligations and liabilities for

which specific assets have been set aside in a trust or other funding

vehicle or reserved for on the Company's most recent audited financial

statements included in the Recent SEC Documents); (5) no Company Plan has

incurred any "accumulated funding deficiency" as such term is defined in

ERISA section 302 and Code section 412 (whether or not waived); (6) no

event or condition exists

<PAGE>
43

which could be deemed a reportable event within the meaning of ERISA

section 4043 which could result in a liability to the Company, its

affiliates or any member of their respective Controlled Groups; and (7)

neither the Company, any affiliate nor any member of their respective

Controlled Groups has engaged in a transaction which could subject any of

them to liability under ERISA section 4069.

(v) With respect to any multiemployer plan (within the meaning

of section 4001(a)(3) of ERISA) to which the Company, any affiliate or any

member of their respective Controlled Groups has any liability or

contributes (or has at any time contributed or had an obligation to

contribute): (1) neither the Company, its affiliates nor any member of

their respective Controlled Groups would be subject to withdrawal liability

in excess of $15,000,000 if, as of the Effective Time, the Company, any

affiliate or any member of their respective Controlled Groups were to

engage in a complete withdrawal (as defined in ERISA section 4203) from any

such multiemployer plan; (2) no such multiemployer plan is in

reorganization or insolvent (as those terms are defined in ERISA sections

4241 and 4245, respectively); and (3) neither the Company, any affiliate

nor any member of their respective Controlled Groups has engaged in a

transaction which could subject any of them to liability under ERISA

section 4212(c) which would reasonably be expected to have a Material

Adverse Effect.

<PAGE>
44

(vi) Except as set forth in Section 4.1(h)(vi) of the Disclosure

Schedule, no Company Plan exists which could result in a payment of

$100,000 or more to any employee or former employee of the Company or any

affiliate of any money or other property or rights, or accelerate or

provide any other rights or benefits with a value in the aggregate of

$100,000 or more to any such employee or former employee as a result of the

transactions contemplated by this Agreement or the Conditional

Purchase/Stock Option Agreement, whether or not such payment would

constitute a parachute payment within the meaning of Code section 280G.

(i) Tax Matters. Except where the failure to do so would not have a
-----------

Material Adverse Effect on the Company, each of the Company and each of its

subsidiaries, and any consolidated, combined, unitary or aggregate group

for tax purposes of which the Company or any of its subsidiaries is or has

been a member has timely filed all material Tax Returns required to be

filed by it, has paid all Taxes shown thereon to be due and has provided

adequate reserves in its financial statements for any Taxes that have not

been paid, whether or not shown as being due on any returns. Except as set

forth in Section 4.1(i) of the Disclosure Schedule, (i) no claim for unpaid

Taxes has become a lien or encumbrance of any kind against the property of

the Company or any of its subsidiaries or is being asserted against the

Company or any of its subsidiaries, except for such claims which have

become a lien or encumbrance which would not have a Material

<PAGE>
45

Adverse Effect; (ii) no audit of any Tax Return of the Company or any of

its subsidiaries is being conducted by a Tax authority, except for such

audits which would not have a Material Adverse Effect; and (iii) no

extension of the statute of limitations on the assessment of any Taxes has

been granted by the Company or any of its subsidiaries and is currently in

effect, except for such extensions which would not have a Material Adverse

Effect. As used herein, "Taxes" shall mean any taxes of any kind,

including but not limited to those measured by or referred to as income,

gross receipts, sales, use, ad valorem, franchise, profits, license,

withholding, payroll, employment, excise, severance, stamp, occupation,

premium, value added, property or windfall profits taxes, customs, duties

or similar fees, assessments or charges of any kind whatsoever, together

with any interest and any penalties, additions to tax or additional amounts

imposed by any governmental authority, domestic or foreign. Neither the

Company nor any of its subsidiaries has made an election under Section

341(f) of the Internal Revenue Code. As used herein, "Tax Return" shall

mean any return, report or statement required to be filed with any

governmental authority with respect to Taxes.

(j) Article VIII of the Company's Restated Certificate of
-----------------------------------------------------

Incorporation and Sections 14A:10A-4 and 14A:10A-5 of the NJBCA. With
---------------------------------------------------------------

respect to Article VIII of the Charter and Sections 14A:10A-4 and 104:10A-5

of the NJBCA, the Merger, this Agreement, the Conditional Purchase/Stock

Option

<PAGE>
46

Agreement, the transactions contemplated hereby or thereby and any Excepted

Future Transactions have been approved by the Board of Directors of the

Company. No other state takeover statute or similar statute or regulation

of the State of New Jersey (and, to the knowledge of the Company after due

inquiry, of any other state or jurisdiction) applies or purports to apply

to the Merger, this Agreement, the Conditional Purchase/Stock Option

Agreement or any of the other transactions contemplated hereby or thereby

and no provision of the Charter (other than with respect to the Series C

Preferred Stock which will be redeemed pursuant to Section 5.15, subject to

the conditions therein) or By-laws of the Company or any governing

instruments of its Significant Subsidiaries would, directly or indirectly,

restrict or impair the ability of Purchaser to vote, or otherwise to

exercise the rights and receive the benefits of a shareholder with respect

to, securities of the Company or any of its subsidiaries that may be

acquired or controlled by Purchaser, Parent or any subsidiary of Parent or

permit any shareholder to acquire securities of the Company on a basis not

available to Purchaser in the event that Purchaser were to acquire

securities of the Company.

(k) Environmental Matters. Except as set forth in Section 4.1(k) of
---------------------

the Disclosure Schedule or except to the extent that the inaccuracy of any

of the following (or the circumstances giving rise to such inaccuracy),

individually or in the aggregate, would not have a Material Adverse

<PAGE>
47

Effect, in connection with any properties or facilities currently or

formerly owned, leased or used by the Company or any of its subsidiaries

and the current and former operations of the Company or any of its

subsidiaries:

(i) the Company or its subsidiaries hold, and are in compliance with

and have been in continuous compliance with for the last five (5) years,

all Environmental Permits, and are otherwise in compliance and have been in

compliance for the last five (5) years with all applicable Environmental

Laws and there is no condition that would reasonably be expected to prevent

or materially interfere with compliance by the Company and its subsidiaries

with Environmental Laws in the future;

(ii) no modification, revocation, reissuance, alteration, transfer,

or amendment of the Environmental Permits, or any review by, or approval

of, any third party of the Environmental Permits is required in connection

with the execution or delivery of this Agreement or the Conditional

Purchase/Stock Option Agreement or the consummation by the Company of the

transactions contemplated hereby or thereby or the continuation of the

business of the Company or its subsidiaries following such consummation;

(iii) neither the Company nor any of its subsidiaries has received

any Environmental Claim, and neither the Company nor any of its

subsidiaries has knowledge of any threatened Environmental Claim;

<PAGE>
48

(iv) the Company and its subsidiaries have not entered into, have not

agreed to, and are not subject to any judgment, decree, order or other

similar requirement of any governmental authority under any Environmental

Laws, including without limitation those relating to compliance with

Environmental Laws or to investigation, cleanup, remediation or removal of

Hazardous Substances;

(v) There are no (A) underground or aboveground storage tanks,

(B) polychlorinated biphenyls, (C) asbestos or asbestos-containing

materials, (D) Hazardous Materials, (E) urea-formaldehyde insulation, (F)

sumps, (G) surface impoundments, (H) landfills or (I) sewer or septic

systems currently or formerly present at or about any of the properties or

facilities currently or formerly owned, leased or otherwise used by the

Company or any of its subsidiaries, that would reasonably be expected to

give rise to liability of the Company or any of its subsidiaries under any

Environmental Laws;

(vi) Hazardous Materials have not been generated, transported,

treated, stored, disposed of, released or threatened to be released at, on,

from or under any of the properties or facilities currently or formerly

owned, leased or otherwise used by the Company or any of its subsidiaries,

in violation of, or in a manner or to a location that would reasonably be

expected to give rise to liability of the Company or any of its

subsidiaries under, any Environmental Laws.

<PAGE>
49

(vii) For purposes of this Agreement, the following terms shall have

the following meanings:

"Environmental Claim" means any written notice, claim, demand,

action, suit, complaint, proceeding or other communication by any

person to the Company or any of its subsidiaries alleging liability or

potential liability (including without limitation liability or

potential liability for investigatory costs, cleanup costs,

governmental response costs, natural resource damages, property

damage, personal injury, fines or penalties) arising out of, relating

to, based on or resulting from (i) the presence, discharge, emission,

release or threatened release of any Hazardous Materials at any

location, (ii) circumstances forming the basis of any violation or

alleged violation of any Environmental Laws or Environmental Permits,

or (iii) otherwise relating to obligations or liabilities under any

Environmental Law.

"Environmental Permits" means all permits, licenses,

registrations and other governmental authorizations required under

Environmental Laws for the Company and its subsidiaries to conduct

their operations.

"Environmental Laws" means all applicable foreign, federal, state

and local statutes, rules, regulations, ordinances, orders, decrees

and common law relating in any manner to pollution or protection of

human health

<PAGE>
50

or the environment, to the extent and in the form that such exist at

the date hereof.

"Hazardous Materials" means all hazardous or toxic substances,

wastes, materials or chemicals, petroleum (including crude oil or any

fraction thereof) and petroleum products, asbestos and asbestos-

containing materials, pollutants, contaminants and all other materials

and substances, including but not limited to electromagnetic fields,

regulated pursuant to any Environmental Laws or that could result in

liability under any Environmental Laws.

(l) Brokers. No broker, investment banker, financial advisor or
-------

other person, other than Lazard Freres and Co. and CS First Boston

Corporation, the fees and expenses of which will be paid by the Company

(pursuant to fee agreements, copies of which have been provided to

Purchaser), is entitled to any broker's, finder's, financial advisor's or

other similar fee or commission in connection with the transactions

contemplated by this Agreement based upon arrangements made by or on behalf

of the Company.

(m) Compliance. Neither the Company nor any of its subsidiaries is
----------

in conflict with, or in default or violation of, (i) any law, rule,

regulation, order, judgment or decree applicable to the Company or any of

its subsidiaries or by which its or any of their respective properties are

bound or affected, or (ii) any note, bond, mortgage, indenture, contract,

agreement, lease, license, permit, franchise or

<PAGE>
51

other instrument or obligation to which the Company or any of its

subsidiaries is a party or by which the Company or any of its subsidiaries

or its or any of their respective properties are bound or affected, except

for any such conflicts, defaults or violations which would not,

individually or in the aggregate, reasonably be expected to have a Material

Adverse Effect.

(n) Required Company Vote. Assuming the Series B Preferred Stock is
---------------------

redeemed as provided in Section 5.12 the affirmative vote of two-thirds of

the shares of the Common Stock (the "Company Shareholder Approval") is the

only vote of the holders of any class or series of the Company's securities

necessary to approve this Agreement, the Merger and the other transactions

contemplated hereby and the Conditional Purchase/Stock Option Agreement and

the transactions contemplated thereby.

(o) Rights Agreement. The Board of Directors of the Company, at a
----------------

meeting duly called and held, has resolved that the Rights shall be

redeemed immediately prior to the acceptance for payment of any of the

outstanding Shares pursuant to the Offer, provided that the Minimum

Condition has been satisfied. The Board of Directors of the Company has

amended the Rights Agreement, prior to the execution of this Agreement and

the Conditional Purchase/Stock Option Agreement, so that none of the

execution or the delivery of this Agreement or the Conditional

Purchase/Stock Option Agreement, or both such agreements taken together, or

<PAGE>
52

commencement of the Offer or the acceptance of Shares for exchange pursuant

to the Offer, or the consummation of the transactions contemplated by the

Conditional Purchase/Stock Option Agreement will (i) trigger the

exercisability of the Rights (as defined in the Rights Agreement), the

separation of the Rights from the stock certificates to which they are

attached, or any other provisions of the Rights Agreement, including

causing Parent and/or Purchaser from becoming an Acquiring Person (as

defined in the Rights Agreement), the occurrence of a Distribution Date (as

defined in the Rights Agreement) or a Shares Acquisition Date (as defined

in the Rights Agreement) or (ii) trigger the right of the holders of the

common units of Borden Chemicals and Plastics Limited Partnership, pursuant

to the Second Amended and Restated Deposit Agreement dated February 16,

1993, to require the Company to purchase the common units held by them.

(p) Dividends. The Board of Directors of the Company, at a meeting
---------

duly called and held, has resolved that, until resolved otherwise, the

Company will not declare, set aside or pay any dividends other than

quarterly dividends on the shares of Common Stock in excess of $0.01 per

share.

Section 4.2 Representations and Warranties of Purchaser and Parent.
------------------------------------------------------

Purchaser and Parent represent and warrant, jointly and severally, to the

Company as follows:

(a) Organization, Standing and Corporate Power. Each of Purchaser
------------------------------------------

and Holdings has been duly incorporated, is validly existing as a

corporation and in good standing under

<PAGE>
53

the laws of the jurisdiction in which it is incorporated and has the

corporate power and authority to own its property and conduct its business

as now being conducted. Each of Purchaser and Holdings is duly qualified

to transact business and is in good standing as a foreign corporation in

each jurisdiction in which the conduct of its business or its ownership or

leasing of property requires such qualification, except to the extent that

the failure to be so qualified or be in good standing would not have a

Material Adverse Effect with respect to Purchaser or Holdings. Purchaser

has delivered to the Company complete and correct copies of its Certificate

of Incorporation and By-laws. Complete and correct copies of the Restated

Certificate of Incorporation, as amended, and By-Laws of Holdings are

included within the Holdings SEC Documents (as defined herein).

(b) Subsidiaries. Purchaser has no direct or indirect subsidiaries.
------------

Each of the Significant Subsidiaries (as defined in Rule 1-02 of Regulation

S-X of the SEC) of Holdings (which, including RJR Nabisco, Inc. ("RJRN"),

R.J. Reynolds Tobacco Company ("RJRT"), R.J. Reynolds Tobacco

International, Inc. and Nabisco, Inc. ("NI") are collectively referred to

as the "Holdings Significant Subsidiaries") has been duly incorporated, is

validly existing as a corporation in good standing under the laws of its

jurisdiction of incorporation, has the corporate power and authority to own

its property and to conduct its

<PAGE>
54

business and is duly qualified to transact business and is in good standing

in each jurisdiction in which the conduct of its business or its ownership

or leasing of property requires such qualification, except to the extent

that the failure to be so qualified or be in good standing would not have a

Material Adverse Effect with respect to Purchaser or Holdings. All of the

outstanding shares of capital stock of each Holdings Significant Subsidiary

have been validly issued and are fully paid and non-assessable and all

outstanding shares of capital stock of each Holdings Significant Subsidiary

owned (of record and beneficially) by Holdings, by another Holdings

Significant Subsidiary or by Holdings and another such Holdings Significant

Subsidiary are owned free and clear of all Liens, except for (i) such

rights of first refusal, claims, options, charges and encumbrances as would

not in the aggregate have a Material Adverse Effect with respect to

Holdings and (ii) for shares of capital stock of (x) RJRT and Nabisco

Brands, Inc. that are pledged pursuant to that certain RJRN Pledge

Agreement dated May 13, 1992 made by RJRN in favor of Manufacturers Hanover

Trust Company, as collateral agent, and (y) RJRN that are pledged pursuant

to that certain Parent Pledge Agreement dated as of February 2, 1989,

amended and restated December 19, 1991, between Holdings and Chemical Bank,

as collateral agent.

consists of (i) 2,200,000,000 shares of Holdings

<PAGE>
55

Common Stock and (ii) 150,000,000 shares of preferred stock, par value $.01

per share. As of August 31, 1994, there were, (i) 1,147,681,192 shares of

Holdings Common Stock issued and outstanding, (ii) 114,206,576 shares of

Holdings Common Stock reserved for issuance pursuant to Holdings stock

plans, (iii) 210,000,000 shares of Holdings Common Stock reserved for

issuance upon conversion of the Series A Conversion Preferred Stock, par

value $.01 per share, of Holdings ("Holdings Series A Stock"), (iv)

15,617,453 shares of Holdings Common Stock reserved for issuance upon

conversion of the ESOP Convertible Preferred Stock, par value $.01 per

share, of Holdings (the "Holdings ESOP Stock"), (v) 266,750,000 shares of

Holdings Common Stock reserved for issuance upon conversion of the Series C

Conversion Preferred Stock, par value $.01 per share, of Holdings (the

"Holdings Series C Stock"), (vi) no shares of Holdings Common Stock held by

Holdings in its treasury or by its subsidiaries, (vii) 52,500,000 shares of

Holdings Series A Stock outstanding, (viii) 50,000 shares of Series B

Preferred Stock, par value $.01 per share, of Holdings (the "Holdings

Series B Stock") outstanding, (ix) 15,490,964 shares of Holdings ESOP Stock

outstanding and (x) 26,675,000 shares of Holdings Series C Stock

outstanding. Except for the Holdings Common Stock, the Holdings Series A

Stock, the Holdings Series B Stock, the Holdings Series C Stock and the

Holdings ESOP Stock, no shares of capital stock or other equity securities

of Holdings are issued, reserved for

<PAGE>
56

issuance or outstanding. All outstanding shares of capital stock of

Holdings are, and all shares which may be issued pursuant to Holdings stock

plans will be, when issued, duly authorized, validly issued, fully paid and

nonassessable and not subject to preemptive rights. There are no

outstanding bonds, debentures, notes or other indebtedness of Holdings

having the right to vote (or convertible into, or exchangeable for,

securities having the present right to vote) on any matters on which

stockholders of Holdings may vote. Except with respect to preferred stock

and options pursuant to Holdings stock plans referred to above, there are

no outstanding securities, options, warrants, calls, rights, commitments,

agreements, arrangements or undertakings of any kind to which Holdings is a

party or by which it is bound obligating Holdings to issue, deliver or

sell, or cause to be issued, delivered or sold, additional shares of

capital stock or other equity or voting securities of Holdings or

obligating Holdings to issue, grant, extend or enter into any such

security, option, warrant, call, right, commitment, agreement, arrangement

or undertaking. Except with respect to certain shares of Holdings Common

Stock sold to employees of Holdings pursuant to stock subscription

agreements containing standard put and call rights upon the occurrence of

certain events, there are no outstanding contractual obligations of

Holdings to repurchase, redeem or otherwise acquire any shares of capital

stock of Holdings. The authorized capital stock of

<PAGE>
57

Purchaser consists of 1000 shares of common stock, par value $.01 per

share, 100 shares of which have been validly issued, are fully paid and

nonassessable and are owned by Parent, free and clear of any Lien. Each

share of Holdings Common Stock to be delivered to shareholders of the

Company pursuant to the Offer or the Merger, or to the Company pursuant to

the Conditional Purchase/Stock Option Agreement, is a "Registrable

Security," as defined in the 1990 Registration Rights Agreement or, as

applicable, the 1989 Registration Rights Agreement.

(d) Authority; Noncontravention. (i) Purchaser has the requisite
---------------------------

corporate power and authority, and Parent has full partnership authority,

to enter into this Agreement and the Conditional Purchase/Stock Option

Agreement and to consummate the transactions contemplated hereby and

thereby. The execution and delivery of this Agreement and the Conditional

Purchase/Stock Option Agreement by Parent and Purchaser and the

consummation by Parent and Purchaser of the transactions contemplated

hereby and thereby have been duly authorized by all necessary action,

corporate or other, on the part of Parent and Purchaser. Each of this

Agreement and the Conditional Purchase/Stock Option Agreement has been duly

executed and delivered by Purchaser and Parent and constitutes a valid and

binding obligation of each of Purchaser and Parent, enforceable against

such party in accordance with its terms subject to the effects of

bankruptcy, insolvency, fraudulent conveyance,

<PAGE>
58

reorganization, moratorium and other similar laws relating to or affecting

creditors' rights generally, general equitable principles (whether

considered in a proceeding in equity or at law) and an implied covenant of

good faith and fair dealing. The execution and delivery of this Agreement

and the Conditional Purchase/Stock Option Agreement do not, and the

consummation of the transactions contemplated by this Agreement and the

Conditional Purchase/Stock Option Agreement and compliance with the

provisions hereof and thereof will not, conflict with, or result in any

breach or violation of or default (with or without notice or lapse of time

or both) under, or give rise to a right of termination, cancellation or

acceleration of any obligation or a right to require the purchase or

repurchase or give rise to a loss of a material benefit under, or result in

the creation of any Lien upon, any of the properties, indebtedness or

assets of Purchaser or any of the properties, indebtedness or assets of

Parent under (i) the certificate of incorporation or by-laws of Purchaser

or the comparable governing or organizational documents of Parent, (ii) any

loan or credit agreement, note, bond, mortgage, indenture, lease or other

agreement, instrument, permit, concession, franchise or license to which

Purchaser or Parent is a party or by which any of its properties or assets

is bound or (iii) except for the governmental filings and other matters

referred to in the following sentence, any judgment, order, decree,

statute, law, ordinance, rule, regulation or arbitration

<PAGE>
59

award applicable to each of Purchaser or Parent or their respective

properties or assets, other than, in the case of clauses (ii) and (iii)

above, any such conflicts, breaches, violations, defaults, rights, losses

or Liens that individually or in the aggregate would not have a Material

Adverse Effect with respect to Purchaser or Parent. No consent, approval,

order or authorization of, or registration, declaration or filing with, or

notice to, any Governmental Entity is required by or with respect to

Purchaser or Parent in connection with the execution and delivery of this

Agreement or the Conditional Purchase/Stock Option Agreement by Purchaser

and Parent or the consummation by Purchaser and Parent of the transactions

contemplated hereby or thereby, except for (i) the filing with the SEC of

(x) the Offer Documents and the Schedule 14D-9, (y) the Proxy Statement and

(z) such reports or filings under the Exchange Act or under the securities

laws of the various states or the securities laws of non-U.S. jurisdictions

in connection with the offer and sale of the Holdings Common Stock as may

be required by law in connection with this Agreement, the Conditional

Purchase/Stock Option Agreement and the transactions contemplated hereby or

thereby, and (ii) with respect to Purchaser, except for (A) the filing of a

premerger notification and report form by Purchaser under the HSR Act and

the applicable requirements, if any, of any relevant foreign jurisdictions,

(B) the filing of the Certificate of Merger with the Secretary of State of

the

<PAGE>
60

State of New Jersey, (C) filings, consents and approvals under

Environmental Laws (as defined herein) of jurisdictions in which the

Company transacts business and (D) such other consents, approvals, orders,

authorizations, registrations, declarations, filings or notices as may be

required under the "takeover" laws of the various states.

(ii) The execution and delivery by Purchaser and Parent of this

Agreement and the Conditional Purchase/Stock Option Agreement do not, and

the consummation of the transactions contemplated by this Agreement and the

Conditional Purchase/Stock Option Agreement and compliance with the

provisions hereof and thereof will not, conflict with, or result in any

breach or violation of or default (with or without notice or lapse of time

or both) under, or give rise to a right of termination, cancellation or

acceleration of any obligation or a right to require the purchase or

repurchase or give rise to a loss of a material benefit under, or result in

the creation of any Lien upon, any of the properties, indebtedness or

assets of Holdings or any of the Holdings Significant Subsidiaries under

(i) the certificate of incorporation or by-laws of Holdings or any of the

Holdings Significant Subsidiaries, (ii) any loan or credit agreement (other

than Holdings' and RJRN's credit agreement dated as of April 5, 1993, as

amended, and Holdings' and RJRN's credit agreement dated as of December 1,

1991, as amended), note (other than Holdings' 10 1/2% Senior Notes due 1998

and Holdings' 13 1/2% Subordinated

<PAGE>
61

Debentures due 2001), bond, mortgage, indenture, lease or other agreement,

instrument, permit, concession, franchise or license to which Holdings or

any of its subsidiaries is a party or by which any of its properties or

assets is bound or (iii) except for the governmental filings and other

matters referred to in the following sentence, any judgment, order, decree,

statute, law, ordinance, rule, regulation or arbitration award applicable

to Holdings or any of its subsidiaries or their respective properties or

assets, other than, in the case of clauses (ii) and (iii) above, any such

conflicts, breaches, violations, defaults, rights, losses or Liens that

individually or in the aggregate would not have a Material Adverse Effect

with respect to Holdings. No consent, approval, order or authorization of,

or registration, declaration or filing with, or notice to, any Governmental

Entity is required by or with respect to Holdings in connection with the

execution and delivery of this Agreement or the Conditional Purchase/Stock

Option Agreement by Purchaser and Parent or the consummation by Purchaser

and Parent of the transactions contemplated hereby or thereby, except for

(i) the filing of a premerger notification and report form by Purchaser

under the HSR Act and the applicable requirements, if any, of any relevant

foreign jurisdictions and (ii) the filing with the SEC of (x) the Form S-4,

and (y) such reports or filings under the Securities Act or Exchange Act or

under the securities laws of the various states or the securities laws of

non-U.S.

<PAGE>
62

jurisdictions in connection with the offer and sale of the Holdings Common

Stock as may be required by law in connection with this Agreement, the

Conditional Purchase/Stock Option Agreement and the transactions

contemplated hereby or thereby.

(e) SEC Documents. Holdings has filed all required reports,
-------------

schedules, forms, statements and other documents with the SEC since

January 1, 1990, and Purchaser has delivered or made available to the

Company all reports, schedules, forms, statements and other documents filed

with the SEC since such date (collectively, and in each case including all

exhibits and schedules thereto and documents incorporated by reference

therein, the "Holdings SEC Documents"). As of their respective dates, the

Holdings SEC Documents complied in all material respects with the

requirements of the Securities Act or the Exchange Act, as the case may be,

and the rules and regulations of the SEC promulgated thereunder applicable

to such Holdings SEC Documents, and none of the Holdings SEC Documents

(including any and all consolidated financial statements included therein),

except to the extent revised or superseded by a subsequent filing with the

SEC, as of such date contained any untrue statement of a material fact or

omitted to state a material fact required to be stated therein or necessary

in order to make the statements therein, in light of the circumstances

under which they were made, not misleading. The consolidated financial

statements of Holdings included

<PAGE>
63

in such Holdings SEC Documents comply as to form in all material respects

with applicable accounting requirements and the published rules and

regulations of the SEC with respect thereto, have been prepared in

accordance with generally accepted accounting principles (except, in the

case of unaudited consolidated quarterly statements, as permitted by Form

10-Q of the SEC) applied on a consistent basis during the periods involved

(except as may be indicated in the notes thereto) and fairly present the

consolidated financial position of Holdings and its consolidated

subsidiaries as of the dates thereof and the consolidated results of their

operations and cash flows for the periods then ended (subject, in the case

of unaudited quarterly statements, to normal year-end audit adjustments).

(f) Information Supplied. Neither the Offer Documents, nor any of
--------------------

the information supplied by Parent or the Purchaser for inclusion in the

Schedule 14D-9, shall, at the respective times such Offer Documents or

Schedule 14D-9 (or any of the amendments or supplements thereto) are filed

with the SEC or are first published, sent or given to shareholders, as the

case may be, contain any untrue statement of a material fact or omit to

state any material fact required to be stated or incorporated by reference

therein or necessary in order to make the statements therein, in light of

the circumstances under which they were made, not misleading. The

information supplied by Purchaser concerning Purchaser and Parent for

inclusion in the Proxy

<PAGE>
64

Statement shall not contain any statement which, at such time and in light

of the circumstances under which it shall be made, is false or misleading

with respect to any material fact, or shall omit to state a material fact

required to be stated therein or necessary in order to make the statements

therein not false or misleading or necessary to correct any statement in

any earlier communication with respect to the solicitation of proxies for

the Shareholders Meeting which has become false or misleading.

Notwithstanding the foregoing, Purchaser makes no representation or

warranty with respect to any information supplied by the Company or any of

its representatives which is contained in any of the Offer Documents, the

Schedule 14D-9 or the Proxy Statement. The Offer Documents and, to the

extent that on the date the Proxy Statement is first mailed to

shareholders, at the time of the Shareholders Meeting or at the Effective

Time a majority of the board of directors of the Company shall have been

designated or elected by Parent, the Proxy Statement, will comply in all

material respects as to form with the requirements of the Exchange Act and

the rules and regulations thereunder.

(g) Brokers. No broker, investment banker, financial advisor or
-------

other person, other than Morgan Stanley & Co., the fees and expenses of

which will be paid by Parent, is entitled to any broker's, finder's,

financial advisor's or other similar fee or commission in connection with

the

<PAGE>
65

transactions contemplated by this Agreement based upon arrangements made by

or on behalf of Purchaser or Parent.

(h) Interim Operations of Purchaser. Purchaser was incorporated on
-------------------------------

September 12, 1994, has engaged in no other business activities and has

conducted its operations only as contemplated hereby.

(i) Absence of Certain Changes or Events. Except as disclosed in the
------------------------------------

Holdings SEC Documents, since the date of the most recent audited financial

statements included in such Holdings SEC Documents, Holdings has conducted

its business only in the ordinary course consistent with past practice, and

there is not and has not been any change in the business, financial

condition or results of operations of Holdings or any of its subsidiaries

which has had, or would reasonably be expected to have, a Material Adverse

Effect with respect to Holdings.

Section 4.3 Representations and Warranties of Parent. Parent
----------------------------------------

represents and warrants to the Company as follows:

(a) Authority. Parent has all requisite power and authority to enter
---------

into this Agreement and to consummate the transactions contemplated by this

Agreement. The execution and delivery of this Agreement by Parent and the

consummation by Parent of the transactions contemplated hereby have been

duly authorized by all necessary action on the part of Parent and no other

proceedings are necessary to authorize this Agreement or to consummate the

transactions so contemplated. This Agreement has been duly executed and

<PAGE>
66

delivered by and constitutes a valid and binding obligation of Parent,

enforceable against Parent in accordance with its terms.

(b) Title to Holdings Common Stock. Subject to any transfer of
------------------------------

shares to Purchaser (or its assignee) in connection with the transactions

contemplated by this Agreement and the Conditional Purchase/Stock Option

Agreement, Parent has good and valid title to the shares of Holdings Common

Stock that will serve as the Aggregate Merger Consideration, free and clear

of all Liens. The shares of Holdings Common Stock that will serve as the

aggregate Merger Consideration have been approved for listing on the New

York Stock Exchange, Inc.

the performance by Parent of its obligations under, this Agreement will not

contravene any provision of applicable law or the governing documents of

Parent or any agreement or other instrument, including, without limitation,

the 1990 Registration Rights Agreement or, as applicable, the 1989

Registration Rights Agreement, binding upon Parent or any of its

subsidiaries or any judgment, order or decree of any Governmental Entity

having jurisdiction over Parent or any of its subsidiaries, except for such

contravention that would not, individually, or in the aggregate, have a

Material Adverse Effect with respect to Parent.

<PAGE>
67

ARTICLE 5

COVENANTS

Section 5.1 Conduct of Business of the Company. Except as
----------------------------------

contemplated by this Agreement, during the period from the date of this

Agreement to the date on which a majority of the board of directors of the

Company shall consist of designees or representatives of Parent, the Company and

each subsidiary shall conduct its operations according to its ordinary course of

business consistent with past practice and shall use its best efforts to

preserve intact its business organization, to keep available the services of its

current officers and employees and to preserve existing relationships with

licensors, licensees, suppliers, contractors, distributors, customers and others

having business relationships with it to the end that their goodwill and ongoing

businesses shall be unimpaired at the date on which a majority of the board of

directors of the Company shall consist of designees or representatives of

Parent. Without limiting the generality of the foregoing, and except as

otherwise contemplated by this Agreement, or as required by law or contract

existing on the date hereof, prior to the date on which a majority of the board

of directors of the Company shall consist of designees or representatives of

Parent, neither the Company nor any of its subsidiaries shall, without the prior

written consent of Parent:

(a) (x) declare, set aside or pay any dividends on, or make any

other distributions in respect of, any of its capital stock (except

(A) dividends and distributions by a direct or indirect wholly owned

subsidiary of the Company to

<PAGE>
68

its parent, (B) dividends and distributions in the ordinary course of

business by any other subsidiary to its parent and (C) that the Company may

continue the declaration and payment of regular quarterly cash dividends

not in excess of $0.01 per share on the shares of Company Common Stock

(with usual record and payment dates and in accordance with its past

dividend policy)), (y) split, combine or reclassify any of its capital

stock or issue or authorize the issuance of any other securities in respect

of, in lieu of or in substitution for shares of its capital stock or (z),

except for the redemption of the Rights and the Series B Preferred Stock,

purchase, redeem or otherwise acquire any shares of capital stock of the

Company or any of its subsidiaries or any other securities thereof or any

rights, warrants or options to acquire any such shares or other securities;

(b) authorize for issuance, issue, deliver, sell or agree or commit

to issue, sell or deliver (whether through the issuance or granting of

options, warrants, commitments, subscriptions, rights to purchase or

otherwise), pledge or otherwise encumber any shares of its capital stock or

the capital stock of any of its subsidiaries, any other voting securities

or any securities convertible into, or any rights, warrants or options to

acquire, any such shares, voting securities or convertible securities or

any other securities or equity equivalents (including without limitation

stock appreciation rights) (other than (x) upon exercise of options

outstanding on the date hereof, as in

<PAGE>
69

effect on the date hereof or as amended pursuant hereto, (y) in connection

with any employment agreements between the Company or any of its

subsidiaries and the employees thereof, as in effect on the date hereof,

and in each case subject to the provisions of Section 3.2 or 5.10 hereof,

or (z) sales of capital stock of any wholly owned subsidiary of the Company

to the Company or another wholly owned subsidiary of the Company) provided,

however, and not in limitation of the foregoing, no additional equity

securities or rights to purchase equity securities will be granted after

the date hereof;

any bonus, profit sharing, compensation, severance, termination, stock

option, stock appreciation right, pension, retirement, employment or other

employee benefit agreement, trust, plan or other arrangement for the

benefit or welfare of any director, officer or, except in the ordinary

course of business consistent with past practice with respect to employees

of the Company or any of its subsidiaries increase in any manner the

compensation or fringe benefits of any director, officer or, except in the

ordinary course of business consistent with past practice with respect to

employees of the Company or any of its subsidiaries or pay any benefit not

required by any existing agreement or place any assets in any trust for the

benefit of employees or directors of the Company or any of its

subsidiaries, other than contributions to the directors

<PAGE>
70

trust fund created pursuant to the Advisory Directors Plan Trust Agreement

in the ordinary course of business and consistent with past practice;

provided, however, that notwithstanding the foregoing, any amendments
-------- -------

required to be made to the provisions of any employee pension plan which is

intended to be qualified under Section 401(a) of the Code in order to

maintain such qualified status may be made;

(d) amend its certificate of incorporation, by-laws or other

comparable charter or organizational documents or alter through merger,

liquidation, reorganization, restructuring or in any other fashion the

corporate structure or ownership of any subsidiary not constituting an

inactive subsidiary of the Company;

(e) acquire or agree to acquire (x) by merging or consolidating with,

or by purchasing a substantial portion of the stock or assets of, or by any

other manner, any business or any corporation, partnership, joint venture,

association or other business organization or division thereof or (y) any

assets that are material, individually or in the aggregate, to the Company

and its subsidiaries taken as a whole, except purchases of inventory in the

ordinary course of business consistent with past practice;

(f) sell, lease, license, mortgage or otherwise encumber or subject

to any Lien or otherwise dispose of any of its properties or assets, except

sales of (i) inventory in the ordinary course of business consistent with

past practice, (ii) properties or assets (A) with a value of less

<PAGE>
71

than $10,000,000 individually but not more than $25,000,000 in the

aggregate, (B) that are currently being marketed or sold by the Company

pursuant to the Company's January 1994 restructuring plan to the extent set

forth in Section 5.1(f) of the Disclosure Schedule or (C) with respect to

which a definitive agreement has been entered into by the Company prior to

September 12, 1994 (provided that no material modification or amendment
--------

shall be made to any such agreements), (iii) sales of accounts receivable

in the ordinary course of business, (iv) sales or pledges of accounts

receivable, or mortgages of other property in connection with certain

financings or refinancings outside of the United States, in an aggregate

amount of such financings or refinancings not to exceed $250 million,

subject to the terms of any such refinanced debt not becoming materially

more restrictive to the Company and the Company paying only market fees

related thereto and (v) in connection with capital expenditures permitted

to be expended by the Company pursuant to Section 5.1(h);

(g) except in the ordinary course of business consistent with past

practice and except for (i) an increase in the amount of up to $300 million

of the amount available or outstanding under the Amended and Restated

Credit Agreement dated as of August 16, 1994 between the Company and

Citibank, as amended and (ii) the refinancing of two issues of industrial

revenue bonds in an aggregate outstanding principal amount of $40,000,000,

subject in the

<PAGE>
72

case of (i) and (ii) to the terms of such refinanced debt instruments not

becoming materially more restrictive to the Company and the Company paying

only market fees related thereto, (y) incur any indebtedness for borrowed

money or guarantee any such indebtedness of another person (other than (A)

guarantees by the Company in favor of any of its wholly owned subsidiaries

or by any of its subsidiaries in favor of the Company or (B) guarantees of

subsidiaries or, in the ordinary course of business, 50% owned affiliates

of the Company, in an aggregate amount not exceeding $10,000,000, on market

terms (including fees)), issue or sell any debt securities or warrants or

other rights to acquire any debt securities of the Company or any of its

subsidiaries, guarantee any debt securities of another person, enter into

any "keep well" or other agreement to maintain any financial statement

condition of another person or enter into any arrangement having the

economic effect of any of the foregoing, except for short-term borrowings

incurred in the ordinary course of business consistent with past practice

or (z) make any loans, advances or capital contributions to, or investments

in, any other person, other than to the Company or any direct or indirect

wholly owned subsidiary of the Company;

(h) expend funds for capital expenditures other than in accordance

with the Company's current capital expenditure plans;

<PAGE>
73

(i) waive, release, grant, or transfer any rights of value or modify

or change in any material respect any existing license, lease, contract or

other document, other than in the ordinary course of business consistent

with past practice;

(j) adopt a plan of complete or partial liquidation or resolutions

providing for or authorizing such a liquidation or a dissolution, merger,

consolidation, restructuring, recapitalization or reorganization;

(k) enter into or amend any material collective bargaining agreement,

other than in the ordinary course of business;

(l) change any accounting principle used by it, unless required by

the SEC or the Financial Accounting Standards Board;

(m) make any tax election or settle or compromise any income tax

liability or file the 1994 federal income tax return prior to the last day

(including extensions) prescribed by law, in the case of any of the

foregoing, material to the business, financial condition or results of

operations of the Company and its subsidiaries taken as a whole;

(n) settle or compromise any litigation (whether or not commenced

prior to the date of this Agreement) or settle, pay or compromise any

claims not required to be paid, individually in an amount in excess of

$1,000,000 and in the aggregate in an amount in excess of $10,000,000,

<PAGE>
74

other than in consultation and cooperation with Purchaser, and, with

respect to any such settlement, with the prior written consent of

Purchaser;

(o) take any action which would cause any debt securities of the

Company or any of its subsidiaries to no longer be listed on any national

securities exchange or registered pursuant to Section 13 or 15(d) of the

Exchange Act, other than with respect to any such debt securities that have

become due as a result of the maturity thereof; or

(p) authorize any of, or commit or agree to take any of, the

foregoing actions.

Section 5.2 Conduct of Business of Purchaser. During the period from
--------------------------------

the date of this Agreement to the Effective Time, Purchaser shall not engage in

any activities of any nature except as provided in, or in connection with the

transactions contemplated by, this Agreement.

Section 5.3 No Solicitation. Except with respect to divestitures in
---------------

accordance with the Company's January 1994 restructuring plan, neither the

Company nor any of is subsidiaries shall, nor shall it or any of its

subsidiaries authorize or permit any of its officers, directors or employees or

any investment banker, financial advisor, attorney, accountant or other

representative retained by it or any of its subsidiaries to, (a) solicit,

initiate, encourage (including by way of furnishing information), or take any

other action to facilitate, any inquiry or the making of any proposal which

constitutes, or may reasonably be expected to lead to, any acquisition or

<PAGE>
75

purchase of a substantial amount of assets of, or any equity interest in, the

Company or any of its subsidiaries or any tender offer (including a self tender

offer) or exchange offer, merger, consolidation, business combination, sale of

substantially all assets, sale of securities, recapitalization, liquidation,

dissolution or similar transaction involving the Company or any of its

subsidiaries (other than the transactions contemplated by this Agreement or the

Conditional Purchase/Stock Option Agreement) or any other transaction the

consummation of which would or could reasonably be expected to impede, interfere

with, prevent or materially delay the Merger or the exercise of the Conditional

Purchase Right or which would or could reasonably be expected to materially

dilute the benefits to Purchaser of the transactions contemplated hereby

(collectively, "Transaction Proposals") or agree to or endorse any Transaction

Proposal or (b) enter into or participate in any discussions or negotiations

regarding any of the foregoing, or furnish to any other person any information

with respect to its business, properties or assets or any of the foregoing, or

otherwise cooperate in any way with, or assist or participate in, facilitate or

encourage, any effort or attempt by any other person to do or seek any of the

foregoing; provided, however, that the foregoing clauses (a) and (b) shall not
-------- -------

prohibit the Company from (i) furnishing information pursuant to an appropriate

confidentiality letter concerning the Company and its businesses, properties or

assets to a third party who has made a Transaction Proposal, (ii) engaging in

discussions or negotiations with such a third party

<PAGE>
76

who has made a Transaction Proposal or (iii) following receipt of a Transaction

Proposal, taking and disclosing to its shareholders a position contemplated by

Rule 14e-2(a) under the Exchange Act or changing the Recommendations, but in

each case referred to in the foregoing clauses (i) through (iii) only after the

Board of Directors of the Company concludes in good faith that such action is

necessary or appropriate in order for the Board of Directors of the Company to

act in a manner which is consistent with its fiduciary obligations under

applicable law. If the Board of Directors of the Company receives a Transaction

Proposal, then the Company shall promptly inform Parent of the terms and

conditions of such proposal and the identity of the person making it and shall

keep Parent generally informed with reasonable promptness of any steps it is

taking pursuant to the proviso of the first sentence with respect to such

Transaction Proposal.

Section 5.4 Access to Information. (a) The Company shall, and shall
---------------------

cause each of its subsidiaries to, afford to Purchaser and Parent and to the

officers, employees, counsel, financial advisors, environmental consultants and

other representatives of Purchaser and Parent ("Parent Representatives")

reasonable access during normal business hours during the period prior to the

Effective Time to all its properties, books, contracts, commitments, personnel

and records and, during such period, the Company shall, and shall cause each of

its subsidiaries to, furnish as promptly as practicable to Purchaser, Parent and

Parent Representatives such information concerning its business, properties,

financial conditions,

<PAGE>
77

operations and personnel as they may from time to time reasonably request.

Parent and Purchaser will hold, and will cause the Parent Representatives to

hold, any nonpublic information obtained from the Company in confidence to the

extent required by, and in accordance with, the provisions of the letter dated

August 1994, between Kohlberg Kravis Roberts & Co. and the Company (the "Company

Confidentiality Agreement"), provided that Parent and Purchaser may disclose any

such nonpublic information to lenders or potential lenders who are advised of

the confidentiality of such information to the extent necessary to satisfy the

condition set forth in clause (iv) of the first paragraph of Annex A hereto.

The Company and Parent hereby agree that the terms and provisions of the Company

Confidentiality Agreement, other than with respect to the use of Evaluation

Material (as defined in the Company Confidentiality Agreement), shall be

superseded by this Agreement.

(b) Parent shall use its reasonable best efforts to make available to

the Company and to the officers, employees, counsel, financial advisors and

other representatives of the Company reasonable access during normal business

hours during the period prior to the Effective Time to all the properties,

books, contracts, commitments, personnel and records of Holdings and, during

such period, Parent shall use its reasonable best efforts to furnish as promptly

as practicable to the Company such information concerning the business,

properties, financial conditions, operations and personnel of Holdings as the

Company party may from time to time reasonably request. The Company will

<PAGE>
78

hold, and will cause its directors, officers, partners, employees, accountants,

counsel, financial advisors and other representatives and affiliates to hold,

any nonpublic information obtained from Parent and Holdings in confidence to the

extent required by, and in accordance with, the provisions of the letter dated

September 11, 1994, between Holdings and the Company.

representations or warranties of the parties herein or the conditions to the

obligations of the parties hereto.

Section 5.5 Notification. Each of the Company, Parent and Purchaser
------------

will, in the event of, or promptly after obtaining knowledge of the occurrence

(or non-occurrence) or threatened occurrence (or non-occurrence) of, any fact or

event which would cause or constitute a material breach of or failure of any of

the representations and warranties, covenants or conditions set forth herein or,

in the case of the Company, would constitute or result in a Material Adverse

Effect, give notice thereof to each other party hereto and will use its

reasonable efforts to prevent or promptly to remedy such breach or satisfy such

conditions; provided, however, that the delivery of, or failure to deliver, any
-------- -------

notice pursuant to this Section 5.5 shall not limit or otherwise affect any

remedies available hereunder.

Section 5.6 Best Efforts. Upon the terms and subject to the
------------

conditions herein provided, each of the parties hereto agrees (subject to the

last sentence of Section 5.9 and to Section 8.3(f)) to use its best efforts to

take, or cause to be

<PAGE>
79

taken, all action, and to do, or cause to be done, and to assist and cooperate

with the other parties hereto in doing all things necessary, proper or advisable

under applicable laws and regulations to ensure that the conditions set forth in

Article 6 and Annex A are satisfied and to consummate and make effective, in the

most expeditious manner practicable, the transactions contemplated by this

Agreement and the Conditional Purchase/Stock Option Agreement, including,

without limitation, using its best efforts to obtain all necessary waivers,

consents and approvals, and effecting all necessary registrations and filings in

accordance with Section 5.7. In case at any time after the Effective Time any

further action is necessary or desirable to carry out the purposes of this

Agreement, the proper officers and directors of each party to this Agreement

shall take all such necessary action. The Company and Parent and Purchaser will

execute any additional instruments necessary to consummate the transactions

contemplated hereby.

Section 5.7 Certain Filings, Consents and Arrangements. Parent,
------------------------------------------

Purchaser and the Company will use their best efforts and cooperate with one

another (i) in promptly determining whether any filings are required to be made

or consents, approvals, 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) under any United States or foreign law or

regulation or from any Governmental Entity or third parties, including parties

to loan agreements, in connection with the transactions contemplated by

<PAGE>
80

this Agreement, including the Offer and the Merger, and the Conditional

Purchase/Stock Option Agreement and (ii) subject to the last sentence of Section

5.9 and to Section 8.3(f), in promptly making any such filings, furnishing

information required in connection therewith and in timely seeking to obtain any

such consents, approvals, permits or authorizations.

Section 5.8 Public Announcements. The initial press release with
--------------------

respect to the transactions contemplated hereby shall be mutually satisfactory

to the parties hereto and thereafter, except as may be required by applicable

laws, court process or by obligations pursuant to any listing agreement with a

national securities exchange, no party shall issue any press release or make any

public filings relating to the transactions contemplated by this Agreement,

including the Offer and the Merger, and the Conditional Purchase/Stock Option

Agreement, without affording the Company, on the one hand, and Parent, on the

other hand, the opportunity to review and comment upon such release or filing.

Section 5.9 Antitrust Filings and Divestitures. The Company and
----------------------------------

Parent shall, as promptly as practicable, file notification and report forms

under the HSR Act with the Federal Trade Commission (the "FTC") and the

Antitrust Division of the Department of Justice (the "Antitrust Division") and

make any other necessary filings with the applicable Government Entities related

to the transactions contemplated by this Agreement, including the Offer and the

Merger, and the Conditional Purchase/Stock Option Agreement and shall use their

best efforts

<PAGE>
81

to respond as promptly as practicable to all inquiries received from the FTC or

the Antitrust Division or such other Governmental Entities for additional

information or documentation. Provided that following receipt of such approvals

Purchaser (or one of its affiliates) acquires at least 28,138,000 Shares

pursuant to the Offer and/or the Conditional Purchase/Stock Option Agreement,

the Company agrees to make any and all divestitures or undertakings required by

the FTC, the Antitrust Division or any other applicable Governmental Entity in

connection with the transactions contemplated by this Agreement and the

Conditional Purchase/Stock Option Agreement, which divestitures in each case

shall be reasonably acceptable to Parent and Purchaser.

Section 5.10 Employee Benefits.
-----------------

(a) Prior to the occurrence of a "Change in Control" as defined in the

Supplemental Benefit Trust Agreement between the Company and Wachovia Bank of

North Carolina, N.A. (the "Trust Agreement"), the Company shall take all such

action as may be necessary so that no funding of the Trust created thereunder

shall occur as a result of the transactions contemplated by this Agreement. The

Trust Agreement shall be amended prior to a Change in Control to permit the

disposition of all Common Shares it holds. The Company may amend the plans

listed in Section 5.10(a) of the Disclosure Schedule that would have been

required to be funded pursuant to the terms of the Trust Agreement in a manner

which provides for a lump-sum distribution to, but does not result in the

constructive receipt of compensation by, a covered employee of his or her

deferred compensation thereunder

<PAGE>
82

in the event of the involuntary termination or normal retirement (under the

Employees Retirement Income Plan) of such employee.

(b) Prior to the Effective Time, Purchaser shall not request that the

Company cancel, and the Company shall be under no obligation to cancel, the CORE

Management Arrangements. For this purpose, "CORE Management Arrangements" mean

those agreements between the Company and the executives so designated by the

Company and disclosed in Section 5.10(b) of the Disclosure Schedule which

provide for certain payments and benefits in the event of certain terminations

of employment.

Non-Exempt Associate Assistance Program and Exempt Associate Assistance

Program, on terms no less favorable than the terms in existence on the date

hereof, for the one-year period following the Effective Time. The Company shall

maintain, for the two-year period following the Effective Time, employee plans

and programs which are substantially similar in the aggregate to those pension

and welfare plans maintained for employees of the Company generally.

(d) Neither the Company nor any of its affiliates shall accelerate

the payment of any deferred award under any bonus plan or arrangement nor award

or pay any pro rata awards thereunder as a result, or in anticipation, of the

transactions contemplated by this Agreement; provided that the Company may pay

the 1994 annual bonuses pursuant to its Management Incentive Plan or other

similar annual bonus plan in a manner which is

<PAGE>
83

consistent with past practice and the achievement of goals set forth therein.

(e) The Company shall ensure that no prohibited transaction (within

the meaning of Section 406 of ERISA or 4975 of the Code) shall occur with

respect to any Company Plan as a result of the transactions contemplated by this

Agreement.

(f) With respect to any of the eleven individuals listed in Section

5.10(f) of the Disclosure Schedule, in lieu of any other severance arrangement

for such individual, the Company shall pay such individual in the event of that

individual's termination by the Company after a "Change in Control" without

"Cause" (as those terms are defined in the Core Management Agreements referred

to in Section 5.10(b)) a cash severance amount equal to twelve months of salary.

The special severance payments set forth in this Section 5.10(f) shall no longer

be applicable when twelve (eighteen for that individual next to whose name an

asterisk appears in Section 5.10(f) of the Disclosure Schedule) months have

elapsed after the Change in Control. For any executive listed on Schedule

5.10(g), such executive's letter of employment shall be modified so that a

termination without cause prior to the second anniversary of a Change in Control

(as defined in such letters) shall include a termination by the executive due to

the occurrence of any one of the following events without his advance consent:

i. the executive's office is relocated to a different city;

ii. the executive's base salary is reduced or executive's bonus
opportunity is materially lower than other Company executives of
comparable rank;

<PAGE>
84

iii. there is a material diminution in the nature or scope of the
authority or responsibilities attached to the executive's
position. A diminution in nature or scope of authority or
responsibilities will not be deemed to occur simply because the
company or business in which the executive is engaged has changed
in size or structure; or

iv. in the case of the executive next to whose name a double asterisk
appears in Section 5.10(g) of the Disclosure Schedule, the
business (either separately or as part of a larger business unit)
in which the executive is engaged is sold or otherwise disposed
of.

Section 5.11 Indemnification and Insurance. (a) The Certificate of
-----------------------------

Incorporation and By-laws of the Surviving Corporation shall contain provisions

identical with respect to elimination of personal liability and indemnification

to those set forth in Articles VI and VII of the Restated Certificate of

Incorporation set forth in Exhibit A hereto and Article X of the By-laws of the

Company, respectively, which provisions shall not be amended, repealed or

otherwise modified for a period of six years from the Effective Time in any

manner that would adversely affect the rights thereunder of individuals who at

the Effective Time were directors, officers, agents or employees of the Company.

(b) Surviving Corporation shall maintain in effect for six years from

the Effective Time policies of directors' and officers' liability insurance

containing terms and conditions which are not less advantageous than those

policies maintained by the Company at the date hereof, with respect to matters

occurring prior to the Effective Time, to the extent available, and having the

maximum available coverage under the current policies of

<PAGE>
85

directors and officers' liability insurance; provided that the Surviving

Corporation shall not be required to spend in excess of a $3,000,000 annual

premium therefor; provided further that if the Surviving Corporation would be

required to spend in excess of a $3,000,000 premium per annum to obtain

insurance having the maximum available coverage under the current policies, the

Surviving Corporation will be required to spend $3,000,000 to maintain or

procure insurance coverage pursuant hereto, subject to availability of such (or

similar) coverage.

paragraph, Parent and Purchaser agree that the officers and directors of the

Company that are defendants in all litigation commenced by shareholders of the

Company with respect to (x) the performance of their duties as such officers

and/or directors under federal or state law (including litigation under federal

and state securities laws) and (y) Purchaser's offer or proposal to acquire the

Company including, without limitation, any and all such litigation commenced on

or after the date of the Letter Agreement (as defined herein) (the "Subject

Litigation") shall be entitled to be represented, at the reasonable expense of

the Company, in the Subject Litigation by one counsel (and New Jersey counsel if

appropriate and one local counsel in each jurisdiction in which a case is

pending) each of which such counsel shall be selected by a plurality of such

director defendants; provided that neither the Company nor the Surviving

Corporation nor Parent shall be liable for any settlement effected without its

prior written consent (which consent shall

<PAGE>
86

not be unreasonably withheld) and that a condition to the indemnification

payments provided in paragraph 5.11(a) shall be that such officer/director

defendant not have settled any Subject Litigation without the consent of Parent

or the Surviving Corporation; and provided further that the Surviving

Corporation and Parent shall have no obligation hereunder to any

officer/director defendant when and if a court of competent jurisdiction shall

ultimately determine, and such determination shall have become final and non-

appealable, that indemnification of such officer/director defendant in the

manner contemplated hereby is prohibited by applicable law.

Section 5.12 Redemption of Series B Preferred Stock. Without
--------------------------------------

limiting the conditions to the Offer set forth in Annex A hereto and provided

that the Minimum Condition is satisfied without having been waived or lowered,

the Company will, promptly after consummation of the Offer, in the manner and to

the extent permitted by the Charter, redeem all of its outstanding shares of

Series B Preferred Stock prior to any record date in connection with the Merger

at the amount provided for redemption in the Charter, and the Company agrees,

subject to first obtaining any required approvals under its debt instruments or

other agreements to which the Company is subject, promptly to commence taking

all steps necessary to effect such redemptions.

Section 5.13 Certain Agreements. Neither the Company nor any
------------------

subsidiary will waive any provision of any confidentiality or standstill or

similar agreement to which it is a party without the prior written consent of

Parent, unless the

<PAGE>
87

board of directors of the Company or such subsidiary concludes in good faith

that waiving such provision is necessary or appropriate in order for the Board

of Directors of the Company to act in a manner which is consistent with its

fiduciary obligations under applicable law.

Section 5.14 Redemption of Rights. The Company will redeem all
--------------------

outstanding Rights at a redemption price of one and two-thirds cents per Right

effective immediately prior to the acceptance for exchange of any Shares

pursuant to the Offer, provided that the Minimum Condition will be satisfied in

the Offer. The Company will amend the Rights Agreement in accordance with

Section 4.1(o) hereof prior to the acceptance for payment of any Shares pursuant

to the Offer if the Minimum Condition is waived to permit only such purchase of

Shares. The Company and Parent hereby agree that if the Company amends any

provision of the Rights Agreement in connection with a Transaction Proposal or

with respect to any Person (as defined in Section 7.1(f)) or if the application

of the Rights Agreement or any provision thereof is enjoined with respect to any

Person or Transaction Proposal or if the Company agrees to redeem the Rights on

terms more favorable than the terms set forth with respect to Parent and

Purchaser in this Agreement (any of such events, a "Third Party Rights

Amendment") in a manner that makes such Third Party Rights Amendment less

restrictive with respect to such Person, or in connection with such Transaction

Proposal, or is otherwise more favorable with respect to such Person, or in

connection with such Transaction Proposal, than the Rights Agreement as then in

effect

<PAGE>
88

with respect to Parent and Purchaser, the Company shall be deemed (if and to the

extent possible and without derogating the obligations of the Company pursuant

to the next sentence), without the necessity of any action by the Company or the

Rights Agent, to have so amended the Rights Agreement with respect to Parent and

Purchaser to the same extent or to have agreed to redeem the Rights with respect

to Parent and Purchaser on terms as favorable. The Company agrees to notify

Parent promptly of any Third Party Rights Amendment and simultaneously with the

execution of the Third Party Rights Amendment to execute a written amendment to

the Rights Agreement with respect to the foregoing.

Section 5.15 Affiliates and Certain Stockholders. Prior to the
-----------------------------------

Closing Date, the Company shall deliver to Parent a letter identifying all

persons who are, at the time the Merger is submitted for approval to the

shareholders of the Company, "affiliates" of the Company for purposes of Rule

145 under the Securities Act. The Company shall use its reasonable best efforts

to cause each such person to deliver to Parent on or prior to the Closing Date a

written agreement substantially in the form attached as Exhibit B hereto.

Parent shall not be required to cause Holdings to maintain the effectiveness of

the Form S-4 or any other registration statement under the Securities Act for

the purposes of resale of Holdings Common Stock by such affiliates and the

certificates representing Holdings Common Stock received by such affiliates in

the Merger shall bear a

<PAGE>
89

customary legend regarding applicable Securities Act restrictions and the

provisions of this Section 5.15.

Section 5.16 Proxy Solicitation For Shareholders' Meeting. If
--------------------------------------------

approval of the Company's shareholders is required by applicable law in order to

consummate the Merger, the Company, Purchaser and Parent agree that, if the

Company or Parent is advised by its respective or joint proxy solicitors prior

to the Shareholders' Meeting that a vote in favor of the Merger is not likely to

be obtained at the Shareholders' Meeting, the Shareholders' Meeting shall, at

the request of the Independent Directors, be adjourned from time to time,

provided that in no event will the Shareholders' Meeting be required hereunder

to be held more than sixty days from the date that the Proxy Statement was first

mailed to the Company's shareholders, which sixty day period shall be extended

by the number of days, if any, that the Company or Parent is enjoined from

soliciting proxies for the Merger in connection with the Shareholders' Meeting

or that the holding of the Shareholders Meeting or the vote thereat is enjoined.

ARTICLE 6

CONDITIONS TO CONSUMMATION OF THE MERGER

Section 6.1 Conditions to Each Party's Obligations to Effect the
----------------------------------------------------

Merger. The respective obligation of each party to effect the Merger is subject
- ------

to the satisfaction at or prior to the Effective Time of the following

conditions:

(a) If required by New Jersey law or the Charter, the Company

Shareholder Approval shall have been obtained;

<PAGE>
90

(b) any waiting period applicable to the Merger under the HSR Act

shall have terminated or expired;

(d) The Form S-4 shall have become effective, and any required post-

effective amendment shall have become effective, under the Securities Act

and shall not be the subject of any stop order or proceedings seeking a

stop order, and any material "blue sky" and other state securities laws

applicable to the registration of the Holdings Common Stock to be exchanged

for Common Stock shall have been complied with; and

(e) no statute, rule, regulation, executive order, decree, or

injunction shall have been enacted, entered, promulgated or enforced by any

Governmental Entity which prohibits the consummation of the Merger, whether

temporary, preliminary or permanent; provided, however, that the parties
-------- -------

hereto shall use their best efforts to have any such order, decree or

injunction vacated.

Section 6.2 Conditions to Obligation of the Company. If fewer than
---------------------------------------

66 2/3% of the Shares outstanding on a fully diluted basis (other than

dilution due to the Rights) shall have been accepted for exchange in the

Offer, the obligation of the Company to effect the Merger is further subject

to the satisfaction or waiver at or prior to the Effective Time of the

following conditions:

<PAGE>
91

(a) The representation and warranty of Purchaser and Parent set forth

in Section 4.2(i) of this Agreement shall be true and correct, as of the

date of this Agreement and as of the Closing Date as though made on and as

of the Closing Date.

Section 6.3 Conditions to Obligations of Purchaser and Parent to
----------------------------------------------------

Effect the Merger. If fewer than 66 2/3% of the Shares outstanding on a fully
- -----------------

diluted basis (other than dilution due to the Rights) shall have been accepted

for exchange in the Offer, the obligations of Purchaser and Parent to effect the

Merger are further subject to the satisfaction or waiver at or prior to the

Effective Time of the following conditions:

(a) The representation and warranty of the Company set forth in

Section 4.1(g) of this Agreement shall be true and correct, as of the date

of this Agreement and as of the Closing Date as though made on and as of

the Closing Date;

(b) The Company shall have performed in all material respects the

affirmative covenants required to be performed by it under Sections 5.1

(except to the extent the same would not cause a Material Adverse Effect

with resect to the Company), 5.9, 5.12 and 5.14 of this Agreement at or

prior to the Closing Date;

Section 4.1(e) of this Agreement, applied mutatis mutandis to the SEC
------- --------

Documents filed by the Company with the SEC since the date of the

Agreement, shall be true and

<PAGE>
92

correct in all material respects as of the Closing Date as though made on

and as of the Closing Date.

Notwithstanding the foregoing, the obligations of the Company or Purchaser and

Parent to effect the Merger are not subject to the satisfaction or waiver of any

of the conditions set forth in this Section 6.2 or 6.3 to the extent that the

failure of any such condition to be satisfied is the result of any action

approved by a majority of those directors of the Company who are designees or

representatives of Parent or to the extent the same results from affirmative

action taken by the Company with the knowledge of the board of directors while a

majority of the directors of the Company consists of persons designated or

elected by Parent.

ARTICLE 7

TERMINATION; AMENDMENT; WAIVER

Section 7.1 Termination. This Agreement may be terminated and the
-----------

Merger contemplated hereby may be abandoned at any time, notwithstanding

approval thereof by the shareholders of the Company, but prior to the Effective

Time:

(a) by mutual written consent of Parent, Purchaser and the Company;

(b) by Parent or the Company, if any court of competent jurisdiction

or other governmental body located or having jurisdiction within the United

States or any country or economic region in which either the Company or

Parent, directly or indirectly, has material assets or operations, shall

have issued an order, decree or ruling or taken any other action

permanently restraining, enjoining or otherwise

<PAGE>
93

prohibiting the Merger and such order, decree, ruling or other action

shall have become final and nonappealable;

result in a failure to satisfy any of the conditions to the Offer set forth

in Annex A hereto Purchaser shall have terminated the Offer, unless such

termination shall have been caused by or resulted from the failure of

Parent or Purchaser to perform in any material respect their material

covenants and agreements contained in this Agreement.

(d) by Parent, if the Company shall have modified or amended in any

respect materially adverse to Parent or Purchaser or withdrawn its approval

or recommendation of the Offer, the Merger or this Agreement, provided that
--------

any communication that advises that the Company has received a Transaction

Proposal or is engaging in an activity permitted by clauses (i) or (ii) of

the proviso to the first sentence of Section 5.3 hereof with respect to a

Transaction Proposal and that takes no action or position with respect to

the Offer, the Merger, this Agreement or any Transaction Proposal shall not

be deemed to be a withdrawal, modification or amendment of the Company's

approval or recommendation of the Offer, the Merger or this Agreement and

provided, further, that a "stop-look-and-listen" communication with respect
-------- -------

to the Offer, the Merger or this Agreement of the nature contemplated in

Rule 14d-9(e) under the Exchange Act made by the Company as a result of a

<PAGE>
94

Transaction Proposal (whether or not a tender offer), without more, shall

not be deemed to be a modification or amendment of the Company's approval

or recommendation of the Offer, the Merger or this Agreement that is

materially adverse to Parent or Purchaser, if within 10 business days after

the date of such communication the Company shall have reaffirmed its

recommendation of the Offer, the Merger and this Agreement;

(e) by Parent if the Company shall have (i) entered into any

definitive agreement to effect the transaction contemplated by a

Transaction Proposal, (ii) recommended any Transaction Proposal from a

person other than Parent or Purchaser or any of its affiliates or (iii)

resolved to do any of the foregoing;

(f) by Parent, if any corporation (including the Company or any of

its subsidiaries), partnership, person, other entity or group (as defined

in Section 13(d)(3) of the Exchange Act) other than Parent or any of its

subsidiaries (collectively, "Persons") shall have become the beneficial

owner of more than 35% of the outstanding Shares (excluding any dilution

due to the Rights)(an "Alternative Acquisition");

(g) by the Company if (i) due to an occurrence or circumstance that

would result in a failure to satisfy any of the conditions set forth in

Annex A hereto Purchaser shall have terminated the Offer, unless such

termination shall have been caused by or resulted from the failure of

<PAGE>
95

the Company to perform in any material respect its material covenants and

agreements contained in this Agreement or (ii) prior to the purchase of

Shares pursuant to the Offer, any person shall have made a bona fide

Transaction Proposal (A) that the Board of Directors of the Company

determines in its good faith judgement is more favorable to the Company's

shareholders than the Offer and the Merger and (B) as a result of which the

Board of Directors concludes in good faith that termination of this

Agreement is necessary or appropriate in order for the Board of Directors

to act in a manner which is consistent with its fiduciary obligations under

applicable law, provided that such termination under this clause (ii) shall
--------

not be effective until payment of the full fee and expense reimbursement

required by Section 8.3(b) hereof;

(h) by Parent or the Company if, without fault of the terminating

party, the Effective Time shall not have occurred on or before June 30,

1995 (provided, that the right to terminate this Agreement under this
--------

Section 7.1(h) shall not be available to any party whose failure to fulfill

any obligation under this Agreement has been the cause of, or results in,

the failure of the Merger to have been consummated within such period);

(i) by the Company if (i) on or after December 15, 1994, the

termination date of the waiver granted to the Company of the provisions of

Subsection 6.01(j)(iii) of the Credit Agreement dated as of August 16, 1994

among the

<PAGE>
96

Company and the banks party thereto (the "Credit Agreement") shall not then

extend past December 15, 1994 and (ii) the Company (A) shall have received

written notice from the Administrative Agent (as defined in the Credit

Agreement) pursuant to the terms of the Credit Agreement that, as a result

of the applicability of the provisions of Subsection 6.01(j)(iii) of the

Credit Agreement, all amounts payable under the Credit Agreement and the

other Loan Documents (as defined in the Credit Agreement) shall have become

and be forthwith due and payable (and provided that this Agreement shall be

deemed to be terminated hereby without any further action by any party

immediately prior to the receipt by the Company of such notice), (B) shall

have been advised in writing by the Administrative Agent that, as a result

of the provisions of Subsection 6.01(j)(iii) of the Credit Agreement, the

Required Banks (as defined in the Credit Agreement) have requested or

consented to such action or (C) the Company shall reasonably believe either

such action referred to in (A) or (B) above to be imminent based on

communications with the Administrative Agent, any of the banks party to the

Credit Agreement or representatives thereof; or

(j) by Parent or the Company if any required approval of the

shareholders of the Company shall not have been obtained by reason of the

failure to obtain the required vote upon a vote held at a duly held meeting

of shareholders or at any adjournment thereof.

<PAGE>
97

Section 7.2 Effect of Termination. In the event of the termination
---------------------

and abandonment of this Agreement pursuant to Section 7.1, this Agreement shall

forthwith become void and have no effect, without any liability on the part of

any party or its directors, officers or shareholders, other than the provisions

of this Section 7.2, Section 1.3(a), Section 2.8(c), Section 4.1(j), the last

sentences of Sections 5.4(a) and (b), Section 5.14, Section 8.1 and Section 8.3.

Nothing contained in this Section shall relieve any party from liability for any

breach of the covenants or agreements contained in this Agreement.

Section 7.3 Amendment. Subject to Section 1.3(c), this Agreement may
---------

be amended or supplemented at any time before or after the date on which a

majority of the board of directors of the Company shall consist of designees or

representatives of Parent but, after such date, no amendment shall be made which

decreases or increases the Final Exchange Ratio or which adversely affects the

rights of the Company's shareholders hereunder without the approval of the

Company and such shareholders. This Agreement may not be amended except by an

instrument in writing signed on behalf of the parties.

Section 7.4 Extension; Waiver. Subject to Section 1.3(c), at any
-----------------

time prior to the Effective Time, the parties may (i) extend the time for the

performance of any of the obligations or other acts of the other parties hereto,

(ii) waive any inaccuracies in the representations and warranties contained

herein of the other parties hereto or in any document, certificate or writing

delivered pursuant hereto or (iii) waive

<PAGE>
98

compliance by the other parties hereto with any of the agreements or conditions

contained herein. Any agreement on the part of any party to any such extension

or waiver shall be valid only if set forth in an instrument in writing signed on

behalf of such party. The failure of any party hereto to assert any of its

rights hereunder shall not constitute a waiver of such rights.

ARTICLE 8

MISCELLANEOUS

Section 8.1 Non-Survival of Representations and Warranties. Except
----------------------------------------------

for Section 2.8(c) and 4.1(j), the representations and warranties made herein

shall not survive beyond the Effective Time or a termination of this Agreement.

Section 8.2 Entire Agreement; Assignment. This Agreement and the
----------------------------

other agreements (other than the Letter Agreement (as defined below) which has

been superseded by this Agreement except to the extent the terms of the Letter

Agreement are expressly referred to herein) referred to herein (a) constitute

the entire agreement among the parties with respect to the subject matter hereof

and, except as provided herein, supersede all other prior agreements and

understandings, both written and oral, between the parties or any of them with

respect to the subject matter hereof and (b) shall not be assigned by operation

of law or otherwise, provided that Parent may assign its rights and obligations

or those of Purchaser, and Purchaser may assign its rights and obligations, to

Parent or to any direct or indirect wholly owned subsidiary of Parent, but no

such assignment shall relieve Parent or Purchaser, as the case may be,

<PAGE>
99

of its obligations hereunder if such assignee does not perform such obligations.

Section 8.3 Fees and Expenses. (a) The Company shall promptly, but
-----------------

in no event later than two business days following written notice thereof,

together with related bills or receipts, reimburse Parent and Purchaser for all

of their Expenses (as defined below) as incurred from time to time in an

aggregate amount of up to $15,000,000, against which aggregate amount Expenses

actually reimbursed (other than the fee in the amount of $20,000,000 (the

"Initial Advisory Fee") reimbursed by the Company upon the execution of that

certain letter agreement dated September 11, 1994 between Parent and the Company

(the "Letter Agreement")) under the Letter Agreement may be credited. For

purposes of this Section 8.3, "Expenses" shall include all out-of-pocket

expenses and fees including the fees and disbursements of counsel, financial

printers, experts, consultants and accountants, as well as all fees and expenses

payable to investment banking firms and other financial institutions and their

respective agents and counsel, whether incurred prior to, on or after the date

hereof, incurred in connection with the transactions contemplated by this

Agreement, the Letter Agreement and the Conditional Purchase/Stock Option

Agreement. The parties acknowledge that the reimbursement of the Initial

Advisory Fee shall not limit the reimbursement of any additional advisory fees

paid by Parent or Purchaser to non-affiliates of Purchaser.

(b) If (i) (x) prior to termination of this Agreement, any Person

shall have commenced, publicly proposed or

<PAGE>
100

communicated to the Company a Transaction Proposal (a "Pre-Termination

Transaction Proposal") (y) this Agreement is terminated pursuant to Section 7.1

and (z) on or prior to June 30, 1996, any Person who commenced, publicly

proposed or communicated to the Company a Pre-Termination Transaction Proposal

enters into any definitive agreement to effect the transaction contemplated by

such Transaction Proposal (whether or not related to such Pre-Termination

Transaction Proposal) or effects an Alternative Acquisition; or (ii) prior to

the purchase of Shares pursuant to the Offer, this Agreement is terminated

pursuant to Section 7.1(d) (other than solely in the event that the average of

the average of the high and low sales prices of the Holdings Common Stock as

reported on the New York Stock Exchange Composite Tape for the Valuation Period

is less than the price per share that would yield an Exchange Ratio of 2.375 or

less without giving effect to the first proviso in the definition of Exchange

Ratio, provided that this exclusion shall not be given effect so long as the

second proviso in the definition of Exchange Ratio is applicable); or (iii)

prior to the purchase of Shares pursuant to the Offer, this Agreement is

terminated pursuant to Section 7.1(e), 7.1(f) or clause (ii) of Section 7.1(g);

then in each case the Company shall promptly, but in no event later than one

business day after the first of such events shall occur, pay Kohlberg Kravis

Roberts & Co. ("KKR & Co.") a fee of $30,000,000 in cash, which amount shall be

payable in same day funds. No more than $30,000,000 in aggregate shall be

payable to KKR & Co. pursuant to this Section 8.3(b), and no fee

<PAGE>
101

shall be payable to KKR & Co. pursuant to this Section 8.3(b) if $30,000,000 has

been paid to KKR & Co. pursuant to Section 8.3(c).

including Purchaser) shall acquire beneficial ownership (in one or more

transactions) of a majority of the outstanding shares of Common Stock, then the

Company shall promptly, but in no event later than one business day after such

event shall occur, pay KKR & Co. a fee of $30,000,000 in cash, which amount

shall be payable in same day funds. No fee shall be payable to KKR & Co.

pursuant to this Section 8.3(c) if $30,000,000 has been paid to KKR & Co.

pursuant to Section 8.3(b).

(d) If the fee of $30,000,000 in cash required to be paid by the

Company to KKR & Co. pursuant to Section 8.3(b) or 8.3(c) hereof (the

"Transaction Fee") is not paid within five business days after the events set

forth in such Sections requiring payment of the Transaction Fee occur, KKR &

Co., at its sole option, may demand (the "Fee Demand") that the Company tender

to KKR & Co., immediately in satisfaction of the Transaction Fee, such number of

shares (rounded to the nearest whole share) of (i) Common Stock ((A) if it is

publicly traded and (B) which at the request of KKR & Co. shall be issued in

shares of treasury stock, if available) or (ii), at the sole option of KKR & Co.

if the Conditional Purchase Right shall have been exercised, and the Company

shall at the time own Holdings Common Stock that is not subject to any other

call or exchange

<PAGE>
102

right, Holdings Common Stock equal to (x) $30,000,000 divided by (y) the Average

Market Price. For purposes of this Section 8.3(d) "Average Market Price" shall

mean the average of the average of the high and low prices of Common Stock, or

Holdings Common Stock, as the case may be, as reported on the New York Stock

Exchange Composite Tape on each of the ten consecutive trading days immediately

preceding the second trading day prior to the Fee Demand. The Company

acknowledges that it is obligated hereunder to pay the Transaction Fee in cash

and that such obligation is not derogated in any respect by the existence of the

option of KKR & Co. to seek satisfaction of such obligation by means of the Fee

Demand.

(e) In addition to the other provisions of this Section 8.3, the

Company agrees promptly, but in no event later than two business days following

written notice thereof, together with related bills or receipts, to reimburse

KKR & Co., Parent and Purchaser for all reasonable out-of-pocket costs, fees and

expenses, including, without limitation, the reasonable fees and disbursements

of counsel and the expenses of litigation, incurred in connection with

collecting Expenses and the Transaction Fee as a result of any willful breach by

the Company of its obligations under Section 8.3.

(f) Except as otherwise provided in this Section 8.3, whether or not

the Merger is consummated, all costs and expenses incurred in connection with

the transactions contemplated by this Agreement and the Conditional

Purchase/Stock Option Agreement shall be paid by the party incurring such

expenses (including, in

<PAGE>
103

the case of the Company, the costs of printing the Schedule 14D-9 and any other

filings to be printed, and in each case all exhibits, amendments or supplements

thereto). Notwithstanding the foregoing, the costs and expenses of preparing

and distributing the Proxy Statement and obtaining and complying with the

antitrust requirements of any Governmental Entity shall be paid by the Company.

Section 8.4 Definitions. For purposes of this Agreement:
-----------

(a) an "affiliate" of any person means another person that directly

or indirectly, through one or more intermediaries, controls, is controlled

by, or is under common control with, such first person;

(b) "Material Adverse Change" or "Material Adverse Effect" means,

when used in connection with any person, any change or effect that either

individually or in the aggregate with all other such changes or effects is

materially adverse to the business, financial condition or results of

operations of such person and its subsidiaries taken as a whole or

adversely effects the ability of such person to consummate the transactions

contemplated by this Agreement in any material respect;

venture, association, trust, unincorporated organization or other entity;

and

(d) a "subsidiary" of any person means another person, an amount of

the voting securities, other voting ownership

<PAGE>
104

or voting partnership interests of which is sufficient to elect at least a

majority of its board of directors or other governing body (or, if there

are no such voting interests, more than 50% of the equity interests of

which) are owned directly or indirectly by such first person and includes,

in addition, with respect to the Company, BCPO and Borden Chemicals and

Plastics Limited Partnership ("BCPLP"). Notwithstanding anything to the

contrary contained herein, neither BCPO nor BCPLP shall be a "subsidiary"

for the purposes of Article V hereof.

Section 8.5 Gains and Transfer Taxes. Any liability with respect to
------------------------

the transfer of the property of the Company arising out of the New York State

Real Property Gains Tax, the New York State Real Estate Transfer Tax or the New

York City Real Property Transfer Tax shall be borne by the Company and expressly

shall not be the liability of the shareholders of the Company.

Section 8.6 Interpretation. When a reference is made in this
--------------

Agreement to a Section, Exhibit or Schedule, such reference shall be to a

Section of, or an Exhibit or Schedule to, this Agreement unless otherwise

indicated. The table of contents and headings contained in this Agreement are

for reference purposes only and shall not affect in any way the meaning or

interpretation of this Agreement. Whenever the words "include", "includes" or

"including" are used in this Agreement, they shall be deemed to be followed by

the words "without limitation".

Section 8.7 Parties in Interest. This Agreement shall be binding
-------------------

upon and inure solely to the benefit of each party

<PAGE>
105

hereto, and, with respect to the provisions of Section 5.11 and 8.3, shall inure

to the benefit of the persons or entities benefitting from the provisions

thereof who are intended to be third-party beneficiaries thereof. Except as

provided in the preceding sentence, nothing in this Agreement, express or

implied, is intended to or shall confer upon any other person any rights,

benefits or remedies of any nature whatsoever under or by reason of this

Agreement.

Section 8.8 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 delivery, telegram or

telecopy, or 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:

If to Parent or Purchaser:

c/o Kohlberg Kravis Roberts & Co.
9 West 57th St.
New York, New York 10019
Attention: Clifton S. Robbins

with a copy to:

Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: David J. Sorkin

if to the Company:

180 East Broad Street
Columbus, Ohio 43215
Attention: Frank J. Tasco

<PAGE>
106

with a copy to:

Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Andrew R. Brownstein, Esq.

or to such other address as the person to whom notice is given may have

previously furnished to the others in writing in the manner set forth above.

Section 8.9 Non-Recourse. Notwithstanding anything that may be
------------

expressed or implied in this Agreement, Parent covenants, agrees and

acknowledges and the Company, by its acceptance of the benefits of this

Agreement, covenants, agrees and acknowledges that notwithstanding that Parent

is a partnership no recourse under this Agreement or the Conditional

Purchase/Stock Option Agreement or any documents or instruments delivered in

connection with this Agreement or the Conditional Purchase/Stock Option

Agreement shall be had against any officer, agent or employee of Parent or

against any partner of Parent or any director, officer, employee, partner,

affiliate or assignee of any of the foregoing, whether by the enforcement of any

assessment or by any legal or equitable proceeding, or by virtue of any statute,

regulation or other applicable law, it being expressly agreed and acknowledged

that no personal liability whatsoever shall attach to, be imposed on or

otherwise be incurred by an officer, agent or employee of Parent or any partner

of Parent or any director, officer, employee, partner, affiliate or assignee of

any of the foregoing, as such for any obligations of Parent under the Agreement

or any documents or instruments delivered in connection with this Agreement or

the

<PAGE>
107

Conditional Purchase/Stock Option Agreement or for any claim based on, in

respect of or by reason of such obligations or their creation; provided,
--------

however, that the foregoing limitation of liability shall in no way constitute a
- -------

limitation on the rights of the Company to enforce any remedies it may have

against the undistributed assets of Parent for the collection of any obligations

or liabilities in connection with this Agreement or the Conditional

Purchase/Stock Option Agreement.

Section 8.10 Governing Law. This Agreement shall be governed by and
-------------

construed in accordance with the laws of the State of New Jersey, regardless of

the laws that might otherwise govern under applicable principles of conflicts of

laws thereof.

Section 8.11 Enforcement. The parties agree that irreparable damage
-----------

would occur in the event that any of the provisions of this Agreement were not

performed in accordance with their specific terms or were otherwise breached.

It is accordingly agreed that the parties shall be entitled to an injunction or

injunctions to prevent breaches of this Agreement and to enforce specifically

the terms and provisions of this Agreement in any court of the United States

located in the State of New Jersey or the City of New York, this being in

addition to any other remedy to which they are entitled at law or in equity. In

addition, each of the parties hereto (a) consents to submit itself to the

personal jurisdiction of (i) the United States District Court for the District

of New Jersey and the United States District Court for the Southern District of

New York in the event any dispute arises out of this Agreement or any of the

<PAGE>
108

transactions contemplated by this Agreement to the extent such courts would have

subject matter jurisdiction with respect to such dispute and (ii) the courts of

the State of New Jersey and the State of New York otherwise, (b) agrees that it

will not attempt to deny or defeat such personal jurisdiction or venue by motion

or other request for leave from any such court and (c) agrees that it will not

bring any action relating to this Agreement or any of the transactions

contemplated by this Agreement in any court other than such courts sitting in

the State of New Jersey or the State of New York.

Section 8.12 Descriptive Headings. The descriptive headings used
--------------------

herein are inserted for convenience of reference only and are not intended to be

part of or to affect the meaning or interpretation of this Agreement.

Section 8.13 Counterparts. This Agreement may be executed in two or
------------

more counterparts, each of which shall be deemed to be an original, but all of

which shall constitute one and the same agreement.

Section 8.14 Severability. Whenever possible, each provision or
------------

portion of any provision of this Agreement will be interpreted in such manner as

to be effective and valid under applicable law but if any provision or portion

of any provision of this Agreement is held to be invalid, illegal or

unenforceable in any respect under any applicable law or rule in any

jurisdiction, such invalidity, illegality or unenforceability will not affect

any other provision or portion of any provision in such jurisdiction, and this

Agreement will be reformed,

<PAGE>
109

construed and enforced in such jurisdiction as if such invalid, illegal or

unenforceable provision or portion of any provision had never been contained

herein.

IN WITNESS WHEREOF, each of the parties has caused this Agreement to

be executed on its behalf by its officers thereunto duly authorized, all as of

the day and year first above written.

WHITEHALL ASSOCIATES, L.P.

By: KKR Associates, a limited
partnership, its General
Partner

By: /s/ Henry Kravis
------------------------------
Title: General Partner

BORDEN ACQUISITION CORP.

By: /s/ Clifton S. Robbins
------------------------------
Name: Clifton S. Robbins
Title: President

BORDEN, INC.

By: /s/ Allan L. Miller
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Name: Allan L. Miller
Title: Senior Vice President,
Chief Administrative
Officer and General
Counsel

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ANNEX A
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The capitalized terms used herein have the meanings set forth in the Agreement
and Plan of Merger (the "Agreement") to
which this Annex A is attached.
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CONDITIONS OF THE OFFER

Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for exchange, exchange or deliver any shares of Holdings
Common Stock for, subject to Rule 14e-1(c) under the Exchange Act, any Shares
tendered and may terminate or (subject to the terms of the Merger Agreement)
amend the Offer or may postpone the acceptance for exchange of the Shares
tendered, if immediately before acceptance for exchange of any such Shares
(whether or not any Shares have theretofore been accepted for exchange pursuant
to the Offer): (i) there shall not have been validly tendered and not properly
withdrawn pursuant to the Offer a number of Shares which, when added to any
Shares previously acquired by Parent or Purchaser (other than pursuant to the
Conditional Purchase Right) represent more than 41% of the Shares outstanding on
a fully diluted basis (other than dilution due to the Rights) (the "Minimum
Condition"); (ii) any waiting period under the HSR Act applicable to the
purchase of Shares pursuant to the Offer shall not have expired or been
terminated or the requisite approvals, authorizations or consents required by
the Investment Canada Act, Canada's Competition Act and the European Community
shall not have been obtained; (iii) the obtaining of all consents and waivers on
terms satisfactory to Parent necessary in order that the consummation of the
transactions contemplated by the Agreement and the Conditional Purchase/Stock
Option Agreement not constitute (A) an event of default or an event which with
or without notice or the passage of time would constitute an event of default
under any indebtedness, partnership agreement or equityholders agreement of the
Company or any subsidiary (or Borden Chemicals and Plastics Limited Partnership,
Borden Chemicals and Plastics Operating Limited Partnership and T.M. Investors
Limited Partnership) ("Indebtedness"), including, without limitation, the
Company's Amended and Restated Credit Agreement dated as of August 16, 1994 with
Citibank, N.A. as Administrative Agent and T.M. Investors Limited Partnership's
Amended and Restated Credit Agreement dated as of August 16, 1994 with Citibank,
N.A. as Administrative Agent, or (B) an event which would individually or in
combination with other events give rise to an obligation on the part of the
Company to repay or repurchase any Indebtedness, partnership interest or equity
interest, which event of default or other event described in clause (A) or (B)
above would give rise to, with or without notice or the passage of time and
taking into account any cross-acceleration or cross-default provisions, the
obligation to repay prior to maturity or the acceleration of an aggregate of at
least $25 million of Indebtedness or other obligations; (iv) the Company shall
not have refinanced, or

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received commitments for refinancing or indications satisfactory to Parent from
lenders that it will be able to refinance, in each case on market terms
reasonably acceptable to Parent, the principal bank credit facilities of the
Company and TMI, provided that such refinancing shall not be required to
increase the available lines of credit under such facilities except to meet the
working capital and other reasonable needs of the Company and its subsidiaries
and shall principally be related to extending maturities and renegotiating
repayment schedules under such facilities as appropriate to meet the business
plan as determined by Parent and the Company; (v) the Form S-4 and any required
post-effective amendment shall not have become effective, under the Securities
Act and shall be the subject of any stop order or proceedings seeking a stop
order, and any material "blue sky" and other state securities laws applicable to
the registration of the Holdings Common Stock to be exchanged for Common Stock
shall not have been complied with; or (vi) any of the following shall occur and
remain in effect and shall, in the reasonable judgment of Purchaser in any such
case, make it inadvisable to proceed with the Offer or such acceptance for
exchange of any of the Shares or to proceed with the Merger:

(a) (i) any representation or warranty of the Company in the
Agreement shall have been untrue as of the date of the Agreement and shall
continue to be untrue, which untrue representations or warranties, in the
aggregate, would have a Material Adverse Effect on the Company; or there has
been a breach by the Company of any covenant or agreement set forth in the
Agreement or the Conditional Purchase/Stock Option Agreement having a Material
Adverse Effect on the Company which has not been cured; (ii) the SEC Documents
filed by the Company with the SEC since the date of the Agreement did not comply
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and the SEC Documents
(including any and all financial statements included therein), except to the
extent revised or superseded by a subsequent filing with the SEC, as of such
dates contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; or (iii) the consolidated financial statements of the Company
included in the SEC Documents filed since the date of the Agreement did not
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were not prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited consolidated quarterly statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and did not
fairly present the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results

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3

of their operations and cash flows for the periods then ended (subject, in the
case of unaudited quarterly statements, to normal year-end audit adjustments).

(b) there shall be any United states or foreign statute, rule,
regulation, decree, order or injunction promulgated, enacted, entered into or
enforced by any Governmental Entity, that (i) restrains or prohibits the making
or consummation of the Offer or the Merger or restrains or prohibits the
performance of this Agreement or the Conditional Purchase/Stock Option
Agreement, (ii) prohibits or materially limits the ownership or operation by
Parent or Purchaser of all or any substantial portion of the business or assets
of the Company or any of its subsidiaries or compels Parent or Purchaser to
dispose of or to hold separate all or any substantial portion of the business or
assets of the Company or any of its subsidiaries, or imposes any material
limitation on the ability of Parent or Purchaser to conduct such business or own
such assets or (iii) imposes material limitations on the ability of Parent or
Purchaser (or any other affiliate of Parent or Purchaser) to acquire or hold or
to exercise full rights of ownership of the Shares, including, but not limited
to, the right to vote the Shares purchased by Purchaser on all matters properly
presented to the shareholders of the Company; provided, however, that Parent and
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Purchaser shall have used their best efforts to have any such decree, order or
injunction vacated or reversed;

(c) any change shall have occurred since the date hereof in the
business, financial condition or results of operations of the Company or any of
its subsidiaries which has had, or would reasonably be expected to have, a
Material Adverse Effect with respect to the Company, including, without
limitation, the commencement in respect of, or by, the Company of an
involuntary, or voluntary, proceeding under any applicable bankruptcy law,
decree, order or any other case or proceeding adjudging the Company a bankrupt
or insolvent, or the condition of the Company is such that it is unable to pay
all of its liabilities as such liabilities mature or has unreasonably small
capital for conducting the business theretofore or proposed to be conducted by
it;

(d) there shall have occurred (and the adverse effect of such
occurrence shall, in the reasonable judgment of Purchaser, be continuing) (i)
any general suspension of trading in, or limitation on prices for, securities on
any national securities exchange or in the over-the-counter market in the United
States, (ii) any extraordinary or material adverse change in United States
financial markets generally, including, without limitation, a decline of at
least 25% in either the Dow Jones Average of Industrial Stocks or the Standard &
Poor's 500 index from the date hereof, (iii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iv) any limitation (whether or not mandatory) by any Governmental
Entity, on, or any other event that would reasonably

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be expected to materially adversely affect, the extension of credit by banks or
other lending institutions, (v) a commencement of a war or armed hostilities or
other national or international calamity directly or indirectly involving the
United States (other than in Haiti) which would reasonably be expected to have a
Material Adverse Effect or materially adversely affect (or materially delay) the
consummation of the Offer or (vi) in the case of any of the foregoing existing
at the time of commencement of the Offer, a material acceleration or worsening
thereof;

(e) the Agreement shall have been terminated in accordance with its
terms or the Offer shall have been amended or terminated with the consent of the
Company.

The foregoing conditions are for the sole benefit of the Parent and
Purchaser and may be asserted by the Parent or Purchaser regardless of the
circumstances giving rise to any such condition and may be waived by the Parent
or Purchaser in whole or in part, provided however, that if Purchaser shall have
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exercised the Conditional Purchase Right in whole or in part prior to the
termination of the Offer Purchaser shall not be permitted to waive the Minimum
Condition. The Parent's or Purchaser's failure at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.

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EXHIBIT A
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RESTATED CERTIFICATE OF INCORPORATION

BORDEN, INC.

Pursuant to N.J.S. 14A:9-5(4)

Dated: ____________, 1995

THE UNDERSIGNED corporation certifies that it has adopted the

following restated certificate of incorporation:

ARTICLE I

Corporate Name

The name of the corporation is Borden, Inc.

ARTICLE II

Purpose

The purpose for which this corporation is organized is to engage in

any activity within the purposes for which corporations may be organized under

the New Jersey Business Corporation Act.

ARTICLE III

Capital Stock

1. Authorized Shares

The corporation is authorized to issue 400,000,000 shares, divided

into:

(a) 300,000,000 shares of common stock, par value $0.01 per share;

and

(b) 100,000,000 shares of preferred stock.

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The board is authorized to amend the certificate of incorporation to

divide the preferred shares into one or more series and to determine the

designation, the number, and the relative rights, preferences and limitations of

the shares of each series so created.

For purposes of illustration only, the foregoing power of the board

includes but is not limited to the determination of:

(i) The number of shares constituting each series;

(ii) The rate and times at which, and the terms and conditions on

which, dividends on shares of a series will be paid, and whether the

dividends are cumulative or non-cumulative or are participating or non-

participating;

(iii) The voting rights of the holders of shares of the series,

including whether the shares shall have no voting rights, or multiple,

full, limited or special voting rights;

(iv) The right, if any, of the holders of shares of the series to

convert their shares into, or exchange them for, shares of other classes or

series of stock of the corporation, and the terms and conditions of the

conversion or exchange, including provisions for adjustment of the

conversion price or rate in such events as the board shall determine;

(v) The right, if any, of the corporation or the holders of the

shares to cause the shares of the series to be redeemed, the redemption

price or prices and the time or times at which, and the terms and

conditions on which, shares of the series may be redeemed, and whether the

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3

shall be redeemed in exchange for cash or other property, or a combination

thereof;

(vi) The rights of the holders of shares of the series upon the

voluntary or involuntary dissolution, liquidation or winding-up of the

corporation and whether those rights are limited or participating; and

(vii) The obligation, if any, of the corporation to establish a sinking

fund for the purchase or redemption of the shares of the series, the

amounts and time of payments to that fund, and the other terms and

conditions of that fund.

2. Pre-emptive Rights

The shareholders of the corporation shall not have pre-emptive rights.

3. Shareholder Vote Required

The affirmative vote of a majority of votes cast by the shareholders

shall be required to authorize or approve any action or matter to be voted upon

by the shareholders, except that directors shall be elected as provided by law.

ARTICLE IV

Registered Office and Agent

The address of the corporation's current registered office is 65

Livingston Avenue, Roseland, New Jersey 07068; the name of the corporation's

current registered agent at that address is John R. MacKay 2nd.

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ARTICLE V

Current Board of Directors

The current board of directors consists of _____ persons whose name

and addresses are as follows:

[To be completed with then current board members.]

ARTICLE VI

Indemnification

Every person who is or was a director or an officer of the corporation

shall be indemnified by the corporation to the fullest extent allowed by law,

including the indemnification permitted by N.J.S. 14A:3-5(8), against all

liabilities and expenses imposed upon or incurred by that person in connection

with any proceeding in which that person may be made, or threatened to be made,

a party, or in which that person may become involved by reason of that person

being or having been a director or an officer of or of serving or having served

in any capacity with any other enterprise at the request of the corporation,

whether or not that person is a director or an officer or continues to serve the

other enterprise at the time the liabilities or expenses are imposed or

incurred. During the pendency of any such proceeding, the corporation shall, to

the fullest extent permitted by law, promptly advance expenses that are

incurred, from time to time, by a director or an officer in connection with the

proceeding, subject to the receipt by the corporation of an undertaking as

required by law.

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ARTICLE VII

Personal Liability of Directors or Officers

A director or officer of the corporation shall not be personally

liable to the corporation or its shareholders for the breach of any duty owed to

the corporation or its shareholders except to the extent that an exemption from

personal liability is not permitted by the New Jersey Business Corporation Act.

IN WITNESS WHEREOF, the undersigned corporation has caused this

certificate to be executed on its behalf by its duly authorized officer as of

the date first above written.

BORDEN, INC.

By:
----------------------
Name:
Title:

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EXHIBIT B

[Closing Date]

RJR Nabisco Holdings Corp.
1301 Avenue of the Americas
New York, New York 10019

Gentlemen:

I have been advised that I have been identified as a possible
"affiliate" of Borden, Inc., a New Jersey corporation (the "Company"), as that
term is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
General Rules and Regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933 (the
"Securities Act"), although nothing contained herein should be construed as an
admission of such fact.

Pursuant to the terms of an Agreement and Plan of Merger dated as of
September 23, 1994 (the "Merger Agreement") among Borden Acquisition Corp., a
New Jersey corporation ("Purchaser"), Whitehall Associates, L.P., a Delaware
limited partnership, and the Company, Purchaser will be merged with and into the
Company (the "Merger"). As a result of the Merger, I will receive Merger
Consideration (as defined in the Merger Agreement), including shares of common
stock, par value $.01 per share ("Holdings Common Stock"), of RJR Nabisco
Holdings Corp., a Delaware corporation ("Holdings") in exchange for shares of
common stock, par value $.625 per share ("Common Stock"), of the Company owned
by me at the effective time of the Merger as determined pursuant to the Merger
Agreement.

A. In connection therewith, I represent, warrant and agree that:

1. I shall not make any sale, transfer or other disposition of the
Holdings Common Stock I receive as a result of the Merger in violation of
the Securities Act or the Rules and Regulations.

2. I have been advised that the issuance of Holdings Common Stock to
me as a result of the Merger has been registered with the Commission under
the Securities Act on a Registration Statement on Form S-4. However, I
have also been advised that, because at the time the Merger was submitted
for a vote of the stockholders of the Company I may have been an
"affiliate" of the Company and the distribution by me of the shares of
Holdings Common Stock I receive as a result of the Merger has not been
registered under the Securities Act, such shares must be held by me
indefinitely unless (i) such distribution of such shares has been
registered under the Securities Act, (ii) a sale of such shares is made in
conformity with the provisions of

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Rule 145 promulgated by the Commission under the Securities Act or (iii)
such sale is pursuant to a transaction which, in the opinion of counsel
reasonably satisfactory to Holdings or as described in a "no-action" or
interpretive letter from the staff of the Commission, is not required to be
registered under the Securities Act.

3. I have carefully read this letter and the Merger Agreement and
have discussed the requirements of the Merger Agreement and other
limitations upon the sale, transfer or other disposition of the shares of
Holdings Common Stock to be received by me, to the extent I have felt
necessary, with my counsel or with counsel for the Company.

B. Furthermore, in connection with the matters set forth herein, I
understand and agree that:

1. Holdings is under no further obligation to register the sale,
transfer or other disposition of the shares of Holdings Common Stock
received by me as a result of the Merger or to take any other action
necessary in order to make compliance with an exemption from registration
available, except as set forth in paragraph C below.

2. Stop transfer instructions will be given to the transfer agents of
Holdings with respect to the shares of Holdings Common Stock I will receive
as a result of the merger, and there will be placed on the certificates
representing such shares, or any certificates delivered in substitution
therefor, a legend stating in substance:

"The shares represented by this certificate were issued in a
transaction to which Rule 145 under the Securities Act of
1933 applies. The shares represented by this certificate
may be transferred only in accordance with the terms of an
agreement dated , 1994 between the registered
holder hereof and RJR Nabisco Holdings Corp., a copy of
which agreement is on file at the principal offices of RJR
Nabisco Holdings Corp."

3. Unless the transfer by me of my shares of Holdings Common Stock is
a sale made in conformity with the provisions of Rule 145 of the Rules and
Regulations or made pursuant to a registration under the Securities Act,
Holdings reserves the right to put the following legend on the certificates
issued to my transferee:

"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were
acquired by the holder not with a view to, or for resale in
connection with, any distribution thereof

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within the meaning of the Securities Act of 1933 and may not be sold,
pledged or otherwise transferred except pursuant to a registration
statement or in accordance with an exemption from the registration
requirements of the Securities Act of 1933."

It is understood and agreed that the legends set forth above shall be
removed and substitute certificates shall be delivered without any such legend
and the transfer agents will be instructed to effectuate transfers of shares of
Holdings Common Stock if the undersigned delivers to Holdings a letter from the
staff of the Commission or an opinion of counsel in form and substance
reasonably satisfactory to Holdings to the effect that such legend is not
required for the purposes of the Securities Act.

C. Holdings hereby represents, warrants and agrees that:

For as long as resales of any shares of Holdings Common Stock owned by
me are subject to Rule 145, Holdings will use all reasonable efforts to
make all filings of the nature specified in paragraph (c)(1) of Rule 144 of
the Rules and Regulations.

Very truly yours,

Exhibit 3.1