1- 2 PRODUCTION AGREEMENT

1
EXECUTION COPY

EXHIBIT 10.2

*** OMITTED INFORMATION
DENOTED BY ASTERISKS (***)
HAS BEEN SEPARATELY FILED
WITH THE COMMISSION AND
IS SUBJECT TO A CONFIDENTIAL
TREATMENT REQUEST***

AMENDED AND RESTATED PRODUCTION AGREEMENT

between

BP CHEMICALS INC.

and

STERLING CHEMICALS, INC.

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PRODUCTION AGREEMENT

TABLE OF CONTENTS

ARTICLE PAGE
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1 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2 - Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3 - Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

4 - Rights and Obligations Respecting Facility Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5 - Delivery, Shipment and Storage Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

6 - Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

7 - Purchase Price and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

8 - Deliveries and Shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

9 - Testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

10 - Measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

***.

12 - Co-Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

13 - Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

14 - Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

15 - BP Security Interests; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

16 - Access to Information and Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

17 - Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

18 - Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

19 - Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 00

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00 - Xxxxxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

21 - Dispute Resolution and Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

22 - Confidentiality and Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

23 - Defaults; Failures; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

24 - Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

25 - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

EXHIBITS

Exhibit A - Definitions

Exhibit B - Propylene Specifications

Exhibit C -Ammonia Specifications

Exhibit D - Acrylonitrile Specifications

SCHEDULES

Schedule 3.5(e)(i) - Sterling Actual Costs

Schedule 15.2 - Insurance

Schedule A-1 - Facility

Schedule A-2 - Example of Fixed Costs

Schedule A-3 - Example of Variable Costs

Schedule A-4 - BP Net Unrecouped Investment Amount

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AMENDED AND RESTATED PRODUCTION AGREEMENT

THIS AMENDED AND RESTATED PRODUCTION AGREEMENT executed as of the 31st
day of March 1998 is by and between BP Chemicals Inc., an Ohio corporation
("BP") and Sterling Chemicals, Inc., a Delaware corporation ("Sterling").

WHEREAS, Sterling owns and operates the Plant which contains the
Facility for the production of Product and Co-Products; and

WHEREAS, BP and Sterling are parties to the Production Agreement dated
as of April 15, 1988 (the "Original Agreement") pursuant to which BP provided
funds for the Project and Sterling granted BP the right to purchase a specified
portion of the Product produced by the Facility for a period of ten years with
BP options to extend such right for up to an additional ten years; and

WHEREAS, in lieu of an extension of the Original Agreement, the
parties hereto wish to amend and restate the Original Agreement to reflect (i)
the completion of the Project, (ii) the Right, and (iii) *** and otherwise to
provide for the terms and conditions under which Sterling shall produce and BP
shall purchase Product hereunder;

NOW, THEREFORE, for and in consideration of the premises and of the
mutual representations, warranties, covenants and agreements herein contained
and the mutual benefits to be derived therefrom, the parties hereto agree as
follows:

Article 1 - Definitions

1.1 Unless otherwise stated in this Agreement, capitalized terms used
herein shall have the meanings ascribed to them in Exhibit A.
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1.2 In this Agreement, unless a clear contrary intention appears:

(a) the words "hereof," "herein" and "hereunder" and words of
similar import refer to this Agreement as a whole and not to
any particular provision of this Agreement;

(b) reference to any gender includes each other gender and the
neuter;

(d) reference to any Person includes such Person's heirs,
executors, personal representatives, administrators,
successors and assigns; provided, however, that nothing
contained in this clause (d) is intended to authorize any
assignment not otherwise permitted by this Agreement;

(e) reference to a Person in a particular capacity or capacities
excludes such Person in any other capacity;

(f) reference to any contract or agreement means such contract or
agreement as amended, supplemented or modified from time to
time in accordance with the terms thereof;

(g) all references to Articles and Sections shall be deemed to be
references to the Articles and Sections of this Agreement;

(h) all references to Exhibits and Schedules shall be deemed to be
references to the Exhibits and Schedules attached hereto which
are made a part hereof and incorporated herein by reference;

(i) the word "including" (and with correlative meaning "include")
means including, without limiting the generality of any
description preceding such term;

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(j) with respect to the determination of any period of time, the
word "from" means "from and including" and the words "to" and
"until" each means "to but excluding";

(k) the captions and headings contained in this Agreement shall
not be considered or given any effect in construing the
provisions hereof if any question of intent should arise;

(l) where any provision of this Agreement refers to action to be
taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person; and

(m) no provision of this Agreement shall be interpreted or
construed against any Person solely because that Person or its
legal representative drafted such provision.

Article 2 - Term

2.1 Unless sooner terminated as provided herein, the term of this
Agreement shall be for an initial term commencing on the Effective
Date and ending on December 31, 2009 (the "Initial Term") and from
year to year thereafter unless either party gives two years' prior
written notice of its election to terminate this Agreement at the
expiration of the Initial Term or any Additional Term pursuant to this
Article 2. Each year that this Agreement remains in effect after the
expiration of the Initial Term shall be considered an "Additional
Term". Notwithstanding anything to the contrary contained in this
Agreement, in the event that (i) ANEXCO, LLC, a Delaware limited
liability company in which Sterling and BP are members, is dissolved
and liquidated for any reason, or (ii) any of the Joint Venture
Agreement dated as of March 31, 1998 or the ***, is terminated for any
reason, then each of Sterling and BP shall have the right, in its sole
discretion, to terminate this Agreement by

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providing written notice of its election to terminate this Agreement
within 30 days after the date ANEXCO LLC is dissolved or liquidated or
such other agreement is effectively terminated, as the case may be
(the "Cross Termination Right").

2.2 Either party shall have the right to terminate this Agreement without
cause for reasons other than as set forth in Section 2.3 effective at
any time by giving the other party at least 24 Months prior written
notice of its intent to terminate as of a date at least 24 Months
after the delivery of such notice. If BP terminates this Agreement
pursuant to this Section 2.2 or the Cross Termination Right during the
Initial Term, ***. If Sterling terminates this Agreement pursuant to
this Section 2.2 or the Cross Termination Right during the Initial
Term, in either case, (i) prior to November 26, 2004, *** of the
License Agreement or (ii) on or after November 26, 2004 but prior to
November 26, 2009, *** of the License Agreement, and, in any event, BP
will receive no further payments hereunder.

2.3 If this Agreement is terminated during the Initial Term due to a
final, non-appealable order of a court or governmental agency of
competent jurisdiction, ***, if any, produced from the Facility each
calendar quarter after the date of termination in excess of one-fourth
of *** then in effect which is sold or otherwise provided to a third
party during such calendar quarter. Such payments shall be made for
each calendar quarter during the period from the date of termination
until the earlier to occur of the following: (i) BP has received the
BP Net Unrecouped Investment Amount or (ii) December 31, 2004 (if
termination occurs before November 26, 1999), or December 31, 2009 (if
termination occurs thereafter). Nothing herein shall require Sterling
to pay BP, in the aggregate, a sum greater than the BP Net Unrecouped
Investment Amount or require Sterling to produce any amount of
Product.

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Article 3 - Technology

3.1 ***

3.2 ***

3.3 Sterling shall have no obligation to pay BP for use of the New
Technology in the Facility except as otherwise provided in this
Agreement, the License Agreement ***.

3.4 ***

3.5 (a) Representatives of each of BP and Sterling shall meet at least
twice during each Contract Year. At each such meeting, (i) BP
will make preliminary disclosures, on a non-confidential
basis, with respect to any technology, know-how, operating
practices and procedures and similar matters of which it is
aware which could improve the operation of the Facility,
reduce the costs of manufacturing acrylonitrile at the
Facility or which are related to safety, manufacturing,
maintenance, technical issues or review of projects and (ii)
Sterling will make preliminary disclosures, on a
non-confidential basis, with respect to any technology,
know-how, operating practices and procedures and similar
matters of which it is aware which could improve the operation
of the acrylonitrile facilities of BP located in Lima, Ohio
and Green Lake, Texas (collectively, the "BP Facilities"),
reduce the costs of manufacturing acrylonitrile at the BP
Facilities or which are related to safety, manufacturing,
maintenance, technical issues or review of projects.

(b) If the recipient of any such preliminary disclosure was
previously aware of the matter disclosed, either (i) each of
BP and Sterling shall make full disclosure to the other of

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the relevant matter, in which event each of BP and Sterling
will be entitled to implement all or any portion of the matter
disclosed by the other without any payment made to the
disclosing party, or (ii) if either party so elects prior to
any further disclosure by the other party, BP and Sterling
shall not make any further disclosure with respect to the
relevant matter.

(c) If the recipient of any preliminary disclosure was not
previously aware of the matter disclosed, the recipient shall
be entitled to elect at any time and from time to time, by
providing written notice of such election to the disclosing
party, to receive full disclosure of the relevant matter, in
which event the party making the preliminary disclosure will,
as soon as practicable after such election, make full
disclosure of the relevant matter to the recipient.

(d) In the event that the recipient of a disclosed matter
implements such matter after full disclosure by the disclosing
party, the recipient shall pay the disclosing party ***. If
the implementation of the disclosed matter is related to a
Capital Project previously contemplated by the recipient, the
value of the disclosed matter to the recipient will be based
upon the difference between the estimated cost of the Capital
Project contained in the most recent Appropriation Request (in
the case of Sterling) or Financial Memorandum (in the case of
BP) prepared prior to the disclosure of such matter and, in
the case of a matter resulting in recurring savings, the
actual cost of the Capital Project (with appropriate
adjustments to such estimated costs due to changes in scope of
the Capital Project which are unrelated to the disclosed
matter) or, in the case of a matter resulting in a one-time
savings, the estimated cost of the Capital

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Project if the disclosed matter is implemented. If the
implementation of the disclosed matter is not related to a
Capital Project, the value of the disclosed matter to the
recipient will be based upon, in the case of a matter
resulting in recurring savings, the savings realized through
the improvement in operating or maintenance procedures or the
reduction in costs from the implementation of the disclosed
matter or, in the case of a matter resulting in a one-time
savings, the savings estimated to be realized through the
improvement in operating or maintenance procedures or the
reduction in costs from the implementation of the disclosed
matter. In the absence of any agreement by the parties as to
the value of the disclosed matter to the recipient, such value
shall be determined in accordance with Article 21. The
recipient shall calculate the documented savings associated
with the implementation of any matter resulting in recurring
savings, as soon as practicable after the expiration of
one-year (and, if applicable, two years) following the
implementation of such matter. Any payment by the recipient
or the disclosing party associated with the full disclosure of
any matter resulting in recurring savings shall be due and
payable upon each such calculation or notice of such
calculation, as the case may be.

(e) For purposes of determining the value of any matter disclosed
pursuant to this Section 3.5, each of BP and Sterling
acknowledge and agree that, as of the date of this Agreement,
the actual costs for the manufacture of acrylonitrile at the
Facility is as set forth in Schedule 3.5(e)(i).

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(f) Any matter which is fully disclosed by a party pursuant to
this Section 3.5 shall be treated by the recipient as
confidential information of the disclosing party and be
subject to the provisions of Article 22 hereof.

(g) Notwithstanding anything to the contrary contained in this
Agreement, (i) this Section 3.5 shall not apply to any matter
disclosed or required to be disclosed pursuant to, and shall
not affect the rights of Sterling to receive technical support
under, the License Agreement, including the disclosure by BP
of any matter related to optimization changes in the reactor
areas of the Facility during the change-out of any catalyst,
and (ii) no payment by Sterling or BP pursuant to this Section
3.5 shall be deemed to be a Fixed Cost or Variable Cost for
purposes of this Agreement.

Article 4 - Rights and Obligations Respecting Facility Production

4.1 On the terms and subject to the conditions of this Agreement, Sterling
hereby grants to BP the Rights, and BP hereby agrees to receive and
purchase and pay for, and Sterling agrees to sell and deliver to BP,
Product in the manner provided herein subject at all times to the
limitations imposed herein.

4.2 BP and Sterling agree that Product delivered to the applicable Point
of Delivery hereunder shall be made available to BP under as uniform
conditions and rates as possible. Accordingly, BP shall take
deliveries of, and Sterling shall deliver, Product in a manner
commensurate with good operating practices and in accordance with
proper maintenance, operating and distribution procedures and at as
uniform rates of delivery as possible throughout each Quarter during
the term of this Agreement.

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4.3 BP and Sterling each agree to give the other reasonable notice of such
party's desire at any time to materially increase or decrease the
quantity of Product deliverable at any particular time hereunder. If
either party fails to meet the requirements of the Delivery, Shipment
and Storage Instructions, such party shall notify the other party of
the reasons for such failure and the estimated time such failure may
continue.

4.4 BP agrees, subject to the terms, provisions and limitations hereof, to
purchase hereunder each Quarter a quantity of Product equal to or in
excess of the Minimum Quarterly Contract Quantity, provided that BP at
its option may purchase and take in any Quarter a quantity of Product
less than the Minimum Quarterly Contract Quantity, if BP pays to
Sterling pursuant to the terms of Section 7.1:

(a) the Variable Cost Component then in effect multiplied by the
pounds of Product actually taken by BP during the Quarter;
plus

(b) the Fixed Cost Component in effect for each Month during the
Quarter.

In the event BP makes payments to Sterling pursuant to this Section
4.4, the failure of BP to purchase the Minimum Quarterly Contract
Quantity in any Quarter shall not be deemed to be a breach of this
Agreement.

4.5 Subject to the terms of this Agreement, Sterling agrees to sell and
deliver to BP the Maximum Annual Contract Quantity of Product (or such
lesser amount as BP shall request) each Contract Year. Sterling shall
not be obligated to sell or deliver to BP hereunder (i) during any
Month, a quantity of Product in excess of the Maximum Monthly Contract
Quantity, (ii) during any Quarter, a quantity of Product in excess of
the Maximum Quarterly Contract Quantity, or (iii) during any Contract
Year, a quantity of Product in excess of the

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Maximum Annual Contract Quantity. Subject to the foregoing, Sterling
agrees to use commercially reasonable efforts, subject to Sterling's
existing or ongoing obligations to third parties, to meet any request
by BP for Product (a) in any Month, in amounts in excess of the
Maximum Monthly Contract Quantity, and (b) in any Quarter, in amounts
in excess of the Maximum Quarterly Contract Quantity.

4.6 ***

Article 5 - Delivery, Shipment and Storage Instructions

5.1 On or before the fifteenth Day of each Month during each Contract
Year, BP shall deliver written notice to Sterling setting forth (a)
BP's requested dates and volumes of deliveries and shipping and its
storage requirements of Product for the coming Month (the "Delivery,
Shipment and Storage Instructions") and (b) BP's estimated delivery,
shipment and storage instructions of Product for the Month after the
coming Month (the "Estimated Delivery, Shipment and Storage
Instructions") which shall include estimated dates and volumes of
deliveries, shipments and storage requirements of Product for such
Month. For example, on January 15, BP would deliver Delivery,
Shipment and Storage Instructions for the Month of February, and
Estimated Delivery, Shipment and Storage Instructions for the Month of
March. The estimated and requested volumes shall comply with Article
4 hereof. Sterling shall be entitled to rely on the Estimated
Delivery, Shipment and Storage Instructions and the same shall be
deemed to be the Delivery, Shipment and Storage Instructions unless
actual Delivery, Shipment and Storage Instructions are received by
Sterling. Notwithstanding anything to the contrary in this Agreement,
delivery of Product shall be made by Sterling only by barge or ocean
going vessels.

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5.2 Sterling will use reasonable efforts to comply with the Delivery,
Shipment and Storage Instructions and shall give BP the same rights of
priority and scheduling with respect thereto that it uses for
deliveries, shipments and storage of its own Product and those of
Sterling's other customers. If Sterling fails to comply with the
Delivery, Shipment and Storage Instructions as a result of Force
Majeure or the actions or omissions of BP, Sterling shall have no
liability for such failure. Nothing contained in this Agreement is
intended to authorize or require, or shall be deemed or construed as
authorizing or requiring, Sterling to violate any Laws.

5.3 In addition to the Estimated Delivery, Shipping and Storage
Instructions and the Delivery, Shipping and Storage Instructions, BP
may deliver to Sterling from time to time additional shipping
instructions for Product. All such instructions with respect to any
particular shipment shall be given as early as is practicable prior to
the requested shipment date. Sterling shall use reasonable efforts to
deliver Product at the times specified in such instructions. If such
instructions cause Sterling to incur unusual expenses in order to
deliver Product for such shipment, and if Sterling has obtained BP's
approval of such expenses before they are incurred, BP shall reimburse
Sterling upon receipt of invoice therefor.

5.4 Sterling and BP shall cooperate in utilizing their respective storage
and transportation facilities to maximize cost savings and
efficiencies in the transportation and storage of Product for both
parties. With respect to shipments or exchanges made pursuant to this
provision, the provisions of Articles 5, 8, 9 and 10 relating to
delivery, shipment, testing and measurement shall generally apply.

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5.5 To the extent required hereunder, Sterling shall comply with all Laws
and other requirements of governmental authorities having jurisdiction
now in force or which may hereafter be in force pertaining to the
operation of the Facility and the production of acrylonitrile.

Article 6 - Specifications

The Specifications shall not be changed unless agreed to in advance in writing
by BP and Sterling. Sterling agrees to use all commercially reasonable efforts
to comply with state of the U.S. chemical industry statistical process control
requirements.

Article 7 - Purchase Price and Payment

7.1 The Purchase Price for all Product delivered to BP hereunder shall be
equal to the sum of the following: ***. BP shall pay each such
invoice on or before the 30th Day after date of shipment or the 25th
Day after receipt of invoice, whichever is later.

7.2 As soon as is practicable after the end of each Quarter, but in any
event prior to the 15th day of first Month following the end of such
Quarter, Sterling shall submit to BP a statement showing: ***

7.3 ***

7.4 Sterling will at all times use commercially reasonable efforts to
minimize its costs of producing Product.

7.5 BP shall provide Sterling at no charge the Raw Materials needed to
produce the Product purchased by BP under this Agreement, provided
that BP may terminate its obligation to provide Raw Materials on one
year's prior written notice to Sterling and, provided further, that,
if BP so terminates its obligation to provide Raw Materials, it may
not again provide Raw Materials needed to produce the Product
purchased by BP hereunder unless it gives

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Sterling at least one year's prior written notice and then only if
such provision does not materially interfere with Sterling's
contractual relationships existing at the time of such notice. BP's
ammonia exchange balance shall never exceed plus or minus five million
pounds. For purposes of determining BP's propylene supply obligations
hereunder, it is agreed that initially the Baseline Raw Materials
Usage for propylene shall apply, adjusted each Quarter to reflect
actual propylene usage. Sterling will maintain a running account of
the Raw Materials supplied by BP and used to produce BP purchased
Product, which amount shall be reflected in the statements delivered
pursuant to this Article 7 and reconciled every Quarter along with the
reconciliation under Section 7.2. It is agreed that ammonia provided
by BP will be delivered by barge and propylene provided by BP will be
delivered by pipeline. Sterling will make available to BP on a volume
pro rata basis any propylene pipeline transportation rights it has
with third parties for the transportation of Raw Materials to the
Facility. To the extent that BP's use of Sterling's pipeline
transportation rights results in charges payable by Sterling to a
third party for BP's transportation of Raw Materials on any given
pipeline, BP shall reimburse Sterling for all of such charges upon
receipt of an invoice therefor.

7.6 If BP has reason to dispute the accuracy of any invoice submitted to
it by Sterling, BP will pay that part of the invoice which is
undisputed in accordance with the provisions of this Article 7 and,
after such dispute has been resolved, BP will pay any balance due to
Sterling upon receipt by BP of a replacement or additional invoice
submitted to it by Sterling.

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7.7 Sterling shall maintain records and production data in accordance with
its usual and customary practices and standards in respect of all
matters referred to in this Agreement and in such detail as is
sufficient to make the calculations required hereby. Sterling shall
provide access to such records and data pursuant to the provisions of
Article 16 hereof.

Article 8 - Deliveries and Shipments

8.1 The point of delivery of any Product ("Point of Delivery") shall be
the point of transfer of custody of such Product from Sterling to BP,
and shall mean the first intake flange on the ship, barge or other
inland water or marine vessel into which the Product is loaded for
shipment. Title and risk of loss shall pass to BP at such flange
(irrespective of whether Sterling owns or has provided the barge or
ship into which the Product is loaded or delivered). As between
Sterling and BP, Sterling shall be in control and possession of the
Product sold and purchased hereunder and responsible for any damage or
injury caused thereby until risk of loss with respect thereto has
passed to BP. In addition to its other obligations hereunder, BP shall
be in control and possession of the Product sold and purchased
hereunder and responsible for any damage or injury caused thereby
after risk of loss with respect thereto has passed to BP. The Point of
Delivery of Raw Materials, if any, delivered by BP pursuant to Section
7.5 hereof shall be the point of transfer of custody of such Raw
Materials to Sterling and shall be (i) the last exit flange on the
ship, barge or other inland water or marine vessel from which the Raw
Materials are unloaded or (ii) the first inlet flange at the Plant
used by the pipeline to effect delivery of Raw Materials to Sterling
by the common carrier, in the case of delivery by pipeline. Title and
risk of loss shall pass to Sterling at such flange or outlet, as the
case may be, and BP shall be in control and

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possession of Raw Materials delivered pursuant to Section 7.5 hereof
and responsible for any damage or injury caused thereby until risk of
loss with respect thereto has passed to Sterling.

Article 9 - Testing

9.1 Product shall be tested prior to delivery to BP under the testing
procedures and schedules being utilized by Sterling at the Facility.
Such procedures and schedules may be changed from time to time by the
agreement of BP and Sterling. Sterling shall retain representative
samples for sufficient time to allow delivery to and acceptance by
BP's customers of such Product but in no event less than six months.
Sterling shall provide BP access to such samples and all records
maintained by Sterling with respect thereto pursuant to the provisions
of Article 16 hereof.

9.2 Confirmatory tests of the quality of (i) Product shipments and (ii)
Raw Materials provided by BP, if any, shall be performed at the time
of delivery according to the procedures and schedules being used from
time to time by Sterling and where requested, in the presence of an
independent surveyor, at BP's expense, utilizing representative
samples taken, (a) in the case of Product, from the intake flange of
the ship, barge or other inland water or marine vessel and from the
tanks thereof where appropriate, into which the Product is loaded, and
(b) in the case of Raw Materials provided by BP, from the outlet
flange of the ship, barge or other inland water or marine vessel and
from the tanks thereof where appropriate, from which such Product is
unloaded or other appropriate facility, in the case of pipeline
delivery. The testing procedures and schedules described herein shall
be subject to change from time to time by agreement of BP and
Sterling.

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9.3 All product of the Facility (other than Co-Products) when tested
according to the agreed procedures and schedules shall be conclusively
presumed to constitute Product unless analysis of the sample retained
pursuant to the provisions of Sections 9.1, 9.2 or 9.4 hereof shows
the product not to have been Product.

9.4 BP shall have the right, at BP's expense, to have Product tested by
independent third parties prior to shipment as Product hereunder, so
long as any such testing does not materially interfere with Facility
operations, and Sterling shall cooperate in any such test and shall
have the right to be represented and to participate in any such test
and to inspect any equipment used in determining the nature or quality
of Product. After such independent test, unless BP or its independent
surveyor notifies Sterling prior to shipment of any such product that
such product is not Product for purposes hereof, all such product
shall be conclusively presumed to meet the Specifications and
constitute Product. If such a notice is delivered to Sterling with
respect to any such product which has not been shipped at the time
such notice is given, such product shall not constitute Product
hereunder, and BP shall have no obligation with respect to any such
product; provided, however, that should Sterling object in writing to
such notice with five Business Days after delivery of such objection,
the parties will meet to resolve the question of whether such product
is Product hereunder. If the parties fail to resolve the matter within
20 Business Days after the delivery of the original objection by
Sterling to BP, either party may refer the matter for dispute
resolution pursuant to Article 21 hereof.

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9.5 BP's sole remedy with respect to all product which is determined not
to have constituted Product hereunder at the Point of Delivery shall
be to require Sterling to, at Sterling's option, either (i) reprocess
such product in the Facility at Sterling's sole cost and expense, (ii)
exchange Product for such product or (iii) refund to BP the Purchase
Price therefor, if previously paid.

9.6 BP agrees to be financially responsible for all product which is
determined to have constituted Product sold to it hereunder at the
Point of Delivery thereof, and the indemnity in Article 19 shall cover
Damages arising from such Product.

9.7 Sterling shall have the right to refuse to accept delivery of raw
materials which do not constitute Raw Materials hereunder, in addition
to any other remedies it may have.

Article 10 - Measurement

10.1 The unit of measurement of Product, Co-Products and Raw Materials (the
"Unit of Measurement") shall be one pound (avoirdupois). All
quantities given herein, unless otherwise expressly stated, are in
terms of such Unit of Measurement.

10.2 Sterling shall maintain and operate the Measuring Equipment in
accordance with customary practice in the industry and all applicable
Laws. BP may, at its option and expense, install measuring equipment
for checking the Measuring Equipment so long as such installation does
not materially interfere with the operation of the Facility.

10.3 BP shall have the right, at BP's expense, to monitor and check the
measurement of Product from the Facility into the tanks of the ship,
barge or other inland water or marine vessel into which Product is
loaded or delivered, in the presence of an independent surveyor, at
BP's

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expense. Any reports and certifications resulting from such monitoring
and checking will be made available by BP to Sterling on request.

10.4 The determination of the quantity of Product deliveries hereunder
shall be made by taking the opening and closing inventory of Sterling
properly calibrated static shore tanks before and after each shipment.

10.5 The determination of the quantity of Product and Co-Product for
pipeline in-Plant transport shall be made by suitable meter(s) and any
other necessary equipment designated by Sterling. The determination of
the quantity of Raw Materials, if any, provided by BP hereunder,
including by means of pipeline, shall be made in the same manner as
set forth in Section 10.4 and this Section 10.5.

10.6 Each party shall have the right to be present at the time any
installing, reading, cleaning, changing, repairing, inspecting,
testing or adjusting is done in connection with the Measuring
Equipment used in measuring deliveries hereunder. The records from
such Measuring Equipment shall remain the property of the owner
thereof, but, upon request, each party will submit to the other party
its records, charts and weight tickets, together with calculations
therefrom, subject to return within 15 days after receipt thereof.
Such records, charts and weight tickets shall be kept on file for a
period of not less than 90 days.

10.7 If upon any test the Measuring Equipment is found to be inaccurate in
the aggregate by 2% or more, any payment based upon such measurements
shall be corrected at the rate of such inaccuracy for any period of
inaccuracy which is definitely known or agreed upon, or if not known
or agreed upon, then for a period extending back one- half of the time
elapsed since the last successful test. Following any test, any
Measuring Equipment found to be inaccurate

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to any degree shall be adjusted as soon as practicable to measure
accurately. If for any reason any Measuring Equipment is out of
service or out of repair so that the quantity delivered cannot be
ascertained or computed from the readings thereof, the quantity so
delivered during the period the Measuring Equipment is out of service
or out of repair shall be estimated and agreed upon by the parties
upon the basis of the best available data, using the first of the
following methods which is feasible:

(a) by using the results of any check measuring equipment or other
measuring device of BP, if installed and measuring accurately;

(b) by using the ship's records of tank measurements where Product
has been loaded onto (or Raw Materials unloaded from) a ship;

(d) by estimating the quantity of deliveries during preceding
periods under similar conditions when the Measuring Equipment
was measuring accurately.

10.8 Notwithstanding the foregoing, Sterling's measurements shall be deemed
to be accurate for purposes of all deliveries made hereunder unless,
as to any particular delivery, BP objects thereto in writing delivered
to Sterling within three weeks after receipt of notice of inaccurate
measurement from BP's customer, but in no event greater than 90 days
from the date of shipment.

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23
***.
Article 12 - Co-Products

12.1 The parties shall have the benefit of Co-Products produced at the
Facility in proportion to the respective pounds of Product actually
taken or retained, as the case may be, by such parties hereunder. ***
In no event shall Co-Products be taken from or delivered off the Plant
site unless they have first been converted to a form deemed safe for
transport by both BP and Sterling.

Article 13 - Capital Expenditures

13.1 Upon compliance by Sterling with the procedures contained in this
Article 13 and the receipt by BP of an invoice therefor, BP shall ***.

13.2 On or before October 1 of each Contract Year, Sterling shall prepare
and submit to BP a capital budget for the next succeeding Contract
Year (the "Capital Budget") including (i) with respect to each
proposed or continuing Capital Project for which the Capital
Expenditures related thereto are anticipated to exceed *** in such
Contract Year (each, a "Major Capital Project"), a description of such
Major Capital Project in reasonable detail (including, to the extent
known at such time, a brief description of such Capital Project, the
estimated costs thereof and any anticipated benefits), and an estimate
of the Capital Expenditures anticipated to be made in connection with
such Major Capital Project during such Contract Year, and (ii) with
respect to any proposed or continuing Capital Projects for which the
Capital Expenditures related thereto are anticipated to be less than
or equal to *** on an individual basis in such Contract Year ("Minor
Capital Projects"), an estimate of the

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24
aggregate amount of Capital Expenditures anticipated to be made in
connection with such Minor Capital Projects during such Contract Year
(the "Minor Capital Projects Budget"). BP shall, on or before the
next succeeding January 1, approve the Capital Budget in whole or in
part; provided that Sterling has provided BP with the description of
each Major Capital Project included in the Capital Budget, as required
under this Section 13.2. Sterling may submit any portion of the
Capital Budget which is not approved by BP for dispute resolution
under Article 21 and, if the matter is ultimately submitted to
arbitration, the arbitrators shall determine whether all or any
portion of such disputed matter should have been approved by BP based
upon whether or not the disputed matter would have been implemented by
a prudent operator in like circumstances in the acrylonitrile
manufacturing business. Prior to making any Capital Expenditure in
connection with a Major Capital Project, Sterling shall, to the extent
practicable under the circumstances, consult with BP with respect to
such Major Capital Project and give BP the opportunity to propose
alternative approaches to such Major Capital Project which it believes
will reduce costs. In the event that Sterling and BP disagree on the
approach to any Major Capital Project, Sterling shall be entitled to
proceed with such Major Capital Project in such manner as it deems
advisable, in its sole discretion, and the matter shall be referred
for dispute resolution under Article 21 and, if the matter is
ultimately submitted to arbitration, the arbitrators shall determine
which of Sterling's and BP's respective approaches would have been
pursued by a prudent operator in like circumstances in the
acrylonitrile manufacturing business and estimate the cost of BP's
approach. The costs and expenses of Sterling's approach shall be
deemed to be Capital Expenditures hereunder if the arbitrators choose
Sterling's approach. The estimated costs and expenses

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25
of BP's approach (as determined by the arbitrators) shall be deemed to
be Capital Expenditures hereunder if the arbitrators choose BP's
approach; provided, however, that Section 3.5 shall not apply to such
approach or any savings which would have been realized had BP's
approach been implemented.

13.3 Prior to commencement of a Major Capital Project included in the
Capital Budget, Sterling shall furnish BP with the details of the
proposed Capital Expenditure including (i) the anticipated cost of
such proposed Major Capital Project, (ii) the anticipated benefits of
such proposed Major Capital Project, (iii) the anticipated effect of
such proposed Major Capital Project on one or more of the Variable
Cost Component, the Fixed Cost Component, production rates of the
Facility, safety and environmental and the quality of Product, and
(iv) an estimated time-table for completion of such proposed Major
Capital Project and the making of the Capital Expenditures associated
therewith. Sterling shall not be required to furnish any of such
information to BP as a condition to any disbursement from BP related
to a Minor Capital Project; provided, however, that the aggregate
amount of Capital Expenditures made during any Contract Year is less
than or equal to the Minor Capital Projects Budget for such Contract
Year.

13.4 Sterling may, at any time and from time to time, propose Major Capital
Projects which are not included in the Capital Budget for the relevant
Contract Year and/or Minor Capital Projects which will cause the
aggregate amount of Capital Expenditures for the relevant Contract
Year to exceed the Minor Capital Projects Budget; provided, however,
that BP shall not be obligated to reimburse Sterling for any Capital
Expenditures made in connection with any such Capital Project unless
and until BP has approved such Capital Project. In the event

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that Sterling is required to make any Capital Expenditure on an
emergency basis, BP will not thereafter unreasonably withhold or delay
approval of the related Capital Project or reimbursement of such
Capital Expenditures. Sterling will provide BP with notice of any
Capital Expenditure made on an emergency basis as soon as practicable
after it has made such Capital Expenditure.

13.5 Any Capital Project for which BP has reimbursed Sterling for a portion
of the Capital Expenditures in accordance with the terms of this
Agreement shall, unless otherwise agreed by the parties, be deemed to
have a useful life of ten years and the Capital Expenditures
associated therewith shall be amortized on a straight- line basis. If
this Agreement is terminated (or rejected in connection with any
bankruptcy proceeding) prior to the end of the useful life of any such
Capital Project, Sterling shall, within 90 days after the date of such
termination or rejection, ***.

13.6 BP shall be entitled to the benefit of any and all depreciation and
amortization or expense deductions with respect to the portion of any
Capital Expenditures for which BP has reimbursed Sterling and Sterling
shall be entitled to the benefit of any and all depreciation and
amortization or expense deductions with respect to the portion of any
Capital Expenditures which has not been reimbursed by BP.

Article 14 - Personnel

Sterling shall at all times have sole authority with respect to all personnel
matters involving the employees, consultants and third-party contractors at the
Facility, including salaries, benefits, compensation, indirect personnel costs,
manpower needs, training, insurance, labor matters, working

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hours, job responsibilities, bonding and all other employee, personnel-related
and contracting matters.

Article 15 - BP Security Interests; Insurance

15.1 Sterling has granted to BP, and hereby reaffirms such grant to BP of,
a first security interest in and lien on the first production of
Product and the receivables and proceeds therefrom generated from the
sale of such Product from the Facility to the extent of BP's Right and
a first security interest in and lien on the Third Reactor, including
associated equipment, (subject to customary exceptions as to
immaterial liens and charges) to secure the performance of Sterling's
obligations under this Agreement and shall execute any necessary
financing statement, mortgage and other documents to perfect such
interests and shall cause any current lien holders on Product and the
Third Reactor to subordinate their security interests and liens to the
above security interests and liens of BP. Subject to the foregoing
rights of BP and obligations of Sterling, Sterling shall have the
right to pledge, mortgage and grant security interests in the
Facility, Product, Co- Products and this Agreement as collateral
security for loans or other financing. The documents granting BP a
security interest and lien shall provide to BP appropriate access
rights to the collateral should a Sterling Event of Default thereunder
occur and be continuing.

15.2 During the term of this Agreement, insurance on the Facility and those
parts of the Plant which serve the Facility shall be maintained by
Sterling in types and amounts agreed to by BP and Sterling or, in the
absence of any agreement, as described in Schedule 15.2; but BP and
Sterling may each carry additional insurance, at its sole discretion
and cost. Sterling shall make BP an additional insured under the
policies evidencing such insurance coverages

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for liability purposes only. In the event of a fire, explosion,
flood, hurricane or windstorm or other casualty resulting in the loss
of the Facility or a substantial part thereof, and Sterling and BP
cannot agree whether or not the Facility should be repaired, Sterling
shall have the right to require the Facility to be repaired and that
the insurance proceeds first be applied to the payment of all repair
costs and the parties' obligations under this Agreement shall
continue, but Sterling shall bear all costs of such repair in excess
of the proceeds of insurance and shall have the right to fully
depreciate such repair costs.

Article 16 - Access to Information and Facility

16.1 For purposes of verifying any information pertinent to this Agreement,
upon written request by BP from time to time, subject to the receipt
by Sterling of appropriate confidentiality agreements, Sterling shall
provide to an independent third party accountant selected by BP, at
reasonable times during normal business hours, access to Sterling's
books, records and accounts relating to this Agreement, except as such
access may be prohibited by law or presently existing third party
confidentiality agreements. Such independent third party accountant
shall thereupon have the right to make copies of and abstracts from
such books, records and accounts, at BP's expense, which copies may be
removed from the premises of Sterling and retained by such accountant,
subject to the terms of any confidentiality agreement between Sterling
and BP regarding use of such information. It is agreed that such
accountant may report to BP only its conclusions resulting from such
accountant's review of Sterling data, and nothing else.

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29
16.2 Sterling agrees to permit representatives of BP, at BP's expense, to
have access to the Facility at reasonable times and on reasonable
notice to obtain information relating to the present or proposed
operations thereof to the extent related to this Agreement so long as
such access does not violate existing third party confidentiality
agreements or materially disrupt the operation of the Facility. BP
agrees to furnish Sterling with copies of all information and audits
obtained or prepared pursuant to the provisions of this Section.

16.3 For purposes of verifying any information pertinent to the Agreement,
upon written request by Sterling from time to time, subject to the
receipt by BP of appropriate confidentiality agreements, BP shall
provide to an independent third party accountant selected by Sterling,
at reasonable times during normal business hours, access to BP's
books, records and accounts relating to this Agreement, except as such
access may be prohibited by law or presently existing third party
confidentiality agreements. Such independent third party accountant
shall thereupon have the right to make copies of and abstracts from
such books, records and accounts, at Sterling's expense, which copies
may be removed from the premises of BP and retained by such
accountant, subject to the terms of any confidentiality agreement
between BP and Sterling regarding use of such information. It is
agreed that such accountant may report to Sterling only its
conclusions resulting from such accountant's review of BP data, and
nothing else.

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Article 17 - Representations and Warranties

17.1 Sterling represents and warrants to BP as follows:

(a) Organization, Good Standing and Corporate Power. Sterling is
a corporation, duly organized, validly existing and in good
standing under the laws of the State of Delaware, is duly
qualified to do business as a foreign corporation in the State
of Texas, and has all requisite corporate power and authority
to carry on its business as presently conducted, to enter into
this Agreement and perform its obligations hereunder.

(b) Authority Relative to Agreement. The execution, delivery and
performance by Sterling of this Agreement have been duly and
effectively authorized by all necessary corporate action.
This Agreement has been duly executed and delivered by
Sterling and constitutes a legal, valid and binding obligation
of Sterling enforceable in accordance with its terms, except
as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or similar Laws affecting
creditors' rights generally and general equitable principles.

(c) No Conflict with Other Instruments or Proceedings. Neither
the execution and delivery of this Agreement, nor the
performance or compliance with the terms and conditions
hereof, conflict with, or will result in a breach by Sterling
of, or constitute a default under, or result in the creation
of any lien, charge or encumbrance (other than those set forth
herein) upon, any asset of Sterling pursuant to any of the
terms, conditions or provisions of (i) the Certificate of
Incorporation or Bylaws of Sterling, (ii) any mortgage, deed
of trust, lease, contract, agreement or other instrument to

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which Sterling is a party or by which Sterling may be bound or
affected or (iii) any writ, order, judgment, decree, statute,
ordinance, regulation or any other restriction of any kind or
character, to which Sterling is subject, or by which Sterling
may be bound or affected.

(d) No Litigation or Agency Proceedings. As of the Effective
Date, except as expressly set forth in writing delivered by
Sterling to BP, there are no actions, suits, claims,
investigations or proceedings, private or governmental,
pending or to Sterling's knowledge threatened against Sterling
at law or in equity or before or by any federal, state,
municipal or other governmental or non-governmental
department, commission, board, bureau, agency or
instrumentality seeking to enjoin, restrain or otherwise
prevent the execution and delivery of this Agreement by
Sterling, or any past or present environmental, safety or
health issue, matter or problem pertaining to the Plant or the
Facility that would diminish the ability of BP to fully enjoy
all of its rights and privileges under this Agreement.

(e) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, STERLING HEREBY
EXPRESSLY DISCLAIMS AND NEGATES (i) ANY REPRESENTATION OR
WARRANTY (EXPRESS, IMPLIED, COMMON LAW, STATUTORY OR
OTHERWISE) RELATING TO THE FACILITY, ANY PRODUCT OR
CO-PRODUCT, THE THIRD REACTOR, THE OPERATION OF ANY OF THE
FOREGOING, OR ANY OTHER TANGIBLE PERSONAL PROPERTY AND
FIXTURES INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR

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PURPOSE OR FITNESS OF DESIGN OR ENGINEERING, AND (ii) ANY
IMPLIED REPRESENTATION OR WARRANTY RELATING TO ANY PRODUCT OR
CO-PRODUCT SOLD HEREUNDER, INCLUDING, BUT NOT LIMITED TO, ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR FITNESS OF DESIGN OR ENGINEERING.

17.2 BP represents and warrants to Sterling as follows:

(a) Organization. BP is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Ohio and is duly qualified to do business as a foreign
corporation in the State of Texas, and has all requisite
corporate power and authority to carry on its business as
currently conducted and to enter into this Agreement and
perform its obligations hereunder.

(b) Authority Relative to Agreement. The execution, delivery and
performance by BP of this Agreement have been duly and
effectively authorized by all necessary corporate action.
This Agreement has been duly executed and delivered by BP and
constitutes a legal, valid and binding obligation of BP
enforceable in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or similar Laws affecting
creditors' rights generally and general equitable principles.

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default under, or result in the creation of any lien, charge
or encumbrance upon, any of its assets pursuant to any of the
terms, conditions or provisions of (i) the Certificate of
Incorporation or Bylaws of BP, (ii) any mortgage, deed of
trust, lease, contract, agreement or other instrument to which
BP is a party or by which BP may be bound or affected or (iii)
any writ, order, judgment, decree, statute, ordinance,
regulation or any other restriction of any kind or character,
to which BP is subject, or by which BP may be bound or
affected.

(d) No Litigation or Agency Proceedings. As of the Effective
Date, except as expressly set forth in writing delivered by BP
to Sterling, there are no actions, suits, claims,
investigations or proceedings, private or governmental,
pending or to BP's knowledge threatened against BP at law or
in equity or before or by any federal, state, municipal or
other governmental or non-governmental department,
commission, board, bureau, agency or instrumentality seeking
to enjoin, restrain or otherwise prevent the execution and
delivery of this Agreement by BP.

(e) EXCEPT AS OTHERWISE PROVIDED HEREIN, IN THE LICENSE AGREEMENT
OR IN THE CATALYST SALES CONTRACT, BP HEREBY EXPRESSLY
DISCLAIMS AND NEGATES (i) ANY REPRESENTATION OR WARRANTY
(EXPRESS, IMPLIED, COMMON LAW, STATUTORY OR OTHERWISE)
RELATING TO THE CATALYST, ANY RAW MATERIALS SUPPLIED BY BP, OR
THE NEW TECHNOLOGY INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
FITNESS OF DESIGN OR ENGINEERING,

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AND (ii) ANY IMPLIED REPRESENTATIONS OR WARRANTY RELATING TO
THE FOREGOING INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR FITNESS OF DESIGN OR ENGINEERING.

Article 18 - Force Majeure

18.1 In the event of either party being rendered unable, wholly or in part,
by Force Majeure to carry out its obligations under this Agreement
(other than any obligation to make payment of any amount when due and
payable hereunder), it is agreed that on such party giving notice and
reasonably full particulars of such Force Majeure in writing to the
other party within a reasonable time after the occurrence of the cause
relied on, then the obligations of the party giving such notice, so
far as they are affected by such Force Majeure, shall be suspended
during the continuance of any inability so caused, but for no longer
period, and such cause shall so far as possible be remedied with all
reasonable dispatch.

18.2 It is understood and agreed that the settlement of strikes or lockouts
shall be entirely within the discretion of the party having the
difficulty, and that the above requirement that any Force Majeure
shall be remedied with all reasonable dispatch shall not require the
settlement of strikes or lockouts by acceding to the demands of the
opposing party when such course is inadvisable in the discretion of
the party having the difficulty.

18.3 Notwithstanding the definitions of Force Majeure herein and the
provisions of Section 18.1 hereof, the failure by either party to
perform any of its obligations under this Agreement shall be deemed
not to have been caused by circumstances reasonably outside its
control if such failure results from breakage or accident to
machinery, equipment, lines of pipe or other

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35
property or the partial or entire failure thereof or the necessity to
make repairs or alterations thereto which result from normal wear and
tear which could be reasonably anticipated by a reasonably prudent
operator or in circumstances where a reasonably prudent operator would
have standby equipment or spare parts.

18.4 In the event that for any reason maintenance, utilities, any pipelines
or other services and resources at or servicing the Plant become
limited, Sterling agrees that it will in good faith allocate such
maintenance utilities, pipelines, services and resources between the
Facility and the other activities at the Plant on a fair and equitable
basis having regard to the needs of BP hereunder and third parties
under contracts for the sale by Sterling of other chemicals produced
in the Plant.

Article 19 - Indemnification

19.1 Except as otherwise provided herein, Sterling, from and after the
Effective Date, shall defend, indemnify and hold harmless BP, its
affiliates, their respective present and former directors, officers
and stockholders and their respective heirs, executors, personal
representatives, administrators, successors and assigns ("BP
Indemnified Persons") from and against any and all Damages suffered or
incurred by BP on account of or arising from or related to the breach
of, or the failure to perform or satisfy any of, the representations,
warranties, covenants or agreements made by Sterling in or under this
Agreement, or any liability to any party whether incurred under
statute or in tort arising directly or indirectly from the operations
carried on by or on behalf of Sterling at or in connection with the
Facility, the Plant, or any Product (prior to the time risk of loss
has passed to BP) or any Co-Product or arising out of Spills or
Releases (whether occurring before or after the termination

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of this Agreement), except and to the extent that (i) such Damages
arise out of or relate to any theory of product liability, including
those covering the manufacture, sale, introduction into commerce or
use of Product for which risk of loss has passed to BP, (ii) such
Damages arise out of Spills or Releases that are attributable to the
acts, omissions, or default of BP, (iii) such Damages are payable to
an employee of BP or (iv) such Damages arise out of or result from a
material breach by BP of its obligations under this Agreement or the
gross negligence, fraud or willful misconduct of any BP Indemnified
Person.

19.2 Except as otherwise provided herein, BP, from and after the Effective
Date, shall defend, indemnify and hold harmless Sterling, its
affiliates, their respective present and former directors, officers
and stockholders and their respective heirs, executors, personal
representatives, administrators, successors and assigns ("Sterling
Indemnified Persons") from and against any and all Damages suffered or
incurred by Sterling on account of or arising from or related to the
breach of, or the failure to perform or satisfy any of, the
representations, warranties, covenants, or agreements made by BP in or
under this Agreement, or any liability to any party whether incurred
under statute or in tort arising directly or indirectly from the
actions of BP carried out at or in connection with the Facility, the
Plant, any Product or any Co-Product or arising out of Spills and
Releases (which Spills and Releases have occurred during the Initial
Term or any Additional Term) to the extent that the Damages arising
out of such Spills and Releases are attributable to the acts,
omissions or default of BP, including Damages arising from or relating
to any theory of product liability, including those covering the
manufacture, sale, introduction into commerce or use of Product on and
after the time risk of loss has passed to BP, excepting any Damages

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(i) payable to employees of Sterling or (ii) arising out of or
resulting from a material breach by Sterling of its obligations under
this Agreement or the gross negligence, fraud or willful misconduct of
any Sterling Indemnified Person.

19.3 BP and Sterling each agree that promptly after any of its officers
becomes aware of the discovery of facts giving rise to a claim by it
for indemnification hereunder (each, a "Claim"), such party will
provide notice thereof in writing to the other party. The failure of
either party to so notify the other party of a Claim shall relieve the
other party from any liability in respect of such Claim to the extent
such other party is prejudiced by the failure to receive timely
notice. For purposes of this Section 19.3, receipt by a party of
notice of any demand, assertion, claim, action to proceedings
(judicial, administrative or otherwise) by or from any Person (other
than the other party to this Agreement) ("Third Party Action") which
may give rise to a Claim on behalf of such party shall constitute the
discovery of facts giving rise to a Claim by it and shall require
prompt notice of the receipt of such matter as provided in the first
sentence of this Section 19.3. Any notice pursuant to this Section
19.3 shall set forth all information respecting such Claim and the
Third Party Action, if any, as such party shall then have and shall
contain a statement to the effect that the party giving the notice is
making a Claim pursuant to and formal demand for indemnification under
this Article 19.

19.4 For purposes of this Article 19, the term "Indemnifying Party" as to a
particular Claim or Third Party Action shall mean the party having or
which is held to have an obligation to indemnify the other party with
respect to such Claim or Third Party Action pursuant to this Article
19 and the term "Indemnified Party" as to a particular Claim or Third
Party Action

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shall mean the party having or which is held to have the right to be
indemnified with respect to such Claim or Third Party Action by the
other party pursuant to this Article 19.

19.5 Except as otherwise expressly provided herein, Indemnifying Party
shall be entitled at its cost and expense to contest and defend by all
appropriate legal proceedings any Third Party Action with respect to
which it is called upon to indemnify Indemnified Party under the
provisions of this Agreement; provided, however, that with respect to
any Claim arising from the assertion of any Third Party Action, notice
of the intention so to contest shall be delivered by Indemnifying
Party to Indemnified Party within 20 days from the date of mailing to
Indemnifying Party of notice by Indemnified Party of the assertion of
the Third Party Action. Any such contest with respect to a Third
Party Action may be conducted in the name and on behalf of
Indemnifying Party or the Indemnified Party as may be appropriate.
Except as otherwise expressly provided herein, such contest shall be
conducted by attorneys employed by Indemnifying Party, but Indemnified
Party shall have the right to participate in such proceedings and to
be represented by attorneys of its own choosing at its cost and
expense. If Indemnified Party joins in any such contest, Indemnified
Party shall have full authority to determine all action to be taken
with respect thereto. If after notice as provided for herein,
Indemnifying Party does not elect to contest any Third Party Action as
provided in this Section 19.5, Indemnifying Party shall be bound by
the result obtained with respect thereto by Indemnified Party and the
Indemnified Party may (but shall have no obligation to) contest any
such Third Party Action or settle or admit liability with respect
thereto, all for the account of Indemnifying Party. At any time after
the commencement of defense of any such Third Party Action,
Indemnifying Party may request Indemnified Party

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to agree in writing to the abandonment of such contest or the payment
or compromise by Indemnifying Party of the asserted Third Party Action
whereupon such action shall be taken unless Indemnified Party so
determines that the contest should be continued, and so notifies
Indemnifying Party in writing within 15 days of such request from
Indemnifying Party. In the event that Indemnified Party determines
that the contest should be continued, Indemnifying Party shall be
liable with respect to such Third Party Action only to the extent of
the lesser of (i) the amount which the third party taking the Third
Party Action had agreed to accept in payment or compromise as of the
time Indemnifying Party made its request therefor to Indemnified
Party, or (ii) such amount for which Indemnifying Party may be liable
with respect to such Claim by reason of the provisions hereof.

19.6 If requested by Indemnifying Party, Indemnified Party agrees to
provide reasonable cooperation to Indemnifying Party and its counsel
in contesting any Third Party Action which Indemnifying Party elects
to contest or, if appropriate, in making any counter-claim against the
third party taking the Third Party Action, or any cross-complaint
against any other Person not a party hereto, but Indemnifying Party
will reimburse Indemnified Party for any expenses incurred by it in so
cooperating.

19.7 Indemnified Party agrees to afford Indemnifying Party and its counsel
the opportunity to be present at, and to participate in, conferences
with all Persons taking Third Party Action against Indemnified Party
or conference with representatives of or counsel for such Persons.

19.8 Indemnifying Party shall promptly pay Indemnified Party any amount due
under this Article 19 and reimburse each Indemnified Party for all
reasonable expenses (including reasonable counsel fees) for which
Indemnified Party is entitled to be indemnified hereunder as they are

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incurred by such Indemnified Party. Upon judgment, determination by a
governmental authority having jurisdiction, settlement or compromise
of any Third Party Action, Indemnifying Party shall promptly pay on
behalf of Indemnified Party, and/or to Indemnified Party in
reimbursement of any amount theretofore required to be paid by it
pursuant to any judgment, determination by a governmental authority
having jurisdiction, settlement or compromise, the amount so
determined by such judgment, determination by such governmental
authority, settlement or compromise, and all other Damages of
Indemnified Party with respect thereto, unless in the case of a
judgment or determination by such governmental authority an appeal is
made from such judgment or determination; provided, however, that if
Indemnifying Party desires to appeal from an adverse judgment or
determination by such governmental authority, then Indemnifying Party
shall post and pay the cost of the security or bond to stay execution
of such judgment or determination pending appeal. Upon the payment in
full by Indemnifying Party of the amounts described in this Section
19.8, Indemnifying Party shall succeed to the rights of Indemnified
Party, to the extent such rights are not waived in settlement, against
the third party in such Third Party Action.

19.9 In no event shall either party be liable to the other for damages
other than Damages.

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Article 20 - Assignment

20.1 Except where all or substantially all of the assets of Sterling are
sold or otherwise transferred to or Sterling is merged with or
acquired by another Person, Sterling shall not assign its rights or
obligations under this Agreement without BP's prior written consent,
which consent shall not be unreasonably withheld, delayed or
conditioned.

20.2 BP may assign its rights or delegate its duties and obligations
hereunder to any Person without the consent of Sterling provided that:

(a) Such assignee is of sound financial condition and, in BP's
good faith judgment, able timely to perform BP's obligations
under this Agreement; and

(b) Within ten days after a request by Sterling, BP executes a
written guarantee of such assignee's timely performance of
BP's obligations hereunder, containing provisions usually and
customarily contained in guarantees of financial performance
in the United States.

20.3 Notwithstanding any assignment of any of its rights or any delegation
of any of its duties by BP under this Agreement, whether permitted
hereby or otherwise, BP shall continue to be responsible for its
obligations hereunder, and does hereby unconditionally and absolutely
guarantee the timely payment of all sums due, and the timely
performance of all obligations, by any such assignee hereunder (the
"Obligations"). On default by any such assignee, Sterling may, at its
option, proceed directly and at once against BP to enforce BP's
obligations hereunder, and exercise all remedies available hereunder,
without notice to such assignee or the necessity for proceeding or
taking any action against such assignee.

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20.4 Any attempted assignment or delegation by either party hereto not
otherwise permitted hereby which is made without the prior written
consent of the other party shall be ineffective and void for all
purposes.

20.5 Notwithstanding the foregoing, Sterling may assign its rights
hereunder as collateral to financial institutions, but any such
assignment shall be subject to BP's security interests and liens
referred to in Article 15.

Article 21 - Dispute Resolution and Arbitration

21.1 In the event of a dispute, difference or question arising out of or
relating to this Agreement or the License Agreement which the parties
are unable to resolve within 30 days, the parties agree to promptly
refer such dispute to a committee comprised of two members appointed
by Sterling (General Manger Acrylonitrile and Technical Service
Manager Acrylonitrile) and two members appointed by BP (Manager of
Planning and Development and Director of Acrylonitrile Engineering and
Technology) ("Dispute Resolution Committee"). If the Dispute
Resolution Committee does not unanimously approve a resolution within
30 days, the parties shall promptly advise their respective chief
executive officers ("CEOs") of their inability to reach agreement
through informal discussion within the required time limits, and shall
within ten days of the passing of such time limits, submit the dispute
to their respective CEOs for resolution. In the event that the CEOs
fail to amicably resolve the dispute within 30 days of such referral,
the dispute shall be settled by binding arbitration as set forth
below.

21.2 All disputes, differences or questions arising out of or relating to
this Agreement or the License Agreement (including those as to the
validity, interpretation, breach, violation or termination hereof)
which are not resolved pursuant to Section 21.1 above shall be finally

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determined and settled pursuant to arbitration in Houston, Texas, by
three arbitrators, one to be appointed by Sterling, one to be
appointed by BP, and a neutral arbitrator to be appointed by such two
party-appointed arbitrators. The neutral arbitrator shall be an
attorney and shall act as chair-person. Any such arbitration may be
initiated by a party by written notice ("Arbitration Notice") to the
other party specifying the subject of the requested arbitration and
appointing such party's arbitrator for such arbitration. The panel of
arbitrators shall be empowered to impose sanctions, permit or order
depositions and discovery and to take such other actions as they deem
necessary to the same extent a judge could pursuant to the Federal
Rules of Civil Procedure and applicable law. With respect to any
matter subject to arbitration hereunder, each party agrees that all
discovery activities shall be expressly limited to matters directly
relevant to such matter and the panel of arbitrators shall be required
to fully enforce this requirement.

21.3 Should (i) a party receiving an Arbitration Notice fail to appoint an
arbitrator as hereinabove contemplated by written notice to the party
giving the Arbitration Notice within 20 days after the receipt of the
Arbitration Notice, or (ii) the two arbitrators appointed by or on
behalf of the parties as contemplated in Section 21.2 hereof fail to
appoint a neutral arbitrator as hereinabove contemplated within 20
days after the date of the appointment of the last arbitrator
appointed by or on behalf of the parties, then a Judge of the United
States District Court for the Southern District of Texas, Houston
Division, upon application of Sterling or of BP, shall appoint an
arbitrator to fill any such position with the same force and effect as
though such arbitrator had been appointed as hereinabove contemplated.

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21.4 The arbitration proceeding shall be conducted in the English language
in Houston, Texas, in accordance with the Rules of the American
Arbitration Association. Each of the parties may, by summary
proceedings (e.g., a plea in abatement or motion to stay further
proceedings) bring any action in any court of competent jurisdiction
to (i) compel arbitration of any dispute, difference or question
arising out of or related to this Agreement or the License Agreement,
(ii) obtain interim measures of protection pending arbitration of any
dispute, difference or question and/or (iii) enforce any decision of
the arbitrators, including the final award. A determination, award or
other action shall be considered the valid action of the arbitrators
if supported by the affirmative vote of two or three of the three
arbitrators. The costs of arbitration (exclusive of the expense of a
party in obtaining and presenting evidence and attending the
arbitration, and of the fees and expenses of legal counsel to such
party, all of which shall be borne by such party) shall be shared
equally by the Sterling and BP. The arbitration award shall be final
and conclusive and shall receive recognition, and judgment upon such
award may be entered and enforced in any court of competent
jurisdiction.

Article 22 - Confidentiality and Intellectual Property

22.1 During the term of this Agreement and thereafter, except for the New
Technology and other technology subject to the License Agreement, all
information relating to the business, products, assets and finances of
Sterling shall be treated as proprietary to Sterling and as
confidential by BP and shall not be disclosed by BP or its officers,
employees, agents, affiliates or representatives to any third party,
or used for the benefit of, BP or any other Person except as otherwise
specifically provided herein. At the termination of the Initial

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Term or any Additional Term, the obligations as to confidentiality
herein shall continue for a period of five years from the date of such
termination.

22.2 During the term of this Agreement and thereafter, except for the New
Technology and other technology subject to the License Agreement, all
information relating to the business, products, assets and finances of
BP shall be treated as proprietary to BP and as confidential by
Sterling and shall not be disclosed by Sterling or its officers,
employees, agents, affiliates or representatives to any third party,
or used for the benefit of, Sterling or any other Person except as
otherwise specifically provided herein. At the termination of the
Initial Term or any Additional Term, the obligations as to
confidentiality herein shall continue for a period of five years from
the date of such termination.

Article 23 - Defaults; Failures; Remedies

23.1 If a Sterling Event of Default shall occur and be continuing, BP may,
at its option, by written notice to Sterling, declare Sterling to be
in default hereunder ("Declaration of Sterling Default"); provided,
however, that a Declaration of Sterling Default shall not relieve or
otherwise discharge Sterling from the performance of its obligations
under this Agreement, except to the extent that the exercise by BP of
its remedies pursuant to the provisions of Section 23.3 hereof
otherwise prevents or restricts Sterling from fully performing its
obligations under this Agreement.

23.2 If a BP Event of Default shall occur and be continuing, Sterling may,
at its option, by written notice to BP, declare BP to be in default
hereunder ("Declaration of BP Default"); provided, however, that a
Declaration of BP Default shall not relieve or otherwise discharge BP
from the performance of its obligations under this Agreement.

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23.3 Subject to Article 24 hereof, upon a Declaration of Sterling Default,
BP may, in addition to the remedies available to it at law or in
equity, by written notice to Sterling, require Sterling to permit, and
Sterling shall permit, at BP's risk but at Sterling's cost (subject to
BP's duty to reasonably mitigate such cost), such employees of BP as
BP may require to have access to the Facility and those parts of the
Plant that serve the Facility for the purpose of seeking a solution to
the cause of the Sterling Event of Default or failure, and Sterling
shall cause its employees to cooperate with BP's said employees while
present in the Facility; provided, however, that BP shall indemnify
and hold Sterling harmless pursuant to the provisions of Article 19
hereof from Damages which Sterling may suffer or incur by reason of
permitting such employees of BP to have such access and, provided
further, that BP shall not materially disrupt Sterling's operations at
the Facility or those parts of the Plant that serve the Facility.
BP's access to the Facility and those parts of the Plant that serve
the Facility shall continue until the Facility has operated so as to
enable Sterling to comply with its obligations hereunder for one
Month. BP shall thereupon withdraw its employees from the Facility.
After withdrawing such employees, BP shall not have any rights
pursuant to the provisions of this Section 23.3 of access to the
Facility for a period of 30 days beginning on the date of such
withdrawal. Once BP has withdrawn its employees, (i) if Sterling fails
to operate the Facility during such 30 day period following such
withdrawal by BP in such a manner as to enable Sterling to comply with
its obligations under this Agreement, BP shall have the right to
require Sterling to permit BP's employees to have access to the
Facility and those parts of the Plant which serve the Facility
immediately upon the expiration of such 30 day period, or (ii) if
Sterling operates the Facility throughout such 30 day period following
such

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withdrawal by BP in such a manner as to enable Sterling to comply with
its obligations under this Agreement, BP shall have no right to
require Sterling to permit BP's employees to have such access until a
subsequent Declaration of Sterling Default, if any.

23.4 Subject to Article 24 hereof, upon a BP Event of Default, Sterling
may, by written notice to BP, cease all further sales and deliveries
of Product and/or Co-Product to BP under this Agreement until such
time as BP complies with its obligations hereunder and may likewise
exercise any and all other remedies available to it at law or in
equity.

Article 24 - Survival

The representations, warranties, covenants and agreements contained herein,
together with all indemnity and payment obligations of any party hereto owing
to the other party (or its directors, officers or stockholders) on the date of
termination hereof or arising thereafter based on events or occurrences prior
to the termination of this Agreement shall survive such termination and for the
period of the applicable statute of limitations (or, if there is no such
statute, for the longest period permitted by law) with respect to such
obligations.

Article 25 - Miscellaneous

25.1 Notices. Any notice provided for by this Agreement and any other
notice, demand or communication which any party may wish to send to
the other party shall be in writing and either delivered by (i)
regular, overnight or registered or certified mail (return receipt
requested), with first class postage prepaid, (ii) hand delivery,
(iii) facsimile or electronic mail transmission or (iv) overnight
courier service, to the parties at the following addresses or numbers:

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48
(a) Sterling: Sterling Chemicals, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: General Manager -
Acrylonitrile
Fax No.: (000) 000-0000
E-Mail: XXxxxxx@Xxxxxxxxxxxxxxxxx.xxx

(b) BP: BP Chemicals Inc.
0000 Xxxxxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxxxxx Xxxxxxx, Xxxx 00000-0000
Attention: Vice President
Marketing
Fax No.: (000) 000-0000
E-Mail: xxxxxxx@xx.xxx

Any address, number, or name specified above may be changed by a
notice given by the addressee to the other parties in accordance with
this Section. Any notice, demand or other communication shall be
deemed given and effective (1) in the case of a notice sent by regular
mail, on the date actually received by the addressee, (2) in the case
of a notice sent by registered or certified mail, on the date
receipted for (or refused) on the return receipt, (3) in the case of a
notice delivered by hand, when personally delivered, (4) in the case
of a notice sent by facsimile or electronic mail, upon transmission
subject to telephone confirmation of receipt, and (5) in the case of a
notice sent by overnight mail or courier service, the date delivered
at the designated address, in each case given or addressed as
aforesaid. The inability to deliver because of changed address of
which no notice was given, or the rejection or other refusal to accept
any notice, demand or communication, shall be deemed to be the receipt
of the notice, demand or communication as of the date of such
inability to deliver or the rejection or refusal to accept.

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25.2 Controlling Law. All questions concerning the validity, operation and
interpretation of this Agreement and the performance of the
obligations imposed upon the parties hereunder shall be governed by
the laws of the State of Texas.

25.3 Modifications and Waivers. No cancellation, modification, amendment,
deletion, addition or other change in this Agreement or any provision
hereof, or waiver of any right or remedy herein provided, shall be
effective for any purpose unless specifically set forth in writing
signed by the party or parties to be bound thereby. No failure or
delay on the part of either of the parties hereto in exercising any
right, power or privilege hereunder, and no course of dealing between
the parties hereto, shall operate as a waiver of any right, power or
privilege hereunder. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege hereunder. No notice to or demand on either of the parties
hereto in any case shall entitle such party to any other or further
notice or demand in similar or other circumstances or constitute a
waiver of the rights of either of the parties hereto to any other or
further action in any circumstances without notice or demand.

25.4 Entire Agreement. This Agreement supersedes all other agreements,
oral or written, heretofore made with respect to the subject matter
hereof and the transactions contemplated hereby, and contains the
entire agreement of the parties.

25.5 Severability. Any provisions hereof prohibited by or unlawful or
unenforceable under any applicable law of any jurisdiction shall be
ineffective as to such jurisdiction, without affecting any other
provision of this Agreement, or shall be deemed to be severed or
modified to conform with such law, and the remaining provisions of
this Agreement shall

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remain in force, provided that the purpose of this Agreement can be
effected. To the full extent, however, that the provisions of such
applicable law may be waived, they are hereby waived, to the end that
this Agreement is deemed to be a valid and binding agreement
enforceable in accordance with its terms.

25.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all
of such counterparts together shall constitute but one and the same
instrument.

25.7 Binding on Successors. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns.

25.8 Public Statements. The parties hereto agree to consult with one
another prior to issuing any public announcement or statement with
respect to the transactions contemplated herein.

25.9 No Partnership or Agency. This Agreement shall not be construed to
create a partnership, joint venture, association or other entity or
business organization or to create a principal agent relationship
between Sterling and BP. Except for the sale or transfer of Product
and Co-Product to BP as contemplated hereby and the granting of the
security interests and liens pursuant to Article 15, nothing in this
Agreement shall be deemed to convey to BP any legal or beneficial
ownership of the Facility.

25.10 Wire Funds, Etc. All sums and amounts payable or to be payable
pursuant to this Agreement shall be payable in immediately available
funds and in coin or currency of the United States of America that, at
the time of payment, is legal tender for the payment of public and
private debts in the United States of America and shall be made by
wire transfer of immediately available

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51
funds to such bank and/or account in the continental United States for
the account of the payee as from time to time the payee shall have
directed to the payor in writing, or, if no such direction shall have
been given, by check to the payee in the manner and at the address set
forth above. Whenever in this Agreement either party is required to
pay or reimburse the other party upon receipt of invoice or otherwise
when no due date for payment is specifically provided, payment shall
be due ten Business Days after receipt of invoice or other statement,
and shall be made in the manner set forth above.

Executed as of the Effective Date.

BP Chemicals Inc.

By: /s/ Xxxx X. Xxxxx
------------------------------
Xxxx X. Xxxxx, President

Sterling Chemicals, Inc.

By: /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx, Chairman
of the Board

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EXHIBIT A

Definitions

Additional Costs and Expenses means all additional direct and indirect
costs and expenses incurred by Sterling as a result of the failure by BP to
take the Minimum Annual Contract Quantity in any Contract Year or during the
one- year period following a termination date, including increased costs of
production of Product, increased incremental costs incurred in the operation of
the Facility and increased raw materials usages, utilities and other costs and
expenses.

Additional Term is defined in Section 2.1 hereof.

Agreement means this Amended and Restated Production Agreement.

Arbitration Notice is defined in Section 21.2 hereof.

Baseline Raw Materials Usage means ***.

BP is defined in the introductory paragraph hereof.

BP Event of Default means (i) the failure by BP to perform any of its
financial obligations hereunder or under the License Agreement which failure
shall continue for a period of ten days after notice from Sterling, (ii) the
failure of BP to perform any other covenants or agreements hereunder or under
the License Agreement to a material extent which failure continues for a period
of 30 days after receipt of written notice thereof by BP from Sterling or (iii)
the inaccuracy in any material respect of any representation or warranty made
by BP in this Agreement or in the License Agreement; provided, however, that
(a) with respect to an event described in (i) or (ii) above, if BP has
performed any such obligation, covenant or agreement or made any such payment
prior to the expiration of such ten or 30 day period, as applicable such
failure or default shall not constitute a BP Event of Default; and (b) a BP
Event of Default shall not be deemed to have occurred if BP is

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53
challenging in good faith in accordance with Article 21 hereof a Declaration of
BP Event of Default, unless such Declaration of BP Event of Default is found by
a court or arbitration to be effective.

BP Facilities is defined in Section 3.5(a) hereof.

BP Indemnified Persons is defined in Section 19.1 hereof.

BP Net Unrecouped Investment Amount shall mean the ***.

BP's Share is defined in Section 12.1 hereof.

Business Day means a day in the City of Houston, Xxxxxx County, Texas,
that is neither a Saturday, Sunday or legal holiday nor a day on which banking
institutions in Houston, Texas, Cleveland, Ohio or New York, New York are
obligated or permitted by law to close.

Capital Budget is defined in Section 13.2 hereof.

Capital Expenditures means expenditures (whether treated as capital or
expense for financial reporting or tax purposes) incurred to (i) acquire or
replace any asset for use on the Facility, (ii) add to (or improve) any asset
in the Facility or (iii) comply with environmental, safety or other Laws
applicable to the Facility or its operation. Such expenditures shall be
classified in accordance with Sterling's usual and customary practices as it
applies them to its own expenditures.

Capital Project means a project which requires Capital Expenditures.

***.

CEOs is defined in Section 21.1 hereof.

Claim is defined in Section 19.3 hereof.

Contract Year means a period of 12 consecutive Months beginning on the
first Day of January next following the Effective Date, and beginning on the
first Day of January of each

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54
subsequent year during the Initial Term and, if applicable, any Additional
Term. The period of time from the Effective Date until the first day of the
January next following the Effective Date, and the period of time from the
first day of January last occurring during the Initial Term or, if applicable,
any Additional Term, until the end of the Initial Term, or, if applicable, any
Additional Term, shall each be considered to be a Contract Year, provided that
in each such period the Minimum Annual Contract Quantity and the Maximum Annual
Contract Quantity shall be prorated.

Co-Products means hydrogen cyanide (HCN), acetonitrile (ACN) and
derivatives thereof and any other materials reasonably agreed to by the
parties.

Cross Termination Right is defined in Section 2.1 hereof.

Damages means any and all damages, cash payments, expenses,
obligations, claims, liabilities, fines, penalties, clean-up or remedial costs,
shut-down costs, repairs or reconstruction costs, costs of investigation,
attorneys' fees, court costs, and operating, extraordinary, business
interruption and other losses, including any such matters arising from Spills
or Releases but otherwise excluding consequential, incidental, special,
punitive or indirect damages.

Day means the 24-hour period commencing at 7:00 a.m. Houston, Texas
time on one calendar day and ending at 7:00 a.m. Houston, Texas time on the
following calendar day. The date of a Day shall be that of its beginning.

Declaration of BP Default is defined in Section 23.2 hereof.

Declaration of Sterling Default is defined in Section 23.1 hereof.

Delivery, Shipment and Storage Instructions is defined in Section 5.1
hereof.

Dispute Resolution Committee is defined in Section 21.1 hereof.

Effective Date is the date of execution hereof by BP and Sterling.

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55
Estimated Delivery, Shipment and Storage Instructions is defined in
Section 5.1 hereof.

Facility means any and all equipment of Sterling which is located at
the Plant and which is dedicated to the production of acrylonitrile, including
the equipment listed on Schedule A-1; provided, however, that the term Facility
shall not include any off-site utilities (e.g., nitrogen, fuel gas, plant air,
instrument air and electricity) or any equipment dedicated to loading dock
operations.

Fixed Cost Component means, ***.

Fixed Costs means any and all actual fixed costs incurred, sustained
or paid by Sterling in connection with the production, sale or delivery of
Products included within the categories listed on Schedule A-2; provided,
however, that ***. For purposes of the definition of Fixed Costs, actual
fixed costs shall be calculated in substantially the same manner as that for
the fourth quarter of fiscal year 1997 attached hereto as Schedule A-2.

Force Majeure means any acts of God, wars, blockades, insurrections,
riots, epidemics, landslides, lightning, earthquakes, fires, storms, floods,
high water, washouts, arrests, restraints of government and people, civil
disturbances, explosions, breakage or accidents to machines, equipment or lines
of pipe or property, freezing of xxxxx, machines, lines of pipe or property,
partial or entire failure of any machinery, equipment or lines of pipe or other
property, the occurrence of any Spills or Releases and any regulatory, civil or
criminal action with respect thereto, strikes, work stoppages, labor
difficulties, other industrial disturbances, acts of public enemy,
transportation difficulties, sabotage, material shortages, difficulties in
obtaining materials through regular channels of supply, governmental controls
(including price and allocation controls), regulations or actions, embargoes
or, without limitation, any other causes or contingencies (whether or not of
the same nature as those hereinbefore specified) beyond the reasonable control
of the party claiming Force

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56
Majeure, provided the party prevented from performing gives prompt notice to
the other party and takes all reasonable actions within its power to remove the
basis for nonperformance and after doing so resumes performance as soon as
possible.

Indemnified Party is defined in Section 19.4 hereof.

Indemnifying Party is defined in Section 19.4 hereof.

Initial Term is defined in Section 2.1 hereof.

Laws means all laws, statutes, rules, regulations, ordinances, orders,
writs, injunctions or decrees and other pronouncements having the effect of law
of any governmental authority.

License Agreement means the License Agreement between BP and Sterling
dated as of April 15, 1988.

Major Capital Project is defined in Section 13.2 hereof.

Maximum Annual Contract Quantity means, ***.

Maximum Monthly Contract Quantity means, ***.

Maximum Quarterly Contract Quantity means, ***.

Measuring Equipment means shore tanks or other appropriate equipment
for measuring deliveries to be loaded into or from barges or ships, scales for
measuring deliveries to be loaded into or from trucks or rail cars and meters
and other appropriate equipment for measuring deliveries into or from
pipelines.

Minimum Annual Contract Quantity means, *** .

Minimum Quarterly Contract Quantity means, ***.

Minor Capital Projects is defined in Section 13.2 hereof.

Minor Capital Projects Budget is defined in section 13.2 hereof.

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57
Month means the period beginning at 7:00 a.m. on the first day of a
calendar month and ending at 7:00 a.m. on the first day of the next succeeding
calendar month.

Net Margin means ***.

New Technology is defined in Section 1 of the License Agreement and
includes BP's improvements.

Obligations is defined in Section 20.3 hereof.

Original Agreement is defined in the recitals hereof.

Other Raw Materials means *** .

Person means any individual, firm, corporation, trust, association,
company, limited liability company, joint stock company, partnership, joint
venture, governmental authority or other entity or enterprise.

Plant means the entire Texas City, Texas petrochemical plant owned by
Sterling.

Point of Delivery is defined in Article 8 hereof.

Prime Rate means the prime rate of interest announced from time to
time by The Chase Manhattan Bank, N.A. or any successor thereto.

Product means acrylonitrile meeting the Specifications.

Project means the pipe-up, instrumentation and completion of the Third
Reactor and alterations to the recovery and purification section to accommodate
the Third Reactor and the New Technology.

Purchase Price means the purchase price payable by BP for Product as
provided in Article 7 hereof.

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58
Quarter means (i) during any Contract Year which is a calendar year,
the period beginning at 7:00 a.m. on the first day of the Months of January,
April, July and October and ending at 7:00 a.m. on the first day of the next
succeeding April, July, October and January, respectively and (ii) during any
Contract Year which is not a calendar year, the three (3) month period (or such
lesser period prior to reaching the commencement of a calendar year as shall be
applicable) commencing at 7:00 a.m. on the first day of such period and ending
at 7:00 a.m. on the morning of the first day of the next succeeding January,
April, July or October, as the case may be.

Rated Capacity means ***. The Rated Capacity, once so established,
shall remain in effect until further agreement of the parties or until proven
to be materially inaccurate.

Raw Materials means propylene meeting the specifications set forth on
Exhibit B and ammonia meeting the specifications set forth on Exhibit C.

Right means BP's exclusive right, during the term of this Agreement,
to purchase Product produced at the Facility in the amount of up to *** as
provided in Article 4 hereof.

Shutdown Reserve means an account for the Facility and a corresponding
schedule for major shutdowns and update these on a regular basis. The period
over which the Shutdown Reserve is accrued is agreed to be consistent with the
expected major shutdown schedule. BP and Sterling will review and agree on the
Shutdown Reserve and corresponding major shutdown schedule by October 1 of each
year.

Once agreed, the amount for "Shutdown Reserve" in the Fixed Costs
shall be revised so that the sum of the monthly charges in current dollars
during the interval between major shutdowns will equal the total. If, during
the period prior to the major shutdown, additions or deletions of major
(non-routine) items to or from the reserve account may be mutually agreed upon.
After completion

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59
of a major shutdown, total costs will be reconciled against the Shutdown
Reserve account. Any difference will then be used to recalculate the next
Shutdown Reserve Account.

Specifications means the acrylonitrile specifications, attached hereto
as Exhibit D, as the same may be changed from time to time by written agreement
between BP and Sterling.

Spills or Releases means any emission, discharge, release or
threatened release of pollutants, contaminants, or hazardous substances or
toxic materials or wastes into or upon ambient air, surface water, ground water
or land, or subsurface strata, or, otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, or hazardous substances or toxic
materials or wastes, as any of the same relate to or affect or arise in
connection with the operation of the Facility, or the production, delivery,
storage, shipment, sale, resale or use, disposal or transportation of Product,
Co-Products, or feedstocks, raw materials, wastes or other materials used in or
resulting from the production of Product or Co-Products.

Start-Up Date means November 26, 1989.

Sterling is defined in the introductory paragraph.

Sterling Event of Default means (i) the failure by Sterling to perform
any of its financial obligations hereunder or under the License Agreement which
failure shall continue for a period of ten days after notice from BP, (ii) the
failure of Sterling to perform any other covenants or agreements hereunder or
under the License Agreement to a material extent which failure continues for a
period of 30 days after receipt of written notice thereof by Sterling from BP
or (iii) the inaccuracy in any material respect of any representation or
warranty made by Sterling in this Agreement or the License Agreement; provided,
however, that (a) with respect to an event described

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60
in (i) or (ii) above, if Sterling has performed any such obligation, covenant
or agreement or made any such payment prior to the expiration of such ten or 30
day period, as applicable, such failure or default shall not constitute a
Sterling Event of Default; and (b) a Sterling Event of Default shall not be
deemed to have occurred if Sterling is challenging in good faith in accordance
with Article 21 hereof a Declaration of Sterling Event of Default, unless such
Declaration of Sterling Event of Default is found by a court or arbitration to
be effective.

Sterling Indemnified Persons is defined in Section 19.2 hereof.

Sterling's Share is defined in Section 12.1 hereof.

*** is defined in Section 3.4 hereof.

Termination Notice is defined in Section 2.2 hereof.

Third Party Action is defined in Section 19.3 hereof.

Third Reactor means the reactor in place in the Facility that, prior
to April 15, 1988, was not connected by piping within the Facility and was
incomplete and which the parties acknowledge and agree has a useful life of ten
years from November 26, 1989.

Unit of Measurement is defined in Section 10.1 hereof.

Variable Cost Component means, ***.

Variable Costs means any and all actual variable costs incurred,
sustained or paid by Sterling in connection with the production, sale or
delivery of Products or Co-Products hereunder included within the categories
listed on Schedule A-3; provided, however, that in no event shall the costs of
Raw Materials which are provided by BP pursuant to Section 7.5 hereof be deemed
to be Variable Costs hereunder.

-9-
61
EXHIBIT B

PROPYLENE SPECIFICATIONS

PROPERTY SPECIFICATION SHELL TEXAS CITY
-------- ------------- ----- ----- ----
MIN MAX
--- ---

Propylene, Wt. % 92 92.0 MIN 602.045
Propane, Wt. % -- 8 8.0 MAX 602.045
C4+, ppm Wt. -- 1000 602.046
C2H4, ppm Wt. (Ethylene) -- 200 100 MAX 602.045
Butylenes, ppm. Wt. -- 125 125 MAX 602.046
Methylacetylene, ppm. Wt. -- 100 602.045
Propadiene, ppm Wt. -- 100 602.045
Acetylene, ppm Wt. -- 100 602.045
Sulfur, ppm Wt. -- 10 3 MAX 602.027
Water, ppm Wt. -- 60 00 XXX Xx Xxxxxx
X0, X0, X0, XX, XX0 -- 100 100 MAX 602.036
Total, ppm, Wt.
Methanol, ppm Wt. -- 100 No Method
DMF, ppm Wt. -- 0.3 No Method
Amines, as MEA, ppm Wt. -- 5 No Method
Ethane & Lighter H.C., Wt. % 0.4 MAX
Butane & Heavier H.C., ppm Wt. 1000 MAX
Butadiene, ppm Wt. 20 MAX

62
EXHIBIT C

AMMONIA SPECIFICATIONS

TEXAS CITY
PROPERTY SPECIFICATION METHOD NO.
-------- ------------- ------ ---
MIN MAX
--- ---

Ammonia, Wt. % 99.5 -- 602.247
Water, Wt. % 0.2 0.5 602.246
Oil, ppm Wt. -- 10 TOC

63
EXHIBIT D

ACRYLONITRILE SPECIFICATIONS

TEXAS CITY
PROPERTY SPECIFICATION METHOD NO.
-------- ------------- ----------

***

SCHEDULE 3.5(e)(i)
STERLING ACTUAL COSTS

***

65
SCHEDULE 15.2
INSURANCE

***

66
SCHEDULE A-1
Facility

***

67
SCHEDULE A-2
EXAMPLE OF FIXED COSTS

***

68
SCHEDULE A-3
EXAMPLE OF VARIABLE COSTS

***

69
SCHEDULE A-4
BP NET UNRECOUPED INVESTMENT AMOUNT

***

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