EXHIBIT 10.3
AMENDED AND RESTATED PLEDGE AGREEMENT
     THIS AMENDED AND RESTATED PLEDGE AGREEMENT (as amended, supplemented,
amended and restated or otherwise modified from time to time, this “Agreement”),
dated as of March 29, 2007, is made by STERLING CHEMICALS, INC., a Delaware
corporation (the “Company”) and STERLING CHEMICALS ENERGY, INC., a Delaware
corporation (“Energy”) (the Company and Energy are each, individually, a
“Borrower” and, together, collectively, the “Borrowers”), and each other Person
(such capitalized term and all other capitalized terms not otherwise defined
herein shall have the meanings provided for or incorporated by reference in
Article I below) that may from time to time become a party to this Agreement
(each such Person and each Borrower, individually, a “Pledgor” and, together
with all such other Persons and all Borrowers, collectively, the “Pledgors”), in
favor of THE CIT GROUP/BUSINESS CREDIT, INC., as Administrative Agent for each
of the Secured Parties (together with its successors and assigns in such
capacity, the “Administrative Agent”).
RECITALS:
     A. On December 19, 2002, the Borrowers, the Administrative Agent and the
lenders party thereto entered into a Revolving Credit Agreement (the “Existing
Credit Agreement”), pursuant to which, among other things the Pledgors entered
into a Pledge Agreement, dated as of December 19, 2002, in favor of the
Administrative Agent for the benefit of the lenders party to such Existing
Credit Agreement (the “Existing Pledge Agreement”).
     B. Pursuant to an Amended and Restated Revolving Credit Agreement, dated as
of the date hereof (as amended, supplemented, amended and restated or otherwise
modified from time to time, the “Credit Agreement”), among the Borrowers, the
various financial institutions as are, or may from time to time become, parties
thereto (the “Lenders”), and the Administrative Agent, the Lenders and the
Issuer have (i) amended and restated the Existing Credit Agreement and (ii)
extended Commitments to make Credit Extensions to the Borrowers.
     C. As a condition precedent to the making of any Credit Extension under the
Credit Agreement, each Pledgor is required to execute and deliver this
Agreement.
     D. Each Pledgor has duly authorized the execution, delivery and performance
of this Agreement.
     E. It is in the best interest of each Pledgor to execute this Agreement
inasmuch as such Pledgor will derive substantial direct and indirect benefits
from the Credit Extensions made from time to time to the Borrowers by the
Lenders and the Issuer pursuant to the Credit Agreement and the providing of
Banking Services to the Borrowers and the execution and delivery of Hedging
Agreements between the Borrowers and certain Lenders.

 

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     NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce (i) the Lenders, the Swing Line
Lender and the Issuer to make Revolving Credit Loans and Swing Line Loans and
issue Letters of Credit pursuant to the Credit Agreement, and (ii) the Secured
Parties to provide Banking Services to the Borrowers and to enter into Hedging
Agreement(s), the parties hereto hereby amend and restate the Existing Pledge
Agreement, and each Pledgor jointly and severally agrees, for the benefit of
each Secured Party, as follows:
ARTICLE I
DEFINITIONS
     SECTION 1.1 Certain Terms. The following terms (whether or not underscored)
when used in this Agreement, including its preamble and recitals, shall have the
following meanings (such definitions to be equally applicable to the singular
and plural forms thereof):
     “Administrative Agent” is defined in the preamble.
     “Agreement” is defined in the preamble.
     “Borrowers” is defined in the preamble.
     “Capital Securities” means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person’s equity (including any instruments
convertible into equity), whether now outstanding or issued after the Closing
Date.
     “Collateral” is defined in Section 2.1.
     “Company” is defined in the preamble.
     “Credit Agreement” is defined in recital B.
     “Disposition” is defined in the Intercreditor Agreement.
     “Distributions” means all stock dividends, liquidating dividends, Capital
Securities resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers or
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other Capital
Securities constituting Collateral, but shall not include Dividends.
     “Dividends” means cash dividends and cash distributions with respect to any
Pledged Shares or other Pledged Property made in the ordinary course of
business, but shall not include liquidating dividends.
     “Energy” is defined in the preamble.
     “Existing Credit Agreement” is defined in recital A.

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     “Existing Pledge Agreement” is defined in recital A.
     “Lenders” is defined in recital B.
     “Pledged Notes” means all promissory notes, bonds or debt instruments at
any time issued to any Pledgor (excluding any promissory notes, bonds or debt
instruments not included in calculating the Borrowing Base Amount and with
respect to which the principal amount owed to such Pledgor thereunder does not
exceed $500,000, and excluding any promissory notes, bonds or debt instruments
arising from a Disposition of Indenture Collateral).
     “Pledged Property” means all Pledged Shares, all other pledged Capital
Securities, all other equity securities, all Pledged Notes, all assignments of
any amounts due or to become due with respect thereto and all other instruments
which are now being delivered by any Pledgor to the Administrative Agent or may
from time to time hereafter be delivered by any Pledgor to the Administrative
Agent for the purpose of pledge under this Agreement, and all proceeds of any of
the foregoing.
     “Pledged Securities” means all Pledged Notes and all Capital Securities
which are now being or may hereafter be delivered or pledged by any Pledgor to
the Administrative Agent hereunder.
     “Pledged Share Issuer” means each Person constituting either a Borrower
(other than the Company) or a Restricted Subsidiary identified in Attachment 1
hereto as the issuer of the Pledged Shares identified opposite the name of such
Person and each other Person whose Capital Securities are required to be pledged
hereunder and under the Credit Agreement from time to time.
     “Pledged Shares” means the Capital Securities of any Pledged Share Issuer
in the amounts and percentages listed in Attachment 1 hereto.
     “Pledgor” and “Pledgors” are defined in the preamble.
     “Termination Date” means the date on which all Obligations (other than any
contingent indemnification or expense reimbursement Obligations that are not
then due and payable) have been paid in full in cash, all Letters of Credit have
been terminated, expired or Cash Collateralized, all Hedging Agreements have
been terminated and all Commitments have been permanently terminated.
     SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Agreement, including its
preamble and recitals, have the meanings provided in the Credit Agreement.
     SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or in the
Credit Agreement or the context otherwise requires, terms for which meanings are
provided in the U.C.C. are used in this Agreement, including its preamble and
recitals, with such meanings.
ARTICLE II
PLEDGE

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     SECTION 2.1. Grant of Security Interest. Each Pledgor hereby pledges,
hypothecates, assigns, charges, delivers and transfers to the Administrative
Agent, for the benefit of each of the Secured Parties, and hereby grants to the
Administrative Agent, for the benefit of the Secured Parties, a continuing
security interest in, all of such Pledgor’s right, title and interest in and to
the following, whether now owned or hereafter acquired by such Pledgor
(collectively, the “Collateral”):
     (a) all issued and outstanding Pledged Shares of each Pledged Share Issuer
identified in Attachment 1 hereto;
     (b) all other Capital Securities of any Pledged Share Issuer issued from
time to time to such Pledgor;
     (c) all Pledged Notes identified in Attachment 1 hereto and all other
Pledged Notes, whether now or hereafter delivered to the Administrative Agent in
connection with this Agreement;
     (d) all other Pledged Property, whether now or hereafter delivered to the
Administrative Agent in connection with this Agreement;
     (e) all Dividends, Distributions and other payments and rights with respect
to any Pledged Property; and
     (f) all proceeds of any of the foregoing.
     SECTION 2.2. Security for Obligations. This Agreement secures the payment
in full and in cash of all Obligations.
     SECTION 2.3. Delivery of Pledged Property. All certificates or instruments
representing or evidencing any Collateral, including all certificates or
instruments representing or evidencing Pledged Securities, shall be promptly
delivered to and held by the Administrative Agent pursuant hereto (or to a party
who will hold such Pledged Securities pursuant to arrangements satisfactory to
the Administrative Agent in its reasonable discretion), shall be in suitable
form for transfer by delivery and shall be accompanied by all necessary
endorsements, instruments of transfer or assignment, duly executed in blank.
     SECTION 2.4. Dividends, Distributions and Payments on Pledged Securities.
In the event that any Dividend or other cash payment is to be paid on any
Pledged Security at a time when no Event of Default has occurred and is
continuing, such Dividend or cash payment may be paid directly to the applicable
Pledgor; provided, however, that all amounts so received shall be promptly
deposited by such Pledgor into a Controlled Deposit Account. If any Event of
Default has occurred and is continuing, then any such Dividend or cash payment
shall be paid directly to the Administrative Agent. In the event that any
Distribution consisting of Capital Securities (other than Distributions with
respect to the general partnership interest in S&L Cogeneration Company
described on Attachment 1 hereto) is to be made on any Pledged Security, such
Distribution shall be delivered to and held by or on behalf of the
Administrative Agent as Collateral in accordance with Section 2.3.

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     SECTION 2.5. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall:
     (a) remain in full force and effect until the Termination Date;
     (b) be binding upon each Pledgor and its successors, transferees and
assigns; and
     (c) inure, together with the rights and remedies of the Administrative
Agent hereunder, to the benefit of the Secured Parties.
Without limiting the foregoing clause (c), any Secured Party may assign or
otherwise transfer (in whole or in part) any Revolving Credit Commitment or
Swing Line Loan Commitment or Loan held by it to any other Person, and such
other Person shall thereupon become vested with all the rights and benefits in
respect thereof granted to such Secured Party under any Loan Document or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 10.11 of the Credit Agreement.
Subject to the last sentence of this Section 2.5, this Agreement (other than the
indemnification and expense reimbursement provisions set forth in Section 6.4
and any other contingent indemnification or expense reimbursement Obligations
expressly provided for herein or in any other Loan Document to survive the
Termination Date) and the security interest granted herein shall terminate and
all rights to the Collateral shall revert to each Pledgor on the Termination
Date. Additionally, upon the designation of any Restricted Subsidiary as an
Unrestricted Subsidiary in accordance with Section 7.1.12 of the Credit
Agreement and the Administrative Agent’s receipt of a written request from the
Company for the release of the Capital Securities issued by such Unrestricted
Subsidiary from the Lien created hereunder, the Administrative Agent shall
promptly release such Lien, provided that no Default then exists and the Lien
created hereunder encumbering all other Collateral shall remain in full force
and effect. Upon any such termination or release of Collateral, the
Administrative Agent will, at each Pledgor’s sole expense, deliver to such
Pledgor, without any representations, warranties or recourse of any kind
whatsoever, all certificates and instruments representing or evidencing all
released Pledged Shares, together with all other released Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Pledgor such
documents as such Pledgor shall reasonably request to evidence such termination
or release. Notwithstanding anything to the contrary contained herein or in any
other Loan Document, each Pledgor agrees that: (i) to the extent that, after
payment in full of all Obligations, the termination, expiration or Cash
Collateralization of all Letters of Credit, and the termination of all Hedging
Agreements, such payment or any part thereof is subsequently invalidated,
voided, declared to be fraudulent or preferential, set aside, recovered,
rescinded or is required to be retained by or repaid to a trustee, receiver, or
any other Person under any bankruptcy code, common law, or equitable cause, then
the Lien and security interest in the Collateral created hereunder shall be
revived, reinstated and continued in full force and effect, as if said payment
had not been made; and (ii) the Lien and security interest in the Collateral
created hereunder shall not be released or discharged by any payment to the
Administrative Agent or any Secured Party from any source that is thereafter
paid, returned or refunded in whole or in part by reason of the assertion of a
claim of any kind relating thereto, including, but not limited to, any claim for
breach of contract, breach of warranty, preference, illegality, invalidity, or
fraud asserted by any account debtor or by any other Person.

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     SECTION 2.6. Security Interest Absolute. All rights of the Administrative
Agent and the Liens granted to the Administrative Agent hereunder, and all
obligations of each Pledgor hereunder, shall be absolute and unconditional,
irrespective of
     (a) any lack of validity or enforceability of any Loan Document,
     (b) the failure of any Secured Party
     (i) to assert any claim or demand or to enforce any right or remedy against
any Pledgor or any other Person under the provisions of the Loan Documents or
otherwise, or
     (ii) to exercise any right or remedy against any guarantor of, or
collateral securing, any Obligations of any Pledgor,
     (c) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations or any other extension, compromise or
renewal of any Obligation of any Pledgor,
     (d) any reduction, limitation, impairment or termination of any Obligation
of any Pledgor for any reason (other than the repayment in full and in cash of
all Obligations), including any claim of waiver, release, surrender, alteration
or compromise, and shall not be subject to (and each Pledgor hereby waives any
right to or claim of) any defense or set-off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise or unenforceability of, or any other event or
occurrence affecting, any Obligation of any Pledgor,
     (e) any amendment to, rescission, waiver or other modification of, or any
consent to departure from, any of the terms of the Loan Documents,
     (f) any addition, exchange, release, surrender or non-perfection of any
collateral (including the Collateral), or any amendment to or waiver or release
of or addition to or consent to departure from any guaranty, for any of the
Obligations, or
     (g) any other circumstances which might otherwise constitute a defense
available to, or a legal or equitable discharge of, any Borrower, any surety or
any guarantor.
     SECTION 2.7. Postponement of Subrogation, etc. Each Pledgor hereby agrees
that it will not exercise any rights which it may acquire by reason of any
payment made hereunder, whether by way of subrogation, reimbursement or
otherwise, until the Termination Date. Any amount paid to any Pledgor on account
of any payment made hereunder prior to the Termination Date shall be held in
trust for the benefit of the Secured Parties and shall promptly be paid to the
Administrative Agent, for the benefit of the Secured Parties, and credited and
applied against the Obligations, whether matured or unmatured, in accordance
with the terms of the Credit Agreement; provided, however, that if
     (a) any Pledgor has made payment to the Administrative Agent for the
benefit of the Secured Parties of all or any part of the Obligations, and

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     (b) the Termination Date has occurred,
each Secured Party agrees that, at such Pledgor’s request, the Administrative
Agent, on behalf of the Secured Parties, will execute and deliver to such
Pledgor appropriate documents (without recourse and without representation or
warranty) necessary to evidence the transfer by subrogation to such Pledgor of
an interest in the Obligations resulting from such payment by such Pledgor. In
furtherance of the foregoing, prior to the Termination Date, each Pledgor shall
refrain from taking any action or commencing any proceeding against any Borrower
(or its successors or assigns, whether in connection with a bankruptcy
proceeding or otherwise) to recover any amounts in respect of payments made
under this Agreement to the Administrative Agent or any other Secured Party.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
     Each Pledgor represents and warrants unto each Secured Party, as at the
date of each pledge and delivery hereunder (including each pledge and delivery
of Pledged Securities) by such Pledgor to the Administrative Agent of any
Collateral, as set forth in this Article III below.
     SECTION 3.1. Ownership, No Liens, etc. Such Pledgor is the legal and
beneficial owner of, and has good and valid title to (and has full right and
authority to pledge and assign) the Collateral pledged by it hereunder, free and
clear of any Liens other than the Liens permitted pursuant to clauses (a) and
(c)(iii) of Section 7.2.3 of the Credit Agreement.
     SECTION 3.2. Valid Security Interest. This Agreement creates a valid
security interest in the Collateral in favor of the Administrative Agent, which
security interest shall be perfected and senior to all other Liens with respect
to the Collateral upon either (x) with respect to Collateral consisting of
certificated securities or Pledged Notes, the delivery to the Administrative
Agent of the certificates and instruments representing or evidencing such
Collateral, together with duly executed instruments of transfer, or (y) with
respect to all Collateral, the filing of appropriate financing statements with
the proper filing office in the appropriate jurisdictions.
     SECTION 3.3. As to Pledged Shares. As of the date hereof, Attachment 1
hereto accurately identifies (i) the name and jurisdiction of organization of
each Pledged Share Issuer, (ii) the number, class(es) and certificate number(s),
if applicable, of the Pledged Shares, and (iii) the percentage of each class of
Capital Securities of each Pledged Share Issuer represented by such Pledged
Shares. In the case of the Pledged Shares of any Subsidiary of such Pledgor that
constitute Collateral, all such Pledged Shares have been duly authorized and
validly issued and are fully paid and nonassessable. No Pledgor has any
Subsidiaries (other than Unrestricted Subsidiaries) of which it directly owns
any Capital Securities that are not pledged hereunder. All Pledged Shares (other
than the general partnership interest in S&L Cogeneration Company described on
Attachment 1 hereto) are certificated, have been delivered to the Administrative
Agent accompanied by undated instruments of transfer duly executed in blank, and
such delivery and instruments of transfer are effective to give the
Administrative Agent “control” (as defined in Section 8-106 the U.C.C.) of such
Pledged Shares.

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     SECTION 3.4. Authorization, Approval, etc. Except as have been obtained or
made and are in full force and effect, no authorization, approval or other
action by, and no notice to or filing with, any Governmental Authority,
regulatory body or other Person is required either
     (a) for the pledge by such Pledgor of any Collateral pursuant to this
Agreement or for the execution, delivery and performance of this Agreement by
such Pledgor, or
     (b) for the exercise by the Administrative Agent of the voting or other
rights provided for in this Agreement, or, except with respect to any Pledged
Shares as may be required in connection with a disposition of such Pledged
Shares by laws affecting the offering and sale of securities generally, the
remedies in respect of the Collateral pursuant to this Agreement,
provided, however, that (i) in order to exercise the voting and certain other
rights provided for in this Agreement with respect to a Pledged Share Issuer,
the Pledged Shares of such Pledged Share Issuer must be transferred into the
name of the Administrative Agent on the books and records of such Pledged Share
Issuer prior to the exercise of such voting or other rights, and (ii) the Liens
granted hereunder will not be perfected until either (x) with respect to
Collateral consisting of certificated securities or Pledged Notes, the delivery
to the Administrative Agent of the certificates and instruments representing or
evidencing such Collateral, together with duly executed instruments of transfer,
or (y) with respect to all Collateral, the filing of appropriate financing
statements with the proper filing office in the appropriate jurisdictions.
     SECTION 3.5. Compliance with Laws. Such Pledgor is in compliance with the
requirements of all applicable laws (including, the provisions of the Fair Labor
Standards Act), rules, regulations and orders of every Governmental Authority,
the non-compliance with which could reasonably be expected to have a Material
Adverse Effect or which could reasonably be expected to materially adversely
affect the value of the Collateral.

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ARTICLE IV
COVENANTS
     SECTION 4.1. Protect Collateral; Further Assurances, etc. Except for the
Liens permitted pursuant to clauses (a) and (c)(iii) of Section 7.2.3 of the
Credit Agreement, no Pledgor will sell, assign, transfer, pledge, or encumber
the Collateral in any other manner (except as permitted under Section 7.2.9 and
Section 7.2.10 of the Credit Agreement). Each Pledgor will warrant and defend
the right and title herein granted unto the Administrative Agent in and to the
Collateral (and all right, title and interest represented by the Collateral)
against the claims and demands of all Persons whomsoever. Each Pledgor agrees
that at any time, and from time to time, at the expense of such Pledgor, such
Pledgor will promptly execute and deliver all further instruments, and take all
further action, that may be necessary or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Each Pledgor hereby authorizes the Administrative Agent to file one
or more financing or continuation statements, and amendments thereto, relative
to all or any part of the Collateral without the signature of such Pledgor where
permitted by law. A carbon, photographic or other reproduction of this Agreement
or any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law. No Pledgor will
permit any Pledged Share Issuer that is a Subsidiary of such Pledgor to issue
any Capital Securities unless the same are pledged hereunder and all
certificates or instruments representing or evidencing such Capital Securities
are promptly delivered to and held by or on behalf of the Administrative Agent
as Collateral in accordance with Section 2.3.
     SECTION 4.2. Stock Powers, etc. Each Pledgor agrees that all Pledged
Securities delivered by such Pledgor pursuant to this Agreement will be
accompanied by duly executed, undated endorsements, stock powers or other
equivalent instruments of transfer reasonably acceptable to the Administrative
Agent. Each Pledgor will, from time to time upon the reasonable request of the
Administrative Agent, promptly deliver to the Administrative Agent such
endorsements, stock powers, instruments and similar documents, reasonably
satisfactory in form and substance to the Administrative Agent, with respect to
the Collateral as the Administrative Agent may reasonably request and will, from
time to time upon the request of the Administrative Agent after the occurrence
and during the continuance of any Event of Default, promptly cause each Pledged
Share Issuer and each maker of each Pledge Note, as applicable, to transfer any
Pledged Securities constituting Collateral into the name of any nominee
designated in writing by the Administrative Agent.
     SECTION 4.3. Continuous Pledge. Subject to Section 2.4, each Pledgor will,
at all times, keep pledged to the Administrative Agent pursuant hereto all
Pledged Shares and all other Capital Securities constituting Collateral, all
Dividends and Distributions with respect thereto, and all other Collateral and
other Capital Securities, instruments, proceeds and rights from time to time
received by or distributable to such Pledgor in respect of any Collateral. Any
Distributions on Pledged Shares consisting of Capital Securities will be
certificated (other than Distributions with respect to the general partnership
interest in S&L Cogeneration Company described on Attachment 1 hereto).

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     SECTION 4.4. Voting Rights; Dividends, etc. Each Pledgor agrees:
     (a) if any Event of Default shall have occurred and be continuing, promptly
upon receipt thereof by such Pledgor and without any request therefor by the
Administrative Agent, to deliver (properly endorsed where required hereby or
requested by the Administrative Agent) to the Administrative Agent, all
Dividends, Distributions and all proceeds of the Collateral, all of which shall
be held by the Administrative Agent as additional Collateral for use in
accordance with Section 6.3; and
     (b) if any Event of Default shall have occurred and be continuing and the
Administrative Agent shall have notified such Pledgor in writing of the
Administrative Agent’s intention to exercise its voting power under this
Section:
     (i) the Administrative Agent may exercise (to the exclusion of such
Pledgor) the voting power and all other incidental rights of ownership with
respect to any Pledged Securities constituting Collateral and such Pledgor
hereby grants the Administrative Agent an irrevocable proxy, exercisable under
such circumstances, to vote the Pledged Securities; and
     (ii) promptly to deliver to the Administrative Agent such additional
proxies and other documents as may be necessary to allow the Administrative
Agent to exercise such voting power.
All Dividends, Distributions and proceeds which may at any time and from time to
time be held by a Pledgor but which such Pledgor is then obligated to deliver to
the Administrative Agent, shall, until delivery to the Administrative Agent, be
held by such Pledgor separate and apart from its other property in trust for the
Administrative Agent. The Administrative Agent agrees that unless an Event of
Default shall have occurred and be continuing and the Administrative Agent shall
have given the written notice referred to in this Section, each Pledgor has the
exclusive power to exercise all voting and other consensual rights with respect
to any Pledged Securities and the Administrative Agent shall, upon the written
request of such Pledgor, promptly deliver such proxies and other documents, if
any, as shall be reasonably requested by such Pledgor which are necessary to
allow such Pledgor to exercise such powers with respect to any such Pledged
Securities; provided, however, that no vote shall be cast, or consent, waiver or
ratification given, or action taken by any Pledgor that would materially impair
the value of any Collateral or be inconsistent with or violate any provision of
the Loan Documents (including, without limitation, any action to foreclose any
Lien securing any Pledged Note or to otherwise enforce any Pledged Note).
ARTICLE V
THE ADMINISTRATIVE AGENT
     SECTION 5.1. Administrative Agent Appointed Attorney-in-Fact. Each Pledgor
hereby irrevocably appoints the Administrative Agent as such Pledgor’s
attorney-in-fact, with full authority and in the name, place and stead of the
Pledgor or in its own name, from time to time in the Administrative Agent’s
discretion, upon the occurrence and during the continuance of any Event of
Default, to take any action and to execute any instrument which the
Administrative

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Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
     (a) to ask, demand, collect, sue for, recover, compromise and receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
     (b) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above; and
     (c) to file any claims or take any action or institute any proceedings
which the Administrative Agent may deem necessary for the collection of any of
the Collateral or otherwise to enforce the rights of the Administrative Agent
with respect to any of the Collateral.
Each Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
     SECTION 5.2. Administrative Agent May Perform. If any Pledgor fails to
perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by such
Pledgor pursuant to Section 6.4.
     SECTION 5.3. Administrative Agent Has No Duty. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest (on behalf of
the Secured Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral or responsibility
for
     (a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Property, whether or not the Administrative Agent has or is deemed to have
knowledge of such matters, or
     (b) taking any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral.
     SECTION 5.4. Reasonable Care. The Administrative Agent agrees to use
reasonable care in the custody and preservation of any of the Collateral in its
possession in accordance with Section 9-207 of the U.C.C.; provided, that
(a) the Administrative Agent shall be deemed to have exercised reasonable care
in the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially similar to that which the
Administrative Agent accords its own property, and (b) it is understood that the
Administrative Agent shall have no responsibility for taking any necessary steps
to preserve rights against prior parties with respect to the Collateral.
ARTICLE VI
REMEDIES

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     SECTION 6.1. Certain Remedies.
     (a) If any Event of Default shall have occurred and be continuing, the
Administrative Agent may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the U.C.C. (whether
or not the U.C.C. applies to the affected Collateral) and also may, without
notice except as specified below (or such other notices that are required by the
U.C.C. (or other applicable law) and cannot be waived by the Pledgor hereunder),
sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Administrative Agent’s offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Administrative Agent may deem commercially reasonable. Each Pledgor agrees that,
to the extent notice of sale shall be required by law, at least ten days’ prior
notice to such Pledgor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Administrative Agent shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. The Administrative
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefore, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
     (b) If any Event of Default shall have occurred and be continuing, the
Administrative Agent may, in addition to other rights and remedies provided for
herein or otherwise available to it,
     (i) transfer all or any part of the Collateral into the name of the
Administrative Agent or its nominee, with or without disclosing that such
Collateral is subject to the Lien and security interest hereunder,
     (ii) notify the parties obligated on any of the Collateral to make payment
to the Administrative Agent of any amount due or to become due thereunder,
     (iii) enforce collection of any of the Collateral by suit or otherwise, and
surrender, release or exchange all or any part thereof, or compromise or extend
or renew for any period (whether or not longer than the original period) any
obligations of any nature of any party with respect thereto,
     (iv) endorse any checks, drafts or other writings in each Pledgor’s name to
allow collection of the Collateral,
     (v) take control of any proceeds of the Collateral and
     (vi) execute (in the name, place and stead of any Pledgor) endorsements,
assignments, stock powers and other instruments of conveyance or transfer with
respect to all or any of the Collateral.
     SECTION 6.2. Compliance with Restrictions. Each Pledgor agrees that in any
sale of any of the Collateral whenever an Event of Default shall have occurred
and be continuing, the Administrative Agent is hereby authorized to comply with
any limitation or restriction in

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connection with such sale as it may be advised by counsel is necessary in order
to avoid any violation of applicable law (including compliance with such
procedures as may restrict the number of prospective bidders and purchasers,
require that such prospective bidders and purchasers have certain qualifications
and restrict such prospective bidders and purchasers to persons who will
represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such
Collateral), or in order to obtain any required approval of the sale or of the
purchaser by any Governmental Authority, and the Pledgor further agrees that
such compliance shall not result in such sale being considered or deemed not to
have been made in a commercially reasonable manner, nor shall the Administrative
Agent be liable nor accountable to any Pledgor for any discount allowed by
reason of the fact that such Collateral is sold in compliance with any such
limitation or restriction.
     SECTION 6.3. Application of Proceeds. All cash proceeds received by the
Administrative Agent in respect of any sale of, collection from or other
realization upon all or any part of the Collateral shall be applied by the
Administrative Agent as follows:
     (a) first, to the payment of any and all fees and expenses then due and
owing to the Administrative Agent (including, without limitation, any amounts
payable to the Administrative Agent pursuant to Section 10.3 of the Credit
Agreement and Section 6.4 of this Agreement);
     (b) second, to the payment of any and all fees and expenses then due and
owing to the other Lenders in accordance with their respective Percentages;
     (c) third, to the payment of all accrued and unpaid interest on Swing Line
Loans;
     (d) fourth, to the payment of all accrued and unpaid interest on Revolving
Credit Loans, to each Lender in accordance with each Lender’s respective
Percentage;
     (e) fifth, to reduce the outstanding principal amount of all Swing Line
Loans until all outstanding Swing Loans have been paid in full;
     (f) sixth, to the payment to the Lenders, in accordance with their
respective Percentages, of all outstanding Revolving Credit Loans until all
outstanding Revolving Credit Loans have been paid in full;
     (g) seventh, to reduce all unpaid and outstanding Reimbursement
Obligations;
     (h) eighth, to Cash Collateralize all Letters of Credit;
     (i) ninth, to the ratable payment of all Banking Services Obligations and
to payment of any amounts owing with respect to Hedging Agreements;
     (j) tenth, to the ratable payment of all other unpaid and outstanding
Obligations, to each Secured Party in accordance with the proportion that the
unpaid and outstanding

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Obligations to such Secured Party bears to the unpaid and outstanding
Obligations to all Secured Parties; and
     (k) eleventh, any remaining funds shall continue to be held by the
Administrative Agent to be held as additional collateral security and applied to
any outstanding Obligations in accordance with clauses (a)-(j) above until the
Termination Date, after which such remaining cash proceeds shall be paid over to
the applicable Pledgor or to whomsoever may be lawfully entitled to receive such
surplus.
The Pledgors shall remain liable on a joint and several basis for any
deficiency.
     SECTION 6.4. Indemnity and Expenses. Each Pledgor hereby jointly and
severally indemnifies and holds harmless the Administrative Agent from and
against any and all claims, losses and liabilities arising out of or resulting
from this Agreement (including enforcement of this Agreement), except claims,
losses or liabilities resulting from the Administrative Agent’s gross negligence
or willful misconduct, and each Pledgor will pay (without duplication) to the
Administrative Agent the amount of any and all reasonable out-of-pocket
expenses, including the reasonable fees and disbursements of its counsel and of
any experts and agents, which the Administrative Agent may incur, in each case,
in connection with:
     (a) the administration of this Agreement;
     (b) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Collateral;
     (c) the exercise or enforcement of any of the rights of the Administrative
Agent hereunder; or
     (d) the failure by any Pledgor to perform or observe any of the provisions
hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
     SECTION 7.1. Loan Document. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof.
     SECTION 7.2. Amendments, etc. No amendment to or waiver of any provision of
this Agreement or consent to any departure by any Pledgor herefrom shall be
effective unless the same shall be in writing and signed by the Administrative
Agent (at the direction of such of the Lenders as may be required by the Credit
Agreement) and such Pledgor, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it is
given.
     SECTION 7.3. Protection of Collateral. The Administrative Agent may from
time to time, at its option, and at the expense of the Pledgors, perform any act
which any Pledgor agrees hereunder to perform and which such Pledgor shall fail
to perform after being requested in writing so to perform (it being understood
that no such request need be given after the

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occurrence and during the continuance of an Event of Default) and the
Administrative Agent may from time to time take any other action which the
Administrative Agent reasonably deems necessary for the maintenance,
preservation or protection of any of the Collateral or of its security interest
therein.
     SECTION 7.4. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing and addressed, delivered or
transmitted, if to any Pledgor, at the address or facsimile number of the
Company provided for in the Credit Agreement, and, if to the Administrative
Agent, at the address or facsimile number provided for in the Credit Agreement,
or to any such party at such other address or facsimile number as shall be
designated by such party in a written notice to each other party complying as to
delivery with the terms of this Section. Any notice, (a)(i) if mailed and
properly addressed with postage prepaid or (ii) if properly addressed and sent
by pre-paid courier service, shall be deemed given when such notice has been
received or (b) if transmitted by facsimile or other electronic transmission,
shall be deemed given when transmitted (and telephonic or electronic
confirmation of receipt thereof has been received, provided that if such
confirmation is electronic, it was generated by an affirmative action by or on
behalf of the recipient of such notice, as opposed to an automated E-Mail
response)
     SECTION 7.5. Headings. The various headings of this Agreement are inserted
for convenience only, and shall not affect the meaning or interpretation of this
Agreement or any provisions hereof.
     SECTION 7.6 . Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
     SECTION 7.7. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
     SECTION 7.8. Counterparts. This Agreement may be executed in several
counterparts and by facsimile or other electronic transmission, each of which
counterparts shall be deemed to be an original (whether such counterpart is
originally executed or a facsimile or other electronic transmission copy of a
counterpart that is originally executed) and all of which shall constitute
together but one and the same agreement. This Agreement shall become effective
as of the date first written above.
     SECTION 7.9. Additional Pledgors. Upon the execution and delivery by any
other Person of an instrument in the form of Annex I hereto, together with the
Schedule thereto, such Person shall become a “Pledgor” hereunder with the same
force and effect as if originally named as a Pledgor herein. The execution and
delivery of any such instrument shall not require the consent of any other
Pledgor hereunder. The rights and obligations of each Pledgor hereunder shall
remain in full force and effect notwithstanding the addition of any new Pledgor
as a party to this Agreement.

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     SECTION 7.10. Restatement of Existing Pledge Agreement. The parties hereto
agree that, on the Closing Date: (a) the Obligations represent, among other
things, the restatement, renewal, amendment, extension, and modification of the
“Obligations” as defined in the Existing Credit Agreement and as secured by the
Liens granted pursuant to the Existing Pledge Agreement; (b) this Agreement is
intended to, and does hereby, restate, renew, extend, amend, modify, supersede,
and replace the Existing Pledge Agreement in its entirety; (c) the promissory
notes, if any, executed pursuant to the Credit Agreement amend, renew, extend,
modify, replace, restate, substitute for, and supersede in their entirety (but
do not extinguish the Indebtedness arising under) the promissory notes issued
pursuant to the Existing Credit Agreement; (d) the Security Documents (including
this Agreement) executed pursuant to the Credit Agreement amend, renew, extend,
modify, replace, restate, substitute for, and supersede in their entirety (but
do not extinguish or impair the collateral security created or evidenced by) the
“Security Documents,” executed and delivered pursuant to the Existing Credit
Agreement; and (e) the entering into and performance of their respective
obligations under the Loan Documents and the transactions evidenced hereby do
not constitute a novation nor shall they be deemed to have terminated,
extinguished, or discharged the “Obligations” under the Existing Credit
Agreement, and the “Security Documents,” or the other “Loan Documents” (or the
collateral security therefor) executed in connection with the Existing Credit
Agreement, all of which Indebtedness and Collateral shall continue under and be
governed by the Credit Agreement and the other Loan Documents, except as
expressly provided otherwise in the Credit Agreement.
[Remainder of this page intentionally left blank; signature page follows]

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     IN WITNESS WHEREOF, each party hereto has caused this Pledge Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.

            PLEDGORS:

STERLING CHEMICALS, INC.
      By:           Paul G. Vanderhoven        Senior Vice President - Finance
and
Chief Financial Officer     

            STERLING CHEMICALS ENERGY, INC.
      By:           Paul G. Vanderhoven        Vice President     

[Signature Page to Pledge Agreement]

 

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            ADMINISTRATIVE AGENT:

THE CIT GROUP/BUSINESS CREDIT, INC., as
Administrative Agent, on behalf of the Secured
Parties
      By:           Chad Ramsey        Vice President     

[Signature Page to Pledge Agreement]

 

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ATTACHMENT 1
to Pledge Agreement

                              Number or                 Percent of      
Certificate     Pledged   Shares/Units   Class(es) of   Number (If Pledgor  
Company   Being Pledged   Pledged Shares   Applicable)
Sterling Chemicals, Inc.
  Sterling Chemicals Energy, Inc.   1,000      Common ($1.00 par value)   No.2
 
                   
Sterling Chemicals, Inc.
  ChemConnect, Inc.   107,418      Series A-1 Preferred Stock   PA-1-088
 
                   
Sterling Chemicals, Inc.
  Primex, Ltd.   2,500      Common (no par
value)   No. 34
 
                   
Sterling Chemicals, Inc.
  Primex, Ltd.   4,164      Series “A”
Preferred (no par
value)   No. 57
 
                   
Sterling Chemicals, Inc.
  Primex, Ltd.   1 share   Series “C”
Preferred (no par
value)   No. 5
 
                   
Sterling Chemicals, Inc.
  S&L Cogeneration
Company   100% of General
Partnership Interest   N/A   N/A

Attachment 1 to Pledge Agreement- Page-1

 

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ANNEX 1
to Pledge Agreement
SUPPLEMENT NO. ___ TO PLEDGE AGREEMENT
     This SUPPLEMENT NO. ___, dated as of                     , ___(this
“Supplement”), to the Amended and Restated Pledge Agreement, dated as of March
___, 2007 (as amended, supplemented, amended and restated or otherwise modified
from time to time, the “Pledge Agreement”), among the initial signatories
thereto and each other Person which from time to time thereafter became a party
thereto pursuant to Section 7.9 thereof (each, individually, a “Pledgor”, and,
collectively, the “Pledgors”), in favor of THE CIT GROUP/BUSINESS CREDIT INC.,
as Administrative Agent for each of the Secured Parties (such term and all other
capitalized terms being used herein with the meanings provided, or incorporated
by reference, in the Pledge Agreement), is made by the undersigned.
RECITALS:
     A. Pursuant to an Amended and Restated Revolving Credit Agreement, dated as
of March ___, 2007 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the “Credit Agreement”), among Sterling Chemicals,
Inc., a Delaware corporation, and Sterling Chemicals Energy, Inc., a Delaware
corporation (collectively, the “Borrowers”), the various financial institutions
as are, or may from time to time become, parties thereto (the “Lenders”) and the
Administrative Agent, the Lenders and the Issuer have extended Commitments to
make Credit Extensions to the Borrowers.
     B. As a condition precedent to the making and maintenance of Credit
Extensions under the Credit Agreement, the undersigned is required to execute
and deliver this Supplement.
     C. The undersigned has duly authorized the execution, delivery and
performance of this Supplement and the Pledge Agreement.
     D. The Pledge Agreement provides that additional parties may become
Pledgors under the Pledge Agreement by execution and delivery of an instrument
in the form of this Supplement.
     E. Pursuant to the provisions of Section 7.9 of the Pledge Agreement, the
undersigned is becoming a Pledgor under the Pledge Agreement.
     F. The undersigned desires to become a Pledgor under the Pledge Agreement
in order to induce the Secured Parties to continue to make and maintain
Revolving Credit Loans and Swing Line Loans and issue and maintain Letters of
Credit under the Credit Agreement as consideration therefor.
Annex 1 to Pledge Agreement- Page-1

 

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     NOW, THEREFORE, the undersigned agrees, for the benefit of each Secured
Party, as follows:
     SECTION 1. In accordance with Section 7.9 of the Pledge Agreement, the
undersigned by its signature below becomes a Pledgor under the Pledge Agreement
with the same force and effect as if it were an original signatory thereto as a
Pledgor and hereby pledges, hypothecates, assigns, charges, delivers and
transfers to the Administrative Agent, for the benefit of the Secured Parties,
and grants to the Administrative Agent, for the benefit of the Secured Parties,
as security for the Obligations, a continuing security interest in all of the
undersigned’s right, title and interest in and to the following, whether now
owned or hereafter acquired by the undersigned (collectively, the “Additional
Collateral”):
     (a) all issued and outstanding Pledged Shares of each Pledged Share Issuer
identified in Attachment 1 hereto;
     (b) all other Capital Securities of any Pledged Share Issuer issued from
time to time to such Pledgor;
     (c) all Pledged Notes identified in Attachment 1 hereto and all other
Pledged Notes, whether now or hereafter delivered to the Administrative Agent in
connection with this Agreement;
     (d) all other Pledged Property, whether now or hereafter delivered to the
Administrative Agent in connection with this Agreement;
     (e) all Dividends, Distributions and other payments and rights with respect
to any Pledged Property; and
     (f) all proceeds of any of the foregoing.
In furtherance of the foregoing, each reference to a “Pledgor” in the Pledge
Agreement shall be deemed to include the undersigned, each reference to
“Collateral” in the Pledge Agreement shall be deemed to include the Additional
Collateral, and Attachment 1 hereto shall be deemed to be part of Attachment 1
to the Pledge Agreement.
     SECTION 2. The undersigned hereby represents and warrants that (i) this
Supplement has been duly authorized, executed and delivered by the undersigned
and constitutes a legal, valid and binding obligation of the undersigned,
enforceable against it in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors’ rights generally and general equitable
principles, and (ii) all representations and warranties set forth in Article III
of the Pledge Agreement are true and correct in all respects as to the
undersigned and the Additional Collateral.
     SECTION 3. Except as expressly supplemented hereby, the Pledge Agreement
shall remain in full force and effect in accordance with its terms.
Annex 1 to Pledge Agreement- Page-2

 

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     SECTION 4. In the event any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Pledge Agreement shall not in any way be affected or impaired.
     SECTION 5. Without limiting the provisions of the Credit Agreement (or any
other Loan Document, including the Pledge Agreement), the undersigned agrees to
reimburse the Administrative Agent for its reasonable out-of-pocket expenses in
connection with this Supplement, including reasonable attorneys’ fees and
expenses of the Administrative Agent.
     SECTION 6. THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
     SECTION 7. This Supplement hereby incorporates by reference the provisions
of the Pledge Agreement, which provisions are deemed to be a part hereof, and
this Supplement shall be deemed to be a part of the Pledge Agreement.
     SECTION 8. This Supplement may be executed in several counterparts and by
facsimile or other electronic transmission, each of which counterparts shall be
deemed to be an original (whether such counterpart is originally executed or a
facsimile or other electronic transmission copy of a counterpart that is
originally executed) and all of which shall constitute together but one and the
same agreement. This Supplement shall become effective and binding upon the
Pledgor when a counterpart hereof executed on behalf of the Pledgor shall have
been received by the Administrative Agent.
     IN WITNESS WHEREOF, the undersigned has caused this Supplement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

            [NAME OF ADDITIONAL PLEDGOR]
      By:           Name:           Title:        

ACKNOWLEDGED AND ACCEPTED BY:
THE CIT GROUP/BUSINESS CREDIT INC.,
as Administrative Agent

         
By:
       
 
 
 
Name:    
 
  Title:    

Annex 1 to Pledge Agreement- Page-3

 

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ATTACHMENT 1
to Supplement No. __
Pledge Agreement
[NAME OF PLEDGOR]

      Pledged Shares           Pledged Share Issuer   Capital Securities      

             
 
  Authorized Shares   Outstanding Shares   % of Shares Pledged
 
           

          Pledged Notes           Maker   Description   Aggregate Principal
Amount
                Outstanding          

Annex 1 to Pledge Agreement- Page-4