<PAGE>
                                                                   EXHIBIT 10.16


                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT


         This Amended and Restated Employment Agreement ("Agreement"), dated as
of January 23, 2001 by and among STERLING CHEMICALS HOLDINGS CORPORATION, a
Delaware corporation ("Holdings"), STERLING CHEMICALS, INC., a Delaware
corporation and a wholly-owned subsidiary of Holdings ("Sterling" and, together
with Holdings "Employers"), and David G. Elkins ("Employee").

         WHEREAS, Employers and Employee are parties to that certain Employment
Agreement dated as of November 12, 1997, as amended (the "Prior Employment
Agreement"), setting forth the terms and conditions of Employee's employment
with Employers as a senior officer; and

         WHEREAS, Employers and Employee desire to amend and restate in its
entirety the Prior Employment Agreement as set forth herein.

         NOW, THEREFORE, in consideration of, the mutual covenants and
agreements contained herein and for other valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree that the
Prior Employment Agreement is hereby amended and restated in its entirety as
follows:

                                    ARTICLE I

                         Definitions and Interpretations

1.01.    Definitions

         For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, the following terms shall have the
following respective meanings:

         "Base Salary" shall have the meaning specified in Section 3.01.

         "Board' shall mean the Board of Directors of Holdings.

         "Bonus Plan" has the meaning specified in Section 3.02.

         "Chairman" shall mean the Chairman of the Board of Holdings.

         "Code" shall mean the Internal Revenue Code of 1986, as in effect from
time to time.

         "Confidential Information" shall have the meaning specified in Section
5.02.

         "Constituent Companies" shall mean, collectively, Holdings, Sterling
and all other direct or indirect subsidiaries of Holdings.



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         "Disability" shall mean a physical or mental condition of Employee that
(1) prevents Employee from being able to perform the services required under
this Agreement, (ii) has continued for a period of at least 180 days during any
period of twelve consecutive months and (iii) is reasonably expected to
continue.

         "Dispute" shall have the meaning specified in Section 6.01.

         "Employment Period" shall have the meaning specified in Section 2.01.

         "Good Reason" shall mean (a) a material alteration by either Employer
in the nature or status of Employee's positions, functions, duties or
responsibilities from those he had on January 1, 1998 or from those described in
"Section 2.02(a), including any change which would (i) alter Employee's
reporting responsibilities described in Section 2.02(a) or (ii) cause Employee's
positions and functions with Employers to become of less dignity or importance
than those described in Section 2.02(a); (b) the failure of Employers to
maintain plans and programs entitling Employee to benefits that, in the
aggregate, are at least as favorable to Employee as those available to Employee
as of January 1, 1998; (c) the failure of either Employer to observe or perform
any provision contained in Article III, Article VI, Section 7.03, 7.05 or
Section 7.06, (d) the failure of either Employer to observe or perform any other
provision of this Agreement or any provision of any indemnification agreement
between Employee and Employers (or either of them), but only if such failure
shall continue unremedied for more than 30 days after written notice thereof is
given by Employee to Employers; (e) the failure of either Employer to elect or
reelect, or to appoint or reappoint, Employee to the offices described in
Section 2.02(a); (f) the failure of Employers to maintain in full force and
effect an insurance policy (having a scope and containing terms and conditions
at least as favorable as those in effect on the date thereof) insuring their
respective directors and officers against personal liability for acts or
omissions in connection with service as a director or officer of any Constituent
Company or service in other capacities at the request of either Employer; or (g)
any act or omission of any Constituent Company which is contrary to any advice,
opinion or instruction given by Employee in the performance of services
hereunder and which constitutes a violation of any law (whether statutory,
administrative, judicial and other) applicable to such Constituent Company or
any of its properties, assets, securities, business or employees.

         "Holdings" shall have the meaning specified in the recitals of this
Agreement.

         "Miscellaneous Benefits" shall have the meaning specified in Section
3.13(a).

         "Misconduct" shall mean (a) the willful commission by Employee of acts
that are both dishonest and demonstrably injurious to the Constituent Companies
(monetarily or otherwise), taken as a whole, in any material respect; (b) the
violation of the Company's drug and alcohol policy; (c) the conviction of
Employee for a felony offense; or (d) the failure by Employee to perform of any
of his obligations under this Agreement, but only if such failure was not caused
by disability or incapacity and shall have continued unremedied for more than 30
days after written notice thereof is given to Employee by Employers. For
purposes of the foregoing, no act





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or failure to act on the part of Employee shall be considered "willful" unless
such act or failure to act was not in good faith and was without reasonable
belief that his action or failure to act was in the best interest of Employers,
and no act or failure to act on the part of Employer shall be considered
"willful" if it is solely the result of his bad judgment or negligence.

         "Notice of Termination" shall mean, as appropriate, (a) a notice; from
Employee to Employers purporting to terminate Employee's employment in
accordance with Section 4.01, which notice shall be dated the date it is given,
specify the Termination Date, state whether or not such termination is for Good
Reason or Disability and, if so, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for such termination or (b) a notice
from Employers to Employee purporting to terminate Employee's employment in
accordance with Section 4.02, which notice shall be dated the date it is given,
specify the Termination Date, state whether or not such termination is for
Misconduct or Disability and, if so, set forth in reasonable detail the facts
and circumstances claimed to provide a basis for such termination. Any Notice of
Termination which is not in compliance with the foregoing requirements shall be
invalid and ineffective. Any Notice of Termination given by Employers after the
death of Employee shall be invalid and ineffective. Any Notice of Termination
given by Employers after Employee has given a valid Notice of Termination shall
be ineffective and vice versa.

         "Pension Plan" shall mean the Sterling Chemicals, Inc. Amended and
Restated Salaried Employees' Pension Plan (Effective as of May 1, 1996), as
amended from time to time.

         "Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust and an
unincorporated organization.

         "Termination Date" shall mean the termination date specified in a
Notice of Termination delivered in accordance with Article IV, provided that in
no event shall such termination date be less than 30 nor more than 60 days after
the date such Notice of Termination is given.

1.02.    Interpretation

         In this Agreement, unless a clear contrary intention appears, (i) the
words "herein," "hereof" and "hereunder" and other words of similar import refer
to this Agreement as a whole and not to any particular Article, Section or other
subdivision, (ii) reference to any Article or Section, means such Article or
Section hereof, (iii) the words "including" (and with correlative meaning
"include") means including, without limiting the generality of any description
preceding such term and (iv) where any provision of this Agreement refers to
action to be taken by any party, or which such party is prohibited from taking,
such provision shall be applicable whether such action is taken directly or
indirectly by such party. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof. No provision of
this Agreement shall be interpreted or construed against any party solely
because that party or its legal representative drafted such provision.



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                                   ARTICLE II
                     Employment: Term, Positions and Duties

2.01.    Employment; Term

         Each Employer hereby employees Employee in a senior executive capacity
and Employee hereby accepts employment by each Employer, in each case on the
terms and conditions, and for the consideration, set forth in this Agreement.
Employee's employment hereunder shall begin on January 1, 1998 and shall
continue until terminated in accordance with Article IV (the "Employment
Period").

2.02.    Position and Duties

         (a) While employed hereunder, Employee shall serve as President of each
Employer and shall have and may exercise all of the powers, functions, duties
and responsibilities normally attributable to such positions, including any such
duties and responsibilities as are set forth with respect to such positions in
the Employers' respective certificates of incorporation and bylaws, as from time
to time in effect. If, subsequent to January 23, 2001, Employee shall be elected
to one or more additional positions, Employee shall also serve in such
position(s) and shall have and may exercise all of the powers, functions, duties
and responsibilities normally attributable to such position(s), including any
such duties and responsibilities as are set forth with respect to such
position(s) in the Employers' respective certificates of incorporation and
bylaws, as from time to time in effect. Employee's standing in the job
classification scheme for senior officers of the Employers shall be consistent
with the foregoing.

         (b) While employed hereunder, Employee shall observe and comply with
all lawful policies, directions instructions which are consistent with paragraph
(a) above and shall devote substantially all of his business time, attention,
skill and efforts to the faithful and efficient performance of his duties
hereunder. Notwithstanding the foregoing, Employee may engage in the following
activities so long as they do not interfere in any material respect with the
performance of Employee's duties hereunder: (i) serve on corporate, bar
association, civic, religious or charitable board or committee, (ii) serve as a
Representative under the Contingent Stock Agreement executed by The Rouse
Company as of January 1, 1996, (iii) deliver lectures and fulfill speaking
engagements and (iv) manage his personal investments.

         (c) While employed hereunder, Employee shall at all times conduct
himself in such a manner as not to knowingly prejudice, in any material respect,
the reputation of any Constituent Company in the fields of business in which it
engaged or with the investment community or the public at large.





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                                   ARTICLE III
                            Compensation and Benefits

3.01.    Base Salary

         For services rendered by Employee under this Agreement on and after
January 1, 2001, Employers shall pay to Employee an annual cash base salary
("Base Salary") of not less than $350,000. The Board shall review the Base
Salary at least annually and may increase the amount of the Base Salary at any
time as the Board may deem appropriate in its sole discretion. If the Base
Salary is increased, it may not thereafter be decreased unless a proportionally
similar decrease is made to the base salaries of all other senior executives of
Employers; provided that in no event may the Base Salary be decreased below
$350,000. The Base Salary shall be proportionally increased in the event there
is a general increase in the base salaries of other senior executives of either
Employer. The Base Salary shall be paid at regular intervals in accordance with
Holdings' payroll policies for senior executives as from time to time in effect.

3.02.    Bonuses

         During the Employment Period, Employee shall be entitled to participate
in the bonus/incentive compensation plan for executive officers of Employers in
general, as from time to time amended by the Board (the "Bonus Plan").
Employee's annual target bonus under the Bonus Plan for fiscal year 2001 and
each subsequent fiscal year (or fraction thereof) during the Employment Period
shall be not less than 90% of the Base Salary for such fiscal year. Each bonus
shall be paid to Employee at such time or times provided in the Bonus Plan.

3.03.    Registration of Employee Shares

         The parties recognize that, from time to time after the date hereof;
Holdings may register shares or units of its equity securities under the
Securities Act of 1933, as amended, for sale or distribution to the public and
that Employee may desire to include in such registration all or a portion of the
shares of Common Stock of Holdings then owned by Employee (collectively, the
"Employee Shares"). Accordingly, if Holdings decides to effect a registration of
any of its equity securities (other than a registration on Form S-4 or Form S-8
or any successor or similar form) for sale or distribution to the public during
the Employment Period, then Holdings will consult with Employee regarding
Employee's desire to include all or a portion of the Employee Shares in such
registration. If Employee requests the inclusion of any of the Employee Shares
in such registration, Holdings shall accommodate such request, subject to
customary terms and conditions, provided, however, that in no event shall
Holdings be obligated to include any Employee Shares in any registration if (i)
such registration is to be effected in a form and in a manner that, in the sole
discretion of Holdings, would not permit the inclusion of the Employee Shares in
such registration without having a material adverse effect on such registration
or (ii) Holdings determines that the inclusion of such Employee Shares would
materially interfere with or infringe upon the demand or "piggyback"
registration rights of other holders of equity securities of Holdings.




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3.04.    Insurance

         (a) At all times during the Employment Period, Employers will maintain
or cause to be maintained, without cost to Employee, a term life insurance
policy on the life of Employee in the amount of $2,000,000, the proceeds of
which, in the event of Employee's death, shall be payable to one or more
beneficiaries designed by Employee or, in the absence of any such designation,
to his estate. Notwithstanding the foregoing, if Employee fails to qualify for
such insurance policy during any period within the Employment Period, Holdings
shall not be required to provide such coverage but, instead, shall pay to
Employee a lump sum cash payment equal to the premiums Employers would have
otherwise paid in order to maintain such policy for such period.

         (b) During the Employment Period, Employers shall pay for the cost (not
to exceed $1,000 per year) of a $5,000,000 excess liability insurance policy for
the benefit of Employee.

         (c) Without cost to Employee, Employers shall continue Employee's and
Employee's dependents' medical insurance benefits (including dental and vision
plans) for a 36-month period following the date of termination of employment of
Employee for any reason (including, but not limited to death, Disability,
Misconduct or termination by Employee for Good Reason), except where the
termination is by Employee without Good Reason.

         (d) The insurance benefits described in this Section 3.04 are in
addition to those available to Employee under the benefit plans and programs
provided to senior executives of Employers in general.

3.05.    Vacation

         During the Employment Period, Employee shall be entitled to not less
than four weeks of paid vacation per year or such greater number of vacation
days as may be permitted in accordance with Holdings' vacation policy (as from
time to time amended) for senior executives in general. Employee shall be
entitled to accumulate or carry over unused vacation time or pay from year to
year during the Employment Period, including the eight weeks of vacation time
accrued and unused by Employee for the fiscal years 1998-2000. Upon termination
of Employee's employment for any reason, Employee or his estate shall be paid a
lump sum cash amount for all unused, accrued vacation time.

3.06.    Annual Physical Examination, Parking

         During the Employment Period, Employers shall (a) pay for the cost of
an annual physical examination of Employee to be conducted by a doctor or clinic
selected by Employee and (b) provide, at no cost to Employee, a parking space
for Employee that is convenient to Employee's office.



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3.07.    Professional Fees

         Employers shall reimburse Employee for up to $5,000 (such greater
amount as may be offered to senior executives in general or approved by the
Board) per year for financial advisory, legal, accounting and tax planning fees
and expenses paid or incurred by Employee during the Employment Period.

3.08.    Luncheon Club Membership

         Employers shall reimburse Employee for the membership fee and the
monthly dues paid or incurred by Employee during the Employment Period with
respect to one luncheon club located in Houston, Texas to be selected by
Employee.

3.09.    Business Expenses

         Each Employer shall, in accordance with the rules and policies that it
may establish from time to time for senior executives, reimburse Employee for
business expenses reasonable incurred in the performance of Employee's duties
hereunder, including dues and fees to industry and professional organizations.
It is understood that Employee is authorized, during the Employment Period, to
incur reasonable business expenses for promoting the businesses and reputations
of the Constituent Companies, including reasonable expenditures for travel,
lodging, meals and client and/or business associate entertainment. Requests for
reimbursement for such expenses must be accompanied by appropriate
documentation.

3.10.    Cellular Telephone; Pager; Computer

         During the Employment Period, Employers shall provide, at no cost to
Employee, a first-class cellular telephone for Employee and pay all charges and
other costs relating to Employee's use thereof in connection with his powers,
authority and duties hereunder. During the Employment Period, Employers shall
provide, at no cost to Employee, a first-class pager and laptop computer for
Employee and pay all charges and other costs relating to the use thereof.

3.11.    Association Dues, etc.

         During the Employment Period, Employers shall pay or reimburse Employee
for (i) all dues and reasonable expenses relating to his membership in
professional organizations, (ii) all reasonable continuing education expenses
incurred by Employee and (iii) all professional occupation taxes imposed on
Employee by the State of Texas.

3.12.    Retirement Income

         If Employee retires, he shall be entitled to receive from Employers a
monthly payment for life in the form of a single life annuity commencing on the
effective date of his retirement (the "Retirement Date"). The amount of each
such monthly payment shall be determined by multiplying 1.2% times the Average
Monthly Earnings times Years of Service. As used herein,





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"Average Monthly Earnings" means (i) if the Retirement Date occurs prior to
January 1, 2001, the average of Employee's monthly earnings during the period
commencing on January 1, 1998 and ending on the Retirement Date and (ii) if the
Retirement Date occurs on or after January 1, 2001, the average of Employee's
monthly earnings during the 36 months immediately prior to the Retirement Date:
provided, however, if the Retirement Date occurs before Employee attains age 65,
then Average Monthly Earnings shall be reduced by one-fourth of one percent for
each whole calendar month by which the Retirement Date precedes the date on
which Employee will attain age 65. As used herein, "Years of Service" means the
number of calendar years (or fractions thereof) during the period commencing on
January 1, 1993 and ending on the Retirement Date. For purposes of this Section
3.12, Employee's monthly earnings during any period shall be determined in
accordance with the Pension Plan. If Employee has a spouse on the Retirement
Date, then Employee shall receive all monthly payments under this Section 3.12
in the form of a joint and survivor annuity and such payments shall be
actuarially equivalent to the amounts otherwise payable to Employee in
accordance with this Section 3.12. The benefits described in this Section 3.12
are in addition to those available to Employee under the benefit plans and
programs provided to senior executives of Employers in general.

3.13.    Other Benefits; Service Credit

         (a) Employee shall be entitled to receive all fringe benefits and other
perquisites that may be offered by each Employer from time to time to its other
senior executives on terms no less favorable to Employee than the terms offered
to such other executives (collectively, the "Miscellaneous Benefits" including
(i) participation in all life, healthcare, medical, retiree medical, dental and
disability insurance plans and programs; (ii) participation in the Pension Plan,
Holdings' Pension Benefit Equalization Plan, Holdings' Supplemental Employee
Retirement Plan, Holdings' Profit Sharing Plan, Holdings' Salaried Disability
Income Plan and Holdings' Employee Stock Ownership Plan, (iii) participation in
all bonus, profit sharing and incentive compensation plans, programs and
arrangements, (iv) participation in all change in control/severance
pay/separation pay plans, programs and practices, (v) automobile allowances,
(vi) club memberships and (vii) participation in all other employee benefit
plans, programs or arrangements provided to senior executives of Employers (or
either of them) in general, subject, in each case, to meeting the applicable
eligibility requirements. However, nothing in this Section 3.13 shall be deemed
to prohibit Employers from making any changes in any of the plans, programs or
benefits described in the foregoing sentence, provided the change similarly
affects all senior executives of Employers similarly situated. If and to the
extent a particular benefit or other perquisite is provided to Employee by two
or more provisions of this Agreement, unless a clear contrary intention appears,
the provision which is most favorable to Employee shall govern and control to
the exclusion of the other provisions.

         (b) For purposes of this Section 3.13, Employee shall be deemed to have
been continuously employed by the Employers since January 1, 1993 (January 1,
1988 in the case of the retiree medical plan) and, accordingly, Employee shall
be credited with five years of service as of January 1, 1993 (January 1, 1988 in
the case of the retiree medical plan) for purposes of determining Employee's
eligibility, benefits and vesting under all the plans, programs and





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benefits referred to in paragraph (a) above other than the Pension Plan and any
other plan which is a "qualified plan" within the meaning of section 401(a) of
the Code.

                                   ARTICLE IV
                            Termination of Employment

4.01    Employee's Right of Termination

        Employee may, at any time, terminate his employment hereunder for any
reason by delivering a Notice of Termination to Employers.

4.02    Employers' Right of Termination

        Employers may, at any time, terminate Employee's employment hereunder
for any reason by delivering a Notice of Termination to Employee.

4.03    Acceleration of Vesting

        If Employee terminates his employment in accordance with Section 4.01
for a Good Reason or if Employers terminate Employee's employment in accordance
with Section 4.02 for any reason other than Misconduct or Disability,
notwithstanding any provision herein or elsewhere to the contrary, any vesting,
lapse of time or similar requirement under any plan (other than the Pension Plan
and any other plan which is a "qualified plan" within the meaning of section
401(a) of the Code) or program in which Employee may participate shall be
accelerated to the date of the Notice of Termination and any conditions to
Employee's entitlement to any benefits under any of such plans or programs shall
be deemed to have been satisfied. Without limitation of the foregoing, all stock
options granted to Employee by either Employer shall become and be fully vested
and immediately exercisable in accordance with the otherwise applicable terms
thereof and shall remain fully exercisable for the remainder of the particular
option period. No acceleration under this Section 4.03 shall be deemed to
constitute severance or separation pay.

4.04.   Certain Payments

        If Employee dies before his employment is terminated in accordance with
Section 4.01 or 4.02 or if Employee's employment is terminated in accordance
with Section 4.01 or 4.02 for any reason, Employers shall pay to Employee as
soon as practicable a lump sum cash payment for (i) any unpaid Base Salary
earned hereunder as of the date of death or termination, (ii) all unused
vacation time accrued by Employee as of the date of death or termination in
accordance with this Agreement and Employers' vacation policies for senior
executives, (iii) all unpaid vested Miscellaneous Benefits earned or accrued as
of the date of death or termination, (iv) all amounts owing to Employee under
Sections 3.06, 3.07, 3.08, 3.09, 3.10, 3.11 and 3.13, (v) the annual target
bonus for Employee under the Bonus Plan (or any replacement or substitute plan)
for the fiscal year that includes the date of death or termination, prorated as
of such date and (vi) any





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additional amounts or benefits which may be required by applicable law,
including the Employee Retirement Income Security Act of 1974, as amended from
time to time.

4.05.   Payment of Benefits During Pendency of Dispute, etc.

        (a) Neither Employee's death nor the termination of his employment
hereunder shall alter or impair (i) any of the Miscellaneous Benefits earned or
accrued as of the date of death or termination or (ii) any employee benefits,
rights, privileges or claims accruing to Employee, whether under this Agreement
or otherwise, prior to or as a result of such death or termination.

        (b) Holdings may, within 10 business days after its receipt of a Notice
of Termination given by Employee, provide notice to Employee, that a dispute
exists concerning the facts and circumstances claimed to be the basis for such
termination, in which event such dispute shall be resolved in accordance with
Article VI. Employee may, within 10 business days after his receipt of a Notice
of Termination given by Holdings, provide notice to Holdings that a dispute
exists concerning the facts and circumstances claimed to be the basis for such
termination, in which event such dispute shall be resolved in accordance with
Article VI. No dispute may be raised with respect to any of such facts or
circumstances after such 10-day period has lapsed.

        (c) Notwithstanding the pendency of any such dispute and notwithstanding
any, provision herein to the contrary, Employers continue to pay Employee the
Base Salary in effect when the notice giving rise to the dispute was given and
continue Employee as a participant in all compensation and benefit plans in
which Employee was participating when the notice giving rise to the dispute was
given, in each case until the dispute is finally resolved or until 180 days
after the date of such notice, whichever is sooner. If (i) Holdings gives a
Notice of Termination to Employee, (ii) Employee disputes the termination as
contemplated by this Section 4.05 and (iii) such dispute is finally resolved in
favor of Employers in accordance with Article VI, then Employee shall be
required to refund to Employers any amounts paid to Employee under this Section
4.05 but only if, and then only to the extent, Employee is not otherwise
entitled to receive such amounts under this Agreement. Employee agrees to pay
interest to Employers on any amount required to be refunded to Employers
pursuant to the preceding sentence, such interest to accrue for the period from
the due date until paid at the rate of 6% per annum.

                                    ARTICLE V
                            Confidential Information

5.01.   Restriction on Use

        Employee recognizes that the services to be performed by him hereunder
are special, unique and extraordinary and that, by reason of his employment with
Employers and the positions described in Section 2.02(a), he may acquire
Confidential Information (defined below) concerning one or more Constituent
Companies, the use or disclosure of which might cause the Constituent Companies
substantial loss and damages which could not be readily calculated and for which
no remedy at law would be adequate. Accordingly, Employee agrees that he will
not (directly or indirectly) at any time, whether during or after his employment
hereunder, disclose





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any such Confidential Information to any Person except (i) as required by
applicable law, (ii) in connection with the performance of his duties and the
rendering of services hereunder, (iii) in connection with the enforcement of his
rights under this Agreement or any other instrument, (iv) in connection with the
defense or settlement of any claim, suit or action asserted or threatened
against Employee by or in the right of any Constituent Company or (v) with the
prior written consent of the Chairman.

5.02.   Definition

        As used herein, "Confidential Information" means information with
respect to the products, services, strategies, facilities, trade secrets and
other intellectual property, pricing systems, patents and patent applications,
procedures, manuals, confidential reports, financial information, business
plans, prospects or opportunities of any Constituent Company; provided that such
term shall not include (i) any information that is or becomes generally known or
available other than as a result of a disclosure by Employee, (ii) any
information that is or becomes known or available to Employee on a
nonconfidential basis from a source (other than the Constituent Companies)
which, to Employee's knowledge, is not prohibited from disclosing such
information to Employee by a legal, contractual, fiduciary or other obligation
to any Constituent Company or (iii) any general knowledge, skill or experience
acquired by Employee.

5.03.   Ownership; Return to Employers

        Employee confirms that all Confidential Information is the exclusive
property of the relevant Constituent Company. All business records, papers and
documents kept or made by Employee (whether electronically or otherwise) while
employed hereunder relating to the business of any Constituent Company shall be
and remain the property of such Constituent Company at all times. Upon the
request of Holdings at any time, Employee shall promptly deliver to Holdings,
and shall retain no copies of, any electronic media or written materials,
records and documents made by Employee or coming into his possession while
employed hereunder concerning the business or affairs of any Constituent Company
other than personal materials, records and documents (including notes and
correspondence) of Employee not containing proprietary information relating to
such business or affairs. Notwithstanding the foregoing, Employee shall be
permitted to retain copies of, or have access to, all such materials, records
and documents relating to any rights, privileges or benefits of Employee or any
disagreement, dispute or litigation between Employee and any Constituent
Company.

5.04.   Injunctive Relief, etc.

        Employee acknowledges that the covenants contained in this Article V are
intended for the benefit of, and may be enforced by, Employers and their
respective successors and assigns. Employee further acknowledges that a breach
of any of the covenants contained in this Article V may result in material
irreparable injury to the Constituent Companies for which there is no adequate
remedy at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach, any payments remaining under
the terms of this Agreement shall cease and Employers (or either of them) shall
be entitled to obtain a temporary





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<PAGE>
restraining order and/or a preliminary or permanent injunction restraining
Employee from engaging in activities prohibited by this Article V or such other
relief as may be required to specifically enforce any of the covenants contained
in this Article V. Employee agrees to and hereby does submit to in personam
jurisdiction before each and every such court for that purpose.

5.05.   Limitation on Personal Liability

        Employee shall not be personally liable to any Constituent Company or
its stockholders for monetary damages for any breach of this Article V if
Employee acted in good faith and in a manner Employee reasonably believed to be
in or not opposed to the best interest of Employers. Employee shall be deemed to
have met the standard of conduct required by the foregoing defense unless the
contrary is conclusively established by a court of competent jurisdiction. The
provisions of this Article V shall survive the termination of Employee's
employment hereunder.

                                   ARTICLE VI
                               Dispute Resolution

        6.01 As used herein, "Dispute" means any and all questions, claims,
controversies or disputes arising out of or relating to this Agreement,
including the construction, meaning, performance, effect or breach of this
Agreement. In the event a dispute shall arise between Employee, on the one hand,
and Holdings or Sterling, on the other hand, the parties agree to resolve such
Dispute in accordance with the following procedure:

                 (1) A meeting shall be held promptly between Employee and
Holdings, attended (in the case of Holdings) by one or more individuals with
decision-making authority regarding the Dispute, to attempt in good faith to
negotiate a resolution of the Dispute.

                 (2) If, within 10 days after such meeting, Employee and
Holdings have not succeeded in negotiating a resolution of the Dispute, the
Dispute shall be submitted to mediation in accordance with the Commercial
Mediation Rules of the American Arbitration Association.

                 (3) Employee and Holdings will jointly appoint a mutually
acceptable mediator seeking assistance in such regard from the American
Arbitration Association if they have been unable to agree upon such appointment
within 10 days following the 10-day period referred to in clause (2) above.

                 (4) Upon appointment of the mediator, Employee and Holdings
agree to participate in good faith in the mediation and negotiations relating
thereto for 15 days.

                 (5) If Employee and Holdings are not successful in resolving
the Dispute through mediation within such 15-day period, the Dispute shall be
settled by arbitration in accordance with the Expedited Procedures of the
Commercial Arbitration Rules of the American Arbitration Association.




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<PAGE>
                  (6) The fees and expenses of the mediator/arbitrators shall be
borne solely by the nonprevailing party or, in the event there is no clear
prevailing party, as the mediator/arbitrators deem appropriate.

                  (7) If any dispute shall arise under this Agreement involving
termination of Employee's employment with Employers or involving the failure or
refusal of Employers to fully perform in accordance with the terms hereof,
Employers shall reimburse Employee (without duplication), on a current basis,
for all reasonable legal fees and expenses, if any, incurred by Employee in
connection with such dispute, together with interest thereon at the rate of 6%
per annum, such interest to accrue from the date Holdings received Employee's
statement for such fees and expenses through the date of payment thereof,
provided, however, that in the event the resolution of such dispute in
accordance with this Article VI includes a finding denying, in all material
respects, Employee's claims in such dispute, Employee shall be required to
reimburse Employers, within 30 days after the date of such resolution, for all
sums advanced to Employee with respect to such dispute pursuant to this
paragraph (7).

                  (8) Except as provided above, each of Employee and Holdings
shall pay its own costs and expenses (including, without limitation, attorneys'
fees) relating to any mediation/arbitration proceeding conducted under this
Article VI.

                  (9) All mediation/arbitration conferences and hearings will be
held in Houston, Texas.

         6.02. In the event there is any disputed question of law involved in
any arbitration proceeding, such as the proper legal interpretation of any
provision of this Agreement, the arbitrators shall make separate and distinct
findings of all facts material to the disputed questions of law to be decided
and, on the basis of the facts so found, express their conclusion of the
question of law. The facts so found shall be conclusive and binding on the
parties to the extent permitted by law, but any legal conclusion reached by the
arbitrators from such facts may be submitted by either Employee or Holdings to a
court of law for final determination by initiation of a civil action in the
manner provided by law. Such action, to be valid, must be commenced within 20
days after receipt of the arbitrators' decision. If no such civil action is
commenced within such 20-day period, the legal conclusion reached by the
arbitrators shall be conclusive and binding on the parties. Any such civil
action shall be submitted, heard and determined solely on the basis of the facts
found by the arbitrators. Neither of Employee or Holdings shall, or shall be
entitled to, submit any additional or different facts for consideration by the
court. In the event any civil action is commenced under this Section 6.02 and if
Employee is the party who prevails or substantially prevails (as determined by
the court) in such civil action, Employee shall be entitled to recover from
Employers all costs, expenses and reasonable attorneys' fees incurred by
Employee in connection with such action and on appeal. In the event any civil
action is commenced under this Section 6.02 and if Holdings is the party who
prevails or substantially prevails (as determined by the court) in such civil
action, Holdings shall be entitled to recover from Employee all costs, expenses
and reasonable attorneys' fees incurred by Employers in connection with such
action and on appeal.




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<PAGE>
        6.03. Except as limited by Section 6.02, the parties agree that
judgment upon the award rendered by the arbitrators may be entered in any court
of competent jurisdiction. In the event legal proceedings are commenced to
enforce the rights awarded in an arbitration proceeding and if Employee is the
party who prevails or substantially prevails in such legal proceeding, Employee
shall be entitled to recover from Employers all costs, expenses and reasonable
attorneys' fees incurred by Employee in connection with such legal proceeding
and on appeal. In the event legal proceedings are commenced to enforce the
rights awarded in an arbitration proceeding and if Holdings is the party who
prevails or substantially prevails in such legal proceeding, Holdings shall be
entitled to recover from Employee all costs, expenses and reasonable attorneys'
fees incurred by Employers in connection with such legal proceeding and on
appeal.

        6.04. All decisions and actions by Holdings under this Article VI shall
be binding on Sterling and each other Constituent Company. Except as provided
above, (i) no legal action may be brought by any parry with respect to any
Dispute and (ii) all Disputes shall be determined only in accordance with the
procedures set forth above.

                                   ARTICLE VII
                                  Miscellaneous

7.01.   Notices

        All notices and all other communications provided for in the Agreement
shall be in writing and shall be sent, delivered or mailed, addressed as
follows: (i) if to Employers (or either of them), at Holdings' principal office
address or such other address as Holdings may have designated by written notice
to Employee for purposes hereof, directed (except as otherwise provided herein)
to the attention of the Chairman and (ii) if to Employee, at his residence
address on the records of Holdings or to such other address as he may have
designated to Holdings in writing for purposes hereof. Each such notice or other
communication shall be deemed to have been duly given when delivered or mailed
by United States registered mail, return receipt requested, postage prepaid,
except that any notice of change of address shall be effective only upon
receipt.

7.02.   Assignability

        The obligations of Employee hereunder are personal and may not be
assigned or delegated by Employee or transferred in any manner whatsoever, nor
are such obligations subject to involuntary alienation, assignment or transfer.
Each Employer shall have the right to assign this Agreement and to delegate all
of its rights, duties and obligations hereunder as provided in Section 7.03, but
not otherwise; provided however, that no such assignment shall relieve or
discharge either Employer of or from any of its obligations under this
Agreement.




                                      -14-
<PAGE>
7.03.   Successors; Binding Agreement

        (a) Each Employer will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of such Employer, by written
agreement in form and substance reasonably acceptable to Employee, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that such Employer would be required to perform it if no such succession
had taken place. Such agreement shall become effective concurrently with the
consummation of the transaction requiring the same. A copy of such agreement
shall promptly be provided to Employee. As used herein, (i) the term "Holdings"
shall include any successor to its business and/or assets as aforesaid which
executes and delivers the Agreement provided for in this Section 7.03 or which
otherwise becomes bound by all terms and provisions of this Agreement by
operation of law and (ii) the term "Sterling" shall include any successor to its
business and/or assets as aforesaid which executes and delivers the Agreement
provided for in this Section 7.03 or which otherwise becomes bound by all terms
and provisions of this Agreement by operation of law.

        (b) This Agreement and all rights of Employee hereunder shall inure to
the benefit of and be enforceable by Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee should die while any amounts would be payable
to him hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Employee's devisees, legatees or other designees or, if there be no such
devisees, legatees or other designees, to Employee's estate. This Agreement and
all rights of Employers hereunder shall inure to the benefit of and be
enforceable by Employers and their respective successors and assigns.

7.04.   Tax Withholdings

        Each Employer shall withhold from all payments hereunder all applicable
taxes (federal, state or other) which it is required to withhold therefrom
unless Employee has otherwise paid to such Employer the amount of such taxes.

7.05.   Gross-Up Payments

        (a) Anything in this Agreement to the contrary notwithstanding, in the
event any income is imputed to Employee on account of any payment, distribution
or benefit provided under Sections 3.03 through 3.13, then Employee shall be
entitled to receive from Employers an additional payment in an amount equal to
all income taxes (including any interest or penalties imposed with respect to
such taxes) attributable to such imputed income.

        (b) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution to or for the
benefit of Employee in connection with his employment hereunder (a "Payment")
would be subject to the excise tax imposed by section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise tax, together
with any such interest or penalties, being collectively referred to below as the




                                      -15-
<PAGE>
"Excise Tax"), then Employee shall be entitled to receive from Employers an
additional payment (the "Gross-Up Payment") in an amount such that, after
payment by Employee of all taxes (including any interest or penalties imposed
with respect to such taxes), including any Excise Tax imposed on the Gross-Up
Payment, Employee retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payment. All determinations required to be made under this
paragraph (b) shall be made by the independent accounting firm then retained by
Holdings in the ordinary course of business.

7.06.   Indemnification

        Without the prior written consent of Employee, neither Employer will
amend, modify or repeal any provision of its certificate of incorporation or
bylaws if such amendment, modification or repeal would materially adversely
affect Employee's rights to indemnification by such Employer.

7.07.   Amendments and Waivers

        No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by the parties. No waiver by any party hereto at any time of any breach by any
other party hereto of, or in compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

7.08.   Obligations Absolute

        Employers' obligations to make the payments and arrangements provided
for in this Agreement and to otherwise perform their obligations under this
Agreement shall be absolute and unconditional and, except as specifically
provided in this Agreement, shall not be affected by any circumstances,
including any set-off, counterclaim, recoupment, defense or other claim, right
or action which Employers (or either of them) may have against Employee or any
other Person. Each payment made by Employers pursuant to the Agreement shall be
final, and Employers shall not seek to recover all or any part of such payment
from Employee (or from any other Person entitled thereto) for any reason
whatsoever. In no event shall Employee be obligated to seek other employment or
take any other action in mitigation of the amounts payable pursuant to any
provision of this Agreement, nor shall the amount of any payment provided for in
this Agreement be reduced by any compensation earned by Employee as the result
of employment by another employer or otherwise.




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<PAGE>
7.09.   Governing Law

        THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO
ITS CONFLICT OF LAWS PRINCIPLES.

7.10.   Counterparts, Severability, etc.

        This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect. No right, power or remedy granted under this Agreement is intended to be
exclusive, but each shall be cumulative and in addition to any other rights,
powers or remedies referred to in this Agreement or otherwise available at law
or in equity. The obligations of Employers hereunder shall be joint and several.

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.


                                  STERLING CHEMICALS HOLDINGS, INC.



                                  By:
                                     -----------------------------------------
                                       Robert W. Roten, Chairman of the Board

                                  STERLING CHEMICALS, INC.



                                  By:
                                     -----------------------------------------
                                       Robert W. Roten, Chairman of the Board


                                  EMPLOYEE



                                  --------------------------------------------
                                  David G. Elkins






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