<PAGE>   1
                                                                    EXHIBIT 10.3

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

================================================================================




                          SECOND AMENDED AND RESTATED

                              PRODUCTION AGREEMENT



                                    between



                               BP CHEMICALS INC.



                                      and



                            STERLING CHEMICALS, INC.



                                effective as of
                                 August 1, 1996
================================================================================




                                      -1-
<PAGE>   2
                          SECOND AMENDED AND RESTATED
                              PRODUCTION AGREEMENT

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                       PAGE
<S>                                                                                                                    <C>
ARTICLE 1
         DEFINITIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE 2
         INITIAL AND ADDITIONAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14

ARTICLE 3
         SUPPLY OF ACETIC ACID  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16

ARTICLE 4
         DELIVERY, SHIPMENT AND STORAGE INSTRUCTIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17

ARTICLE 5
         CHANGES IN SPECIFICATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18

ARTICLE 6
         PAYMENT FOR ACETIC ACID  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20

ARTICLE 7
         PRODUCT OWNERSHIP, DELIVERIES AND SHIPMENTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25

ARTICLE 8
         TESTING  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28

ARTICLE 9
         MEASUREMENT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29

ARTICLE 10
         STORAGE OF ACETIC ACID BY COMPANY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31

ARTICLE 11
         OPERATION OF UNIT AND RELATED MATTERS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32

ARTICLE 12
         SHUT-DOWNS OF THE UNIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33

ARTICLE 13
         INSURANCE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
</TABLE>





                                      -i-
<PAGE>   3
<TABLE>
<S>                                                                                                                    <C>
ARTICLE 14
         ACCESS TO THE UNIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37

ARTICLE 15
         METHANOL SUPPLY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38

ARTICLE 16
         SPECIAL EXPENDITURE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40

ARTICLE 17
         CAPITAL EXPENDITURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41

ARTICLE 18
         PERSONNEL  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44

ARTICLE 19
         REPRESENTATIONS AND WARRANTIES OF THE COMPANY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45

ARTICLE 20
         REPRESENTATIONS AND WARRANTIES OF BP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46

ARTICLE 21
         PARTICIPATION IN NEGOTIATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  48

ARTICLE 22
         ACCESS TO INFORMATION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  48

ARTICLE 23
         SEMIANNUAL MEETINGS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  50

ARTICLE 24
         FINANCIAL ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51

ARTICLE 25
         ARBITRATION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51

ARTICLE 26
         CONFIDENTIALITY AND INTELLECTUAL PROPERTY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  52

ARTICLE 27
         DEFAULTS; FAILURES; REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  53

ARTICLE 28
         NOTICE OF CERTAIN EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  55
</TABLE>





                                      -ii-
<PAGE>   4
<TABLE>
<S>                                                                                                                    <C>
ARTICLE 29
         SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  56

ARTICLE 30
         INDEMNIFICATION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  57

ARTICLE 31
         ADDITIONAL RIGHTS AND LIABILITIES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  60

ARTICLE 32
         FORCE MAJEURE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  61

ARTICLE 33
         ASSIGNMENTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  63

ARTICLE 34
         GENERAL  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  64
</TABLE>





                                     -iii-
<PAGE>   5
                          SECOND AMENDED AND RESTATED
                              PRODUCTION AGREEMENT

                                    EXHIBITS

<TABLE>
         <S>                                                                 <C>
         Cost of Sales                                                       A

         Fixed Costs                                                         B

         Methanol Specification                                              C

         Acetic Acid Specifications                                          D

         Legal Description of the Land of the Unit                           E

         Variable Costs                                                      F

         Summary of Insurance Coverage                                       G

         Sample Profit Calculations After 2006                               H

         Blend Gas Credit                                                    I
</TABLE>





                                      -iv-
<PAGE>   6
                          SECOND AMENDED AND RESTATED
                              PRODUCTION AGREEMENT


THE STATE OF TEXAS                )
                                  )    KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF HARRIS                  )


         THIS SECOND AMENDED AND RESTATED PRODUCTION AGREEMENT executed this
___ day of ____________, 1997, but effective as of August 1, 1996, is by and
between BP CHEMICALS INC., an Ohio corporation and successor in interest to BP
Chemicals Americas Inc., and STERLING CHEMICALS, INC., a Delaware corporation.

                             W I T N E S S E T H :

         WHEREAS, the Company (as defined below) acquired on August 1, 1986 a
petrochemical plant located in Texas City, Texas which contains facilities for
the production of acetic acid; and

         WHEREAS, effective August 1, 1986 the Company executed and delivered
to BP (as defined below) a special warranty deed with vendor's lien whereby the
Company conveyed to BP fee simple determinable title in and to the Unit, which
fee interest ceased, determined and reverted to the Company on August 1, 1996;
and

         WHEREAS, on August 1, 1986 BP leased the Unit to the Company for the
production  of acetic acid pursuant to a Lease and Production Agreement dated
August 1, 1986 ("1986 Agreement") provided that the Company agreed to give BP,
during an Initial Term of ten (10) years commencing on August 1, 1986, the
exclusive right to purchase all acetic acid produced by the Company in the
Unit, except as otherwise permitted by the 1986 Agreement; and





                                      -1-
<PAGE>   7
         WHEREAS, on August 1, 1986 pursuant to the 1986 Agreement the Company
gave BP an option to extend such Initial Term for up to two further periods
(not exceeding in the aggregate a period of ten [10] years) during which BP was
granted the exclusive right to acquire all acetic acid produced by the Company
in the Unit in consideration of the payment of an extension fee; and

         WHEREAS, the 1986 Agreement has heretofore been amended on October 9,
1986, November 17, 1988, December 12, 1988, December 13, 1988, and September 8,
1993; and

         WHEREAS, on August 8, 1994, the parties hereto (a) restated the 1986
Agreement to reflect all prior amendments, and (b) amended the 1986 Agreement
to make provision for the terms and conditions under which, in lieu of BP
exercising its right to extend the Initial Term for up to two further periods
not exceeding in the aggregate a period of ten (10) years, (i) the production
agreement portion of the 1986 Agreement was extended through July 31, 2016,
composed of two ten (10) year terms and (ii)  BP was granted the exclusive
right to acquire acetic acid during the period from August 1, 1996 through July
31, 2016 ("1994 Restated Agreement"); and

         WHEREAS, the Initial Term expired and title to the Unit reverted to
the Company on August 1, 1996; and

         WHEREAS; the parties hereto wish to restate the 1994 Restated
Agreement again, and also to further amend the 1994 Restated Agreement to among
other things:  (a) ***. (b) modify the 1994 Restated Agreement to reflect
changes in the operation of the Unit resulting from (i) completion by Praxair of
the Praxair Facility, (ii) completion of the Methanol Facility and (iii) the
completion of DB III; and (c) reflect the expiration of the Initial Term;

         NOW, THEREFORE, for and in consideration of the premises and of the
mutual representations, warranties, covenants and agreements herein contained
and the mutual benefits to





                                      -2-
<PAGE>   8
be derived therefrom, the parties hereto agree that the 1994 Restated
Agreement, be and hereby is further amended as provided herein, such amendments
to be effective as of the Amendment Effective Date (except as otherwise
provided herein), and that the 1994 Restated Agreement be and hereby is amended
and restated in its entirety as follows:

                                   ARTICLE 1

                                  DEFINITIONS

         Unless otherwise stated in this Agreement, the following terms shall
have the meanings ascribed to them below, and the following definitions shall
be equally applicable to both the singular and plural forms of any of the terms
herein defined:

         Acetic Acid:  Acetic acid produced in the Unit and meeting the
Specifications in effect from time to time pursuant to this Agreement.

         Acetic Acid Measuring Equipment:  Shore tanks located on the Unit for
measuring deliveries of Acetic Acid to be loaded into barges or ships, and
scales located at the Plant for measuring deliveries of Acetic Acid to be
loaded into trucks and rail cars.

         Acetic Acid Plant Assets:  As defined in Section 17.8(a) hereof.

         Acetic Acid Technology Agreement:  That certain Acetic Acid Technology
Agreement dated as of the date hereof but effective as of August 1, 1986 among
BPCL, BP and the Company.

         Additional Rail Cars:  As defined in Section 7.2 hereof.

         Affiliate:  Affiliate of a party shall mean a corporation, at least
50% of the voting securities of which is owned directly or indirectly by such
party; a corporation which owns directly or indirectly at least 50% of the
voting stock of such party; a corporation, at least 50% of the voting
securities of which is owned directly by a corporation which owns directly or
indirectly at least 50%





                                      -3-
<PAGE>   9
of the voting stock of such party; or any other entity controlled, controlled
by or under common control with such party.

         After Acquired Assets:  As defined in Section 2.1(b) hereof.

         Agreement:  This Second Amended and Restated Production Agreement, as
the same may be further amended from time to time pursuant to the provisions
hereof.

         1986 Agreement and 1994 Restated Agreement:  As defined in the
recitals hereof.

         Amendment Effective Date:  August 1, 1996.

         Arbitration Notice:  As defined in Section 25.1 hereof.

         Barge:  That certain barge, identified as M-25, Official No. 527030,
for so long as such barge remains in service during the Initial Term and the
First and Second Additional Terms.

         Blend Gas:  A mixed carbon monoxide/hydrogen stream plus a pure
hydrogen stream.

         Blend Gas Credit:  A credit calculated in the manner set forth in
Exhibit I attached hereto.

         BP:  BP Chemicals Inc., an Ohio corporation, and its successors and
permitted assigns hereunder.

         BPCL:  BP Chemicals Ltd., a company registered in England and Wales
and an Affiliate of BP, and its successors and assigns.

         BP Event of Default:  During the Initial Term and the First and Second
Additional Terms hereof, (i) the failure by BP to perform any of its financial
obligations hereunder which failure shall continue for a period of thirty (30)
days after the same is due hereunder, (ii) the failure by BP to perform any
other covenants or agreements hereunder to a material extent which failure
continues for a period of thirty (30) days after receipt of written notice
thereof by BP from the Company, (iii) the inaccuracy in any material respect of
any representation or warranty made by BP in this Agreement, (iv) the failure
by either of BP or BPCL to perform any of its financial obligations or





                                      -4-
<PAGE>   10
any other covenants or agreements under the Acetic Acid Technology Agreement to
a material extent which failure continues for a period of thirty (30) days
after receipt of written notice by BP from the Company, and/or (v) if BP shall
(a) make a general assignment for the benefit of creditors or shall petition or
apply to any tribunal for the appointment of a trustee, custodian or receiver
of all or any substantial part of its business, estate or assets or shall
commence any proceeding under any bankruptcy, reorganization, arrangement,
insolvency or readjustment of debt law of any jurisdiction; or any such
petition or application shall be filed or any such proceedings shall be
commenced against BP and BP shall indicate approval thereof, consent thereto or
acquiescence therein, or an order shall be entered appointing a trustee,
custodian or receiver of all or any substantial part of the business, estate or
assets of BP or approving the petition or application in any such proceeding,
and such order shall remain in effect for more than ninety (90) days, and (b)
as a result thereof, any such trustee, custodian or receiver shall take any
action having any of the effects set forth in subsections (i), (ii)  and/or
(iv) above; provided, however, that with respect to an event described in (i),
(ii) or (iv) above, if BP (or in the case of (iv) above, and/or BPCL) or any
such trustee, custodian or receiver has performed any such obligation, covenant
or agreement or made any such payment prior to the expiration of such thirty
(30) day period, such failure or default shall not constitute a BP Event of
Default.

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

         Capital Expenditures:  Expenditures incurred to (a) acquire any asset
for use on the Unit, or (b) add to, modify, replace or improve any asset on the
Unit so that (i) the cost of operations on the Unit is reduced, (ii) the
capacity of the Unit is increased, (iii) the efficiency of the Unit is
improved,





                                      -5-
<PAGE>   11
(iv) operational safety of the Unit is improved, or compliance with legal
requirements is achieved or maintained, and/or (v) the product quality or
reliability of the Unit is improved.  Also, any expenditures incurred in
replacing or improving the Barge or the Rail Cars or in purchasing the
Additional Rail Cars.

         Capital Project:  A project which requires Capital Expenditures.

         Claim:  As defined in Section 30.3 hereof.

         Company:  Sterling Chemicals, Inc., a Delaware corporation, and its
successors and permitted assigns hereunder.

         Company Event of Default:  During the Initial Term and the First and
Second Additional Terms hereof, (i) the failure by the Company to perform any
of its obligations, covenants or agreements hereunder to a material extent
which failure continues for a period of thirty (30) days after receipt of
written notice thereof by the Company from BP, (ii) the inaccuracy in any
material respect of any representation or warranty made by the Company in this
Agreement, (iii) the failure by the Company to deliver to BP the quantity of
Acetic Acid as required by the Delivery, Shipment and Storage Instructions for
two (2) consecutive Months unless such failure to deliver is otherwise excused
hereunder, and/or (iv) if the Company shall (a) make a general assignment for
the benefit of creditors or shall petition or apply to any tribunal for the
appointment of a trustee, custodian or receiver of all or any substantial part
of its business, estate or assets or shall commence any proceeding under any
bankruptcy, reorganization, arrangement, insolvency or readjustment of debt law
of any jurisdiction; or any such petition or application shall be filed or any
such proceedings shall be commenced against the Company and the Company shall
indicate approval thereof, consent thereto or acquiescence therein, or an order
shall be entered appointing a trustee, custodian or receiver of all or any
substantial part of the business, estate or assets of the Company or approving





                                      -6-
<PAGE>   12
the petition or application in any such proceeding, and such order shall remain
in effect for more than ninety (90) days, and (b) as a result thereof, any such
trustee, custodian or receiver shall take any action having any of the effects
set forth in subsections (i) and/or (iii) above; provided however, with respect
to an event described in (i) above, if the Company or any such trustee,
custodian or receiver has performed any such obligation, covenant or agreement
prior to the expiration of such thirty (30) day period, such failure to perform
shall not constitute a Company Event of Default.

         Company Taxes:  Subject to the provisions of Section 34.2(b), all
taxes, if any, (other than capital stock, income or excess profit taxes,
general franchise taxes imposed on corporations on account of their corporate
existence or on their right to do business within the state as a foreign
corporation, ad valorem and real property taxes and similar taxes) licenses,
fees or charges levied, assessed or made by any governmental authority on the
act, right or privilege of production, transportation, handling, sale, resale
or delivery of Acetic Acid produced, sold or delivered under this Agreement
which (i) are measured by the volume in pounds, value or sales price of, or are
otherwise based on producing, transporting, purchasing, handling, selling or
reselling, Acetic Acid and (ii) are imposed upon and paid by or for the account
of the Company.

         Contract Year:  A period of twelve (12) consecutive months beginning
on the first Day of January next following the Effective Date, and beginning on
the first Day of January of each subsequent year during the Initial Term and,
if applicable, the First and Second Additional Terms. The period of time from
the Effective Date until the first day of the January next following the
Effective Date, and the period of time from the first day of January last
occurring during the Initial Term or, if applicable, the First and Second
Additional Terms, shall each be considered to be a Contract Year.





                                      -7-
<PAGE>   13
         Cost of Sales:  The reasonable direct out-of-pocket expenses incurred
by BP in connection with the sale of Acetic Acid or Unit Product including, but
not limited to, the expenses listed in Exhibit A attached hereto and reasonable
allocations of BP's direct marketing support costs.

         DB III:  A debottlenecking project for the purpose of increasing
Acetic Acid production capacity to 770,000,000 pounds per year.

         Damages:  Any and all damages, cash payments, expenses, obligations,
claims, liabilities, fines, penalties, clean-up or remedial costs, shut-down
costs, repairs or reconstruction costs, costs of investigation, attorneys'
fees, court costs, and operating, extraordinary or business interruption losses
including (i) except as otherwise provided herein, any such matters arising
from Spills or Releases Requiring Response Action, and (ii) unless otherwise
specifically disclaimed herein, consequential, incidental and indirect damages,
but excluding any and all of the foregoing arising from or related to the
acetic acid process or acetic acid technology licensed by BPCL to the Company.

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

         Declaration of BP Default:  As defined in Section 27.2 hereof.

         Declaration of Company Default:  As provided in Section 27.1 hereof.

         Delivery, Shipment and Storage Instructions:  As defined in Section
4.1 hereof.

         Effective Date:  The Purchase Closing Date.

         Estimated Delivery, Shipment and Storage Instructions:  As defined in
Section 4.1 hereof.

         First Additional Term:  As defined in Section 2.1(a) hereof.

         First Extension Fee:  As defined in Section 2.1(c) hereof.





                                      -8-
<PAGE>   14
         Fixed Costs:  All actual fixed costs incurred, sustained or paid in
connection with the production, sale or delivery  of Acetic Acid, Unit Product
and syn-gas, including but not limited to the items listed in Exhibit B;
provided that fixed costs invoiced to Sterling by Praxair as a result of the
monthly production of carbon monoxide will be considered Fixed Costs under this
Agreement and will be included therein.

         Initial Term:  As defined in Section 2.1(a) hereof.

         Major Capital Item:  As defined in Section 6.6(c) hereof.

         Methanol:  Methanol meeting the specification set forth on Exhibit C
attached hereto.

         Methanol Facility:  That certain facility owned by the Company and
located at the Plant that, through a combination of new construction and
increases in capacity, has been reconstructed by the Company and BP pursuant to
the Methanol Production Agreement and from which BP will purchase methanol for
delivery to the Company pursuant to this Agreement.

         Methanol Measuring Equipment:  For Methanol delivered by barge, shore
tanks located at the Plant for measuring deliveries of Methanol.  For Methanol
delivered from the Methanol Facility, the meter that measures the flow of
Methanol into the Unit.

         Methanol Production Agreement:  That certain Methanol Production
Agreement dated September 26, 1996 by and between the Company and BP, as same
may be amended from time to time pursuant to the terms thereof.

         Minor Capital Item:  As defined in Section 6.6(c) hereof.

         Monsanto:  Monsanto Company, a Delaware corporation.

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





                                      -9-
<PAGE>   15
         Note:  That certain Promissory Note dated August 1, 1986 in the
original principal amount ***, executed by BP, as maker, payable to the order
of the Company, as payee, and bearing interest as provided therein,
constituting the purchase price of the Unit.

         Plant:  The petrochemical plant located in Texas City, Texas, acquired
by the Company from Monsanto pursuant to the Purchase Agreement.

         Point of Delivery:  As defined in Section 7.1 hereof.

         Praxair:  Praxair Hydrogen Supply, Inc., a Delaware corporation, and
its successors and assigns.

         Praxair Facility:  That certain facility for the production of carbon
monoxide, blend gas, hydrogen and steam owned by Praxair and located within the
Plant on a site leased by the Company to Praxair, from which the Company has
contracted to purchase its requirements of carbon monoxide, hydrogen and blend
gas for the Unit and for the Company's oxo-alcohol unit.

         Praxair Product Supply Agreement:  That certain Product Supply
Agreement dated as of May 15, 1995 by and between the Company and Praxair, as
same may be amended from time to time pursuant to the terms thereof.

         Profit:  ***.




                                      -10-
<PAGE>   16

         Purchase Agreement:  The Asset Purchase Agreement dated August 1, 1986
between Monsanto and the Company.

         Purchase Closing Date:  The date the closing occurred under the
Purchase Agreement.

         Quarter:  During any Contract Year which is a calendar year, the
period beginning at 7:00 a.m. on the first day of the Months of January, April,
July and October and ending at 7:00 a.m. on the first day of the next
succeeding April, July, October and January, respectively. During any





                                      -11-
<PAGE>   17
Contract Year which is not a calendar year, Quarter shall mean a three (3)
month period (or such lesser period prior to reaching the commencement of a
calendar year as shall be applicable) commencing at 7:00 a.m. on the first day
of such period and ending at 7:00 a.m. on the morning of the first day of the
next succeeding January, April, July or October, as the case may be.

         Rail Cars:  Those certain sixty (60) railroad tank cars made available
by the Company to BP pursuant to Section 7.2 hereof for so long as such cars
remain in service during the Initial Term and the First and Second Additional
Terms.

         Right:  The exclusive right of BP to acquire all Acetic Acid or Unit
Product produced by the Company in the Unit.

         Scheduled Shutdown:  A period during which the Unit is shut down for
the purpose of a Capital Project or to install equipment acquired by a Special
Expenditure or such maintenance as has been agreed by the parties hereto in a
Semiannual Meeting.

         Second Additional Term:  As defined in Section 2.1(a) hereof.

         Semiannual Meetings:  The meetings of representatives of the Company
and BP to be held no later than four (4) weeks after the end of each March and
September in each Contract Year.

         Special Expenditure:  Any expenditure incurred to acquire and install
any significant item of equipment for use on the Unit not otherwise defined as
Capital Expenditure or reimbursed by BP to the Company as a Fixed Cost.

         Specifications:  The acetic acid specifications, attached hereto as
Exhibit D, as the same may be changed from time to time by written agreement
between BP and the Company.

         Spills or Releases Requiring Response Action:  Any emission,
discharge, release or threatened release of pollutants, contaminants, or
hazardous substances or toxic materials or wastes into or upon ambient air,
surface water, ground water or land, or subsurface strata or otherwise





                                      -12-
<PAGE>   18
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, or hazardous
substances or toxic materials or wastes, as any of the same relate to or affect
or arise in connection with the operation of the Unit, the Barges, the Rail
Cars or Additional Rail Cars, or the production, delivery, storage, shipment,
sale, resale or use, disposal or transportation of Acetic Acid, Unit Product,
or feedstocks, raw materials, wastes or other materials used in or resulting
from the production of Acetic Acid or Unit Product.

         Surplus Payment:  As defined in Section 6.6(b) hereof.

         Third Party Action:  As defined in Section 30.3 hereof.

         Unit:  Those certain tracts of real property situated in Texas City,
Galveston County, Texas, as more particularly described on Exhibit E  attached
hereto and made a part hereof by reference for all purposes as if copied herein
in full, together with all buildings, improvements and fixtures located and to
be located thereon, generally known or referred to as the Plant's acetic acid
complex, including, but not limited to the syn-gas unit, the acetic acid plant,
buildings, storage tanks and all replacements, substitutions, deletions,
additions or other changes thereto from time to time as permitted by this
Agreement; provided, that from and after the shutdown of the syn-gas unit in
connection with the Startup (as that term is defined in the Praxair Product
Supply Agreement) of the Praxair Facility, those items of the syn-gas unit to
be used as part of the Methanol Facility shall cease to be a part of the Unit
for all purposes.

         Unit Capacity:  As defined in Section 6.6(b) hereof.

         Unit of Measurement:  As defined in Section 9.1 hereof.

         Unit Product:  Any acetic acid produced in the Unit which does not
meet the Specifications in effect from time to time pursuant to this Agreement.





                                      -13-
<PAGE>   19
         Variable Costs:  The actual variable costs incurred in the production
of acetic acid including but not limited to the items listed on Exhibit F and
the variable costs invoiced to the Company by Praxair but excluding the
variable costs associated with the syn-gas unit.

                                   ARTICLE 2

                          INITIAL AND ADDITIONAL TERMS

         2.1   (a) The term of this Agreement, during which time BP shall have
the Right shall be for a period of thirty (30) years commencing on August 1,
1986 and continuing through July 31, 2016, unless earlier terminated as
provided herein.  The first ten (10) year period, commencing on August 1, 1986
and continuing through July 31, 1996, is herein referred to as the "Initial
Term".  The second ten (10) year period, commencing on August 1, 1996 and
continuing through July 31, 2006, is herein referred to as the "First
Additional Term".  The third ten (10) year period, commencing on August 1, 2006
and continuing through July 31, 2016, is herein referred to as the "Second
Additional Term".

         (b)     On July 31, 1996, the lease provisions of the 1994 Restated
Agreement terminated and on August 1, 1996 title to the Unit reverted to the
Company and the Unit, as constituted on August 1, 1986 and including all
improvements thereto made by the Company and unreimbursed by BP subsequent to
August 1, 1986, became the sole property of the Company.  BP agrees to execute
and deliver to the Company such instruments, in recordable form, as the Company
may reasonably request to confirm the reversion of record title to the Unit and
all personal property used as part of the Unit to the Company.  BP agrees that
it has no ownership interest in the Unit or any improvements to the Unit made
since August 1, 1986, other than that portion of any Capital Expenditure,
Capital Project or Special Expenditure paid for either directly or through
reimbursement by BP (the "After Acquired Assets").





                                      -14-
<PAGE>   20
         (c)     As consideration for the grant by the Company to BP of the
Right for the First Additional Term, BP shall pay to the Company an aggregate
amount (the "First Extension Fee") equal to 120 (the number of Months in the
First Additional Term) multiplied by the monthly payment set forth below.  The
First Extension Fee shall be payable in equal consecutive monthly installments
of *** each, in immediately available funds by wire transfer to the Company's
account at such account or place of payment as may be designated by the Company
in writing to BP. The first monthly installment shall be due and payable on the
first Business Day of the second Month of the First Additional Term (September
3, 1996) and each of the remaining monthly payments shall be due and payable on
the first Business Day of each Month thereafter, with the last payment due on
August 1, 2006.  As consideration for the grant by the Company to BP of the
Right for the Second Additional Term, BP shall not be required to pay to the
Company any extension fee, but the share of Profit payable to the Company shall
be increased in accordance with Section 6.6(b), and paid in accordance with
Section 6.6(c), of this Agreement.

         2.2   In the event of  any breach or failure to perform hereunder
during the First or Second Additional Term by BP or the Company, which breach
or failure continues for a period of thirty (30) Days after written notice
thereof, the other party hereto shall be entitled to pursue all rights and
remedies provided at law or in equity for such breach or failure including, but
not limited to, terminating this Agreement and seeking and recovering Damages
therefor or the remedy of specific performance of this Agreement whether or not
such remedy is otherwise normally available.  Unless earlier terminated in
accordance with the provisions hereof, or unless the parties agree to another
extension hereof prior to January 1, 2016, this Agreement will terminate on
July 31, 2016.  Upon termination of this Agreement, BP agrees to sell to the
Company and the Company agrees to purchase from BP, all of BP's right, title
and interest in and to the After Acquired Assets ***





                                      -15-
<PAGE>   21
BP agrees to execute and deliver to the Company such instruments, in recordable
form, as the Company shall reasonably require at the termination of this
Agreement to transfer record title to the After Acquired Assets to the Company.
In the event that a project or projects similar in scope and effect to DB III
are agreed and implemented by the parties during the First or Second Additional
Term, it is the intent of the parties to negotiate an extension of the Agreement
over the estimated useful life of such project or projects.

         2.3   Upon the termination of this Agreement, BP will own the Acetic
Acid and Unit Product in inventory at the Unit and will pay to the Company
within thirty (30) days the Company's share of the Profit on such inventory,
calculated using a sales price equal to the average price of all sales by BP
during the month following such termination.

                                   ARTICLE 3

                             SUPPLY OF ACETIC ACID

         3.1   On the terms and subject to the conditions of this Agreement,
commencing on August 1, 1986 BP hereby agrees to receive and pay for and the
Company agrees to produce and deliver to BP Acetic Acid in such amounts as
requested by BP in the manner provided herein subject at all times to the
limitations imposed in Section 3.4 hereof.





                                      -16-
<PAGE>   22
         3.2   BP and the Company agree that Acetic Acid delivered to the
applicable Point of Delivery hereunder shall be made available to BP under as
uniform conditions and rates as possible. Accordingly, BP shall take deliveries
of, and the Company shall deliver, Acetic Acid in a manner commensurate with
good operating practices and in accordance with proper maintenance, operating
and distribution procedures and at as uniform rates of delivery as possible
throughout each Quarter during the Initial Term and the First and Second
Additional Terms.

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

         3.4   The Company shall not be required to expand, upgrade or, except
as otherwise expressly required herein, rebuild the Unit or any other Plant
facilities or to purchase acetic acid from other sources in order to perform
its obligations to BP pursuant to the provisions of this Agreement.

                                   ARTICLE 4

                  DELIVERY, SHIPMENT AND STORAGE INSTRUCTIONS

         4.1   On or before fourteen (14) Days prior to the end of each Quarter
during each Contract Year, BP shall provide notice to the Company (orally, in
writing or in other mutually agreeable form) setting forth BP's estimated
delivery, shipment and storage instructions of Acetic Acid for the coming
Quarter (the "Estimated Delivery, Shipment and Storage Instructions") which
shall include estimated dates, quality requirements and volumes of deliveries,
shipments and storage requirements of Acetic Acid for such Quarter. At least
five (5) Business Days prior to the first Day of each Month,





                                      -17-
<PAGE>   23
BP shall provide notice in similar form to the Company setting forth BP's
requested dates, quality requirements and volumes of deliveries and shipping
and its storage requirements of Acetic Acid for the coming Month (the
"Delivery, Shipment and Storage Instructions").

         4.2   In addition to the Estimated Delivery, Shipment and Storage
Instructions and the Delivery, Shipment and Storage Instructions, BP may
deliver to the Company from time to time additional shipping instructions for
the Acetic Acid.  All such instructions with respect to any particular shipment
shall be given as early as is practicable prior to the requested shipment date.
The Company shall use its best efforts to deliver Acetic Acid at the times
specified in such instructions. 

         To the extent required hereunder, the Company shall comply with the
requirements of governmental authorities having jurisdiction now in force or
which may hereafter be in force pertaining to the operation of the Unit and the
production of Acetic Acid or Unit Product and shall faithfully observe in the
use and operation of the Unit applicable laws and regulations now in force or
which may hereafter be in force.

                                   ARTICLE 5

                           CHANGES IN SPECIFICATIONS

         5.1   The Company shall produce Acetic Acid in accordance with
established procedures and methods of manufacture.

         5.2   Prior to making any change in raw materials or in procedures and
methods of manufacture employed in producing Acetic Acid hereunder which the
Company has, or should have, reason to believe may make such Acetic Acid
unsuitable to any of BP's customers, the Company will notify BP of the
Company's intent to make any such change.  If the Company fails to notify BP of
the Company's intent to make any such change, or if the Company notifies BP of
the Company's intent to make any such change and BP does not consent to such
change, and the Company thereafter





                                      -18-
<PAGE>   24
makes such change, the Company shall indemnify and hold BP harmless pursuant to
the provisions of Article 30 hereof from Damages which BP may suffer or incur
by reason of such change.  If the Company notifies BP of the Company's intent
to make any such change and BP consents to such change, BP shall indemnify and
hold the Company harmless pursuant to the provisions of Article 30 hereof from
Damages which the Company may suffer or incur by reason of such change.

         5.3   If at any time, any Acetic Acid to be supplied to BP changes in
chemical composition from that previously supplied to BP by the Company
hereunder, or the procedures and methods of manufacture employed in producing
Acetic Acid hereunder change so that in either event, such Acetic Acid is
unsuitable to any of BP's customers, then (i) BP shall notify the Company of
such unsuitability and may thereafter refuse to accept shipments of Acetic Acid
hereunder, and (ii) the Company shall indemnify and hold BP harmless pursuant
to the provisions of Article 30 hereof from Damages which BP may suffer or
incur by reason of any such change or changes.  If, notwithstanding the
unsuitability of Acetic Acid to BP's customer, BP accepts such shipment of
Acetic Acid, then (i) BP shall notify the Company of such acceptance
notwithstanding such unsuitability, and (ii) BP shall indemnify and hold the
Company harmless pursuant to the provisions of Article 30 hereof from Damages
which the Company may suffer or incur by reason of such unsuitable Acetic Acid.

         5.4   If the product produced by the Company in the Unit fails to meet
the Specifications, in whole or in part, and is delivered to BP as if it were
Acetic Acid and BP is not notified of such failure in advance, the Company
shall indemnify and hold BP harmless pursuant to the provisions of Article 30
hereof from Damages which BP may suffer or incur by reason of any such failure.
If the Company notifies BP of such failure in advance, but BP accepts the Unit
Product notwithstanding such failure, BP shall indemnify and hold the Company
harmless pursuant to the





                                      -19-
<PAGE>   25
provisions of Article 30 hereof from Damages which the Company may suffer or
incur by reason of such failure.

         5.5   The Specifications shall not be changed unless agreed to in
advance in writing by BP and the Company.

                                   ARTICLE 6

                            PAYMENT FOR ACETIC ACID

         6.1   Effective as of October 1, 1995, the charge for all Acetic Acid
delivered to BP hereunder during each Month of each Contract Year shall be the
sum of the following:

                 (a)      ***.

                 (b)      ***.

                 (c)      ***.

         6.2   BP shall pay the charge therefor to the Company after receipt of
invoice therefor in the following manner:

                 (a)      ***.

                 (b)      ***.

                 (c)      ***.

         6.3   The Company shall, on or before the fifth Business Day of each
Month, render to BP





                                      -20-
<PAGE>   26
                 (a)     an invoice for the preceding Month showing the 
         quantity of Acetic Acid delivered; beginning and ending Acetic Acid
         inventories, the production quantities of hydrogen, carbon monoxide,
         blend gas; the carbon monoxide usage in Acetic Acid; the value of
         Acetic Acid (including the value of the Methanol contained therein)
         shipped to the Company's acrylonitrile unit; the current price of
         methanol, carbon dioxide and natural gas; and the amount of the
         Variable Costs due; and BP shall pay each such invoice on or before the
         tenth Day after receipt thereof (or if such Day is not a Business
         Day, on the Business Day next following); and

                 (b)      a credit memorandum for the preceding Month showing
         the calculation of the Blend Gas Credit in the manner provided by
         Exhibit I hereto.

         6.4   As soon as is practicable after the end of each Month, the
Company shall submit to BP an invoice showing an adjustment to the Fixed Costs
based on the difference between the estimated Fixed Costs paid by BP and
referred to in Section 6.2(a) hereof and the actual Fixed Costs due for that
Month based on any adjustments thereto necessary to fully reimburse the Company
for all Fixed Costs for the Month.  The net sum due to the Company or any
credit due to BP resulting from the items referred to in Section 6.4 hereof
shall be paid or credited, as the case may be, on or before the twelfth Day
after receipt of the invoice (or if such Day is not a Business Day, on the
Business Day next following).

         6.5   The Company and BP shall cooperate in investigating, evaluating
and implementing mutually agreeable methods to reduce the Variable Costs and
the Fixed Costs; provided, however, that nothing contained in this Section 6.5
shall be construed to apply or pertain to any Capital Project.





                                      -21-
<PAGE>   27
         6.6     (a) For the period of time from December 12, 1988 through the
end of the First Additional Term within ninety (90) Days after the end of each
Contract Year, BP shall pay to the Company in cash an amount equal to *** of
any Profit for such Contract Year as an additional fee hereunder.

                 (b)      Commencing August 1, 2006 through the termination of
         this Agreement, the Company's share of Profit will be increased during
         the period from *** to the quotient, expressed as a percentage,
         obtained as a result of the application of the following formula:

                        Sterling Profit Share (%) = ***

         where "Unit Capacity" is the rated daily output of the Unit multiplied
         by 325 days in millions of pounds on August 1, 2006.

                 BP shall pay *** to the Company on the first day of each
         January, April, July and October (*** per Contract Year) during this
         period as an advance of the Company's share of Profit for such
         Contract Year.  (The period from August 1, 2006 through December 31,
         2006, and the period from January 1, 2016 through July 31, 2016, shall
         each be considered a Contract Year, with payments by BP to the Company
         during such periods being prorated.  For example, during the period
         from August 1, 2006 through December 31, 2006, a *** payment shall be
         made on August 1, 2006 and a payment of *** shall be made on November
         1, 2006 [***, the quotient obtained by dividing 61 (the number of days
         remaining in 2006) by 365].  If for any Contract Year of twelve months
         the Company's share of Profit is less than ***, the difference between
         *** and the amount of the Company's share of Profit for such Contract
         Year ("Surplus Payment") shall accumulate from year to year.  (For
         Contract Years of less than 12 months in which the payments by BP to
         the Company have been prorated, the amount of the Company's share of
         Profit used to calculate the amount of any





                                      -22-
<PAGE>   28
         Surplus Payment shall also be prorated on the same basis as the
         payments by BP to the Company during the Contract Year were prorated.)
         If at the beginning of any Contract Year a Surplus Payment
         accumulation exists and the amount of the Company's share of Profit at
         the end of such year (calculated in the manner provided by Section
         6.6(b)) exceeds *** , BP shall be entitled to reduce the amount of the
         Company's share of Profit for such year (but not below *** for
         Contract Years of 12 months, with such amount prorated for Contract
         Years having less than 12 months) until the sum of the accumulated
         Surplus Payments has been reduced to zero.  Any accumulated Surplus
         Payment which has not been paid by December 31, 2016 shall be forgiven
         by BP.

                 Notwithstanding the provisions above, if in any Contract Year
         of 12 months the Profit is less than ***, BP shall be entitled to take
         a credit equal to the difference between the *** advanced and the
         total Profit for the Contract Year.  BP shall take such credits
         against the *** per quarter advance payments to the Company in the
         Contract Year immediately following.  (In this manner, BP shall not be
         required to pay out a sum that exceeds that total Profit for a
         Contract Year.)  The difference between cash received by the Company
         (the *** advanced, less the subsequent credits to BP) and the
         Company's calculated Profit Share shall be accumulated as Surplus
         Payment for future recovery by BP as described above.

                 Example calculations of the Company's share of Profit are
         shown on Exhibit H.

                 (c)      During the Second Additional Term the Company will be
         reimbursed by BP for all costs of Minor Capital Items and the costs of
         Major Capital Items will be shared in accordance with the Profit
         sharing ratios in effect during the period.  For these purposes, a
         "Major Capital Item" shall be a Capital Expenditure of ONE HUNDRED
         THOUSAND





                                      -23-
<PAGE>   29
         AND NO/100 DOLLARS ($100,000.00) U.S. or more, and a "Minor Capital
         Item" shall be a Capital Expenditure of less than ONE HUNDRED THOUSAND
         AND NO/100 DOLLARS ($100,000.00) U.S.  Expenditures on Major Capital
         Items will have no effect on the definition of Profit, and such
         expenditures will be made for jointly approved projects without regard
         to the presence or absence of Profit or any accumulated Surplus
         Payment.

                 Expenditures for any major project that would achieve
         beneficial operation after August 1, 2006, but that would require fund
         disbursement prior to August 1, 2006, shall be shared in accordance
         with the Profit sharing ratios to become effective on August 1, 2006
         without regard to the impact such major project may have on Unit
         Capacity after August 1, 2006.

         6.7   If BP has reason to dispute the accuracy of any invoice
submitted to it by the Company, other than invoices for the Fixed Costs or the
Variable Costs, BP will pay that part of the invoice which is undisputed in
accordance with the provisions of this Article 6 and, after such dispute has
been resolved, BP will pay any balance due to the Company on or before the
twelfth day after the receipt by BP of a replacement invoice submitted to it by
the Company.  If BP has reason to dispute the accuracy of any Fixed Costs for
any Month or any Variable Costs for any Month, BP will pay an amount at least
equal to the Fixed Costs or the Variable Costs, as the case may be, paid by BP
to the Company for the preceding Month in accordance with the provisions of
Sections 6.2 and 6.3 hereof and, after such dispute has been resolved, BP will
pay any balance due to the Company or the Company will pay any balance due to
BP, as the case may be, on or before the twelfth day after the receipt by BP of
a replacement invoice submitted to it by the Company; provided, however, that
in the event that any balance is due to BP, such replacement invoice be
submitted to BP later than ten (10) days after such dispute has been resolved.





                                      -24-
<PAGE>   30
         6.8     The Company shall maintain records and production data in
accordance with usual and customary practices and standards in the acetyls
industry in respect of all matters referred to in this Article 6. The Company
shall provide BP access to such records and data pursuant to the provisions of
Section 22.1 hereof.

         6.9   The suspension of the obligations of the Company hereunder to
produce and supply Acetic Acid by reason of a force majeure event shall not
suspend BP's obligation to make the payments required hereunder.

                                   ARTICLE 7

                  PRODUCT OWNERSHIP, DELIVERIES AND SHIPMENTS

         7.1   Title to all Acetic Acid and Unit Product shall automatically
vest in BP from the moment of initial production, and all Acetic Acid and Unit
Product produced in the Unit shall at all times remain one hundred percent
(100%) owned by BP.  Solely for purposes of establishing BP's title to and
ownership of all Acetic Acid and Unit Product produced in the Unit, the Company
shall execute and deliver to BP an information UCC financing statement and/or
other necessary documents in a form reasonably acceptable to BP and any
renewals thereof as reasonably requested by BP to reflect such BP ownership of
Acetic Acid and Unit Product as a matter of public record. The Point of
Delivery of any Acetic Acid for purpose of offsite shipment shall be the point
of transfer of custody of such Acetic Acid from the Company to BP, and shall
mean (i) the first intake flange on the Barge or other inland water or marine
vessel into which the Acetic Acid is loaded for shipment, and (ii) the
perimeter boundary line of the Plant with respect to any Rail Car, Additional
Rail Car, truck or other conveyance into which the Acetic Acid is loaded for
shipment.  Risk of loss shall pass to BP at such flange or perimeter boundary
line, as the case may be (irrespective of





                                      -25-
<PAGE>   31
whether the Company owns or has provided any Barge, Rail Car, Additional Rail
Car or other conveyance into which the Acetic Acid is loaded). As between the
Company and BP, except as otherwise provided in Section 7.2 hereof, the Company
shall be in control and possession of the Acetic Acid produced hereunder and
responsible for any damage or injury caused thereby until risk of loss with
respect there to has passed to BP.  In addition to its other obligations
hereunder, BP shall be in control and possession of the Acetic Acid produced
hereunder and responsible for any damage or injury caused thereby after risk of
loss with respect thereto has passed to BP.

         7.2   Subject to the terms and conditions of this Agreement and to
normal and customary shipping practices, the Company shall make available to BP
at all times hereunder the Barge and the Rail Cars for movement of the Acetic
Acid, except when the Barge and/or the Rail Cars are being stored or used under
instruction for BP, provided that the Estimated Delivery, Shipment and Storage
Instructions, the Delivery, Shipment and Storage Instructions or any additional
shipping instructions state (i) the number of Rail Cars required by BP and the
date(s) on which the same are required, (ii) the date(s) on which the Barge is
required, (iii) transfer, connection and dispatch instructions, and (iv) such
other information as may be reasonably required by the Company. The Company
shall bear the costs of regular maintenance and repair of the Barge and the
Rail Cars and in-Plant loading and switching charges and other normal expenses
with respect to the ownership and operation thereof.  The Company shall not be
required to pay any Capital Expenditures with respect to the Barge or the Rail
Cars unless BP is obligated to reimburse the Company therefor as provided in
Article 16 hereof. The use of the Barge or any Rail Car by BP shall not affect
or alter the Point of Delivery hereunder or the time of the passing of risk of
loss with respect to the Acetic Acid. The Company shall have no liability for
any loss, damage, injury or other event or occurrence involving





                                      -26-
<PAGE>   32
the Barge or any Rail Car other than loss, damage or injuries resulting solely
from the gross negligence or willful misconduct of the Company, its agents or
employees.

         At such times as it becomes necessary to supplement the Rail Cars with
additional rail cars ("Additional Rail Cars") for transporting Unit Product to
customers, the costs of leasing the Additional Rail Cars shall be billed to BP
on a monthly basis.  Costs shall include lease fees, less mileage credits
received by the Company for the use of the Additional Rail Cars.  The
utilization of the Rail Cars and the Additional Rail Cars will be reviewed at
least annually to determine whether new cars are required or subleases should
be sought for excess rail cars in the fleet.  BP will make best efforts to use
any excess Rail Cars or Additional Rail Cars within its system for other
products, crediting the Profit with agreed sublease fees.

         7.3   BP may from time to time request that the Company arrange the
delivery and transportation of Acetic Acid in accordance with the Delivery,
Shipment and Storage Instructions or any additional instructions referred to in
Section 4.2 hereof and the Company may at its option comply with any such
request of BP; provided, however, that the Company shall have no liability or
other obligation with respect to its having arranged the delivery and
transportation of any Acetic Acid pursuant to this Section 7.3. If the Company,
in arranging for the delivery and transportation of Acetic Acid pursuant to
this Section 7.3, earns or realizes discounts or other cost savings as a result
of aggregating shipments or by reason of other economies of scale, such
discounts and other cost savings shall be proportionately shared with BP on the
basis on which such discounts and other cost savings were earned or realized by
the Company. BP shall reimburse the Company for any additional costs incurred
by the Company in the performance of any request of BP pursuant to the
provisions of this Section 7.3.





                                      -27-
<PAGE>   33
                                   ARTICLE 8

                                    TESTING

         8.1   The Acetic Acid and Unit Product shall be tested prior to
delivery to BP under the testing procedures and schedules being utilized by the
Company at the Effective Date.  Such procedures and schedules may be changed
from time to time by the agreement of BP and the Company.  The Company shall
retain representative samples for sufficient time to allow delivery to and
acceptance by BP's customers of such product. The Company shall provide BP
access to such samples and all records maintained by the Company with respect
there to pursuant to the provisions of Section 22.1 hereof.

         8.2   Confirmatory tests of the quality of Acetic Acid shipments shall
be performed at the time of delivery according to the procedures and schedules
referred to in Section 8.1 hereof and where requested, in the presence of an
independent surveyor, utilizing representative samples taken from the intake
flange of the Barge, other inland water or marine vessel, any Rail Car,
Additional Rail Car, truck or other conveyance, and from the tanks thereof
where necessary, into which the Acetic Acid is loaded.  The Company shall
retain such samples for sufficient time to allow delivery to and acceptance by
BP's customers of such product.  The Company shall provide BP access to such
samples and certifications and all records maintained by the Company with
respect thereto pursuant to the provisions of Section 22.1 hereof.

         8.3   All product made pursuant to the provisions of Article 5 hereof
when tested according to the agreed procedures and schedules shall be
conclusively presumed to constitute Acetic Acid unless analysis of the sample
retained pursuant to the provisions of Sections 8.1 or 8.2 hereof shows the
product not to have been Acetic Acid.





                                      -28-
<PAGE>   34
         8.4   BP shall have the right, at BP's expense, to have the Acetic
Acid tested by independent third parties prior to shipment as Acetic Acid
hereunder, so long as any such testing does not materially interfere with Unit
or Plant operations, and the Company shall cooperate in any such test and shall
have the right to be represented and to participate in any such test and to
inspect any equipment used in determining the nature or quality of the Acetic
Acid or Unit Product.

                                   ARTICLE 9

                                  MEASUREMENT

         9.1   The Unit of Measurement of Acetic Acid shall be one pound
(avoirdupois). All quantities given herein, unless otherwise expressly stated,
are in terms of such Unit of Measurement.

         9.2   The Company shall maintain and operate the Acetic Acid Measuring
Equipment and the Methanol Measuring Equipment in accordance with customary
practice in the industry and all applicable laws and regulations. BP may, at
its option and expense, install measuring equipment for checking the Acetic
Acid Measuring Equipment or the Methanol Measuring Equipment so long as such
installation does not materially interfere with the operation of the Unit or
the Plant.

         9.3   BP shall have the right, at BP's expense, to monitor and check
the measurement of Acetic Acid from the Unit into the tanks of the Barge, other
inland water or marine vessels, any Rail Cars, Additional Rail Cars, trucks or
other conveyances into which the Acetic Acid is loaded, in the presence of an
independent surveyor.  Any reports and certifications resulting from such
monitoring and checking will be made available by BP to the Company on request.

         9.4   The determination of the quantity of Acetic Acid deliveries
hereunder for inland water and marine vessel transport shall be made by taking
the opening and closing inventory of the Company's properly calibrated shore
tank before and after each shipment.





                                      -29-
<PAGE>   35
         9.5   The determination of the quantity of Acetic Acid deliveries
hereunder for transport by rail car or tank truck shall be made by weighing the
rail cars or tank trucks on certified scales before and after loading.  The
receiving party shall gauge or weigh the rail cars or tank trucks upon arrival
and, if the amount gauged or weighed is different than the weight obtained
prior to shipment by more than one percent (1%), the receiving party shall
notify BP, and BP will in turn notify the Company, and the procedures set forth
in Section 9.7 hereof shall apply.

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

         9.7   If upon any test the measuring equipment is found to be
inaccurate in the aggregate by one percent (1%) or more, any payment based upon
such measurements shall be corrected at the rate of such inaccuracy for any
period of inaccuracy which is definitely known or agreed upon, or if not known
or agreed upon, then for a period extending back one-half (1/2) of the time
elapsed since the last successful test. Following any test, any measuring
equipment found to be inaccurate to any degree shall be adjusted as soon as
practicable to measure accurately.  If for any reason any measuring equipment
is out of service or out of repair so that the quantity of Acetic Acid
delivered cannot be ascertained or computed from the readings thereof, the
quantity of Acetic Acid so delivered during the period the measuring equipment
is out of service or out of repair shall be





                                      -30-
<PAGE>   36
estimated and agreed upon by the parties upon the basis of the best available
data, using the first of the following methods which is feasible:

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

                 (b)      By using the ship's records of tank measurements
         where Acetic Acid has been loaded onto a ship;

                 (c)      By correcting the error if the percentage of error is
         ascertainable by test or mathematical calculation; or

                 (d)      By estimating the quantity of deliveries during
         preceding periods under similar conditions when the measuring
         equipment was measuring accurately.

         9.8   Notwithstanding the foregoing, the Company's measurements shall
be deemed to be accurate for purposes of all deliveries made hereunder unless
as to any particular delivery, BP objects thereto in writing delivered to the
Company within three (3) weeks after such delivery to BP's customer.

                                   ARTICLE 10

                       STORAGE OF ACETIC ACID BY COMPANY

         10.1   The Unit presently contains three (3) bulk storage tanks (Nos.
5OT508-1, 5OT508-2 and 5OT508-3) with an aggregate storage capacity of
approximately 30,000,000 pounds.  The Company shall use such bulk storage tanks
for the storage of Acetic Acid as designated by BP in the Estimated Delivery,
Shipment and Storage Instructions and the Delivery, Shipment and Storage
Instructions or as otherwise determined by the Company. Should any such bulk
storage tank be taken out of service by the Company for repair service, the
Company will, so long as the costs with respect





                                      -31-
<PAGE>   37
thereto are subject to reimbursement under this Agreement or included as a part
of the Fixed Costs, repair the same and place it back in service as soon as is
practicable.

                                   ARTICLE 11

                     OPERATION OF UNIT AND RELATED MATTERS

         11.1   The Company shall have the authority to, and does hereby agree
to, operate the Unit subject to the terms and conditions of this Agreement.
Unless otherwise provided herein, the Company shall operate the Unit in
accordance with the Delivery, Shipment and Storage Instructions of BP provided
that such operation (i) is not in violation of this Agreement, prudent
operation and maintenance procedures, or applicable laws and (ii) does not have
the effect of altering the Specifications unless agreed between the Company and
BP.

         11.2   Notwithstanding any other provision of this Agreement to the
contrary, the Company shall operate the Unit and perform its other obligations
hereunder using the same standard of care as it would use in operating its
other units at the Plant, and the Company shall have no liability hereunder
based on any higher standard of care.

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

         11.4   Effective for the Company's fiscal year beginning October 1,
1991, the Company will prepare a detailed annual maintenance budget for the
Unit, which will cover the period October 1 to September 30 on an evergreen
basis.  This budget will be available for review by BP 45 days prior to each
October 1 and will be agreed to by both parties by September 15 of each year.
If there is a





                                      -32-
<PAGE>   38
need to undertake significant additional maintenance or, if certain scheduled
items are found no longer to require attention, additions or deletions will be
mutually agreed upon.  The Company shall keep a record of maintenance spending
and will report such spending to BP upon reasonable notice from BP.  Such
reports will include, as a minimum requirement:  any agreed changes to the
original budget, actual spending compared to budget, and an annualized total
forecast including agreed additions or deletions.  BP shall have access to the
Company's maintenance records necessary to verify the accuracy of all items
charged against maintenance to the extent and in the manner provided in Article
22 of this Agreement.

                                   ARTICLE 12

                             SHUT-DOWNS OF THE UNIT

         12.1   The parties agree that the Unit will be shut down for such
periods of time as are required to accomplish the Scheduled Shutdowns.  During
such shut-down, the Company shall not be required to produce Acetic Acid
hereunder and it is the present intention of the parties to utilize the Unit's
storage capacity to accumulate Acetic Acid for delivery during such Scheduled
Shutdowns.  Any such Scheduled Shutdown shall affect neither the obligations of
BP to make all other payments due hereunder nor the other covenants and
agreements of the parties hereunder.

         12.2   Upon reasonable notice from BP, the Company shall temporarily
cease or reduce the production of Acetic Acid at the times and for the periods
so requested.  In such event, in addition to all other payments required
hereunder, BP shall reimburse the Company upon receipt of invoice therefor and
reasonable supporting detail as BP's auditors may reasonably require for any
and all additional costs and expenses incurred in connection with such
cessation or reduction, including, without limitation, increased costs of
production of other products produced at the Plant resulting





                                      -33-
<PAGE>   39
from such cessation or reduction; provided that the Company shall have a duty
to reasonably mitigate any such additional costs and expenses and to share with
BP any benefit in excess of such additional costs that the Company may obtain
or derive as a result of such cessation or reduction of production.

         12.3   In the event BP gives six (6) Months' prior written notice to
the Company that, in its judgment, the Unit should be permanently shut down,
(i) the Company shall proceed to shut down the Unit, and BP shall pay all
expenses of such shutdown, and (ii) the Company shall reduce the Fixed Costs as
soon as is practicable. Notwithstanding such shut-down, BP shall remain
obligated to pay the Fixed Costs for a full six (6) Months after the date of
such shut-down.  Thereafter, BP shall have no further obligations hereunder to
pay the Fixed Costs; provided, however, that BP shall reimburse the Company for
(i) all insurance, maintenance, security and other expenses thereafter incurred
by the Company with respect to the Unit, provided that the Company has a duty
to reasonably mitigate such expenses, and (ii) any and all additional expenses
incurred by the Company in connection with such permanent shut-down including,
but not limited to, (X) all amounts due or that become due to Praxair under the
Praxair Production Agreement, whether as a result of the shutdown or otherwise
(net of any benefit derived by the Company in connection with the shutdown
pursuant to the Praxair Production Agreement) and (Y) increased costs of
production of other products produced at the Plant (other than the Unit)
provided that the Company shall have a duty to reasonably mitigate any such
additional expenses.  The Company shall not be required to operate the Unit or
to maintain the Unit in a condition which is ready for production of Acetic
Acid.  Any such permanent shut-down shall affect neither the obligations of BP
to make all other payments due hereunder (including but not limited to the
First Extension Fee) nor the other covenants and agreements of the parties
hereunder.





                                      -34-
<PAGE>   40
         12.4   During the First and Second Additional Terms, in the event of a
fire, explosion, flood, hurricane, windstorm or other casualty resulting in the
loss of the Unit or a substantial part thereof or the inability for a period of
more than three (3) Months of the Company to deliver Acetic Acid as required by
BP, the Company and BP shall meet to decide whether or not to repair the Unit.
If the Company and BP agree to repair the Unit, the Unit shall be repaired and
the parties' obligations under this Agreement shall continue, irrespective of
whether or not the proceeds of insurance are sufficient to pay all costs of
such repair.  Any costs of such repair in excess of the proceeds of insurance
shall be shared by the parties as Capital Expenditures in accordance with their
then applicable Profit sharing ratios.  If both parties agree not to repair the
Unit, this Agreement shall terminate whereupon the Company shall retain all
insurance proceeds and purchase BP's undepreciated book basis in the After
Acquired Assets, plus ten (10) percent, pursuant to Section 2.2 hereof;
provided, however, that such payment shall not exceed an amount equal to the
product obtained by multiplying the insurance proceeds of such After Acquired
Assets by (a) during the First Additional Term, *** or (b) during the Second
Additional Term, *** minus the Company's share of Profit calculated in
accordance with Section 6.5(b) hereof and the covenants and obligations
referred to in Articles 26 and 29 hereof shall survive such termination as set
forth therein.  If the Company and BP cannot agree whether or not the Unit
should be repaired, either party shall have the right to require the Unit to be
repaired and that the insurance proceeds be first applied to the payment of all
repair costs and the parties' obligations under this Agreement shall continue,
but the party requiring the repair shall bear all costs of such repair in
excess of the proceeds of insurance and shall have the right to fully
depreciate such excess repair costs.

         12.5   The Company will prepare a detailed shutdown reserve ("SDR")
account for the Unit and a corresponding schedule for major shutdowns and
update these on a regular basis.  The period





                                      -35-
<PAGE>   41
over which the shutdown reserve is accrued is agreed to be a nominal 24 months
consistent with the expected major shutdown schedule.  BP and the Company will
review and agree on the SDR account and corresponding major shutdown schedule
by October 1 of each year.

         Once agreed, the amount for "Shutdown Reserve" in the Fixed Costs
shall be revised so that the sum of the monthly charges in current dollars
during the interval between major shutdowns (nominally 24 months) will equal
the total.  If, during the period prior to the major shutdown, additions or
deletions of major (non-routine) items to or from the reserve account may be
mutually agreed upon.  After completion of a major shutdown, total costs will
be reconciled against the SDR account.  Any difference will then be used to
recalculate the next SDR.

         In the event that there is a significant change to the major shutdown
schedule, the parties may agree to modify SDR charges to reflect the expected
interval between major shutdowns.  BP shall have access to the Company's
records necessary to verify the accuracy of charges made against the SDR
account to the extent and in the manner provided in Article 22 of this
Agreement.

                                   ARTICLE 13

                                   INSURANCE

         13.1   As of the Amendment Effective Date, the Company will obtain the
insurance coverage for the benefit of the Company and BP as described on
Exhibit G attached here to in respect of the Unit.  The Company shall obtain
adequate insurance coverage for those parts of the Plant which serve the Unit.
In the event that any parts of the Plant which serve the Unit are destroyed or
damaged, whether by the insured risks or not, the Company shall rebuild the
same as soon as practicable and to the extent that the insurance proceeds are
deficient will make up the difference from its own funds.  The Company shall
advise BP whenever any insurance policy or area of





                                      -36-
<PAGE>   42
coverage listed on the Summary of Insurance Coverage as set out in Exhibit G to
this Agreement is renegotiated or otherwise changed.  BP shall be advised prior
to making any major changes in these coverages and shall be afforded a
reasonable opportunity to review such changes.  If, as a result of such review,
it is determined that the revised coverages do not provide equivalent value to
the coverages required by Exhibit G, the parties shall agree to revise cost
allocations to the Unit and revise the Fixed Costs as appropriate.  The Company
and BP shall jointly review and compare current insurance coverages with those
specified in Exhibit G, on an annual basis.  BP shall be named an additional
insured with respect to the Unit on the policies as specified in Exhibit G and
no action to drop coverage for BP or increase insurance policy deductibles
shall be taken by the Company without prior approval by BP.

         13.2   During the Initial Term and the First and Second Additional
Terms, the Company shall maintain such insurance coverage, and all insurance
premiums in respect of the insurance for the Unit which are not included in the
Fixed Costs shall be paid by BP on receipt by BP of an invoice.

                                   ARTICLE 14

                               ACCESS TO THE UNIT

         14.1   The Company agrees that upon written request by BP, the Company
shall provide to BP, at cost, reasonably suitable office accommodation at the
Plant for a limited number of BP personnel.

         14.2   The Company agrees to permit BP personnel, at the cost of BP,
to have access to the Unit at reasonable times and on reasonable notice and
consistent with the Company's contractual obligations under licenses or
sub-licenses to which it is a party.  BP shall indemnify and hold the





                                      -37-
<PAGE>   43
Company harmless pursuant to the provisions of Article 30 hereof from Damages
which the Company may suffer or incur by reason of its admission of such BP
personnel to the Unit.

                                   ARTICLE 15

                                METHANOL SUPPLY

         15.1   BP shall provide Methanol meeting the specifications described
in Exhibit C attached hereto in the volumes and at the times required by the
Company to operate the Unit and supply Acetic Acid as required hereby.   The
Company shall provide adequate facilities to receive, handle and store, on
behalf of BP for use in the Unit, Methanol delivered by pipeline from the
Methanol Facility or Methanol delivered by sea in up to 6,000 metric ton
shipments.  Title to all Methanol supplied by BP for use in the Unit shall at
all times remain one hundred percent (100%) in BP.  Solely for purposes of
establishing BP's title to and ownership of such Methanol supplied by BP for
use in the Unit, the Company shall execute and deliver to BP an information UCC
financing statement and/or other necessary documents in a form reasonably
acceptable to BP and any renewals thereof as reasonably requested by BP to
reflect such BP ownership of Methanol supplied by BP as a matter of public
record.

         15.2   For all Methanol delivered pursuant to Section 15.1 by means
other than pipeline from the Methanol Facility, the cost of  Methanol consumed
shall be the price payable by BP from time to time to its major Methanol
supplier together with any reasonable costs incurred by BP in connection with
its purchase of Methanol from such supplier, including, without limitation, the
costs of delivery from the said supplier's terminal to the Company.

         For all Methanol delivered pursuant to Section 15.1 by pipeline from
the Methanol Facility, the cost for the Methanol consumed in the Unit shall be
the price of Methanol as reported for the





                                      -38-
<PAGE>   44
Month of delivery in the Transaction Index of the Methanol and Derivatives
Pricing Table contained in the Methanol and Derivatives Monthly Business Report
(published monthly by Petrochemical Consultants International), appropriately
adjusted to reflect the FOB Gulf Coast Price for Methanol available to large
volume users.

         For any Month, Methanol consumption shall be equal to the amount
measured by the Methanol Measuring Equipment.

         15.3   For all Methanol delivered pursuant to Section 15.1 by any
means other than pipeline from the Methanol Facility, the point of delivery
shall be the point of transfer of custody of such Methanol to the Company,
which for purposes of this Agreement shall mean the last exit flange on the
ship or other conveyance from which the Methanol is unloaded.  Risk of loss
shall pass from BP to the Company at such flange and the Company shall be in
control and possession of Methanol delivered pursuant to Section 15.1 hereof
and responsible for any damage or injury caused thereby after risk of loss with
respect thereto has passed to it.  As between the Company and BP, BP shall be
deemed to be in control and possession of Methanol delivered by BP pursuant to
Section 15.1 hereof and responsible for any damage or injury caused thereby
until risk of loss with respect thereto has passed to the Company.

         15.4   The Methanol produced in the Methanol Facility and purchased by
BP for use in the Unit shall be transferred by the Company by pipeline to the
Unit.

                                   ARTICLE 16

                              SPECIAL EXPENDITURE

         16.1   The Company may approve any project requiring Special
Expenditure and make any Special Expenditure, regardless of amount, in any
Contract Year if such project and such Special





                                      -39-
<PAGE>   45
Expenditure have been included in the Company's operating plan under this
Agreement for such Contract Year and such plan was approved by BP prior to the
payment of such Special Expenditure. Upon receipt of invoice therefor, BP will
promptly reimburse the Company for a Special Expenditure incurred in accordance
with this Section 16.1.

         16.2   A project and Special Expenditure not contemplated by Section
16.1 hereof, and the manner of reimbursement or payment to the Company
therefor, shall be agreed upon by the parties hereto.  The Company may, where
circumstances reasonably require, without the approval of BP, commence a
project and Special Expenditure not contemplated by Section 16.1 hereof
necessary, in the judgment of the Company, (i) to ensure that the Unit, the
Barge, the Rail Cars, the Additional Rail Cars and the operation of any of the
foregoing and the production, delivery, storage, shipment, sale, resale, use,
disposal or transportation of Acetic Acid, Unit Product, feedstock, supplies
and materials comply with applicable law and regulations, and (ii) to provide
for the health, safety and welfare of the Company's employees on the Unit;
provided, however, that the Company shall at the earliest practicable
opportunity notify BP of such project and Special Expenditure, and thereupon
the manner of reimbursement or payment shall be as follows:

         (a)     All costs actually incurred by the Company with respect to
such project and Special Expenditure prior to notifying BP of the commencement
thereof shall be promptly reimbursed by BP to the Company upon receipt of
invoice therefor;

         (b)     If the parties hereto agree, the Company shall be paid for
additional costs to be incurred by the Company with respect thereto as agreed
by the parties hereto;

         (c)     If the parties fail to agree, the Company shall at its option
(i) cease such project and Special Expenditure, or (ii) continue such project
and Special Expenditure at its own cost; provided, however, that the Company
may refer the matter to arbitration under Article 25 hereof.





                                      -40-
<PAGE>   46
                                   ARTICLE 17

                              CAPITAL EXPENDITURES

         17.1   During the Initial Term and the First Additional Term, all
Capital Expenditures shall be paid by the Company but shall be reimbursed by BP
upon receipt of an invoice, provided that the Company complies with the
procedures described in this Article 17.  Each Contract Year during the Initial
Term and the First Additional Term BP shall recover payment of the Company's
share of Capital Expenditures (determined in accordance with the parties then
applicable Profit sharing ratios) by deducting the Company's share of Capital
Expenditures for that year from the Company's share of Profit, if any, for that
year.  In the event the Company's share of Capital Expenditures is greater than
the Company's share of Profit for any Contract Year, the Company shall pay BP
the difference within ninety (90) days after the end of each such Contract
Year. During the Second Additional Term, all Minor Capital Items shall be paid
by the Company but reimbursed by BP upon receipt of an invoice, provided that
the Company complies with the procedures described in this Article 17.  During
the Second Additional Term, the cost of all Major Capital Items will be
invoiced to BP in accordance with the Profit sharing ratios in effect during
such period.  During the Second Additional Term, expenditures on Major Capital
Items will have no effect on the definition of Profit, and such expenditures
will be made for jointly approved projects without regard to the presence or
absence of Profit or any accumulated Surplus Payment.

         17.2   For any Contract Year a capital budget shall be prepared by the
Company and submitted for approval by BP no later than September 30 of the
previous Contract Year. Such capital budget shall consist of an outline
description of and an estimate of the Capital Expenditures for each identified
job and a lump sum provision in respect of other possible developments. Such
capital





                                      -41-
<PAGE>   47
budget will be discussed at the October Semiannual Meeting and approved in
whole or in part by BP at or subsequent to that meeting, but in any event
before the next succeeding January 1.

         17.3   When the Company desires to obtain a disbursement from BP for a
Capital Project described in the capital budget, the Company shall furnish BP
with the details of the proposed Capital Project including (i) the cost of such
proposed Capital Project, (ii) the benefits of the proposed Capital
Expenditure, and (iii) the changes which will result to the Variable Costs, the
Fixed Costs, the Acetic Acid production volume and the Specifications, for
authorization and disbursement of funds in accordance with the procedures in
Sections 17.4 through 17.6, inclusive, hereof.

         17.4   Further proposed Capital Projects may be added to the capital
budget described in Section 17.2 by the Company at any time during a Contract
Year, provided that the approval of BP has first been obtained.

         17.5   All Capital Projects may be committed to by the Company and
expended by the Company only after the approval of the authorized BP
representative who will, in respect of any Capital Project requiring Capital
Expenditures of more than *** U.S., submit the same to BP for approval.

         17.6   The effective date of any changes in the Specifications will be
the date the Capital Project in question is completed.  The actual results
arising from a Capital Project shall be determined by BP and the Company no
later than six (6) Months after such completion date.  If BP and the Company
agree that the actual results therefrom differ from those anticipated in
Section 17.2 hereof, the items referred to above in this Section 17.6 shall be
adjusted to take account of the actual results obtained.





                                      -42-
<PAGE>   48
         17.7   BP shall designate in writing to the Company the name of the
authorized BP representative for purposes of this Agreement which name may be
changed from time to time by BP by written notice to the Company.

         17.8   During the operation of the Agreement questions have arisen
regarding the allocation of certain U.S.  federal income tax deductions between
the Company and BP.  In order to clarify this situation and avoid confusion on
this issue in the future, the parties have agreed and do hereby agree as
follows:

                 (a)      At all times from and after August 1, 1986, the
         Company has been the beneficial owner of the Acetic Acid Plant Assets
         covered by the Production Agreement, being the following specific
         assets acquired by the Company from the Monsanto Company on August 1,
         1986, and therefore the Company is entitled to all available
         depreciation and/or amortization deductions with respect thereto:

                 All acetic acid process units, technology licenses, tank cars
                 and all personal property more particularly described on
                 Exhibit "B" of the Contract of Purchase and Sale of Real
                 Estate and Personal Property entered into between the Company
                 and BP, effective August 1, 1986, said Exhibit "B" being
                 incorporated herein by reference for all purposes as if copied
                 herein in full (the "Acetic Acid Plant Assets").

                 The parties hereby agree that BP is not and will not be
         entitled to any depreciation or amortization deductions with respect
         to the Acetic Acid Plant Assets.

                 (b)      BP will be entitled to any and all depreciation and
         amortization or expense deduction with respect to the After Acquired
         Assets, and the Company will be entitled to any and all depreciation
         and amortization or expense deductions with respect to that portion of





                                      -43-
<PAGE>   49
         any Capital Expenditure, Capital Project or Special Expenditure or any
         other expenditure unreimbursed by BP.

                 (c)      The payments required under the terms of the Note
         shall be currently deductible as rental expense by BP and recognized
         as income by the Company during the Initial Term.

                 (d)      The Company and BP will not file claims for refund,
         or any other form of return with the United States Internal Revenue
         Service, or with any governmental unit of any state, based on
         depreciation and/or amortization deductions inconsistent with the
         agreement reflected in this Section 17.8.

                                   ARTICLE 18

                                   PERSONNEL

         18.1   The Company shall at all times have sole authority with respect
to all personnel matters involving the employees, consultants and third-party
contractors at the Plant and the Unit, including, without limitation, salaries,
benefits, compensation, indirect personnel costs, manpower needs, training,
insurance, labor matters, working hours, job responsibilities, bonding and all
other employee, personnel-related and contracting matters.  Any incentive
schemes for employees on the Unit shall be made at the discretion and cost of
the Company.

                                   ARTICLE 19

                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company represents and warrants to BP as follows:

         19.1   Organization, Good Standing and Corporate Power. The Company is
a corporation, duly organized, validly existing and in good standing under the
laws of the State of Delaware, is duly





                                      -44-
<PAGE>   50
qualified as a foreign corporation in the State of Texas, and has all requisite
corporate power and authority to carry on its business as presently conducted,
to enter into this Agreement and perform its obligations hereunder.

         19.2   Authority Relative to Agreement. The execution, delivery and
performance by the Company of this Agreement have been duly and effectively
authorized by all necessary corporate action.  This Agreement has been duly
executed and delivered by the Company and is a legal, valid and binding
obligation of the Company enforceable in accordance with its terms, except
insofar as enforcement may be limited by (i) bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally, and (ii) general principles of equity.

         19.3   No Conflict with Other Instruments or Proceeding.  Neither the
execution and delivery of this Agreement, nor the performance or compliance
with the terms and conditions hereof conflict with, or will result in a breach
by the Company of, or constitute a default under, or result in the creation of
any lien, charge or encumbrance upon, any asset of the Company pursuant to any
of the terms, conditions or provisions of (i) the Certificate of Incorporation
or Bylaws of the Company, (ii) any mortgage, deed of trust, lease, contract,
agreement or other instrument to which the Company is a party by which the
Company may be bound or affected, or (iii) any writ, order, judgment, decree,
statute, ordinance, regulation or any other restriction of any kind or
character, to which the Company is subject, or by which the Company may be
bound or affected.

         19.4   No Litigation or Proceeding.  As of the date hereof, there are
no actions, suits, investigations or proceedings pending or to the Company's
knowledge threatened against the Company at law or in equity or before or by
any federal, state, municipal or other governmental or non-governmental
department, commission, board, bureau, agency or instrumentality seeking to
enjoin, restrain or otherwise prevent the execution and delivery of this
Agreement by the Company.





                                      -45-
<PAGE>   51
         19.5   No Warranties.  THE COMPANY HEREBY EXPRESSLY DISCLAIMS AND
NEGATES (i) ANY REPRESENTATION OR WARRANTY (EXPRESS, IMPLIED, COMMON LAW,
STATUTORY OR OTHERWISE) RELATING TO THE UNIT, THE BARGE, THE RAIL CARS, THE
ADDITIONAL RAIL CARS, OR THE OPERATION OF ANY OF THE FOREGOING, OR ANY OTHER
TANGIBLE PERSONAL PROPERTY AND FIXTURES INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR FITNESS OF
DESIGN OR ENGINEERING, EXCEPT AS EXPRESSLY SET FORTH HEREIN, AND (ii) ANY
IMPLIED REPRESENTATION OR WARRANTY RELATING TO ANY ACETIC ACID OR UNIT PRODUCT
SOLD HEREUNDER, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR FITNESS OF DESIGN OR
ENGINEERING.

                                   ARTICLE 20

                      REPRESENTATIONS AND WARRANTIES OF BP

         BP represents and warrants to the Company as follows:

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

         20.2   Authority Relative to Agreement. The execution, delivery and
performance by BP of this Agreement have been duly and effectively authorized
by all necessary corporate action. This





                                      -46-
<PAGE>   52
Agreement has been duly executed by BP and is a legal, valid and binding
obligation of BP enforceable in accordance with its terms, except insofar as
enforcement may be limited by (i) bankruptcy, insolvency, reorganization or
similar laws relating to or affecting the enforcement of creditors' rights
generally, and (ii) general principles of equity.

         20.3   No Conflict with Other Instruments or Proceedings.  Neither the
execution and delivery of this Agreement, nor the performance or compliance
with the terms and conditions hereof conflict with, or will result in a breach
by BP of, or constitute a default under, or result in the creation of any lien,
charge or encumbrance upon, any of its assets pursuant to any of the terms,
conditions or provisions of (i) the Certificate of Incorporation or Bylaws of
BP, (ii) any mortgage, deed of trust, lease, contract, agreement or other
instrument to which BP is a party or by which BP may be bound or affected, or
(iii) any writ, order, judgment, decree, statute, ordinance, regulation or any
other restriction of any kind or character, to which BP is subject, or by which
BP may be bound or affected,

         20.4   No Litigation or Proceedings.  As of the date hereof, there are
no actions, suits, investigations or proceedings pending or to BP's knowledge
threatened against or affecting BP at law or in equity or before or by any
federal, state, municipal or other governmental or non-governmental department,
commission, board, bureau, agency or instrumentality seeking to enjoin,
restrain or otherwise prevent the execution and delivery of this Agreement by
BP.

                                   ARTICLE 21

                         PARTICIPATION IN NEGOTIATIONS

         21.1   Upon any amendment to or the expiration from time to time of
any of the supply contracts in effect as of the Amendment Effective Date
pursuant to which natural gas or carbon monoxide are or are to be supplied to
the Unit, and before entering into any new supply contracts





                                      -47-
<PAGE>   53
for natural gas or carbon monoxide for the Unit, at BP's request the Company
shall permit BP to participate in (i) the negotiations which the Company
conducts with such suppliers and (ii) the resolution of any disputes relating
to the supply of natural gas or carbon monoxide to the Unit. Except as
otherwise provided herein, the Company may, without participation by BP,
negotiate and shall have the right, without the approval of BP, to enter into
all contracts relating to supplies, materials, feedstocks (except Methanol so
long as BP has not defaulted in its contractual obligations with respect
thereto), utilities, treatment, disposal and other services or materials or
property required in the Company's opinion for the operation of the Unit, the
Barge, the Rail Cars, the Additional Rail Cars, storage facilities and the
performance of its obligations hereunder.

                                   ARTICLE 22

                             ACCESS TO INFORMATION

         22.1   Upon written request by BP from time to time, the Company shall
provide to BP, its attorneys, accountants and other representatives, subject to
the confidentiality provisions of Section 26.1 hereof, at reasonable times
during normal business hours, access to the Company's books, records and
accounts relating to the operation of the Unit and the performance of the
Company's obligations under this Agreement, except as such access may be
prohibited by licenses or sub-licenses from a third party other than BPCL to
which the Company is a party. BP shall thereupon have the right to make copies
of and abstracts from such books, records and accounts, at BP's expense, which
copies may be removed from the premises of the Company and retained by BP,
subject to the confidentiality provisions of Section 26.1 hereof.

         22.2   The Company agrees to permit representatives of BP, at BP's
expense for purposes other than the Acetic Acid Technology Agreement, to have
(i) access to the Unit at reasonable times





                                      -48-
<PAGE>   54
and on reasonable notice to obtain information relating to the present or
proposed operations of the Unit so long as such access does not materially
disrupt the operation of the Unit, and (ii) access to the Plant at reasonable
times and on reasonable notice to obtain information and audit the
environmental status and condition of the Plant and the operations thereof as
long as such access does not materially disrupt the operation of the Plant and
BP pays all costs relating thereto.  BP agrees to furnish the Company with
copies of all information and audits obtained or prepared pursuant to the
provisions of this Section 22.2.  The Company shall make its employees and
other representatives available to BP for purposes other than the Acetic Acid
Technology Agreement at reasonable times on reasonable notice to discuss the
present or proposed operations of the Unit so long as such availability does
not materially disrupt the operation of the Unit or the Plant.  BP shall
reimburse the Company for all reasonable direct out-of-pocket costs incurred by
the Company in making such employees or other representatives available, on
receipt of an invoice therefor.

         22.3   Upon written request by the Company from time to time, BP shall
provide to the Company and its attorneys, accountants and other representatives
subject to the confidentiality provisions of Section 26.1 hereof, at reasonable
times during normal business hours, access to BP's books, records and accounts
relating to the calculation of Profit, Cost of Sales, Methanol supplies, cost
savings and the performance of BP's obligations under this Agreement.  The
Company shall thereupon have the right to make copies of and abstracts from
such books, records and accounts, at the Company's expense, which copies may be
removed from the premises of BP and retained by the Company, subject to the
confidentiality provisions of Section 26.1 hereof.





                                      -49-
<PAGE>   55
                                   ARTICLE 23

                              SEMIANNUAL MEETINGS

         23.1   At the Semiannual Meetings, the representatives of BP and the
Company shall review such matters as may be determined as appropriate by the
parties.

         23.2   By no later than September 30 of each Contract Year, the
Company shall deliver to BP a proposed operating plan (including proposed
Special Expenditures, Capital Projects and Capital Expenditures) for the Unit,
the Barge, the Rail Cars, the Additional Rail Cars and the other equipment and
property used in connection therewith, prepared by the Company in good faith
and upon realistic assumptions, for the following Contract Year.  At or after
the October Semiannual Meeting in each Contract Year and in any event prior to
the commencement of the next Contract Year, the parties shall formally agree on
and adopt the operating plan for the following Contract Year.  In the absence
of such an agreement on or before the first day of the Contract Year to which
such proposed operating plan would, if agreed, apply, the Company shall be
entitled to operate, maintain, repair, renovate, remodel, change and make
expenditures as may be reasonably necessary for the operation of the Unit and
in a manner consistent with the pattern of expenditure in the preceding
Contract Year but excluding any Capital Expenditures unless approved by BP
pursuant to this Agreement.

                                   ARTICLE 24

                              FINANCIAL ASSURANCES

         24.1   In the event any federal, state or other governmental authority
requires the Company to provide financial assurances in connection with the
Unit, its operations or any Spills or Releases Requiring Response Action, the
Company will use its best efforts to provide the same, and BP will





                                      -50-
<PAGE>   56
reimburse the Company for all premiums or other costs incurred in connection
with providing such financial assurances, upon receipt of invoice therefor. In
the event the Company is unable to provide such financial assurances, BP will
provide them.

                                   ARTICLE 25

                                  ARBITRATION

         25.1   All disputes, differences or questions arising out of or
relating to this Agreement (including, without limitation, those as to the
validity, interpretation, breach, violation or termination hereof) shall, at
the written request of either party, be finally determined and settled pursuant
to arbitration at Houston, Texas, by three (3) arbitrators, one (1) to be
appointed by the Company, one (1) by BP, and a neutral arbitrator to be
appointed by such two (2) party-appointed arbitrators.  The neutral arbitrator
shall be an attorney and shall act as chairman. Any such arbitration may be
initiated by a party by written notice ("Arbitration Notice") to the other
party specifying the subject of the requested arbitration and appointing such
party's arbitrator for such arbitration.

         25.2   Should (i) a party receiving an Arbitration Notice fail to
appoint an arbitrator as hereinabove contemplated by written notice to the
party giving the Arbitration Notice within ten (10) days after the receipt of
the Arbitration Notice, or (ii) the two (2) arbitrators appointed by or on
behalf of the parties as contemplated in Section 25.1 hereof fail to appoint a
neutral arbitrator as hereinabove contemplated within ten (10) days after the
date of the appointment of the last arbitrator appointed by or on behalf of the
parties, then a Judge of the United States District Court for the Southern
District of Texas, Houston Division, upon application of the Company or of BP,
shall appoint an arbitrator to fill any such position with the same force and
effect as though such arbitrator had been appointed as hereinabove
contemplated.





                                      -51-
<PAGE>   57
         25.3   The arbitration proceeding shall be conducted in the English
language in Houston, Texas, in accordance with the Rules of the American
Arbitration Association.  A determination, award or other action shall be
considered the valid action of the arbitrators if supported by the affirmative
vote of two (2) or three (3) of the three (3) arbitrators.  The costs of
arbitration (exclusive of the expense of a party in obtaining and presenting
evidence and attending the arbitration, and of the fees and expenses of legal
counsel to such party, all of which shall be borne by such party) shall be
shared equally by the Company and BP.  The arbitration award shall be final and
conclusive and shall receive recognition, and judgment upon such award may be
entered and enforced in any court of competent jurisdiction.

         25.4   The validity of the foregoing provisions of this Article 25
shall, to the fullest extent practicable, be governed by the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards.

                                   ARTICLE 26

                   CONFIDENTIALITY AND INTELLECTUAL PROPERTY

         26.1   During the term of this Agreement and thereafter, all
information relating to the business, products, assets and finances of the
Company or BP or their respective Affiliates, including, but not limited to
financial statements and related books and records, minutes books, personnel
records, list of customers and potential customers, lists of suppliers and
potential suppliers, price and cost data, computer programs, computer hardware,
reports and similar information and records, excluding, however, all
information provided in connection with and covered by the Acetic Acid
Technology Agreement, shall be treated as confidential to the Company or BP or
their respective Affiliate, as the case may be, and as confidential by BP or
the Company, as the case may





                                      -52-
<PAGE>   58
be, and shall not be disclosed directly or indirectly by or for BP or the
Company or their respective officers, employees, agents, affiliates or
representatives to, or used for the benefit of, BP or the Company or any other
person.  At the termination of this Agreement, the obligations as to
confidentiality herein shall continue for a period of five (5) years from the
date of such termination.

         26.2   The rights and obligations of BP, BPCL and the Company with
respect to confidentiality and intellectual property relating to acetic acid
process or acetic acid technology licensed by BPCL to the Company are set forth
in the Acetic Acid Technology Agreement.

                                   ARTICLE 27

                          DEFAULTS; FAILURES; REMEDIES

         27.1   If a Company Event of Default shall occur and be continuing, BP
may, at its option, by written notice to the Company, declare the Company to be
in default hereunder ("Declaration of Company Default"); provided, however,
that a Declaration of Company Default shall not relieve or otherwise discharge
the Company from the performance of its obligations under this Agreement,
except to the extent that the exercise by BP of its remedies pursuant to the
provisions of Section 27.3 hereof otherwise prevents or restricts the Company
with respect thereto.

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

         27.3   Forthwith upon a Declaration of Company Default, BP may, by
written notice to the Company, require the Company to permit, and the Company
shall permit at BP's risk, but at the Company's cost (subject to BP's duty to
reasonably mitigate such cost), such employees of BP as BP





                                      -53-
<PAGE>   59
may require to have access to the Unit and those parts of the Plant that serve
the Unit for the purpose of seeking and implementing (including, if necessary,
operating the Unit) a solution to the cause of the Company Event of Default or
failure, and the Company shall cause its employees to comply with the requests
and instructions of BP's said employees while present in the Plant or the Unit;
provided, however, that BP shall indemnify and hold the Company harmless
pursuant to the provisions of Article 30 hereof from Damages which the Company
may suffer or incur by reason of permitting such employees of BP to have such
access and provided further that BP shall not materially disrupt the Company's
operations on other parts of the Plant. BP's access to the Unit and those parts
of the Plant that serve the Unit shall continue until the Unit has operated so
as to enable the Company to comply with its obligations hereunder for one (1)
calendar month.  BP shall thereupon withdraw its employees from the Unit and
the Plant. After withdrawing such employees, BP shall not have any rights
pursuant to the provisions of this Section 27.3 of access to the Plant or the
Unit for a period of thirty (30) days beginning on the date of such withdrawal.
Once BP has withdrawn its employees, (i) if the Company fails to operate the
Unit during such thirty (30) day period following such withdrawal by BP in such
a manner as to enable the Company to comply with its obligations under this
Agreement, BP shall have the right to require the Company to permit BP's
employees to have access to the Unit and those parts of the Plant which serve
the Unit immediately upon the expiration of such thirty (30) day period, or
(ii) if the Company operates the Unit throughout such thirty (30) day period
following such withdrawal by BP in such a manner as to enable the Company to
comply with its obligations under this Agreement, BP shall have no right to
require the Company to permit BP's employees to have such access until a
subsequent Declaration of Company Default, if any.

         27.4   Forthwith upon a Declaration of BP Default, the Company may, by
written notice to BP, (i) cease all further production of Acetic Acid for BP
under this Agreement, (ii) commence





                                      -54-
<PAGE>   60
production of Acetic Acid using Methanol other than that which is provided by
BP hereunder, at which time title to any Acetic Acid or Unit Product produced
shall not automatically vest in BP as set forth in Article 7 hereof, and (iii)
sell Acetic Acid or Unit Product produced following a Declaration of BP Default
to third parties until such time as BP complies with its obligations hereunder.
Upon a Declaration of BP Default pursuant to clause (iv) of the definition of
"BP Event of Default", the Company may, by written notice to BP terminate this
Agreement.

                                   ARTICLE 28

                            NOTICE OF CERTAIN EVENTS

         28.1   In the event that the Company has failed to make payment of any
part of principal or interest on any of its indebtedness for borrowed money with
an outstanding balance of *** U.S.  or more when same shall have become due and
payable and such failure has not been waived by the holder(s) of such
Indebtedness, the Company agrees to give written notice thereof to BP within
seven (7) days of such failure. In such event, the Company shall discuss with BP
such failure to make any such payment and the effects thereof on the operations
of the Company and afford BP a reasonable opportunity for a reasonable period of
time under the existing circumstances to assist the Company in resolving any
financial difficulties the Company might have.

         28.2   In the event the Company enters serious negotiations with a
third party with respect to the sale or transfer of the Unit (whether directly
or indirectly) or as part of the sale or exchange of all or substantially all
of the assets of the Company, the sale or exchange of a majority or more of the
outstanding voting securities of the Company in a transaction requiring
approval by the Company, the merger or consolidation of the Company with or
into another corporation or





                                      -55-
<PAGE>   61
otherwise, the Company agrees to inform BP of such negotiations as soon as the
Company is permitted to so inform BP by such third party or by applicable law.

         28.3   In the event that the Company receives notice that the holders
of a majority of the outstanding voting securities of the Company have entered
serious negotiations to sell, exchange or otherwise transfer such voting
securities in a transaction not requiring approval of the Company or its
security holders as such, the Company agrees to inform BP of such negotiations
as soon as the Company is permitted to so inform BP by such holders or by
applicable law.

                                   ARTICLE 29

                                    SURVIVAL

         29.1   The representations, warranties, covenants and agreements
contained in Article 30 hereof, together with all indemnity and payment
obligations of any party hereto owing to the other party on the date of
termination hereof or arising thereafter based on events or occurrences prior
to the termination of this Agreement shall survive such termination and for the
period of the applicable statute of limitations (or, if there is no such
statute, for the longest period permitted by law) with respect to such
obligations.

                                   ARTICLE 30

                                INDEMNIFICATION

         30.1   otherwise provided herein, the Company, from and after the
Effective Date, shall indemnify and hold BP harmless from and against any and
all Damages suffered or incurred by BP on account of or arising from or related
to the breach of, or the failure to perform or satisfy any of, the
representations, warranties, covenants or agreements made by the Company in or
under this





                                      -56-
<PAGE>   62
Agreement, or any liability to any party whether incurred under statute or in
tort arising directly or indirectly from the operations carried on by or on
behalf of the Company at or in connection with the Plant or arising out of
Spills or Releases Requiring Response Action (whether occurring before or after
the termination of this Agreement), unless such Spills or Releases Requiring
Response Action are attributable to the acts, omissions or default of BP.

         30.2   Except as otherwise provided herein, BP, from and after the
Effective Date, shall indemnify and hold the Company harmless from and against
any and all Damages suffered or incurred by the Company on account of or
arising from or related to the breach of, or the failure to perform or satisfy
any of, the representations, warranties, covenants or agreements made by BP in
or under this Agreement, or any liability to any party whether incurred under
statute or in tort arising directly or indirectly from the actions of BP
carried out at or in connection with the Plant excepting any Damages arising
out of Spills or Releases Requiring Response Action occurring during the
Initial Term or the First or Second Additional Terms unless such Spills or
Releases Requiring Response Action are attributable to the acts, omissions or
default of BP.

         30.3   BP and the Company each agree that promptly after any of its
officers becomes aware of the discovery of facts giving rise to a claim by it
for indemnification hereunder ("Claim"), such party will provide notice thereof
in writing to the other party.  The failure of either party to so notify the
other party of a Claim, where such failure results in insufficient time being
available to permit the party receiving the notice or its counsel to defend
against such Claim, shall relieve the other party from any liability in respect
of such Claim which it may have otherwise had, but shall not relieve such party
from any liability it may have hereunder. For purposes of this Section 30.3,
receipt by a party of notice of any demand, assertion, claim, action or
proceeding (judicial, administrative or otherwise) by or from any person or
entity (other than the other party to this Agreement) or





                                      -57-
<PAGE>   63
governmental authority ("Third Party Action") which may give rise to a Claim on
behalf of such party shall constitute the discovery of facts giving rise to a
Claim by it and shall require prompt notice of the receipt of such matter as
provided in the first sentence of this Section 30.3.  Any notice pursuant to
this Section 30.3 shall set forth all information respecting the Claim and the
Third Party Action, if any, as such party shall then have and shall contain a
statement to the effect that the party giving the notice is making a Claim
pursuant to and formal demand for indemnification under this Article 30.

         30.4   For purposes of this Article 30, the term "Indemnifying Party,"
as to a particular Claim or Third Party Action shall mean the party having or
which is held to have an obligation to indemnify the other party with respect
to such Claim or Third Party Action pursuant to this Article 30 and the term
"Indemnified Party" as to a particular Claim or Third Party Action shall mean
the party having or which is held to have the right to be indemnified with
respect to such Claim or Third Party Action by the other party pursuant to this
Article 30.

         30.5   Except as otherwise expressly provided herein, Indemnifying
Party shall be entitled at its cost and expense to contest and defend by all
appropriate legal proceedings any Third Party Action with respect to which it
is called upon to indemnify Indemnified Party under the provisions of this
Agreement; provided, however, that with respect to any Claim arising from the
assertion of any Third Party Action, notice of the intention so to contest
shall be delivered by Indemnifying Party to Indemnified Party within twenty
(20) days from the date of mailing by Indemnified Party of notice to
Indemnifying Party of the assertion of the Third Party Action.  Any such
contest with respect to a Third Party Action may be conducted in the name and
on behalf of Indemnifying Party or the Indemnified Party as may be appropriate.
Except as otherwise expressly provided herein, such contest shall be conducted
by attorneys employed by Indemnifying Party, but Indemnified Party





                                      -58-
<PAGE>   64
shall have the right to participate in such proceedings and to be represented
by attorneys of its own choosing at its cost and expense.  If Indemnified Party
joins in any such contest, Indemnified Party shall have full authority to
determine all action to be taken with respect thereto.  If after notice as
provided for herein, Indemnifying Party does not elect to contest any Third
Party Action as provided in this Section 30.5, Indemnifying Party shall be
bound by the result obtained with respect thereto by Indemnified Party and the
Indemnified Party may (but shall have no obligation to) contest any such Third
Party Action or settle or admit liability with respect thereto, all for the
account of the Indemnifying Party. At any time after the commencement of
defense of any such Third Party Action, Indemnifying Party may request
Indemnified Party to agree in writing to the abandonment of such contest or the
payment or compromise by Indemnifying Party of the asserted Third Party Action
whereupon such action shall be taken unless Indemnified Party so determines
that the contest should be continued, and so notifies Indemnifying Party in
writing within fifteen (15) days of such request from Indemnifying Party. In
the event that Indemnified Party determines that the contest should be
continued, Indemnifying Party shall be liable with respect to such Third Party
Action only to the extent of the lesser of (i) the amount which the third party
taking the Third Party Action had agreed to accept in payment or compromise as
of the time Indemnifying Party made its request therefor to Indemnified Party,
or (ii) such amount for which Indemnifying Party may be liable with respect to
such Claim by reason of the provisions hereof.

         30.6   If requested by Indemnifying Party, Indemnified Party agrees to
cooperate with Indemnifying Party and its counsel in contesting any Third Party
Action which Indemnifying Party elects to contest or, if appropriate, in making
any counterclaim against the third party taking the Third Party Action, or any
cross complaint against any other person or entity not a party hereto, but





                                      -59-
<PAGE>   65
Indemnifying Party will reimburse Indemnified Party for any expenses incurred
by it in so cooperating.

         30.7   Indemnified Party agrees to afford Indemnifying Party and its
counsel the opportunity to be present at, and to participate in, conferences
with all persons or entities, including governmental authorities, taking Third
Party Action against Indemnified Party or conference with representatives of or
counsel for such persons or entities.

         30.8   Indemnifying Party shall pay to Indemnified Party, upon demand,
the amount of any Damages to which Indemnified Party may become entitled by
reason of the provisions of this Article 30.

                                   ARTICLE 31

                       ADDITIONAL RIGHTS AND LIABILITIES

         31.1   Nothing contained in this Agreement shall require BP to
reimburse the Company for any costs or expenses or to provide financial
assurances if such costs or expenses are incurred or such financial assurances
are required for reasons attributable to a Company Event of Default.

                                   ARTICLE 32

                                 FORCE MAJEURE

         32.1   In the event of either party being rendered unable, wholly or
in part, by force majeure to carry out its obligations under this Agreement
(other than any obligation to make payment of any amount when due and payable
hereunder), it is agreed that on such party giving notice and reasonably full
particulars of such force majeure in writing or by telegraph to the other party
within a reasonable time after the occurrence of the cause relied on, then the
obligations of the party giving





                                      -60-
<PAGE>   66
such notice, so far as they are affected by such force majeure, shall be
suspended during the continuance of any inability so caused, but for no longer
period, and such cause shall so far as possible be remedied with all reasonable
dispatch.

         32.2   The term "force majeure," as employed herein, shall mean acts
of God, strikes, lockouts or other industrial disturbances, acts of the public
enemy, wars, blockades, embargoes, insurrections, riots, epidemics, landslides,
lightning, earthquakes, fires, storms, floods, high water, washouts, arrests
and restraints of government and people, civil disturbances, explosions,
breakage or accident to machinery, equipment, lines of pipe or property,
freezing of wells, machines, equipment, lines of pipe, or property, partial or
entire failure of any machine, equipment, lines of pipe or other property, the
occurrence of any Spill or Release Requiring Response Action and any
regulatory, civil or criminal action with respect thereto and any other causes,
whether of the kind herein enumerated or otherwise, not reasonably within the
control of the party claiming suspension; such term shall likewise include (i),
in those instances where any party hereto is required to obtain servitudes,
rights-of-way grants, permits or licenses (including permits relating to any
Spill or Release Requiring Response Action) to enable such party to fulfil its
obligations hereunder, the inability of such party to acquire, or delays on the
part of such party in acquiring, at reasonable cost and after the exercise of
reasonable diligence, such servitudes, rights-of-way grants, permits or
licenses, (ii), in those instances where any party hereto is required to
furnish materials and supplies or is required to secure permits or permissions
from any governmental agency to enable such party to fulfill its obligations
hereunder, the inability of such party to acquire, or delays on the party of
such party in acquiring, at reasonable cost and after the exercise of
reasonable diligence, such materials and supplies, permits and permissions; and
(iii) the failure of Praxair to deliver to the Company carbon monoxide, blend
gas and hydrogen at the times and in the quantities required by





                                      -61-
<PAGE>   67
the Praxair Product Supply Agreement; provided the Company uses reasonable
diligence to resolve such failure to deliver pursuant to the Praxair Product
Supply Agreement.

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

         32.4   Notwithstanding the provisions of Section 32.2 hereof, the
failure by either party to perform any of its obligations under this Agreement
shall be deemed not to have been caused by circumstances reasonably outside its
control if such failure results from breakage or accident to machinery,
equipment, lines of pipe or other property or the partial or entire failure
thereof or the necessity to make repairs or alterations thereto which result
from normal wear and tear which could be reasonably anticipated by a reasonably
prudent operator or in circumstances where a reasonably prudent operator would
have standby equipment or spare parts.

                                   ARTICLE 33

                                  ASSIGNMENTS

         33.1   Except in a transaction pursuant to which all or substantially
all of the assets of the Plant are sold or exchanged or the Company merges or
consolidates with or into another corporation, and in which the purchaser of
the assets or the other party to the merger or consolidation is not a
competitor of BP, the Company may not assign its rights hereunder except as
collateral to any third party providing financing to the Company or sell,
assign or transfer the Unit to any person without





                                      -62-
<PAGE>   68
the prior written consent of BP.  A public offering of securities by the
Company shall not be deemed an assignment hereunder.

         33.2   BP may assign its rights or delegate its duties and obligations
hereunder to any person without the consent of the Company provided that:

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

                 (b)      Within ten (10) days after a request by the Company,
         BP executes a written guarantee of such assignee's timely performance
         of BP's obligations hereunder, containing the provisions usually and
         customarily contained in guarantees of financial performance in the
         United States.

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

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





                                      -63-
<PAGE>   69
                                   ARTICLE 34

                                    GENERAL

         34.1   Noncompetition Agreement. The Company covenants and agrees with
BP that, during the First and Second Additional Terms and so long as no BP
Event of Default has occurred and is continuing, the Company will not produce
or sell acetic acid other than pursuant to this Agreement without BP's consent,
which will not be unreasonably withheld; provided, that (i) the disposition of
waste acid pursuant to mutually agreed procedures, and (ii) the transfer of
acetic acid to the acrylonitrile production unit located at the Plant for the
Company's internal use shall be permitted and shall not constitute violations
of this Agreement.

         34.2   Taxes.

                 (a)      Upon receipt of invoice therefor, BP shall remit to
         the Company all Company Taxes.

                 (b)      The parties recognize that, during the term of this
         Agreement, major changes may occur in the system of federal, state and
         local taxation at the location of the Unit, which may materially alter
         the existing federal, state and local property, energy, franchise,
         income and sales tax systems presently in effect.  In the event of
         such alteration, the parties agree to equitably adjust all formulas in
         this Agreement to reflect such changes.

                 (c)      BP shall be responsible for and pay any state or
         local property tax attributable to the Acetic Acid and Unit Product
         produced hereunder and to the Methanol provided by BP hereunder, which
         taxes shall be considered part of BP Cost of Sales.

         34.3   Notices.  Except as otherwise specifically provided, any notice
provided for by this Agreement and any other notice, demand or communication
which any party may wish to send to another shall be in writing and either
delivered in person or sent by registered or certified United





                                      -64-
<PAGE>   70
States mail, first-class postage prepaid, return receipt requested, in a
properly sealed envelope, and addressed to the party for which such notice,
demand or communication is intended at such party's address as set forth below:

                 (a)      Company:      Sterling Chemicals, Inc.
                                        1200 Smith Street
                                        Houston, Texas 77002
                                        Attention: General Manager, Acetic Acid

                          Copy To:      Sterling Chemicals, Inc.
                                        1200 Smith Street
                                        Houston, Texas 77002
                                        Attention: General Counsel

                 (b)      BP:           BP Chemicals Inc.
                                        4440 Warrensville Center Road
                                        Warrensville Heights, Ohio 44128-2837
                                        Attention: Vice President, Acetyls



                          Copy To:      BP Chemicals Inc.
                                        1 Second Avenue South
                                        Texas City, Texas 77590
                                        Attention: Product Manager, Acetyls
                                             and

                          Copy To:      BP America Inc.
                                        200 Public Square
                                        Cleveland, Ohio 44114-2373
                                        Attention: Mr. R.G. Raymond
                                                   Corporate Counsel

         Any address or name specified above may be changed by a notice given
by the addressee to the other parties in accordance with this Section 34.3. Any
notice, demand or other communication shall be deemed given and effective as of
the date of delivery in person or upon receipt as set forth on the return
receipt.  The inability to deliver because of changed address of which no
notice was given, or the rejection or other refusal to accept any notice,
demand or communication, shall be





                                      -65-
<PAGE>   71
deemed to be the receipt of the notice, demand or communication as of the date
of such inability to delivery or the rejection or refusal to accept.

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

         34.5   Heading.  The headings and titles to the Articles of this
Agreement are inserted for convenience only and shall not be deemed a part
hereof or affect the construction or interpretation of any provision hereof.

         34.6   Modifications and Waivers.  No intermination, cancellation,
modification, amendment, deletion, addition or other change in this Agreement
or any provision hereof, or waiver of any right or remedy herein provided,
shall be effective for any purpose unless specifically set forth in writing
signed by the party or parties to be bound thereby.  The waiver of any right or
remedy in respect of any occurrence or event on the occasion shall not be
deemed a waiver of such right or remedy in respect of such occurrence or event
on any other occasion.

         34.7   Entire Agreement.  This Agreement, including the other
instruments herein provided for or referred to, and that certain letter dated
as of the date of execution of this Agreement between BP and the Company
regarding the purchase of inventory supersede all other agreements, oral or
written, heretofore made with respect to the subject matter hereof and the
transactions contemplated hereby, and contain the entire agreement of the
parties.

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





                                      -66-
<PAGE>   72
purpose of this Agreement can be effected. To the full extent, however, that
the provisions of such applicable law may be waived, they are hereby waived, to
the end that this Agreement is deemed to be a valid and binding agreement
enforceable in accordance with its terms.

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

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

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

         34.12   No Partnership or Agency.  This Agreement shall not be
construed to create a partnership, joint venture, association or other entity
or business organization or to create a principal-agent relationship between
the Company and BP.

         34.13   No Transfer of Title.  BP expressly does not by the terms of
this Agreement sell, transfer or assign to the Company any title or interest in
the Unit.  The Company expressly does not by the terms of this Agreement sell,
transfer or assign to BP any title or interest in the Unit or any of the
Company's other assets or properties other than Acetic Acid when and as
provided herein.

         34.14   Wire Transfer, Etc.  All sums and amounts payable or to be
payable pursuant to this Agreement shall be payable in immediately available
funds and in coin or currency of the United States of America that, at the time
of payment, is legal tender for the payment of public and private debts in the
United States of America and shall be made by wire transfer of immediately
available funds to such bank and/or account in the continental United States
for the account of the payee as from time to time the payee shall have directed
to the payor in writing, or, if no such direction shall





                                      -67-
<PAGE>   73
have been given, by check to the payee in the manner and at the address set
forth above.  Whenever in this Agreement BP is required to pay or reimburse the
Company upon receipt of invoice or otherwise when no due date for payment is
specifically provided, payment shall be due ten (10) Business Days after
receipt of invoice or other statement, and shall be made in the manner set
forth above.

         34.15   No Known Disputes.  As of the date of this Amended and
Restated Production Agreement, the Company and BP agree, acknowledge and
confirm (i) that there are no known disputes pending between them arising out
of or relating to this Agreement which are unresolved and (ii) that the
Agreement, as amended and restated hereby, remains in full force and effect on
and as of the date hereof.

         IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written, but effective as of the Effective Date.

                                  BP CHEMICALS INC.,
                                  an Ohio corporation



                                  By: /s/ G.C. Greve                          
                                     -----------------------------------------
                                      G. C. Greve
                                      President

                                  Endorsed
                                      By: /s/ G.R. Hunt                       
                                         -------------------------------------
                                         G. R. Hunt
                                         Business General Manager, Acetyls
                                         BP Chemicals Ltd.

                                      STERLING CHEMICALS, INC.,
                                      a Delaware corporation


                                      By: /s/ Robert W. Roten                 
                                         -------------------------------------
                                          Robert W. Roten
                                          President





                                      -68-
<PAGE>   74
                                   EXHIBIT A

                                BP Cost of Sales

Cost of Sales shall include, but not be limited to, the following items of
direct expenditure:

SALARIES, ASSOCIATED DIRECT EMPLOYMENT AND TRAVEL AND ENTERTAINMENT COSTS

For each of the following positions, the actual percentage of direct man-years
dedicated to the Texas City acetic acid operations shall be estimated on an
annual basis.  (The 1994 man-year allocations are shown in parenthesis.)
Salaries associated to direct employment costs (excluding incentive schemes)
and travel and entertainment for each individual shall be included based on
these percentages.

<TABLE>
<CAPTION>
Position                                               Location
--------                                               --------
<S>                                                <C>
 ***                                               Warrensville, OH
                        

 ***                                               Warrensville, OH

 ***                                               Texas City, TX

 ***                    
                             
                                                   Texas City, TX
                                                        Local
                                                        Local

 ***                                               Warrensville, OH
                              
</TABLE>

OFFICE ACCOMMODATION, EQUIPMENT, AND DIRECT BUSINESS SUPPORT COSTS

Business Support costs shall be allocated to Cost of Sales, based on the ratio
of direct man-years (from the list above) to the total comparable man-years
(i.e. V.P., Business and Product Managers, Sales Managers, Sales Representatives
and Customer Service personnel) included in the Acetyls, Solvents and
Petrochemicals Department. (For 1994, *** )  The percentage thus determined
shall be applied to the total actual Acetyls, Solvents and Petrochemicals
Department cost for business support areas, including, but not limited to, those
listed below:





                                      -1-
<PAGE>   75
                                      ***

DIRECT EXPORTING COSTS

Agents' Commissions (e.g. Marubeni, Japan 3%)
Commissions (Internal BP) on sales to South/Central America
Duties, Taxes as applicable
Direct Costs of Independent Surveyors


The above costs to be advised on a provisional quarterly basis, together with
any identified additional costs.  Formal costs to be advised on an annual basis
for profit sharing calculations.





                                      -2-
<PAGE>   76
                                   EXHIBIT B

                                  FIXED COSTS



                                      ***




                                      -1-
<PAGE>   77
                                   EXHIBIT C

                             Methanol Specification


                                      ***


                                      -1-
<PAGE>   78
                                   EXHIBIT D

                           Acetic Acid Specifications


                                      ***


                                      -1-
<PAGE>   79
                                   EXHIBIT E

                   Legal Description of the Land of the Unit





                                      -1-
<PAGE>   80
                                    TRACT 1

                                ACETIC ACID SITE
                          METES AND BOUNDS DESCRIPTION
                    77,729 S.F. OUT OF A 237.0539 ACRE TRACT
                            NORMAN HURD SURVEY, A-77
                          SYLVESTER BOWEN SURVEY, A-24
                            JOHN GRANT SURVEY, A-72
                             JAMES B. WELLS SURVEY
                      TEXAS CITY, GALVESTON COUNTY, TEXAS

All that certain 77,729 square feet of land out of a 237.0539 acre tract out of
the Norman Hurd Survey, A-77, Sylvester Bowen Survey, A-24, John Grant Survey,
A-72, James B. Wells Survey, Texas City, Galveston County, Texas and being more
particularly described by metes and bounds as follows:

Commencing at a set 5/8" iron rod located in the south right-of-way line of 4th
Avenue South (70' wide) at its intersection with the east right-of-way line of
6th Street (100' wide);  Thence S. 00 degrees 23' 20" E - 949.19'; Thence N
89 degrees 36' 40" E - 1,069.61' to the POINT OF BEGINNING of the herein
described parcel;

THENCE  N    0 degrees  23'   20"  W   -   439.50'  to a point;

THENCE  N   89 degrees  36'   40"  E   -   284.60'  to a point;

THENCE  S    0 degrees  23'   20"  E   -   141.50'  to a point;

THENCE  S   89 degrees  36'   40"  W   -   198.90'  to a point;
               
THENCE  S    0 degrees  23'   20"  E   -   298.00'  to a point;

THENCE  S   89 degrees  36'   40"  W   -   125.70'  to the POINT OF BEGINNING 
and containing 77,729 square feet.

Compiled By:
Prejean & Company Inc.,
Surveying and Mapping

July 30, 1986





                                     Page 1
<PAGE>   81
                                    TRACT 2

                                  SYNGAS UNIT
                          METES AND BOUNDS DESCRIPTION
                    96,295 S.F. OUT OF A 237.0539 ACRE TRACT
                      OUT OF THE NORMAN HURD SURVEY, A-77
                          SYLVESTER BOWEN SURVEY, A-24
                            JOHN GRANT SURVEY, A-72
                             JAMES B. WELLS SURVEY
                      TEXAS CITY, GALVESTON COUNTY, TEXAS

All that certain 96,295 square feet of land out of a 237.0539 acre tract out of
the Norman Hurd Survey, A-77, Sylvester Bowen Survey, A-24, John Grant Survey,
A-72, James B. Wells Survey, Texas City, Galveston County, Texas and being more
particularly described by metes and bounds as follows:

Commencing at a set 5/8" iron rod located in the south right-of-way line of 4th
Avenue South (70' wide) at its intersection with the east right-of-way line of
6th Street (100' wide);  Thence S. 00 degrees 23' 20" E - 112.22'; Thence N
89 degrees 36' 40" E - 1,523.94' to the POINT OF BEGINNING of the herein
described parcel;

THENCE  S   89 degrees  13'   04"  E   -   228.21'  to a point for corner;

THENCE  S   01 degrees  28'   23"  E   -   252.06'  to a point for corner;

THENCE  S   88 degrees  44'   19"  E   -   112.24'  to a point for corner;

THENCE  S   02 degrees  12'   19"  W   -   113.22'  to a point for corner;

THENCE  S   88 degrees  26'   45"  W   -   197.05'  to a point for corner;

THENCE  N   01 degrees  56'   59"  E   -    19.03'  to a point for corner;

THENCE  S   89 degrees  19'   25"  W   -   142.19'  to a point for corner;

THENCE  N   00 degrees  38'   23"  W   -   358.61'  to the POINT OF BEGINNING 
and containing 96,295 square feet (2.2106 acres) of land, more or less.

Compiled By:

PREJEAN & COMPANY, INC.
Surveying/mapping

July 30, 1986





                                     Page 2
<PAGE>   82
                                    TRACT 3

                             FLARE FOR SYNGAS UNIT
                          METES AND BOUNDS DESCRIPTION
                     796 S.F. OUT OF A 237.0539 ACRE TRACT
                      OUT OF THE NORMAN HURD SURVEY, A-77
                          SYLVESTER BOWEN SURVEY, A-24
                            JOHN GRANT SURVEY, A-72
                             JAMES B. WELLS SURVEY
                      TEXAS CITY, GALVESTON COUNTY, TEXAS

All that certain 796 square feet of land out of a 237.0539 acre tract out of
the Norman Hurd Survey, A-77, Sylvester Bowen Survey, A-24, John Grant Survey,
A-72, James B. Wells Survey, Texas City, Galveston County, Texas and being more
particularly described by metes and bounds as follows:

Commencing at a set 5/8" iron rod located in the south right-of-way line of 4th
Avenue South (70' wide) at its intersection with the east right-of-way line of
6th Street (100' wide);  Thence S. 00 degrees 23' 20" E - 467.50'; Thence N
89 degrees 36' 40" E - 1,461.50' to the POINT OF BEGINNING of the herein
described parcel;

THENCE  N   00 degrees  23'   20"  W   -    32.50'  to a point for corner;

THENCE  N   89 degrees  36'   40"  E   -    24.50'  to a point for corner;

THENCE  S   00 degrees  23'   20"  E   -    32.50'  to a point for corner;

THENCE  S   89 degrees  36'   40"  W   -    24.50'  to the POINT OF BEGINNING
and containing 796 square feet of land, more or less.

Compiled By:

PREJEAN & COMPANY, INC.
Surveying/mapping

July 30, 1986





                                     Page 3
<PAGE>   83
                                    TRACT 4

                                 DAY TANKS SITE
                          METES AND BOUNDS DESCRIPTION
                    4,773 S.F. OUT OF A 237.0539 ACRE TRACT
                      OUT OF THE NORMAN HURD SURVEY, A-77
                          SYLVESTER BOWEN SURVEY, A-24
                            JOHN GRANT SURVEY, A-72
                             JAMES B. WELLS SURVEY
                      TEXAS CITY, GALVESTON COUNTY, TEXAS

All that certain 4,773 square feet of land out of a 237.0539 acre tract out of
the Norman Hurd Survey, A-77, Sylvester Bowen Survey, A-24, John Grant Survey,
A-72, James B. Wells Survey, Texas City, Galveston County, Texas and being more
particularly described by metes and bounds as follows:

Commencing at a set 5/8" iron rod located in the south right-of-way line of 4th
Avenue South (70' wide) at its intersection with the east right-of-way line of
6th Street (100' wide);  Thence S. 00 degrees 23' 20" E - 470.50'; Thence N
89 degrees 36' 40" E - 1,218.30' to the POINT OF BEGINNING of the herein
described parcel;

THENCE  N   00 degrees  23'   20"  W   -    64.50'  to a point for corner;

THENCE  N   89 degrees  36'   40"  E   -    74.00'  to a point for corner;

THENCE  S   00 degrees  23'   20"  E   -    64.50'  to a point for corner;

THENCE  S   89 degrees  36'   40"  W   -    74.00'  to the POINT OF BEGINNING
and containing 4,773 square feet of land, more or less.

Compiled By:

PREJEAN & COMPANY, INC.
Surveying/mapping

July 30, 1986





                                     Page 4
<PAGE>   84
                                    TRACT 5

                             ACETIC ACID TANK SITE
                          METES AND BOUNDS DESCRIPTION
                        56,220 SQUARE FEET GROUND LEASE
                            JOHN GRANT SURVEY, A-72
                          SYLVESTER BOWEN SURVEY, A-24
                      TEXAS CITY, GALVESTON COUNTY, TEXAS

All that certain 56,220 square feet for ground lease out of the John Grant
Survey, A-72 and the Sylvester Bowen Survey, A-24 in Texas City, Galveston
County, Texas and being more particularly described by metes and bounds as
follows:

Commencing at a set 5/8" iron rod marking the southeast corner of that certain
22.71 acres of land described in a deed dated 8-19-1969 from Texas City
Terminal Railway Company to Monsanto Company filed at Volume 2051, Page 654
Galveston County Deed Records, thence N 00' 51' 00" W - 389.07', along the east
line of said 22.71 acre tract being westerly of, parallel with and 50'
perpendicular distance from the centerline of said flood wall, to a set 5/8"
iron rod for the southerly southeast corner of said 22.71 acre tract, thence N
20 degrees 52 degrees 05" W - 209.65', continuing along the east line of said
22.71 acre tract, to a set 5/8" iron rod for angle point, thence N 89 degrees
46' 57" E - 80.15', along an interior south line of said 22.71 acre tract, to a
set 5/8" iron rod for corner, thence N 20 degrees 52' 05" W - 82.13', along the
east line of said flood wall, to a set 5/8" iron rod for corner, thence N
00 degrees 50' 20" E - 204.69', along the east line of said 22.71 acre tract
being easterly of, parallel with and 25' perpendicular distance from the
centerline of said flood wall, to a point for corner, thence N 89 degrees 09'
40" W - 86.82', to the POINT OF BEGINNING of the herein described tract:

THENCE N 01 degrees 17' 29" E - 143.99', to a point for corner;

THENCE S 75 degrees 20' 45" W - 306.41', to a point for corner;

THENCE S 00 degrees 36' 19" E - 242.45', to a point for corner;

THENCE N 89 degrees 33' 49" E - 137.79', to a point for corner;

THENCE N 16 degrees 37' 18" W - 126.42', to a point for corner;

THENCE N 74 degrees 06' 25" E - 196.52', to the POINT OF BEGINNING and
containing 56.220 square feet for ground lease more or less.

Compiled By:
Prejean and Company, Inc.
Surveying and Mapping
July 30, 1986





                                     Page 5
<PAGE>   85
                                    TRACT 6

                               METHANOL TANK SITE
                          METES AND BOUNDS DESCRIPTION
                     72,362 S.F. OUT OF 237.0639 ACRE TRACT
                      OUT OF THE NORMAN HURD SURVEY, A-77
                          SYLVESTER BOWEN SURVEY, A-24
                            JOHN GRANT SURVEY, A-72
                             JAMES B. WELLS SURVEY
                      TEXAS CITY, GALVESTON COUNTY, TEXAS

All that certain 72.362 square feet of land out of a 237.0539 acre tract out of
the Norman Hurd Survey, A-77, Sylvester Bowen Survey, A-24, John Grant Survey,
A-72 and James B. Wells Survey, Texas City, Galveston County, Texas and being
more particularly described by metes and bounds as follows:

Commencing at a set 5/8" iron rod located in the south right-of-way line of 4th
Avenue South (70' wide) at its intersection with the east right-of-way line of
6th Street (100' wide); Thence S 00 degrees 23' 20" E - 438.00'; Thence N
89 degrees 36' 40" E - 30.00' to the POINT OF BEGINNING of the herein described
parcel;

THENCE N 00 degrees 23' 20" W - 373.00' to a point for corner;

THENCE N 89 degrees 36' 40" E - 194.00' to a point for corner;

THENCE S 00 degrees 23' 20" E - 373.00' to a point for corner;

THENCE S 89 degrees 36' 40" W - 194.00' to the POINT OF BEGINNING and containing
72.362 square feet of land, more or less.

Compiled By:

PREJEAN & COMPANY, INC.
Surveying/mapping

July 30, 1986





                                     Page 6
<PAGE>   86
                                    TRACT 7

                              CARBON DIOXIDE SITE
                          METES AND BOUNDS DESCRIPTION
                     10,360 S.F. OUT OF 237.0639 ACRE TRACT
                       OUT OF HE NORMAN HURD SURVEY, A-77
                          SYLVESTER BOWEN SURVEY, A-24
                            JOHN GRANT SURVEY, A-72
                             JAMES B. WELLS SURVEY
                      TEXAS CITY, GALVESTON COUNTY, TEXAS

All that certain 10,360 square feet of land out of a 237.0539 acre tract out of
the Norman Hurd Survey, A-77, Sylvester Bowen Survey, A-24, John Grant Survey,
A-72 and James B. Wells Survey, Texas City, Galveston County, Texas and being
more particularly described by metes and bounds as follows:

Commencing at a set 5/8" iron rod located in the south right-of-way line of 4th
Avenue South (70' wide) at its intersection with the east right-of-way line of
6th Street (100' wide); Thence N 89 degrees 36' 40" E - 1,882.50'; Thence N
00 degrees 23' 20" W - 261.00' to the POINT OF BEGINNING of the herein described
parcel;

THENCE N 00 degrees 23' 20" W - 285.00' to a point for corner;

THENCE N 89 degrees 36' 40" E - 27.00' to a point for corner;

THENCE S 00 degrees 23' 20" E - 220.00' to a point for corner;

THENCE N 89 degrees 36' 40" E - 41.00' to a point for corner;

THENCE S 00 degrees 23' 20" E - 65.00' to a point for corner;

THENCE S 89 degrees 36' 40" W - 68.00' to the POINT OF BEGINNING and containing
10.360 square feet of land, more or less.

Compiled By:

PREJEAN & COMPANY, INC.
Surveying/mapping

July 30, 1986





                                     Page 7
<PAGE>   87
                                   EXHIBIT F

                           VARIABLE COSTS-ACETIC ACID

                                      ***


                                     Page 1
<PAGE>   88
                                   EXHIBIT G

                                   Insurance





                                      ***





                                     Page 1
<PAGE>   89


                                   EXHIBIT H


                     SAMPLE PROFIT CALCULATIONS AFTER 2006





                                    Page 1
<PAGE>   90
                EXAMPLE POST-2006 PROFIT CALCULATION AND PAYMENT

                                      ***
<PAGE>   91

                                   EXHIBIT I

                                BLEND GAS CREDIT

                                      ***



                                     -1-