<PAGE>   1
                                                                    EXHIBIT 10.4

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

RGR                                                        EXECUTION COPY
3/16/98


                            JOINT VENTURE AGREEMENT

                                    BETWEEN

                            STERLING CHEMICALS, INC.

                                      AND

                               BP CHEMICALS INC.


         THIS JOINT VENTURE AGREEMENT executed this 31st day of March, 1998,
and effective as of the Effective Date, is made by and between STERLING
CHEMICALS, INC., a corporation headquartered in Houston, Texas and duly
organized and existing under the laws of the state of Delaware, United States
of America (hereinafter referred to as "Sterling"), and BP CHEMICALS INC., a
corporation headquartered in Cleveland, Ohio and duly organized and existing
under the laws of the state of Ohio, United States of America (hereinafter
referred to as  "BP").  RECITALS:





                                      -1-
<PAGE>   2
                                                                    EXHIBIT 10.4

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

RGR                                                       EXECUTION COPY
3/16/98


         WHEREAS, Sterling and BP desire to enter into a marketing joint
venture as hereinafter described for the sale and distribution of acrylonitrile
in and to the Joint Venture Territory (as hereinafter defined); and

         WHEREAS, Sterling and BP desire to enter into this Agreement to
establish their respective interests, rights and obligations in connection with
such joint venture;

         NOW, THEREFORE, Sterling and BP, intending to be legally bound hereby,
do mutually covenant and agree as follows:

                            Article 1.  Definitions

         1.      Definitions.     For purposes of this Agreement, the following
terms shall have the meanings set forth below:

         1.1     "Acrylonitrile" shall mean acrylonitrile  meeting the
Specifications.





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<PAGE>   3

         1.2     "Agreement" shall mean this Joint Venture Agreement, including
all Exhibits attached hereto which are incorporated herein, as the same may be
modified or amended by the Parties in accordance with the provisions hereof.

         1.3     "BP Floor" as defined in Section 5.1 hereof.

         1.4     "BRV" as defined in Section 5.1 hereof.

         1.5     "BRV Ratio" as defined in Article 4 hereof.

         1.6     "Certificate of Formation" as defined in Section 2.2 hereof.

         1.7     "Company" shall mean the Delaware limited liability company
established by the Parties pursuant to the provisions of Section 2.2 hereof for
the purpose of carrying out the Joint Venture.

         1.8     "Confidential Information" as defined in Section 12.1 hereof.

         1.9     "Default" as defined in Section 10.1 hereof;

         1.10    "Delivery Differences" as defined in Section 3.5 hereof.

         1.11    "Effective Date" shall mean March 31,1998.

         1.12    "Excess Volume" as defined in Section 5.3 hereof.

         1.13    "Existing Contracts" as defined in Section 3.4 hereof.

         1.14    "Final Price" as defined in Section 3.6 hereof.

         1.15    "Fixed Costs" as defined in Section 3.6 hereof.

         1.16    "Force Majeure" as defined in Section 11.2 hereof.

         1.17    "Joint Venture" shall mean the Acrylonitrile joint venture
arrangement between the Parties established pursuant to the provisions of this
Agreement.

         1.18    "Joint Venture Territory" shall mean ***.





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<PAGE>   4
         1.19    "LLC Agreement" as defined in Section 2.2.1 hereof.

         1.20    "Marketing Plan" as defined in Section 3.1 hereof.

         1.21    "Operating Costs" as defined in Section 3.6 hereof.

         1.22    "Parties" or "Party" shall mean, respectively, Sterling and
BP, or either of them, and shall include their respective successors in
interest.

         1.23    "Production Agreement" as defined in Section 5.1 hereof.

         1.24    "Provisional Price" as defined in Section 3.6 hereof.

         1.25    "Purchase Contracts" as defined in Section 3.4 hereof.

         1.26    "Revenue-Streamed Volume" as defined in Section 3.4.3 hereof.

         1.27    "Sales Contracts" as defined in Section 3.4 hereof.

         1.28    "Specifications" shall mean the acrylonitrile specifications
set forth in attached Exhibit B.

         1.29    "Sterling Floor" as defined in Section 5.1 hereof.

         1.30    "Support Services" as defined in Article 4 hereof.

         1.31    "Support Services Agreement" as defined in Article 4 hereof.

         1.32    "Terminal Contracts" as defined in Section 3.4 hereof.

         1.33    "Texas City Plant" as defined in Section 5.4 hereof.

                       Article 2.  Purpose and Structure

         2.1     Joint Venture Purpose.  Subject to and under the terms and
conditions set forth in this Agreement, the Parties hereby establish the Joint
Venture, with effect as of the Effective Date, to sell and distribute
Acrylonitrile in and to the Joint Venture Territory pursuant to the provisions
of this Agreement.





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<PAGE>   5
         2.2     Joint Venture Structure.  Promptly after the Effective Date,
and subject to the Parties obtaining any necessary government approvals, the
Parties shall establish, pursuant to the provisions of the Certificate of
Formation set forth in attached Exhibit C-1 ("Certificate of Formation"), a
limited liability company under the laws of the State of Delaware to carry out
the Joint Venture ("Company").

                 2.2.1    Sterling and BP shall become the sole members of the
                 Company, *** pursuant to the provisions of the limited
                 liability company agreement set forth in attached Exhibit C-2
                 ("LLC Agreement").  Voting rights, capital contributions,
                 earnings distribution and allocation of Company costs shall be
                 as set forth in the LLC Agreement.

                 2.2.2    The business purposes of the Company shall be as set
                 forth in the Certificate of Formation and the LLC Agreement
                 and shall not be changed nor shall the business of the Company
                 be extended, unless the members of the Company agree to do so
                 pursuant to duly approved amendments to the Certificate of
                 Formation and the LLC Agreement.

                 2.2.3    Although the structure of the Company shall initially
                 be a limited liability company, the Parties recognize that in
                 time there may be advantages in adopting additional or
                 alternative company structures under the laws of the State of
                 Delaware or such other jurisdiction as the Parties mutually
                 agree to in writing.  Accordingly, the Parties shall undertake
                 a review of the Company structure from time to time for





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<PAGE>   6
                 the purpose of considering the desirability and advantages of
                 any alternative structures as may be then available and
                 determining whether, and if so what, changes in the Company
                 structure may be appropriate.

         2.3     Company Name.  The name of the Company shall be "ANEXCO, LLC"
or such other name as the members of the Company and the appropriate
governmental authorities may approve.

         2.4     Transfer of Company Interests.  Neither Party at any time
during the term of this Agreement shall sell or otherwise transfer its limited
liability company interests in the Company except in accordance with the
provisions of the LLC Agreement.

                     Article 3 - Marketing Responsibilities

         3.1     Marketing Plan.  The Company shall develop and define for
review and approval at least annually by the Board and, as so approved, shall
implement a comprehensive business plan and strategy for the sale and
distribution of Acrylonitrile in the Joint Venture Territory, consistent with
the provisions of the Certificate of Formation, the LLC Agreement and this
Agreement ("Marketing Plan").  The Board shall revise the Marketing Plan as
needed to achieve the overall business results desired by the Company.  The
Marketing Plan shall allow the Company to enter into advantageous exchange
agreements within the Joint Venture Territory.

         3.2     ***

         3.3     Purchase and Resale.  The Company, as a separate and
independent contracting Party, shall purchase Acrylonitrile from the Parties
(or their foreign sales companies or other corporate affiliates), take title
thereto and resell the Acrylonitrile to the Company's customers in the Joint





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<PAGE>   7
Venture Territory on its own behalf and for its own account, all subject to the
provisions of the Marketing Plan.

         3.4     Existing Contracts.  The Parties shall, as of the Effective
Date, assign to the Company all acrylonitrile sales and sales agency contracts
("Sales Contracts") and all storage and terminal contracts with third parties
("Terminal Contracts" and together with the Sales Contracts, collectively
referred to as the "Existing Contracts") that they have as of the Effective
Date to the extent that they relate to the sale of Acrylonitrile to or the
handling and storage of Acrylonitrile in the Joint Venture Territory ***.  No
existing third-party contract under which either Party is obligated to purchase
acrylonitrile ("Purchase Contracts") shall be assigned to the Company, but the
volume of Acrylonitrile which each of the Parties is required to purchase under
such Purchase Contracts shall be used in determining each Party's BRV as
provided in Article 5 hereof.

                 3.4.1    ***.

                 3.4.2    ***.

                 3.4.3    The Parties shall ***.

         3.5     Deliveries.  All shipments of Acrylonitrile to the Company
shall be made FOB the U.S. Gulf Coast deep water port for Acrylonitrile
produced, purchased or otherwise obtained in the U.S., and as the Company and
the shipping Party shall agree for foreign-sourced Acrylonitrile.  Unless the
Company and the Parties otherwise agree, title to and risk of loss of
Acrylonitrile sold by each Party hereunder shall pass at the point and time set
forth in the relevant contract between





                                      -7-
<PAGE>   8
the Company and its customer for the transfer of title and risk of loss.  In
the event that the Company ships any Acrylonitrile to an offshore storage
facility prior to having a customer for such Acrylonitrile, title to and risk
of loss of such Acrylonitrile shall pass from the Party shipping such
Acrylonitrile to the Company at such point and at such time as the Company and
the Parties shall agree.  In the event a Party delivers Acrylonitrile to the
Company at a location outside of the U.S. resulting in a higher or lower
freight cost to the Company (when compared with deliveries from the U.S. Gulf
Coast), such difference ("Delivery Differences") shall be debited or credited,
as the case may be, to such delivering Party as set forth in Section 3.4.3
hereof.

         3.6     Price and Terms.  The Company shall ***

                          Article 4 - Support Services

         Support services for the Company, including, but not limited to,
marketing and sales function and associated support, customer service, marine,
distribution, health, safety, environmental and other technical services,
credit billing and other related services ("Support Services"), shall be
provided directly to the Company by BP or passed through to the Company by BP
from service providers under contract to BP and the costs of the Support
Services shall be shared by BP and Sterling as set forth in attached Exhibit E
("Support Services Agreement").  The Support Services Agreement shall cover the
payment of all out of pocket third party service provider costs and BP's fully
allocated costs, including salaries and benefits, incurred in providing the
Support Services.  Offshore terminalling costs (e.g., JTT terminal) will be
included in the Support Services.  Each calendar month each Party shall pay
one-twelfth of its share of the Company's budgeted costs for





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<PAGE>   9
such Support Services based on ***.  At end of each calendar year, each Party
shall pay its share of the Company's actual Support Service costs ***.

                 Article 5 - Volumes and Base Reference Volumes

         5.1     Base Reference Volumes. ***    Force Majeure shall not apply
to the extent a Party is able to provide substitute Acrylonitrile for the lost
Acrylonitrile in the market at a price no greater than the price at which the
Company is then selling in the Joint Venture Territory.  In the event of Force
Majeure, the BRV for the Party declaring Force Majeure for that year for the
purposes of adjustment for the subsequent year shall be the actual sales which
would have been made to the Company by such Party if the Force Majeure had not
occurred.  For the initial year of the Company (prorated for less than a full
calendar year): ***.

         5.2     Reduced Volume.  If for any reason other than an event of
Force Majeure declared by either of the Parties or by the Company as addressed
herein, ***.  If for reason of Force Majeure the Company is unable in any
fiscal quarter to ***.

         5.3     Excess Volume.  During the course of any calendar year, either
Party may offer volumes of Acrylonitrile in excess of its BRV for that year
("Excess Volume"), and the Company will purchase such volume (if both Parties
offer Excess Volume, ratably in proportion to the Parties' respective BRVs) if
and to the extent it is able to market such Excess Volume during such year at
prices acceptable to the Board.  If there remains any additional Excess Volume
after the ratable purchases from both Parties hereunder, either Party shall be
free to supply up to 100% of such additional Excess Volume that the Company is
able to market during such year at prices acceptable to the Board.





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<PAGE>   10
         5.4     BRV Adjustment. ***.

         5.5     Toll Conversions.  Neither Party shall enter into any new or
extend or increase the volume under any existing agreements with any third
party for the raw material toll conversion of acrylonitrile for export to the
Joint Venture Territory.

         5.6     Volume Imbalances.  Company purchases of Acrylonitrile loaded
for shipment during each calendar quarter shall be provisionally allocated
between the Parties based, as nearly as possible, on each Party's then
applicable BRV Ratio.  At the end of each calendar quarter, each Party's actual
BRV for that quarter shall be reconciled with its provisionally allocated
volume and any difference or imbalance shall be added to the underallocated
Party's BRV and subtracted from the overallocated Party's BRV for the next
calendar quarter, as described in attached Exhibit D, to determine purchases by
the Company from the Parties in such calendar quarter; provided, however, that
such reconciliation of any volume imbalances shall not affect the Parties'
respective BRVs or BRV Ratios for any other purpose under this Agreement.

         5.7     New Purchase Contracts.  After the Effective Date, except as
provided in Section 5.1 hereof, neither Party shall enter into any new Purchase
Contracts relating to the purchase of Acrylonitrile for resale within the Joint
Venture Territory without the consent of the other Party, it being the intent
of the Parties hereto that the Company will execute any such new Purchase
Contracts.





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<PAGE>   11
                        Article 6 - Term and Termination

         6.1     Term.  The initial term of this Agreement shall be from the
Effective Date  through December 31, 2009.  Thereafter, this Agreement shall
continue from year to year unless and until terminated as provided herein.

         6.2     Termination.  Sterling may terminate this Agreement effective
not earlier than December 31, 2009 by giving BP at least one (1) year's prior
written notice of termination.  BP may terminate this Agreement effective not
earlier than December 31, 2009 by giving Sterling at least three (3) years'
prior written notice of termination.  In addition, either Party may terminate
this Agreement on one year's prior written notice at any time in the event of a
Default.  This Agreement may also be terminated by either Party pursuant to
Section 5.4 hereof.

         6.3     Involuntary Termination.   If this Agreement is terminated due
to a final, non-appealable order of a court or governmental agency or authority
having jurisdiction or with the consent of both Parties in connection with a
court or governmental agency order or directive, BP shall act as Sterling's
exclusive agent for the sale of acrylonitrile in the Joint Venture Territory at
volumes no less than the volumes then in effect under this Agreement for a
mutually agreed period, or in the absence of any agreement, for twelve (12)
months from the effective date of such termination unless and except to the
extent that such arrangement  is barred by such order or directive. For such
acrylonitrile sales during such period, ***.

         6.4     ***  If this Agreement is terminated pursuant to this Section
6.4 or Section 5.4 hereof, BP shall act as Sterling's exclusive agent for the
sale of acrylonitrile in the Joint Venture Territory at volumes no less than
the volumes then in effect under this Agreement for a mutually agreed period,
or in the absence of any agreement, twelve (12) months from the effective date
of such termination.  For such acrylonitrile sales during such period, ***.





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<PAGE>   12
         6.5     *** be cleared by the Parties within one year of termination
pursuant to a mutually acceptable arrangement or, in the absence of such an
arrangement, by the sale of acrylonitrile by the oversupplied Party to the
undersupplied Party at the times provided in such assigned contracts ***.   BP
shall continue to make available to Sterling any Support Services being
provided by BP or any third party provider to the Company for a period of one
(1) year after termination of this Agreement pursuant to terms identical to
those contained in the Support Services Agreement.  In addition, the Parties
will provide for a transition continuation of third party services, such as
joint terminalling, for up to one (1) year after termination of this Agreement,
to the extent such services are transferable to the Parties.

                         Article 7 - Transition Matters

         7.1     Exchange Agreements.  Exchange agreements whereby
Acrylonitrile is received anywhere in the Joint Venture Territory shall be
entered into solely and exclusively by the Company.

         7.2     Third Party Beneficiary.  Because not all Existing Contracts
may be unilaterally assignable to the Company by the Parties, each Party agrees
that, until such Existing Contracts expire or terminate or the consent to such
assignment has been obtained, such Party shall perform such Existing Contract
for the exclusive benefit of the Company, with the "benefit" of the contract
being credited to the Company, subject to the revenue streaming provisions of
Section 3.4.3 hereof.  The volume of any Acrylonitrile sold in connection with
such  Sales Contracts shall be included, for all purposes of Article 5 hereof,
in that Party's BRV for the calendar year in which such sales are made and
shall be considered as sales by the Company on behalf of such party for
purposes of the Sterling Floor and the BP Floor.  Any sales commitments (other
than those contained in the Sales





                                      -12-
<PAGE>   13
Contracts) entered into by either Party prior to the Effective Date but loading
after the Effective Date will be included in that Party's BRV for the calendar
year in which loaded, will be deemed sales for the benefit of the Company,
subject to the revenue streaming provisions of Section 3.4.3 hereof and shall
be considered as sales by the Company on behalf of such Party for purposes of
the Sterling Floor and the BP Floor.  Any inventory in the Parties' offshore
terminals or in transit to the Parties' offshore terminals after the Effective
Date will be sold to the Company and applied to the individual Parties' BRVs
and the Sterling Floor and the BP Floor as appropriate.

                     Article 8 - Bookkeeping and Accounting

         8.1     Books and Records.  The Company shall keep true and accurate
books of account and records and shall make all reports in accordance with
sound accounting practices and principles employing standards and procedures,
and in a form, in conformity with U.S. generally accepted accounting principles
as historically practiced by BP.  If, in the reasonable opinion of either BP or
Sterling, such practices do not readily provide for the preparation of
quarterly financial reports in a form that it is accustomed to using in their
own operations, then the detailed substance for the preparation of all
necessary financial reports and all relevant cost reports shall be supplied to
BP and Sterling by the Company at the Company's expense.

         8.2     Financial Reports; Audit.  At the end of each fiscal year, the
financial records of the Company shall be audited at the Company's expense by a
firm of independent certified public accountants of international reputation to
be selected by BP and Sterling, as auditor of the Company.  The financial
reports prepared by the Company and the audit report prepared by these
accountants shall be in English.  BP and Sterling, each at its own expense,
reserves the right to have an annual





                                      -13-
<PAGE>   14
review and audit made by an outside accounting firm of its own choice of:  (i)
the audit prepared by the auditor of the Company; and (ii) the underlying
records of the Company.

         8.3     Access to Books and Records.  In addition to any other rights
they may have under the laws of the State of Delaware as members of the
Company, BP and Sterling each shall have the right to verify any information
pertinent to this Agreement.  Upon written request by either Party from time to
time, the Company shall provide to an independent third party accountant
selected by the Party making the request, at reasonable times during normal
business hours, subject to the receipt by the Company of an appropriate
confidentiality agreement signed by such accountant, access to the Company's
books, records and accounts relating to this Agreement, except as such access
may be prohibited by law or presently existing third party confidentiality
agreements.  Such independent third party accountant shall thereupon have the
right to make copies of and abstracts from such books, records and accounts, at
the requesting Party's expense, which copies may be removed from the premises
of the Company and retained by such accountant, subject to the terms of the
confidentiality agreement signed by such accountant.  It is agreed that such
accountant may report to the requesting Party only its conclusions resulting
from such accountant's review of the Company's data, and nothing else.

                   Article 9 - Representations and Warranties

         9.1     Each of the Parties represents and warrants to the other Party
that:

                 (i)      it is a corporation, duly organized, validly existing
and in good standing in the jurisdiction of its incorporation;





                                      -14-
<PAGE>   15
                 (ii)     it has all requisite power and authority, corporate
or otherwise, to execute and deliver this Agreement and the LLC Agreement;

                 (iii)    the execution and delivery of this Agreement and the
LLC Agreement, and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by its Board of Directors and no
other corporate proceeding or approvals on its part are necessary to authorize
this Agreement or the LLC Agreement or to consummate the transactions
contemplated hereby or thereby;

                 (iv)     this Agreement and the LLC Agreement have been duly
executed and delivered by it and, assuming the due authorization, execution and
delivery hereof and thereof by the other Party, constitute its legal, valid and
binding obligations, enforceable against it in accordance with their respective
terms, except as such enforcement may be limited by applicable law and general
equitable principles;

                 (v)      the execution and delivery of this Agreement and the
LLC Agreement and the consummation of the transactions contemplated hereby and
thereby by it do not and will not (a) constitute a violation of any law,
statute, rule or regulation, (b) constitute a breach or violation of any
provision contained in its articles or certificate of incorporation or bylaws,
(c) constitute a breach of any provision contained in, or a default under, (1)
any authorization, consent, approval, license, permit, certificate or exemption
of any governmental authority, (2) any order, writ, injunction, judgment or
award of any governmental authority or (3) any contract or other agreement to
which it is a party, or (d) result in or require the creation of any lien,
claim or encumbrance upon any of its assets (other than such violations,
conflicts, breaches, defaults or creations of liens, claims or encumbrances
that, individually or in the aggregate, could not reasonably be expected to
have a





                                      -15-
<PAGE>   16
material adverse affect on its or the Company's business, operations, assets,
conditions (financial or otherwise), results of operations or prospects);

                 (vi)     no authorizations, consents, approvals, licenses,
permits, certificates of any governmental authority, and no notifications,
filings or registrations to or with any governmental authority or any other
person or entity is or will be necessary for the valid execution and delivery
by it of this Agreement or the LLC Agreement or the consummation by it of the
transactions contemplated hereby or thereby other than (1) those that have been
obtained or made and are in full force and effect, and (2) those that the
failure to obtain or make, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on its or the
Company's business, operations, assets, condition (financial or otherwise),
results of operations or prospects.

         9.2     Health, Safety and Environmental Compliance.   In the
performance of this Agreement, the Parties shall comply in all material
respects with any and all applicable laws, regulations, permits and orders of
governmental authorities pertaining to health, safety and the environment.

                       Article 10 - Default and Remedies

         10.1    Definition.  For purposes of this Agreement, a "Default" shall
mean, with respect to a Party, the failure by such Party to make any payment or
to perform any other material obligation under or pursuant to this Agreement
(for any reason other than an event of Force Majeure), which failure remains
uncured for thirty (30) days after receipt of notice of such failure from the
other Party.





                                      -16-
<PAGE>   17
         10.2    Rights and Obligations upon Default.  Upon the occurrence of
any Default, the non-defaulting Party may, at its option, terminate this
Agreement in accordance with the provisions of Section 6.2 hereof and/or may
make a claim for damages pursuant to Section 11.3 hereof.

         10.3    Damages.  In the event of any Default, the defaulting Party
shall compensate the non-defaulting Party for all loss or damage sustained as a
direct result of the Default, excluding punitive, exemplary, consequential or
contingent damages (e.g., loss of profits, loss of goodwill and investment
opportunity loss).  No claim for damages hereunder shall be made later than six
(6) months after a Default shall have occurred.

                           Article 11 - Force Majeure

         11.1    The inability of either Party to make or take delivery
hereunder (or any material portion thereof) when due, if occasioned by an event
or condition of Force Majeure, shall not subject such Party to any liability
hereunder to the extent that such event or condition prevents or delays in
whole or in material part the manufacture, sale, supply, shipment, acceptance,
conversion, use, consumption or resale by such Party of the Acrylonitrile to be
delivered by such Party hereunder.  The total quantity hereunder so omitted
shall be deducted from such Party's BRV and the Sterling Floor or the BP Floor,
whichever is appropriate, without liability, but the Agreement shall otherwise
remain unaffected.

         11.2    For purposes of this Agreement, "Force Majeure" shall mean,
without limitation, conditions arising out of war, fire, flood, strike,
breakage of equipment, accident, riot, action of governmental authority and
laws, rules, ordinances and regulations (including, but not limited to, those
dealing with pollution, health, ecology, tariffs, duties and other governmental
assessments or





                                      -17-
<PAGE>   18
restrictions, environmental matters), act of God, the inability to obtain any
raw material (including energy source or power) used in connection with the
production of Acrylonitrile, or any other event, contingency or circumstances
of like or different character beyond the reasonable control of the Party so
affected which prevents or delays the material performance by such Party of its
obligations hereunder.

         11.3    If a Party is prevented or delayed by Force Majeure from
performing hereunder, it shall give prompt notice to the other Party and the
Company and take all actions within its power (excluding the settlement of
labor disputes or strikes) to remove the basis for non-performance and after
doing so shall resume performance as soon as possible.

         11.4    Notwithstanding the above definition of Force Majeure and the
provisions of Section 11.1 hereof to the contrary, the failure by either Party
to perform any of its obligations under this Agreement shall be deemed not to
have been caused by Force Majeure or 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 or 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 12 - Confidentiality and Public Statements

         12.1    Except as otherwise provided in this Article 12, the terms and
conditions of this Agreement, and all data, reports, records, and other
information of any kind whatsoever developed or acquired by either Party in
connection with the Joint Venture shall be used solely for purposes of





                                      -18-
<PAGE>   19
this Agreement and the LLC Agreement and shall be treated by the Parties as
confidential (hereinafter referred to as "Confidential Information") and
neither Party shall reveal or otherwise disclose such Confidential Information
to third parties, other than the Company, without prior written consent of the
other Party.  The foregoing restrictions shall not apply to the disclosure of
Confidential Information by a Party to any of its affiliates, and to employees
and consultants of the Parties; provided, however, that in any such case only
such Confidential Information as such third party shall have a legitimate
business need to know shall be disclosed and the person or company to whom
disclosure is made shall first undertake in writing to protect the confidential
nature of such Confidential Information at least to the same extent as the
Parties are obligated under this Article 12.  In addition, the foregoing
restrictions shall not apply to information that (i) at the time of its
disclosure is, or thereafter becomes, generally available to the public other
than as a result of a disclosure by a Party or any of its affiliates in
violation of this Agreement, (ii) was known by or available to the Party
receiving such information or its affiliates on a non-confidential basis prior
to its disclosure to such Party pursuant to this Agreement (provided that the
source of such information was not known by such Party or its affiliates to be
then bound by a confidentiality agreement or other obligation of
confidentiality to the other Party or any of its affiliates with respect to
such information), or (iii) becomes available to such Party or its affiliates
on a non-confidential basis (provided that the source of such information was
not known by such Party or its affiliates to be then bound by a confidentiality
agreement or other obligation of confidentiality with respect to such
information).  Notwithstanding anything contained herein to the contrary, in
the event that (1) any information or materials is excluded from the term
Confidential Information hereunder because such information or materials was
known by or available to a Party or any of its affiliates on a non-





                                      -19-
<PAGE>   20
confidential basis through a source which was not known by a Party or any of
its affiliates to be bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to the other
Party or any of its affiliates with respect to such information or materials,
and (2) a Party or any of its affiliates thereafter becomes aware that such
source was, in fact, bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to the other
Party or any of its affiliates with respect to such information or materials,
then, upon such awareness, such information or materials shall thereafter be
deemed to be Confidential Information hereunder; provided, however, that a
Party or any of its affiliates shall not have any liability hereunder for any
disclosure of such Confidential Information which it may have made prior to
such awareness.

         12.2    Nothing contained in this Agreement shall be deemed to
prohibit a Party from disclosing any of the Confidential Information to the
extent required by law, regulation, legal process or other legal compulsion.
In the event that a Party or anyone to whom it transmits any Confidential
Information in accordance with this Agreement are requested or required (by
deposition, interrogatories, requests for information or documents in legal
proceedings, subpoenas, civil investigative demand or similar process), in
connection with any proceeding or investigation to disclose any Confidential
Information, that Party will use commercially reasonable efforts to give the
other Party prompt written notice of such request or requirement so that the
other Party may seek an appropriate protective order or other remedy and/or
waive compliance with the provisions of this Agreement, and that Party will
cooperate (reasonably) with the other Party (at the latter's expense) to obtain
such protective order.  In the event that such protective order or other remedy
is not obtained and the other Party does not waive compliance with the relevant
provisions of this





                                      -20-
<PAGE>   21
Agreement, the Party so requested or required to disclose Confidential
Information (or such other persons to whom such request is directed) will
furnish only that portion of the Confidential Information which, in the opinion
of its counsel, is legally required to be disclosed and, upon the other Party's
request, and at its expense, use commercially reasonable efforts to obtain
assurances that confidential treatment will be accorded to such information.

         12.3    Neither Party shall make any public announcement or public
disclosure with regard to the Joint Venture, including confidential and
non-confidential information, without the prior written consent of the other
Party as to the content and timing of such announcement or disclosure unless
such Party is required by law to make such public announcement or disclosure,
in which case the provisions of Section 12.2 hereof shall apply with respect to
any Confidential Information disclosed.

         12.4    Prior to the disclosure of any technical Confidential
Information by one Party to the other, or by a Party to the Company, the
Parties, or Party and the Company, as the case may be, will enter into a
separate Confidentiality Agreement covering such disclosures in the event such
disclosures are not protected by any pre-existing agreement by the Parties or
by the Party and Company, as the case may be.

         12.5    Nothing in this Agreement shall require the Parties to
disclose to the Company or to each other confidential information received from
third parties which is precluded by written agreement from further disclosure
by the Parties.





                                      -21-
<PAGE>   22
                           Article 13 - Miscellaneous

         13.1    Assignment.  Neither Party hereto may assign or otherwise
transfer, in whole or part, to any third party any of its rights or obligations
under this Agreement without the prior written consent of the other Party
provided, however, that no such consent shall be required for assignment to a
successor in interest of all or substantially all of the assets or business of
any Party to which this Agreement relates (unless such successor in interest
is, at the time of proposed assignment, a competitor of the other Party or is
otherwise objectionable to the other Party for legitimate business reasons, and
such objection is asserted in good faith and not waived by the Party asserting
it).  As part of any permitted assignment, the assigning Party shall require
its assignee to accept and be bound by the terms of this Agreement.  In the
case of an assignment to a successor in interest of a Party, the assigning
Party shall remain liable for the performance by the assignee of the
obligations of the assigning Party under this Agreement unless the other Party
agrees otherwise in writing.  This Agreement shall be binding upon and inure to
the benefit of the successors in interest and permitted assigns of the Parties
hereto.

         13.2    Governing Law.  This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware, without giving effect to
conflict of laws principles thereof.

         13.3    Relationship of Parties.  Each Party hereto shall be
responsible only for the obligations and liabilities as expressly set forth in
this Agreement.  Nothing contained in this Agreement shall be deemed to
constitute either Party the agent or legal representative of the other.
Neither Party shall have any authority to act for or to assume any obligation
or responsibility on behalf of the other Party, except as otherwise provided
herein.





                                      -22-
<PAGE>   23
         13.4    Entire Agreement.  This Agreement, including the Exhibits
attached hereto and the LLC Agreement, constitute the entire agreement of the
Parties in respect to the subject matter hereof and thereof.  Any and all
previous discussions, representations, negotiations, proposals and
understandings relative thereto, oral or written, are superseded by this
Agreement and the LLC Agreement, and any and all other documents exchanged by
the Parties prior to the signature of this Agreement and the LLC Agreement and
relating to the subject matter hereof and thereof, whether or not signed by
either or both of the Parties, are null and void.

         13.5    Amendments.  No waiver, modification or amendment of this
Agreement shall be valid for any purpose whatsoever unless made in writing and
signed by both Parties.

         13.6    Severability.  The Parties agree that if any part, term or
provision of this Agreement shall be found illegal or unenforceable by a court
of competent jurisdiction or by binding arbitration, the validity and effect of
the remaining parts, terms and provisions shall not be affected thereby.

         13.7    Headings and Titles.  The various headings and titles in this
Agreement are inserted solely for convenience and shall not affect the meaning
or interpretation of this Agreement.

         13.8    Waiver.  The failure of either Party to insist on a strict
performance of any of the terms or provisions of this Agreement shall not be
deemed a waiver of any subsequent breach of or default in the performance of
such terms or provisions.

         13.9    Notices.  All notices made or required hereunder shall be
deemed sufficiently given if made by first class mail or by personal delivery,
air express courier or by facsimile or electronic transmission and confirmed by
first class mail, properly addressed and sent to the recipient at its
designated address.  All notices shall be deemed to have been sent on the date
mailed or, if by fax or electronic mail on the date faxed or sent, and to have
been received on the third business day





                                      -23-
<PAGE>   24
thereafter in the case of mail or when actually received in the case of fax or
electronic mail (subject to telephonic confirmation of receipt).  For purposes
hereof, the designated addresses and numbers of the Parties shall be the
following addresses and numbers or, with respect to either Party, such other
address as such Party may at any time designate in a notice given in accordance
with this section for these purposes:

TO BP:           BP Chemicals Inc.
                 4440 Warrensville Road
                 Cleveland, Ohio 44128-2837
                 Attention:  Vice President Nitriles Marketing
                 Fax #: (216) 586-3838
                 E-mail: smithdb@bp.com

TO STERLING:     Sterling Chemicals Inc.
                 1200 Smith Street, Suite 1900
                 Houston, Texas 77002-4312
                 Attention:       General Manager, Acrylonitrile
                                  and General Counsel
                 Fax #: (713) 654-9551
                 E-mail: PRostek@Sterlingchemicals.com

         13.10   Disputes.  In the event the Parties, using commercially
reasonable efforts, fail to amicably resolve within thirty (30) days any
dispute arising out of:  (i) the interpretation of this Agreement, (ii) the
execution, amendment or termination of any Company contract with any person or
entity (not part of the Company's approved Marketing Plan), including any sales
Contract or Purchase Contract, involving a Company commitment reasonably
expected in the aggregate to exceed one million dollars ($1,000,000), or (iii)
any Acrylonitrile price changes (not part of the Company's approved Marketing
Plan), unless both Parties otherwise agree such matter shall be resolved in
accordance with the following:





                                      -24-
<PAGE>   25
                 13.10.1  They shall promptly advise their respective chief
         executive officers ("CEOs") of their inability to reach agreement
         through informal discussion within the required time limits, and shall
         within ten (10) days of the passing of such time limits, submit the
         dispute to their respective CEOs for resolution.  In the event the
         CEOs fail to amicably resolve the dispute within thirty (30) days of
         such referral, the dispute shall be settled by binding arbitration
         pursuant to Section 13.10.2 below.

                 13.10.2  Both Parties shall set forth their respective
         positions with regard to the issue in dispute in writing and
         resolution of the issue shall be determined by arbitration by three
         (3) arbitrators, one (1) of whom shall be appointed by BP, one (1) by
         Sterling and one (1) by the other two (2) arbitrators.  If the first
         two (2) arbitrators cannot agree on the appointment of a third
         arbitrator, then such third arbitrator shall be a partner in one of
         the "Big Six" accounting firms not employed by BP or Sterling or any
         of their affiliate companies appointed by the Midwest Regional
         Director of the American Arbitration Association.  The arbitration
         shall be conducted in Chicago pursuant to the Commercial Arbitration
         Rules of the American Arbitration Association.  The Parties hereto
         agree that the determination of the arbitrators will be final and
         binding.  Judgment upon the arbitrators' award may be entered in any
         court having jurisdiction thereof.  BP and Sterling shall each bear
         the costs of their respective arbitrators and their related expenses,
         and the costs of the third arbitrator and his related expenses, as
         well as all other costs of the arbitration, shall be paid equally by
         BP and Sterling or as otherwise determined by





                                      -25-
<PAGE>   26
         such arbitrators.  During arbitration, the Parties shall continue to
         perform their obligations under this Agreement with the exception of
         those under arbitration.

         IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed by their duly authorized and empowered representatives on the day
and year first above written, but effective as of the Effective Date.

STERLING CHEMICALS, INC.                 BP CHEMICALS INC.





By:/s/ Frank P. Diassi                   By: /s/ Gary C. Greve
   ---------------------------              ------------------------------
        Frank P. Diassi                              Gary C. Greve
     Chairman of the Board                             President





                                      -26-
<PAGE>   27
                                   EXHIBIT A





                                      ***





                                      -1-
<PAGE>   28
                                   EXHIBIT B



                   EXPORT GRADE ACRYLONITRILE SPECIFICATIONS





                                      ***





                                      -1-
<PAGE>   29
                                  EXHIBIT C-1



                  Form of Company Certificate of Formation





                                      -1-
<PAGE>   30


                          CERTIFICATE OF FORMATION

                                     OF

                                 ANEXCO, LLC


         This Certificate of Formation of ANEXCO, LLC (the "Company") is being
executed by the undersigned for the purpose of forming a limited liability
company pursuant to the Delaware Limited Liability Company Act ("Act").

                                   ARTICLE I

                         NAME, REGISTRATION AND PURPOSE

                 Section  1.01   Name.  The name of the limited liability
company is "ANEXCO, LLC" (the "Company").

                 Section  1.02   Registered Office and Registered Agent.  The
registered office of the Company in the State of Delaware is located at
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.  The
name of the registered agent of the Company at such address is The Company
Trust Company.

                 Section  1.03   Purpose.  The purpose and business of the
Company shall be to sell and distribute acrylonitrile produced, purchased or
otherwise obtained by the members of the Company (the "Members") in the
Territory (as defined in the Limited Liability Company Agreement of the
Company, the "LLC Agreement").  In addition, the Company may carry on any
business that a company organized under the Delaware Limited Liability Company
Act (the "Act") may carry on that is necessary or incidental to such purpose,
or otherwise appropriate given such purpose, that is not forbidden by the LLC
Agreement or the Act.  The Company shall conduct no business other than the
businesses permitted under this Section 1.03.

                                 ARTICLE II

                                  MANAGERS

                 Section  2.01   Number and Term.  The number of managers of
the Company (the "Managers") shall from time to time be fixed exclusively by
the Members in accordance with, and subject to the limitations set forth in,
the LLC Agreement.  No decrease in the number of Managers shall have the effect
of shortening the term of any incumbent Manager.  Notwithstanding anything





                                      -2-
<PAGE>   31
to the contrary contained in this Certificate of Formation or the LLC
Agreement, each Manager shall hold office until his or her successor is duly
appointed or elected and qualified or until his or her earlier death,
resignation or removal.

                 Section  2.02   Nomination and Election.  (a) The LLC
Agreement shall set forth procedures for the nomination of persons for election
or reelection to the Board of Managers and only persons who are nominated in
accordance with such procedures (if any) shall be eligible for election or
reelection as Managers of the Company.

                 (b)      Each Manager shall be elected in accordance with this
Certificate of Formation, the LLC Agreement and applicable law.  Election of
Managers by the Members need not be by written ballot unless the LLC Agreement
so provides.

                 Section  2.03   Limitation of Personal Liability.  (c) No
person who is or was a Manager of the Company shall be personally liable to the
Company or its Members for monetary damages for breach of fiduciary duty as a
Manager, except for liability (i) for acts or omissions which involve
fraudulent or intentional misconduct or a knowing violation of law or (ii) for
any transaction from which the Manager derived an improper personal benefit.

                 (b)      If the Act is hereafter amended to authorize action
by the Company further limiting or eliminating the personal liability of
Managers, then the personal liability of the Managers to the Company or its
Members shall be limited or eliminated to the full extent permitted by the Act,
as so amended from time to time.

                                 ARTICLE III

                  INDEMNIFICATION OF MANAGERS AND OFFICERS

                 Subject to the standards and restrictions, if any, as are set
forth in the LLC Agreement, the Company shall (i) indemnify, to the fullest
extent permitted by applicable law, each person who is or was a Manager or
officer of the Company or is or was serving at the request of the Company as a
manager, director, officer or fiduciary of another corporation, partnership,
limited liability company, joint venture, trust or other enterprise, and (ii)
may indemnify each employee and agent of the Company and all other persons whom
the Company is authorized to indemnify under the provisions of the Act.
Without limiting the generality or effect of the foregoing, the Company may
enter into one or more agreements with any person which provide for
indemnification greater or different than that provided in this Article III.





                                      -3-
<PAGE>   32
                                 ARTICLE IV

                    AMENDMENT OF CERTIFICATE OF FORMATION

                 The Company reserves the right to amend, alter, change or
repeal any provisions contained in this Certificate of Formation, in the manner
now or hereafter prescribed by applicable law, and all rights, preferences and
privileges conferred upon Members, Managers or any other persons by and
pursuant to this Certificate of Formation are granted subject to this
reservation.  Notwithstanding the foregoing or any other provision of this
Certificate of Formation or any provision of law that might otherwise permit a
lesser or no vote, the provisions of this Article IV and of Articles II and III
may not be repealed or amended in any respect, unless such action is approved
by the affirmative vote of all of the Members; provided, however, that any
amendment or repeal of Section 2.03 or Article III of this Certificate of
Formation shall not adversely affect any right or protection existing
thereunder in respect of any act or omission occurring prior to such amendment
or repeal.

                 IN WITNESS WHEREOF, the undersigned, an authorized person or
agent or attorney-in-fact of the Company, has caused this Certificate of
Formation to be duly executed as of the 16th day of March, 1998.




                                                 -----------------------------
                                                 Jared A. Schnall, President





                                      -4-
<PAGE>   33
                                  EXHIBIT C-2

                             Form of LLC Agreement





                                      -1-
<PAGE>   34
LIMITED LIABILITY COMPANY AGREEMENT
of
ANEXCO, LLC


                 THIS LIMITED LIABILITY COMPANY AGREEMENT OF ANEXCO, LLC, dated
as of March 31, 1998, is entered into by and between BP Chemicals Inc., an Ohio
corporation ("BP"), and Sterling Chemicals, Inc., a Delaware corporation
("Sterling").

                                   ARTICLE V

                         DEFINITIONS AND INTERPRETATION

                 Section  5.01    Certain Defined Terms.  Capitalized terms
used in this Agreement shall have the following respective meanings, except as
otherwise provided herein or as the context shall otherwise require:

                 "Act" means the Delaware Limited Liability Company Act.

                 "Adjusted Capital Account" means the Capital Account
         maintained for each Member as of the end of each fiscal year of the
         Company:

                          (i)     increased by any amounts that such Member is
                 obligated to restore under the standards set forth by Treasury
                 Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed
                 obligated to restore under Treasury Regulation Sections
                 1.704-2(g) and 1.704-2(i)(5)); and

                          (ii)    decreased by (a) the amount of all losses and
                 deductions that, as of the end of such fiscal year, are
                 reasonably expected to be allocated to such Member in
                 subsequent years under Sections 704(e)(2) and 706(d) of the
                 Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and
                 (b) the amount of all distributions that, as of the end of
                 such fiscal year, are reasonably expected to be made to such
                 Member in subsequent fiscal years in accordance with the terms
                 of this Agreement, or otherwise to the extent they exceed
                 offsetting increases to such Member's Capital Account that are
                 reasonably expected to occur during (or prior to) the fiscal
                 year of the Company in which such distributions are reasonably
                 expected to be made.

         This definition of Adjusted Capital Account is intended to comply with
         the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
         shall be interpreted consistently therewith.





                                      -2-
<PAGE>   35
                 "Adjusted Property" means any Asset of the Company, the
         Carrying Value of which has been adjusted pursuant to Section 6.01(d)
         or Section 6.01(e).  Upon termination of the Company pursuant to
         Treasury Regulation 1.708-1(b)(1)(iv), an Adjusted Property deemed
         contributed to a new company in exchange for an interest in the new
         company, followed by the deemed liquidation of the Company, shall
         thereafter constitute a Contributed Property until the Carrying Value
         of such Contributed Property is subsequently adjusted pursuant to
         Section 6.01(d) or 6.01(e).

                 "Affiliate" means, when used with respect to any Person, (i)
         any other Person at the time directly or indirectly controlling,
         controlled by or under common control with, such Person, (ii) any
         other Person of which such Person at the time owns, or has the right
         to acquire, directly or indirectly, more than 50% on a consolidated
         basis of the equity or beneficial interest, or (iii) any other Person
         which at the time owns, or has the right to acquire, directly or
         indirectly, more than 50% of any class of the capital stock or
         beneficial interest of such Person.  The term "control" (including,
         with correlative meaning, the terms "controlling," "controlled by" and
         "under common control with") means the possession, directly or
         indirectly, of the power to direct or cause the direction of the
         management or policies of such Person, whether by Contract or
         otherwise.  For purposes of this Agreement, (a) the Company shall not
         be deemed an Affiliate of any of the Members and (b) none of the
         Members shall be deemed Affiliates of each other by virtue of the
         consummation of the transactions contemplated hereby.

                 "Agreed Allocation" means any allocation, other than a
         Required Allocation, of an item of income, gain, loss or deduction
         pursuant to the provisions of Section 6.02, including a Curative
         Allocation (if appropriate to the context).

                 "Agreed Value" means, with respect to any Contributed
         Property, the fair market value of such Contributed Property or other
         consideration at the time of contribution as determined by the Board
         using such reasonable method of valuation as it may adopt; provided,
         however, that (i) with respect to the Continued Properties initially
         contributed to the Company by each of the Members, the Agreed Value of
         such Contributed Properties is the amounts reflected on Exhibit B
         hereto on an aggregate and separate property basis, and (ii) the Board
         shall, in its discretion, use such method as it deems reasonable and
         appropriate to allocate the aggregate Agreed Value of Contributed
         Properties contributed to the Company in a single or integrated
         transaction among each separate Contributed Property on a basis
         proportional to the fair market value of each Contributed Property.

                 "Agreement" means this Limited Liability Company Agreement.

                 "Annual Business Plan" means, for each fiscal year of the
         Company, the comprehensive business plan and strategy for the sale and
         distribution of acrylonitrile in the Territory for such fiscal year,
         including goals and objectives of the Company with respect





                                      -3-
<PAGE>   36
         to volume, customers, pricing, storage, distribution, exchange and
         Third Party supply Contracts, market penetration and share and similar
         matters.

                 "Assets" means, with respect to any Person, all assets and
         properties of every kind, nature, character and description, whether
         real, personal or mixed, tangible or intangible, wherever situated,
         including any goodwill related thereto, which are operated, owned or
         leased by such Person.

                 "Bankrupt" or "Bankruptcy" means, with respect to any Person,
         that:

                          (i)     such Person has (a) made a general assignment
                 for the benefit of creditors, (b) filed a voluntary bankruptcy
                 petition, (c) become the subject of an order for relief or
                 been declared insolvent in any federal or state bankruptcy or
                 insolvency proceeding, (d) instituted a proceeding or filed an
                 answer in a proceeding seeking to adjudicate itself insolvent
                 or seeking reorganization, arrangement, composition,
                 readjustment, protection, liquidation, winding-up, dissolution
                 or similar relief of such Person or such Person's Liabilities
                 under any Debtor Relief Law, (e) filed an answer or other
                 pleading admitting or failing to contest the material
                 allegations of a petition filed against such Person in a
                 proceeding of the type described in subclauses (a) through (d)
                 of this clause (i), (f) sought, consented to or acquiesced in
                 an order for relief or the appointment of a trustee, receiver,
                 liquidator or similar official for such Person or for any
                 substantial part of such Person's Assets or (g) taken any
                 action in furtherance of any such actions; or

                          (ii)    any proceeding of the type referred to in
                 clause (i) above has been filed or commenced against such
                 Person or such Person by any act has indicated its approval
                 thereof, consented thereto or acquiesced therein, or an order
                 for relief has been entered in an involuntary case under any
                 Debtor Relief Law, or an order, judgment or decree has been
                 entered appointing a trustee, receiver, custodian, liquidator
                 or similar official or adjudicating such Person insolvent, or
                 approving the petition in any such proceedings, and such
                 order, judgment or decree has remained in effect and unstayed
                 for 60 days.

                 "Bankrupt Member" has the meaning specified in Section
         4.05(b).

                 "Board" has the meaning specified in Section 7.01.

                 "Book-Tax Disparity" means with respect to any item of
         Contributed Property or Adjusted Property, as of the date of any
         determination, the difference between the Carrying Value of such
         Contributed Property or Adjusted Property and the adjusted basis
         thereof for federal income tax purposes as of such date.  A Member's
         share of the Company's Book-Tax Disparities in all of its Contributed
         Property and Adjusted Property shall be reflected by the difference
         between such Member's Capital Account balance as maintained pursuant
         to





                                      -4-
<PAGE>   37
         Section 6.01 and the hypothetical balance of such Member's Capital
         Account computed as if it had been maintained in accordance with
         federal income tax accounting principles.

                 "BP" has the meaning specified in the introductory paragraph
         of this Agreement.

                 "BP Representative" has the meaning specified in Section
         7.03(a).

                 "Capital Account" means the capital account maintained for a
         Member pursuant to Section 6.01.

                 "Capital Contribution" means any cash, cash equivalents or the
         Net Agreed Value of any Contributed Property that a Member contributes
         to the Company pursuant to Article V of this Agreement.

                 "Carrying Value" means (i) with respect to a Contributed
         Property, the Agreed Value of such Contributed Property reduced (but
         not below zero) by all depreciation, amortization and cost recovery
         deductions charged to the Member' Capital Accounts in respect of such
         Contributed Property, and (ii) with respect to any other Asset of the
         Company, the adjusted basis of such Asset for federal income tax
         purposes, all as of the time of determination.  The Carrying Value of
         any Asset shall be adjusted from time to time in accordance with
         Sections 6.01(d) and 6.01(e) and to reflect changes, additions or
         other adjustments to the Carrying Value for dispositions and
         acquisitions of Assets of the Company, as approved by the Tax Matters
         Member.

                 "Catalyst Supply Contract" means *** .

                 "CEOs" has the meaning specified in Section 7.02.

                 "Certificate of Formation" has the meaning specified in
         Section 2.01.

                 "Claim" means any claim, demand, investigation, inquiry, cause
         of action, suit, default, assessment, litigation, third party action,
         arbitral proceeding or other proceeding by or before any Governmental
         Authority or any other Person.

                 "Code" means the Internal Revenue Code of 1986, together with,
         and as interpreted by, the regulations promulgated and rulings issued
         thereunder.

                 "Company" means ANEXCO, LLC, a Delaware limited liability
         company.

                 "Company Fiduciary" has the meaning specified in Section
         7.16(a).





                                      -5-
<PAGE>   38
                 "Contract" means any agreement, lease, license, evidence of
         indebtedness, mortgage, deed of trust, note, bond, indenture, security
         agreement, commitment, instrument, understanding or other contract,
         obligation or arrangement of any kind.

                 "Contributed Property" means each Asset, in such form as may
         be permitted by the Act, but excluding cash or cash equivalents,
         contributed or deemed contributed to the Company (or deemed
         contributed to the Company pursuant to Section 708 of the Code).  Once
         the Carrying Value of a Contributed Property is adjusted pursuant to
         Section 6.01(d) or 6.01(e), such Contributed Property shall no longer
         constitute a Contributed Property, but shall be deemed to be an
         Adjusted Property

                 "Curative Allocation" means any allocation of an item of
         income, gain, deduction, loss or credit pursuant to the provisions of
         Section 6.02(c).

                 "Debtor Relief Laws" means the Bankruptcy Code of the United
         States, and any successor statute of similar import, and all other
         applicable dissolution, liquidation, conservatorship, bankruptcy,
         moratorium, readjustment of debt, compromise, rearrangement,
         receivership, insolvency, fraudulent transfer or conveyance,
         reorganization or similar debtor relief Laws from time to time in
         effect affecting the rights of creditors generally.

                 "Dissolution Event" has the meaning specified in Section 2.05.

                 "Economic Risk of Loss" has the meaning set forth in Treasury
         Regulation Section 1.752-2(a).

                 "GAAP" means generally accepted United States accounting
         principles, applied by BP on a consistent basis (except for changes
         made due to the implementation of new or revised standards issued by
         the Financial Accounting Standards Board), which are applicable in the
         circumstances as of the date in question.  Accounting principles are
         applied on a "consistent basis" when the accounting principles
         observed by BP in a current period are comparable in all material
         respects with those accounting principles applied by BP in a preceding
         period.

                 "Governmental Authority" means (i) any nation or government,
         (ii) any federal, state, county, province, city, town, municipality,
         local or other political subdivision thereof or thereto, (iii) any
         court, tribunal, department, commission, board, bureau,
         instrumentality, agency, council, arbitrator or other entity
         exercising executive, legislative, judicial, regulatory or
         administrative functions of or pertaining to government and (iv) any
         other governmental entity, agency or authority having or exercising
         jurisdiction over any relevant Person, item or matter.

                 "Indemnified Persons" has the meaning specified in Section
         11.06.





                                      -6-
<PAGE>   39
                 "Joint Venture Agreement" means the Joint Venture Agreement
         dated as of March 31, 1998 between Sterling and BP.

                 "Laws" means (i) all laws, statutes, rules, regulations,
         ordinances, orders, writs, injunctions or decrees and other
         pronouncements having the effect of law of any Governmental Authority
         and (ii) all Contracts with any Governmental Authority relating to
         compliance with the matters described in (i) above.

                 "Liability" means, with respect to any Person, any
         indebtedness, obligation and other liability of such Person, whether
         absolute, accrued, contingent, fixed, liquidated or otherwise, or
         whether due or to become due.

                 "Lien" means (i) any lien, charge, mortgage, pledge,
         hypothecation, assignment, security interest, assessment, levy or
         encumbrance of any kind or nature whatsoever (whether voluntary or
         involuntary, affirmative or negative, and whether imposed or created
         by Contract, operation of Law or otherwise) in, on, of or with respect
         to any Assets of the applicable Person, whether now owned or hereafter
         acquired, (ii) any Contract to give any of the foregoing and (iii) any
         conditional sale or other title retention agreement and any financing
         lease having substantially the same effect as any of the foregoing.

                 "Liquidator" has the meaning specified in Section 11.01.

                 "Losses" means any and all damages (including special,
         consequential, exemplary or punitive damages), fines, penalties,
         judgments, deficiencies, losses, costs and expenses, including court
         costs, reasonable fees of attorneys, legal assistants, consultants,
         accountants and other experts and other reasonable expenses of any
         Claim.

                 "Major Acquisitions" means, for any fiscal year of the
         Company, the acquisition of Assets by the Company, in a single
         transaction or series of related transactions, for consideration in an
         aggregate amount exceeding ***.

                 "Major Expenditures" means, for any fiscal year of the
         Company, (i) all capital expenditures in such fiscal year which, when
         aggregated with the capital expenditures included in the Annual
         Business Plan for such fiscal year, exceed the aggregate amount of
         capital expenditures approved in such Annual Business Plan by more
         than ***, (ii) a reallocation of capital expenditure amounts between
         and among authorized categories of spending in the Annual Business
         Plan for such fiscal year which, when aggregated with all other such
         reallocations in such fiscal year, exceeds ***, (iii) any capital
         expenditures not included as a line item in the Annual Business Plan
         for such fiscal year (other than capital expenditures which are
         consistent with or incidental to such approved line items and which do
         not, in the aggregate, exceed ***) and (iv) operating and personnel
         expenses not included in the Annual Business Plan for such fiscal
         year; provided, however, that the term "Major Expenditures" shall not
         include any expenditures related to the acquisition of any Assets.





                                      -7-
<PAGE>   40
                 "Manager" means a manager of the Company.

                 "Member" means any Person executing this Agreement as of the
         date of this Agreement as a member or hereafter admitted to the
         Company as a member as provided in this Agreement; provided, however,
         that such term does not include any Person which has ceased to be a
         member in the Company.

                 "Membership Interest" means the interest of a Member in the
         Company, including rights to distributions (liquidating or otherwise),
         allocations, information and to consent or approve.

                 "Net Agreed Value" means (i) in the case of any Contributed
         Property, the Agreed Value of such Contributed Property reduced by any
         Liabilities either assumed by the Company upon such contribution or to
         which such Contributed Property is subject when contributed, and (ii)
         in the case of any Asset of the Company distributed to a Member by the
         Company, the Company's Carrying Value of such Asset (as adjusted
         pursuant to Section 6.01(e)) at the time such Asset is distributed,
         reduced by any indebtedness either assumed by such Member upon such
         distribution or to which such Asset is subject at the time of
         distribution, in either case, as determined under Section 752 of the
         Code.

                 "Net Income" means, for any fiscal year of the Company, the
         excess, if any, of the Company's items of income and gain (other than
         those items taken into account in the computation of Net Termination
         Gain or Net Termination Loss) for such fiscal year over the Company's
         items of loss and deduction (other than those items taken into account
         in the computation of Net Termination Gain or Net Termination Loss)
         for such fiscal year.  The items included in the calculation of Net
         Income shall be determined in accordance with Section 6.01(b) and
         shall not include any items specially allocated under Section 6.02(c).

                 "Net Loss" means, for any fiscal year of the Company, the
         excess, if any, of the Company's items of loss and deduction (other
         than those items taken into account in the computation of Net
         Termination Gain or Net Termination Loss) for such fiscal year over
         the Company's items of income and gain (other than those items taken
         into account in the computation of Net Termination Gain or Net
         Termination Loss) for such fiscal year.  The items included in the
         calculation of Net Loss shall be determined in accordance with Section
         6.01(b) and shall not include any items specially allocated under
         Section 6.02(c).

                 "Net Termination Gain" means the sum, if positive, of all
         items of income, gain, loss or deduction recognized by the Company for
         the fiscal year of the Company that includes the date on which the
         Company is liquidated and all fiscal years thereafter.  The items
         included in the determination of Net Termination Gain shall be
         determined in accordance with Section 6.01(b) and shall not include
         any items of income, gain or loss specially allocated under Section
         6.02(c).





                                      -8-
<PAGE>   41
                 "Net Termination Loss" means the sum, if negative, of all
         items of income, gain, loss or deduction recognized by the Company for
         the fiscal year of the Company that includes the date on which the
         Company is liquidated and all fiscal years thereafter.  The items
         included in the determination of Net Termination Loss shall be
         determined in accordance with Section 6.01(b) and shall not include
         any items of income, gain or loss specially allocated under Section
         6.02(c).

                 "Nonrecourse Built-in Gain" means, with respect to any
         Contributed Properties or Adjusted Properties that are subject to a
         Lien securing a Nonrecourse Liability, the amount of any taxable gain
         that would be allocated to the Members pursuant to Sections
         6.03(b)(i)(A), 6.03(b)(ii)(A) and 6.03(b)(iii) if such Assets were
         disposed of in a taxable transaction in full satisfaction of such
         Liabilities and for no other consideration.

                 "Nonrecourse Deductions" means any and all items of loss,
         deduction or expenditures (including any expenditure described in
         Section 705(a)(2)(B) of the Code) that, in accordance with the
         principles of Treasury Regulation Section 1.704-2(b), are attributable
         to a Nonrecourse Liability.

                 "Nonrecourse Liability" has the meaning specified in Treasury
         Regulation Section 1.752-1(a)(2).

                 "Partner Nonrecourse Debt" has the meaning specified in
         Treasury Regulation Section 1.704-2(b)(4).

                 "Partner Nonrecourse Debt Minimum Gain" has the meaning
         specified in Treasury Regulation Section 1.704- 2(i)(2).

                 "Partner Nonrecourse Deductions" means any and all items of
         loss, deduction or expenditures (including any expenditure described
         in Section 705(a)(2)(B) of the Code) that, in accordance with the
         principles of Treasury Regulation Section 1.704-2(i), are attributable
         to a Nonrecourse Liability.

                 "Partnership Minimum Gain" means the amount determined in
         accordance with Treasury Regulation Section 1.704-2(d).

                 "Percentage Interests" means ***.

                 "Permitted Liens" means (i) statutory liens for Taxes if the
         same shall at the time not be delinquent or thereafter may be paid
         without penalty or if such Taxes are being contested in good faith by
         appropriate proceedings promptly initiated and diligently conducted,
         (ii) Liens consisting of easements, zoning restrictions or other
         restrictions on the use of real property that do not materially affect
         the value of the Assets encumbered thereby or materially impair the
         ability of the owner thereof to use such Assets in its business as is





                                      -9-
<PAGE>   42
         presently being conducted, (iii) with respect to any Person, Liens of
         landlords, mechanics, materialmen, warehousemen, carriers or other
         statutory Liens securing obligations that are not yet due and are
         incurred in the ordinary course of business of such Person, (iv) with
         respect to any Person, Liens resulting from deposits to secure
         payments of workmen's compensation or other social security programs
         or to secure the performance of tenders, statutory obligations, surety
         and appeal bonds, bids or Contracts in the ordinary course of business
         of such Person, and (v) purchase money security interests.

                 "Permitted Transfer" has the meaning specified in Section
         10.01.

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


                 "Production Agreement" means the Amended and Restated
         Production Agreement dated as of March 31, 1998 between Sterling and
         BP.

                 "Recapture Income" means any gain recognized by the Company
         (computed without regard to any adjustment required by Section 734 or
         743 of the Code) upon the disposition of any Asset of the Company,
         which gain is characterized as ordinary income because it represents
         the recapture of deductions previously taken with respect to such
         Asset.

                 "Representatives" has the meaning specified in Section
         7.03(a).

                 "Required Allocation" means any allocation (or limitation
         imposed on an allocation) of an item of income, gain, deduction or
         loss pursuant to Section 6.02(c)(i) through Section 6.02(c)(vi).

                 "Residual Gain" or "Residual Loss" means any item of gain or
         loss, as the case may be, of the Company recognized for federal income
         tax purposes resulting from a sale, exchange or other disposition of a
         Contributed Property or Adjusted Property, to the extent such item of
         gain or loss is not allocated pursuant to Sections 6.03(b)(i)(A) or
         6.03(b)(ii)(A) to eliminate Book-Tax Disparities.

                 "Secretary of State" means the Secretary of State of the State
         of Delaware.

                 "Sterling" has the meaning specified in the introductory
         paragraph of this Agreement.

                 "Sterling Representative" has the meaning specified in Section
         7.03(a).

                 "Tax Adjustment" has the meaning specified in Section 6.01(f).

                 "Tax Matters Member" has the meaning specified in Section
         9.05.





                                      -10-
<PAGE>   43
                 "Taxes" means any and all taxes, assessments, imposts,
         deductions, charges, withholdings, Claims and levies assessed or
         imposed by any Governmental Authority and all Liabilities with respect
         thereto, including any sales, use, occupation, transfer, stock
         transfer, real property transfer, export, recording, gains, stamp,
         documentary, income, windfall profits, franchise, license, excise,
         payroll, social security, withholding, service, service use, ad
         valorem and property taxes, charges and similar levies and fees.

                 "Territory" means ***.

                 "Third Parties" means any Person other than the Company, the
         Members and their respective Affiliates.

                 "Transfer" means any sale, exchange, gift, assignment, grant
         of a Lien in or on, transfer by will or intestacy or other disposition
         of any Membership Interest (or any interest therein) or of all or part
         of the voting power (other than the granting of a revocable proxy)
         associated with any Membership Interest (or any interest therein)
         whatsoever, or any other transfer of beneficial ownership of any
         Membership Interest, whether voluntary or involuntary, including any
         such disposition or transfer as a part of any liquidation of a
         Member's Assets or any reorganization of a Member pursuant to any
         Debtor Relief Law.

                 "Transferee" means any assignee, transferee, secured party,
         creditor, trustee, receiver or other Person who obtains any Membership
         Interest, whether pursuant to Article X, a Permitted Transfer or
         Debtor Relief Law or by attachment, execution or operation of law.

                 "Treasury Regulations" means the Income Tax Regulations
         promulgated under the Code.

                 "Unrealized Gain" means, with respect to any Asset of the
         Company, as of the date of determination, the excess, if any, of (i)
         the fair market value of such Asset (as determined under Section
         6.01(d) or 6.01(e), over (ii) the Carrying Value of such Asset (prior
         to any adjustment to be made pursuant to Section 6.01(d) or 6.01(e) as
         of such date).

                 "Unrealized Loss" means, with respect to any Asset of the
         Company, as of the date of determination, the excess, if any, of (i)
         the Carrying Value of such Asset (prior to any adjustment to be made
         pursuant to Section 6.01(d) or 6.01(e) as of such date) over (ii) the
         fair market value of such Asset as determined under Section 6.01(d) or
         6.01(e).

                 "Whole Board" has the meaning specified in Section 7.03(a).





                                      -11-
<PAGE>   44
                 Section  5.02    Interpretation.  In this Agreement, unless a
clear contrary intention appears:

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

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

                 (c)      all terms defined in the singular shall have the same
meanings in the plural and vice versa;

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

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

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

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

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

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

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

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

                 (l)      reference to any Law means such Law as amended,
modified, codified, reenacted, supplemented or superseded in whole or in part,
and in effect from time to time;

                 (m)      references to sections of the Code shall be construed
to also refer to any successor sections.





                                      -12-
<PAGE>   45
                 (n)      accounting terms used but not defined herein shall be
construed in accordance with GAAP, and whenever the character or amount of any
Asset, Liability or item of income or expense is required to be determined, or
any consolidation or accounting computation is required to be made, such
determination or computation shall be made in accordance with GAAP;

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

                 (p)      a Claim shall be deemed to be threatened against or
with respect to any Person if any demand or statement shall have been made to
such Person (orally or in writing) or any notice shall have been given to such
Person (orally or in writing) that could reasonably be expected to lead such
Person prudently to conclude that there is a reasonable possibility that such a
Claim will be asserted, commenced, taken or otherwise pursued against or with
respect to such Person in the future; and

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

                                 ARTICLE VI

                                ORGANIZATION

                 Section  6.01    Formation.  The Company has been or will be
organized as a Delaware limited liability company by the filing of a
Certificate of Formation in the form attached hereto as Exhibit C (the
"Certificate of Formation") under and pursuant to the Act and the issuance of a
Certificate of Formation certified by the Secretary of State.  Except as
otherwise specifically provided in this Agreement, the Members shall have the
rights and Liabilities specified in the Act.

                 Section  6.02    Name.  The name of the Company is "ANEXCO,
LLC" and all business of the Company shall be conducted in that name or such
other names as the Board may select that comply with applicable Law.

                 Section  6.03    Offices; Registered Agent.  The registered
office of the Company required by the Act to be maintained in the State of
Delaware shall be the office of the initial registered agent named in the
Certificate of Formation or such other office (which need not be a place of
business of the Company) as the Board may designate in the manner provided by
Law.  The registered agent of the Company in the State of Delaware shall be the
initial registered agent named in the Certificate of Formation or such other
Person or Persons as the Board may designate in the manner provided by Law.
The principal office of the Company in the United States shall be at such place
as the Board may designate, which need not be in the State of Delaware.  The
Company may have such other offices as the Board may designate.





                                      -13-
<PAGE>   46
                 Section  6.04    Foreign Qualification.  Prior to the
Company's conducting business in any jurisdiction other than the State of
Delaware, the Board shall cause the Company to comply, to the extent procedures
are available and those matters are reasonably within the control of the Board,
with all requirements necessary to qualify the Company as a foreign limited
liability company in that jurisdiction.  At the request of the Board, each
Member shall execute, acknowledge, swear to and deliver all certificates and
other instruments conforming with this Agreement that are necessary or
appropriate to qualify, continue or terminate the Company as a foreign limited
liability company in all such jurisdictions in which the Company may conduct or
cease conducting business, as the case may be.

                 Section  6.05    Term.  The term of the Company shall begin on
the date that the Certificate of Formation is filed with the Secretary of State
and continue thereafter until the business and affairs of the Company are wound
up following the dissolution of the Company after the first of the following
events to occur (each, a "Dissolution Event"):

                 (a)      the written consent of all of the Members;

                 (b)      any event which makes it unlawful for the business of
the Company to be continued;

                 (c)      the termination of the Joint Venture Agreement;

                 (d)      the termination of the ***  or the Production 
Agreement for any reason if, within 30 days after the effective date
of such termination, either BP or Sterling provides written notice to the
Company and the other Members of its election to have the Company dissolved and
liquidated;

                 (e)      the breach by any Member of any material covenant,
agreement, term, provision or condition of this Agreement which is not remedied
within 30 days after receipt from another Member of a written notice of such
breach if, within 10 days after the expiration of such 30-day period, the
Member that provided such notice provides written notice to the Company and the
other Members of its election to have the Company dissolved and liquidated;

                 (f)      the sale or other disposition of all of the Assets of
the Company; provided, however, that if such sale or other disposition results
in the acquisition of a receivable by the Company, then the Company shall not
dissolve until such receivable has been collected; or

                 (g)      any other event which under this Agreement or the Act
results in the dissolution of the Company.

No Member shall cause a dissolution of the Company, directly or indirectly,
except as provided for in this Section 2.05.





                                      -14-
<PAGE>   47
                 Section  6.06    No State Law Partnership.  The Members intend
that the Company not be a partnership (including a limited partnership) or
joint venture, and that, except as otherwise expressly provided in the Joint
Venture Agreement, no Member be a partner or joint venturer of any other
Member, for any purposes other than federal and state Tax purposes, and this
Agreement may not be construed to suggest otherwise.

                 Section  6.07    Title to Company Assets.  Title to the Assets
of the Company shall be deemed to be owned by the Company as an entity, and no
Member, individually or collectively, shall have any ownership interest in such
Assets or any portion thereof.  Title to any or all Assets of the Company may
be held in the name of the Company or one or more of its Affiliates, as the
Board may determine.  All Assets of the Company shall be recorded as the
property of the Company in its books and records, irrespective of the name in
which record title to any of such Assets is held.

                                   ARTICLE VII

                              PURPOSE AND BUSINESS

                 Section  7.01    Scope of Company Business.  The purpose and
business of the Company shall be to sell and distribute in the Territory,
pursuant to the provisions of the Joint Venture Agreement, acrylonitrile
produced, purchased or otherwise obtained by the Members.  In addition, the
Company may carry on any business that a company organized under the Act may
carry on that is necessary or incidental to such purpose, or otherwise
appropriate given such purpose, that is not forbidden by this Agreement or the
Act.

                 Section  7.02    Restricted Activities.  The Company shall
conduct no business other than the businesses permitted under Section 3.01.

                 Section  7.03    Customer Claims.  The Company shall have sole
responsibility for handling and resolving any Claims by its customers and other
third parties, and shall bear all costs in defense thereof, for alleged damage
to persons, property or the environment arising from the marketing and sale of
acrylonitrile and any other chemicals sold by the Company, whether supplied by
any of the Members or obtained from third parties by purchase, exchange or
otherwise, including any combination of acrylonitrile and other chemicals
commingled in terminal or other storage facilities.

                 Section  7.04    Insurance.  The Company shall procure and
maintain in full force and effect during the term of this Agreement insurance
coverage of such types and in such amounts as may be deemed advisable by the
Board, from time to time, insuring against the Liability risks of the Company
unless the costs of such insurance, when compared with the risks involved, are
determined by the Board to not be economically justified.





                                      -15-
<PAGE>   48
                 Section  7.05    Health, Safety and Environmental Compliance.
The Company shall at all times comply in all material respects with any and all
applicable Laws and permits and orders of Governmental Authorities pertaining
to health, safety and the environment and with any applicable policies and
procedures established by BP or its parent company pertaining thereto.

                 Section  7.06    Affiliate Transactions.  No Contract between
the Company and a Member or any of its Affiliates which is approved by the
Board shall be deemed to constitute a breach of such Member's obligations to
the Company, including duties of loyalty, care and good faith under the Act and
such other duties as may be imposed under the Act or any other applicable Law.

                 Section  7.07    Conflicts of Interest.  Subject to the
express provisions of this Agreement and the Joint Venture Agreement, each
Member, Manager and officer of the Company and each of their respective
Affiliates may engage in and possess interests in other business ventures of
any and every type and description, independently or with others (other than,
to the extent not specifically permitted in the Joint Venture Agreement,
business ventures which compete with the Company in the Territory), with no
obligation to offer the Company or any other Member, Manager or officer of the
Company or any of their respective Affiliates the right to participate therein.

                                ARTICLE VIII

                                 MEMBERSHIP

                 Section  8.01    Initial Members.  The initial Members of the
Company are Sterling and BP, each of which is admitted to the Company as a
Member effective contemporaneously with the execution by Sterling and BP of
this Agreement.  The respective name, address, Percentage Interest and Capital
Contribution of each Member is set forth on Exhibit B hereto.  The Membership
Interest of each Member shall be personal property for all purposes.

                 Section  8.02    Additional Members.  Additional Persons may
be admitted to the Company and Membership Interests may be created and issued
to those Persons and to existing Members with the consent of the Members.  The
admission of such Person(s) to the Company and the creation of such Membership
Interests shall be on such terms and conditions as the Members may agree at the
time of admission.  The terms of admission or issuance must specify the
Percentage Interest applicable to the new Membership Interest and may provide
for the creation of different classes or groups of Members having different
rights, powers and duties.  The Members shall reflect the creation of any new
class or group of Members in an amendment to this Agreement which indicates the
different rights, powers and duties.  No such admission shall be recognized by
the Company for any purpose until the Company and each of the Members has
received a document executed by the Person to be admitted to the Company as a
Member which includes the address and numbers of the Person to be admitted to
the Company as a Member for notification purposes, such Person's agreement to
be bound by this Agreement in respect of the Membership Interest acquired and
such representations and warranties of such Person as the Company or the
members may reasonably request.





                                      -16-
<PAGE>   49
                 Section  8.03    Interests in a Member.  A Member that is not
a natural Person may not cause or permit an interest, direct or indirect, in
itself to be disposed of such that, after the disposition, the Company would be
considered to have terminated within the meaning of Section 708 of the Code.

                 Section  8.04    Lack of Authority.  Except as otherwise
provided herein, no Member has the authority or power to (a) act for or on
behalf of the Company, (b) bind the Company in any respect or (c) incur any
expenditure on behalf of the Company.

                 Section  8.05    Withdrawal of Members; Bankrupt Members.  (a)
No Member may withdraw from the Company prior to the dissolution of the
Company, the completion of the winding up of the affairs of the Company and the
liquidation (and/or distribution, as the case may be) of the Assets of the
Company pursuant to the provisions of Article XI and, thereafter, each Member
shall be entitled to receive those amounts (and only those amounts), if any,
which are distributable to it pursuant to the provisions of Article XI.  No
Bankruptcy or dissolution or other occurrence with respect to, or act of, a
Member shall dissolve the Company.  If a Member dissolves, the legal
representative of such Member may exercise all of its rights for the purpose of
administering its Assets, including (but subject to the provisions of this
Agreement) any power it has to assign its Membership Interest and to give an
assignee the right to become a Member of the Company.  All Persons who are
liable for the obligations of any Member shall continue to be liable for the
Liabilities of the Member notwithstanding the Bankruptcy or dissolution of such
Member.

                 (b)      Upon the Bankruptcy of any Member, the Company shall
have the option, exercisable by notice from the Company to such Member (a
"Bankrupt Member") at any time prior to the 180th day after receipt of notice
of the occurrence of an event causing it to become a Bankrupt Member, to buy,
and on the exercise of such option the Bankrupt Member (or its representative)
shall sell to the Company, the Bankrupt Member's Membership Interest.  The
purchase price for such Membership Interest shall be an amount equal to the
fair market value of the Membership Interest as determined by agreement of the
Bankrupt Member (or its representative) and the Company; provided, however,
that if the Bankrupt Member (or its representative) and the Company do not
agree on the fair market value on or before the 30th day following the exercise
of the option, either the Bankrupt Member (or its representative) or the
Company may require the determination of the fair market value to be made by an
independent appraiser specified in a notice made to the other.  If the Bankrupt
Member (or its representative) or the Company receiving such notice objects, on
or before the tenth day following receipt of the notice, to the designation of
the independent appraiser named in the notice, and the Bankrupt Member (or its
representative) and the Company otherwise fail to agree on an independent
appraiser, then either the Bankrupt Member (or its representative) or the
Company may petition a court of appropriate jurisdiction to designate an
appraiser.  The determination of the fair market value of the Membership
Interest made by the independent appraiser, however chosen, shall be final and
binding on all parties.





                                      -17-
<PAGE>   50
                 (c)      The Bankrupt Member and the Company shall each pay
one-half of the costs of the appraisal.  The Company shall pay the fair market
value agreed upon or determined by the appraiser in four equal cash
installments, the first such payment due on the closing of the purchase and one
of the remaining installments (together with accumulated interest on the amount
unpaid) shall be due and payable on each of the next three anniversaries of
such closing until the purchase price shall have been paid in full.  The
payments to be made to the Bankrupt Member (or its representative) under this
Section 4.05(c) are in complete liquidation and satisfaction of all the rights
and interests of the Bankrupt Member (or its representative) and of all Persons
claiming by, through or under the Bankrupt Member (or its representative) in
respect of (i) the Company, including the Membership Interest of the Bankrupt
Member, (ii) any rights in specific Assets of the Company, (iii) any rights
against the Company and (iv) insofar as the affairs of the Company are
concerned, against the other Members.  If at the time a Member becomes a
Bankrupt Member there is only one other Member, such other Member shall have
all of the rights of the Company under this Section 4.05.

                 Section  8.06    Expulsion.  A Member may not be expelled from
the Company.

                 Section  8.07    Actions Reserved to the Members.  The Board
and the President shall not have the right or power to take any of the
following actions without the prior unanimous consent of the Members:


                 (a)      any amendment or restatement of this Agreement or the
Certificate of Formation (including any change in the purpose or scope of
business activities) or the termination of this Agreement;

                 (b)      the admission of new Members to the Company, other
than as a result of a Permitted Transfer;

                 (c)      the issuance of any equity interest in the Company,
or any option, right, warrant or appreciation right relating thereto, or any
other type of equity or debt security that the Company may lawfully issue;

                 (d)      the merger or consolidation of the Company with or
into any other Person or the reorganization, recapitalization, liquidation or
dissolution of the Company;

                 (e)      any investment in, acquisition or purchase of any
stock, partnership, joint venture interest or other security of or any interest
in, or any loan, advance or contribution of capital to, any other Person;

                 (f)      any commencement of an event of Bankruptcy; and

                 (g)      any other action or series of actions which
constitutes a deviation from the stated purposes and business of the Company
under Article III.





                                      -18-
<PAGE>   51
                 Section  8.08    Annual Meetings.  The annual meeting of the
Members shall be held on such date and at such time and place as shall be
determined by the Board unless, in the case of any such annual meeting, another
date, time and/or place is fixed therefor by a majority of the Members.  At
each annual meeting of the Members, the Members shall elect members of the
Board to succeed any members of the Board whose terms have expired or are
scheduled to expire before the next annual meeting of the Members and to
transact such other business as may lawfully come before the meeting.  The
Secretary of the Company shall give at least ten days' advance notice of the
time, place and date of each annual meeting to each Member.

                 Section  8.09    Special Meetings.  Special meetings of the
Members shall be called by the Secretary of the Company upon the request of the
Chairman of the Board or the President of the Company or upon the request of at
least one of the Members.  The Secretary of the Company shall give at least 48
hours' advance notice of the time, place and date of each such special meeting,
and the purpose or purposes for which the meeting is called, to each Member.
Business transacted at any special meeting of the Members shall be limited to
the purposes stated in the notice or any waivers of notice for such meeting.

                 Section  8.10    Quorum and Voting.  The presence of a
majority of the Members shall be necessary and sufficient to constitute a
quorum for the transaction of business at all meetings of the Members.  The
vote of a majority of the Members present at any such meeting at which there is
a quorum shall decide any matter properly submitted to such meeting unless the
matter is one upon which the vote of a greater number of the Members is
required by applicable Law or by express provision of the Certificate of
Formation or this Agreement, in which case the vote of such greater number
shall govern and control the decision of such matter.  If at any meeting of the
Members there shall be less than a quorum present, a majority of the Members
present may adjourn the meeting from time to time until a quorum is obtained.
A meeting of the Members at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of Members; provided, however,
that no action of the remaining Members shall constitute the act of the Members
unless the action is approved by at least a majority of the required quorum for
the meeting or such greater number of Members as shall be required by
applicable Law or by express provision of the Certificate of Formation or this
Agreement.  Attendance by a Member at a meeting shall constitute a waiver of
notice of such meeting except where such Member attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the grounds that the meeting is not lawfully
called or convened.

                 Section  8.11    Telephonic Meetings.  Unless otherwise
restricted by the Certificate of Formation or this Agreement, Members may
participate in a meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear one another, and such participation in a meeting shall
constitute presence in person at such meeting.

                 Section  8.12    Action by Written Consent.  Any action
required or permitted to be taken at a meeting of the Members may be taken
without a meeting if a consent in writing, setting





                                      -19-
<PAGE>   52
forth the action to be taken, shall be signed by all of the Members.  All such
written consents shall be filed with the minutes of proceedings of the Members.

                 Section  8.13    Non-Liability of Members.  No Member shall be
personally liable or responsible for the Liabilities of the Company.

                                 ARTICLE IX

                                CONTRIBUTIONS

                 Section  9.01    Contributions.  (a) Unless otherwise agreed
by the Members, each Member shall deliver to the Company the Capital
Contribution described in Exhibit B contemporaneously with the execution of
this Agreement,.

                 (b)      In exchange for their Capital Contributions, the
Members shall own, hold and be entitled to Membership Interests in the Company
with the Percentage Interests shown on Exhibit B, such Membership Interests to
be subject to all of the terms, provisions and conditions of this Agreement.
Except as otherwise provided for by the Act, the Capital Contribution of each
Member shall constitute the full obligation of such Member to furnish funds or
property to the Company and no additional funds or other property shall be
required of any Member.

                 (c)      Except as otherwise provided in Section 11.07 or as
may otherwise be unanimously agreed by the Members, no Member shall be
required, nor have the right, to make additional Capital Contributions to the
Company.  All costs and expenses of the Company shall be funded out of its
revenues and, if and to the extent approved by the Board pursuant to Section
7.02, borrowing from commercial or institutional lenders, other Third Parties
or the Members or their respective Affiliates.

                 Section  9.02    Interest.  No interest shall be paid by the
Company on any Capital Contribution of any Member or on the balance in the
Capital Account of any Member.

                 Section  9.03    Return of Capital.  A Member shall not be
entitled to have any part of its Capital Contribution or its Capital Account
returned to it or to receive any distributions from the Company, except in
accordance with this Agreement or, if this Agreement is silent in respect of
any particular situation, the Act.  No Capital Contribution shall be deemed or
considered to be a Liability of the Company or any Member.  Except as otherwise
provided in Section 11.07, no Member shall be required to contribute or lend
any cash or property to the Company in order to enable the Company to return
any Member's Capital Contribution.

                 Section  9.04    Advances by Members.  Subject to Section
5.01(c), any Member (or any Affiliate of any Member) may make loans to the
Company in order to satisfy the Liabilities of the Company or further the
business of the Company.  Any such loan shall not be considered a





                                      -20-
<PAGE>   53
Capital Contribution and shall be on such terms and conditions as are
determined between the Company and the Member or Affiliate making such loan;
provided, however, that the rate of interest charged on any such loan may not
exceed the rate (including points or other financing charges or fees) that
would be charged to the Company by unrelated lenders on a comparable loan.

                 Section  9.05    Creditors of the Company.  No creditor of the
Company will have or shall acquire at any time any direct or indirect interest
in the profits, capital or Assets of the Company (other than as a secured
creditor, if applicable, as a result of making a loan to the Company which is
approved by the Board pursuant to Section 7.02).

                                  ARTICLE X

                      CAPITAL ACCOUNTS, ALLOCATIONS AND
                                DISTRIBUTIONS

                 Section  10.01    Capital Accounts.  (a) The Company shall
establish and maintain for each Member a separate Capital Account in accordance
with the rules of Treasury Regulation Section 1.704-1(b)(2)(iv).  To the extent
not inconsistent with such regulation, the Capital Account of each Member shall
be (i) increased by (A) the cash amount or Net Agreed Value of all Capital
Contributions made or deemed made to the Company by such Member pursuant to
this Agreement and (B) all items of Company income and gain (including income
and gain exempt from tax) computed in accordance with Section 6.01(b) and
allocated to such Member pursuant to Section 6.02, and (ii) decreased by (A)
the amount of cash or Net Agreed Value of all actual and deemed distributions
of cash or Assets made to such Member pursuant to this Agreement and (B) all
items of Company deduction and loss computed in accordance with Section 6.01(b)
and allocated to such Member pursuant to Section 6.02.  The Members have agreed
that the Net Agreed Value of the initial Capital Contributions made by each of
them are the amounts set forth on Exhibit B.

                 (b)      For purposes of computing the amount of any item of
income, gain, loss or deduction to be reflected in the Capital Accounts of the
Members, the determination, recognition and classification of any such item
shall be the same as its determination, recognition and classification for
federal income tax purposes (including any method or methods of depreciation,
cost recovery or amortization used for that purpose); provided, however, that:

         (i)     Except as otherwise provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section 754 of the
Code which may be made by the Company and, as to those items described in
Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without regard to the fact
that such items are not includable in gross income or are neither currently
deductible nor capitalized for federal income tax purposes.





                                      -21-
<PAGE>   54
         (ii)    Any income, gain or loss attributable to the taxable
disposition of any Assets of the Company shall be determined as if the adjusted
basis of each such Asset as of the date of disposition was equal in amount to
the Carrying Value with respect to such Asset as of such date.

         (iii)   In accordance with the requirements of Section 704(b) of the
Code, any deductions for depreciation, cost recovery or amortization
attributable to any Contributed Property shall be determined as if the adjusted
basis of such Contributed Property on the date it was acquired by the Company
was equal to the Agreed Value of such Contributed Property.  Upon any
adjustment pursuant to Section 6.01(d) or 6.01(e) to the Carrying Value of any
Assets of the Company subject to depreciation, cost recovery or amortization,
any further deductions for such depreciation, cost recovery or amortization
attributable to such Assets shall be determined (A) as if the adjusted basis of
such Assets was initially equal to the Carrying Value of such Assets
immediately following such adjustment and (B) using a rate of depreciation,
cost recovery or amortization derived from the same method and useful life (or,
if applicable, the remaining useful life) as is applied for federal income tax
purposes; provided, however, that, if any of such Assets has a zero adjusted
basis for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method that
the Tax Matters Member may adopt.

         (iv)    If the Company's adjusted basis in a depreciable or cost
recovery Asset is reduced for income tax purposes pursuant to Section 48(q)(1)
or 48(q)(3) of the Code, the amount of reduction shall, solely for the purposes
hereof, be deemed to be an additional depreciation or cost recovery deduction
in the fiscal year of the Company during which such Asset is placed in service
and shall be allocated among the Members pursuant to Sections 6.02, 6.03 and
6.04 and any restoration of such basis pursuant to Section 48(q)(2) of the Code
shall, to the extent possible, be allocated in the same manner to the Members
to whom such deemed deduction was allocated.

                 (c)      A transferee of a Membership Interest shall succeed
to a pro rata portion of the Capital Account of the transferor relating to the
Membership Interest so transferred.  If, however, the transfer causes a
termination of the Company under Section 708(b)(1)(B) of the Code, the Assets
of the Company shall be deemed to have been contributed to a new company which
will be deemed to be a continuation of, and successor to, the Company, and the
Company will be deemed to make liquidating distributions of the interests in
such new company to the Members (including any transferee of a Membership
Interest that is a party to the transfer causing such termination) pursuant to
Article XI.  Any such deemed distribution shall be treated as an actual
distribution for purposes of this Section 6.01.  In such event, the Carrying
Values of the Assets of the Company shall be adjusted immediately prior to such
deemed contribution and distribution pursuant to Section 6.01(e), and such
Carrying Values shall then constitute the Agreed Values of such Assets upon
such deemed contribution to the reconstituted company.  The Capital Accounts of
such reconstituted company shall be maintained in accordance with the
principles of this Section 6.01.

                 (d)      Consistent with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), upon an issuance of additional Membership
Interests for cash or Contributed Property, the Capital Accounts of the Members
and the Carrying Value of all Assets of the Company





                                      -22-
<PAGE>   55
immediately prior to such issuance shall be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to such Assets, as
if such Unrealized Gain or Unrealized Loss had been recognized on a sale of
such Assets immediately prior to such contribution for an amount equal to its
fair market value.  Any Unrealized Gain or Unrealized Loss attributable to such
Assets shall be allocated in the manner set forth in Section 6.02(b).  In
determining such Unrealized Gain or Unrealized Loss, the aggregate cash amount
and fair market value of all Assets of the Company (including cash or cash
equivalents) immediately prior to the issuance of additional Membership
Interests shall be determined by the Tax Matters Member using such reasonable
method of valuation as it may adopt.

                 (e)      In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed distribution to
a Member of any Assets of the Company (other than a distribution of cash that
is not in redemption or retirement of a Membership Interest), the Capital
Accounts of all Members and the Carrying Value of all Assets of the Company
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Assets, as if such Unrealized Gain or
Unrealized Loss had been recognized on a sale of such Assets immediately prior
to such distribution for an amount equal to its fair market value.  Any
Unrealized Gain or Unrealized Loss attributable to such Assets shall be
allocated in the same manner as set forth in Section 6.02(b).  In determining
such Unrealized Gain or Unrealized Loss, the aggregate cash amount and fair
market value of all Assets of the Company (including cash or cash equivalents)
immediately prior to a distribution shall be determined and allocated among
such Assets by the Tax Matters Member using such reasonable method of valuation
as it may adopt.

                 (f)      If the Company's items of income, gain, loss or
deduction are adjusted by any taxing authority by reason of a transaction
between the Company and a member of a group of organizations under common
ownership or control (of which the Company is also a member), including
adjustments pursuant to Section 482 of the Code or any similar provisions under
state, local or foreign Law (any such adjustment, a "Tax Adjustment") and such
Tax Adjustment results in a deemed Capital Contribution to the Company by any
Member or a deemed distribution by the Company to any Member, (i) the Capital
Account of any Member that is deemed to have made any such Capital Contribution
shall be increased by the amount of such Capital Contribution and (ii) the
Capital Account of any Member that is deemed to have received any such deemed
distribution shall be reduced by the amount of such distribution.  In general,
the adjustments to Capital Accounts pursuant to this Section 6.01(f) are
intended to cause, after taking into account the adjustments to Capital
Accounts pursuant to this Section 6.01(f) and Section 6.02(c)(ix), the balance
in each Member's Capital Account, to the extent possible, to be equal to the
balance which would have been in such Capital Account if no Tax Adjustment had
occurred.

                 Section 6.02.  Allocations for Capital Account Purposes.  (a)
For purposes of allocating among the Members the items computed under Section
6.01(b) to be reflected in the Capital Accounts of the Members, subject to the
special allocations set forth in Section 6.02(c), all items of income, gain,
loss, deduction and credit of the Company taken into account in computing Net
Income or Net Loss with respect to any fiscal year of the Company, shall be
allocated among





                                      -23-
<PAGE>   56
the Members in each fiscal year of the Company (or portion thereof) in
accordance with their Percentage Interests. For purposes of allocating items of
income, gain, loss, deduction and credit among the Members in any fiscal year
of the Company during which the Percentage Interests of the Members change as a
result of any event, such items shall be allocated as if the books of the
Company were closed on the date of such change in Percentage Interests.

                 (b)      After giving effect to the special allocations set
forth in 6.02(c), all items of income, gain, loss and deduction taken into
account in computing Net Termination Gain or Net Termination Loss for the
fiscal year that includes the date on which the Company is liquidated (and any
subsequent fiscal year) shall be allocated in the same manner as such Net
Termination Gain or Net Termination Loss is allocated hereunder.  All
allocations under this Section 6.02(b) shall be made after balances of the
Capital Accounts have been adjusted by all other allocations provided under
this Section 6.02 and after all distributions provided under Section 6.04 have
been made.

                 If a Net Termination Gain is recognized (or deemed recognized
pursuant to Section 6.01(d) or (e)), such Net Termination Gain shall be
allocated among the Members in the following manner (and the Capital Accounts
of the Members shall be increased by the amount so allocated in each of the
following subclauses, in the order listed, before an allocation is made
pursuant to the next succeeding subclause):

         (i)     first, to each Member having a deficit balance in its Capital
Account, in the proportion that such deficit balance bears to the total deficit
balances in the Capital Accounts of all Members, until each such Member has
been allocated Net Termination Gain equal to any such deficit balance in its
Capital Account;

         (ii)    second, 100% to the Members whose Capital Accounts have a
balance which is less than the product of (A) the Percentage Interest of such
Member times (B) the total balance of the Capital Accounts of all Members
until, to the extent possible, the relative ratios of the balances of the
Capital Accounts of the Members are equal to their respective Percentage
Interests; and

         (iii)   third, to the Members in accordance with their respective
Percentage Interests.

                 If a Net Termination Loss is recognized (or deemed recognized
pursuant to Section 6.01(d) or 6.01(e)), such Net Termination Loss shall be
allocated among the Members in the following manner (and the Capital Accounts
of the Members shall be decreased by the amount so allocated in each of the
following subclauses, in the order listed, before an allocation is made
pursuant to the next succeeding subclause):

         (i)     first, 100% to the Members whose Capital Accounts have a
balance which is greater than the product of (A) the Percentage Interest of
such Members times (B) the total of the balances of the Capital Accounts of all
Members until, to the extent possible, the relative ratios of the balances of
the Capital Accounts of the Members are equal to their respective Percentage
Interests; and





                                      -24-
<PAGE>   57
         (ii)    second, to the Members in accordance with their respective
Percentage Interests.

                 (c)      Notwithstanding the foregoing, the following special
allocations shall be made:

         (i)     Notwithstanding any other provision of this Section 6.02, if
there is a net decrease in the amount of any Partnership Minimum Gain during
any taxable year of the Company, each Member shall be allocated items of income
and gain of the Company for such period (and, if necessary, subsequent periods)
in the manner and amounts provided in Treasury Regulation Sections
1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision.
For purposes of this Section 6.02(c), the balance of the Adjusted Capital
Account of each Member shall be determined, and the allocation of income or
gain required hereunder shall be effected, prior to the application of any
other allocations pursuant to this Section 6.02(c) with respect to such taxable
year (other than an allocation pursuant to Sections 6.02(c)(v) and
6.02(c)(vi)).  This Section 6.02(c)(i) is intended to comply with the minimum
gain chargeback requirement of Treasury Regulation Section 1.704-2(f) and shall
be interpreted and applied in a manner consistently therewith.

         (ii)    Notwithstanding any other provision of this Section 6.02
(other than Section 6.02(c)(i)), except as provided in Treasury Regulation
Section 1.704-2(i)(4), if there is a net decrease in the amount of any Partner
Nonrecourse Debt Minimum Gain during any taxable year of the Company, any
Member with a share of Partner Nonrecourse Debt Minimum Gain at the beginning
of such taxable year shall be allocated items of income and gain of the Company
for such period (and, if necessary, subsequent periods) in the manner and
amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions.  For purposes of this Section
6.02(c), the balance of the Adjusted Capital Account of each Member shall be
determined, and the allocation of income or gain required hereunder shall be
effected, prior to the application of any other allocations pursuant to this
Section 6.02(c), other than Section 6.02(c)(i) and other than an allocation
pursuant to Sections 6.02(c)(v) and 6.02(c)(vi), with respect to such taxable
period.  This Section 6.02(c)(ii) is intended to comply with the minimum gain
chargeback requirements of Treasury Regulation Section 1.704-2(i)(4) and shall
be interpreted and applied consistently therewith.

         (iii)   If any Member unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6),
items of income and gain of the Company shall be specially allocated to such
Member in an amount and manner sufficient to eliminate, to the extent required
by the Treasury Regulations promulgated under Section 704(b) of the Code, the
deficit balance, if any, in the Adjusted Capital Account of such Member created
by such adjustments, allocations or distributions as quickly as possible.

         (iv)    In the event that any Member has a deficit balance in its
Adjusted Capital Account at the end of any taxable period of the Company, such
Member shall be specially allocated items of gross income and gain of the
Company in the amount of such excess as quickly as possible;





                                      -25-
<PAGE>   58
provided, however, that an allocation pursuant to this Section 6.02(c)(iv)
shall be made only if and to the extent that such Member would have a deficit
balance in its Adjusted Capital Account after all other allocations provided
for in this Section 6.02 have been tentatively made as if this Section
6.02(c)(iv) were not in this Agreement.

         (v)     Nonrecourse Deductions for any taxable period shall be
allocated to the Members in accordance with their Percentage Interests.  If the
Tax Matters Member determines in its good faith discretion that the Nonrecourse
Deductions of the Company must be allocated in a different ratio to satisfy the
safe harbor requirements of the Treasury Regulations promulgated under Section
704(b) of the Code, the Tax Matters Member is authorized, upon notice to the
other Members, to revise the prescribed ratio to the numerically closest ratio
that does satisfy such requirements.

         (vi)    Partner Nonrecourse Deductions for any taxable period shall be
allocated 100% to the Member that bears the Economic Risk of Loss with respect
to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Treasury Regulation Section 1.704-2(i).  If
more than one Member bears the Economic Risk of Loss with respect to a Partner
Nonrecourse Debt, such Partner Nonrecourse Deductions attributable thereto
shall be allocated between or among such Members in accordance with the ratios
in which they share such Economic Risk of Loss.

         (vii)   For purposes of Treasury Regulation Section 1.752-3(a)(3), the
Members agree that Nonrecourse Liabilities of the Company in excess of the sum
of (A) the amount of Partnership Minimum Gain and (B) the total amount of
Nonrecourse Built-in Gain shall be allocated among the Members in accordance
with the manner in which it is reasonably expected that the deductions
attributable to those excess Nonrecourse Liabilities will be allocated.

         (viii)  To the extent an adjustment to the adjusted tax basis of any
Asset of the Company pursuant to Section 734(b) or 743(b) of the Code is
required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be
taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall treated as an item of gain (if the
adjustment increases the basis of the Asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Members in a manner consistent with the manner in which their
respective Capital Accounts are required to be adjusted pursuant to such
Section of the Treasury Regulations.

         (ix)    In the event that a deduction or loss is imputed to the
Company as a result of the imputation of income or gain to any Member by any
taxing authority, such resulting deduction or loss shall be allocated among the
Members in the same proportion as the Members are required to recognize the
corresponding income or gain.  In the event that income or gain is imputed to
the Company as a result of the imputation of a deduction or loss to any Member,
such resulting income or gain shall be allocated among the Members in the same
proportion as the Members are required to recognize the corresponding deduction
or loss.  In general, the allocations pursuant to this Section 6.02(c)(ix), are
intended to cause, after taking into account this Section 6.02(c)(ix) and the





                                      -26-
<PAGE>   59
adjustments to Capital Accounts pursuant to Section 6.01(f), the balance of the
Capital Account of each Member, to the extent possible, to be equal to the
balance such Capital Account would have had if no Tax Adjustment had occurred.

         (x)     Notwithstanding any other provision of this Section 6.02,
other than the Required Allocations, the Required Allocations shall be taken
into account in making the Agreed Allocations so that, to the extent possible,
the net amount of items of income, gain, loss and deduction allocated to each
Member pursuant to the Required Allocations and the Agreed Allocations,
together, shall be equal to the net amount of such items that would have been
allocated to each such Member under the Agreed Allocations had the Required
Allocations and the related Curative Allocations not otherwise been provided in
this Section 6.02.  Notwithstanding the preceding sentence, Required
Allocations relating to (A) Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a decrease in Partnership
Minimum Gain and (B) Partner Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a decrease in Partner
Nonrecourse Debt Minimum Gain.  Allocations pursuant to this Section 6.02(c)(x)
shall only be made with respect to Required Allocations to the extent that the
Tax Matters Member reasonably determines that such Required Allocations will
otherwise be inconsistent with the economic agreement among the Members.
Further, allocations pursuant to this Section 6.02(c)(x) shall be deferred with
respect to allocations pursuant to clauses (A) and (B) hereof to the extent the
Tax Matters Member reasonably determines that such allocations are likely to be
offset by subsequent Required Allocations.

                 Section 6.03.  Allocations for Tax Purposes.  (a)  Except as
otherwise provided herein, for tax purposes, each item of income, gain, loss
and deduction shall be allocated among the Members in the same manner as its
correlative item of "book" income, gain, loss or deduction is allocated
pursuant to Section 6.02.

                 (b)      In an attempt to eliminate Book-Tax Disparities
attributable to a Contributed Property or Adjusted Property, items of income,
gain, loss, depreciation, amortization and cost recovery deductions shall be
allocated for tax purposes among the Members as follows:

         (i) (A) in the case of a Contributed Property, such items attributable
thereto shall be allocated among the Members in the manner provided under
Section 704(c) of the Code that takes into account the variation between the
Agreed Value of such Contributed Property and its adjusted basis at the time of
contribution; and

         (B)     except as otherwise provided in Section 6.03(b)(iii), any item
of Residual Gain or Residual Loss attributable to a Contributed Property shall
be allocated among the Members in the same manner as its correlative item of
"book" gain or loss is allocated pursuant to Section 6.02(a);

         (ii) (A)  in the case of an Adjusted Property, such items shall (x)
first, be allocated among the Members in a manner consistent with the
principles of Section 704(c) of the Code to take into account the Unrealized
Gain or Unrealized Loss attributable to such Adjusted Property and the





                                      -27-
<PAGE>   60
allocations thereof pursuant to Section 6.01(d) or 6.01(e), and (y) second, in
the event such Adjusted Property was originally a Contributed Property, be
allocated among the Members in a manner consistent with Section 6.03(b)(i); and

         (B)     except as otherwise provided in Section 6.03(b)(iii), any item
of Residual Gain or Residual Loss attributable to an Adjusted Property shall be
allocated among the Members in the same manner as its correlative item of
"book" gain or loss is allocated pursuant to Section 6.02(a);

         (iii)   any items of income, gain, loss, or deduction otherwise
allocable under Sections 6.03(a), 6.03(b)(i)(B) or 6.03(b)(ii)(B), at the
election of the Tax Matters Member, shall be subject to allocation in the
manner allowed under Treasury Regulation Section 1.704-3 to eliminate Book-Tax
Disparities in a Contributed Property or Adjusted Property otherwise resulting
from the application of the "ceiling" limitation (under Section 704(c) of the
Code or related principles) to the allocations provided under Sections
6.03(b)(i)(A) or 6.03(b)(ii)(A);

         (iv)    notwithstanding anything to the contrary contained in this
Agreement, the Company shall not elect to eliminate Book-Tax Disparities
pursuant to Treasury Regulation Section 1.704-3(d) and shall limit the curative
allocations under Treasury Regulation Section 1.704-3(c) to income, gain, loss
and deductions attributable to Assets of the Company with respect to which the
Book-Tax Disparity exists; and

         (v)     notwithstanding anything to the contrary contained in this
Agreement, it is not intended that items of income or gain be allocated under
this Section 6.03(b) and Treasury Regulation Section 1.704-3 with respect to an
intangible Asset of the Company that is not an "amortizable section 197
intangible" under Section 197(f)(9) of the Code, even though the Tax Matters
Member may elect, pursuant to Section 6.01(b)(iii), to amortize the Carrying
Value with respect to such intangible Asset for purposes of maintaining the
Capital Accounts of the Members.

                 (c)      Any gain allocated to the Members upon the sale or
other taxable disposition of any Asset of the Company shall, to the extent
possible, after taking into account other required allocations of gain pursuant
to this Section 6.03, be characterized as Recapture Income in the same
proportions and to the same extent as such Member (or their predecessors in
interest) have been allocated any deductions directly or indirectly giving rise
to the treatment of such gains as Recapture Income.

                 (d)      All items of income, gain, loss, deduction and credit
recognized by the Company for tax purposes and allocated to the Members in
accordance with the provisions hereof shall be determined without regard to any
election under Section 754 of the Code which may be made by the Company;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.





                                      -28-
<PAGE>   61
                 (e)      As between a transferor and transferee of any
Membership Interest, each item of income, gain, loss, deduction or credit
attributable to the transferred Membership Interest shall, for tax purposes, be
allocated among the transferor and transferee as if the books of the Company
were closed on the date of the transfer and (i) all items of income, gain,
loss, deduction or credit attributable to the period ending on or before the
date of the transfer shall be allocated to the transferor and (ii) all items of
income, gain, loss, deduction or credit attributable to the period beginning on
the day after the date of the transfer shall be allocated to the transferee.

                 Section 6.04.  Distributions.  At such time or times as the
Board determines, the Company shall make distributions of cash to the Members
in proportion to their respective Membership Interests on the date of such
distribution.

                 Section 6.05.  Distributions in Kind.  The Company may
distribute Assets of the Company to the Members in kind as the Members may
unanimously agree.  All distributions of Assets of the Company in kind (other
than in connection with the winding up and liquidation of the Company) shall be
made in proportion to the respective Percentage Interests of the Members on the
date of any such distribution and may be (as the Members specifically provide)
subject to existing Liabilities.

                 Section 6.06.  Limitations on Distributions.  Notwithstanding
anything to the contrary contained in this Agreement, the Company shall not
make any distribution of any of its Assets to a Member to the extent that such
distribution is not permitted under the Act; provided, however, that a Member
who receives a distribution of any Assets of the Company that is not permitted
under the terms of Section 18-607 of the Act shall have no Liability under the
Act or this Agreement to return such distribution unless the Member knew that
such distribution violated the terms of such Section.

                                  ARTICLE VII

                               Board of Managers

                 Section 7.01.  Management.  Except as otherwise provided by
applicable Law or by express provision of the Certificate of Formation or this
Agreement, the direction and management of the affairs of the Company and the
control and disposition of its Assets shall be vested in a board of managers
(the "Board").  In addition to the powers and authorities expressly conferred
upon the Board by this Agreement, the Board may exercise all the powers of the
Company and do all such lawful acts and things as are not by applicable Law,
the Certificate of Formation or this Agreement directed or required to be
exercised or done by the Members.

                 Section 7.02.  Actions Requiring Board Approval.  The Company
may not take any of the following actions unless such action is required by
this Agreement or has been approved by a majority of the Whole Board:





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         (a)     any amendment to the Certificate of Formation of the Company
or this Agreement, including any change in the name of the Company or its
purpose, scope or structure;

         (b)     adoption of the Company's financial statements and business
reports;

         (c)     any change in the Capital Contributions or Capital Accounts of
the Members;

         (d)     approval of the Annual Business Plan or any material revision
to the Annual Business Plan;

         (e)     any making of, or any commitment to make, any Major
Expenditure or Major Acquisition;

         (f)     any borrowing of funds by the Company from any Member or any
other Person or the issuance of any bonds, debentures or other debt or equity
securities;

         (g)     the sale, transfer, lease or otherwise disposition of any
Asset of the Company (other than pursuant to a Contract entered into pursuant
to an Annual Business Plan) if the aggregate fair market value of the Assets
disposed of in a single transaction exceeds $75,000;

         (h)     the incurrence of any Lien (other than a Permitted Lien) on
any Asset of the Company;

         (i)     the discontinuation of the business of the Company or the
liquidation of the Company;

         (j)     any action which would constitute an event of Bankruptcy with
respect to the Company;

         (k)     any change in the distribution of the profits or retained
earnings of the Company;

         (l)     the initiation of any litigation or arbitration or other
proceedings, or the settlement of any disputes, involving Claims in excess of
$75,000;

         (m)     the appointment of any successor to the President; and

         (n)     the selection of a firm of independent certified public
accountants to audit the books of account of the Company and outside attorneys
to represent the Company.

In the event that a majority of the Board fails to approve or disapprove of any
of the foregoing matters which is submitted to the Board for its consideration
within 30 days of its submission to the Board, the Representatives shall
promptly, but in any event within ten days after the expiration of





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such 30-day period, advise their respective chief executive officers ("CEOs")
of such failure and submit such matter to their respective CEOs for resolution.

                 Section 7.03.  Number, Qualification and Term of Office.  (a)
Until the number of Managers constituting the whole Board is changed by an
amendment to this Agreement, the number of Managers constituting the whole
Board (the "Whole Board") shall be ***.  Each Representative shall (i) be a
director, officer or employee of the Member that appointed such Representative
(or an Affiliate of such Member) and (ii) be the agent of the Member that
designated such Representative.  Accordingly, (A) each Representative shall act
(or refrain from acting) with respect to the business and affairs of the
Company solely in accordance with the wishes of the Member that designated such
Representative and (B) no Representative shall owe (or be deemed to owe) any
duty (fiduciary or otherwise) to the Company or to any Member other than the
Member that designated such Representative; provided, however, that nothing
contained in this Agreement is intended to or shall relieve or discharge any
Representative or Member from liability to the Company or the Members on
account of any fraudulent or intentional misconduct of or a knowing violation
of Law by such Representative or any transaction from which a Manager derived
an improper personal benefit and, provided further, that each Representative
shall not disclose any material information regarding the business of the
Company and shall not use such information, in either case, in any manner not
related to the business of the Company.

                 (b)      No decrease in the number of Managers shall have the
effect of requiring the removal of, or shortening the term of, any Manager then
in office.  No Manager needs to be a Member or a resident of the State of
Delaware.

                 (c)      Each Manager shall serve for a term of office
commencing on the effective date of his or her appointment until the first
annual meeting of the Members held after the effective date of his or her
appointment and until his or her successor shall have been duly appointed and
qualified or until his or her earlier death, resignation or removal.  Any
Manager whose term of office is scheduled to expire may be appointed to succeed
himself or herself.

                 Section 7.04.  Appointments.  Appointments of persons to the
Board shall be made by BP (in the case of the BP Representatives) and by
Sterling (in the case of the Sterling Representatives).  Appointments to the
Board by a Member shall be set forth in a notice to the Board and the other
Members, each such notice to set forth the exact name of each person so
appointed and such person's age, principal occupation, business and residence
address and telephone number.  Notwithstanding anything in this Agreement to
the contrary, only persons who are appointed to the Board in accordance with
the procedures set forth in this Section 7.04 (or who are appointed pursuant to
Section 7.07 below) shall be appointed as Managers.

                 Section 7.05.  Resignation.  Each Manager shall have the right
to resign at any time upon written notice thereof to the Board or the President
of the Company.  Unless otherwise specified in the notice, any such resignation
shall take effect upon receipt thereof, and the acceptance of such resignation
shall not be necessary to make it effective.





                                      -31-
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                 Section 7.06.  Removal.  BP may remove any BP Representative
at any time, with or without cause, and Sterling may remove any Sterling
Representative at any time, with or without cause.  The Board may not remove
any Manager.  Except as otherwise provided in this Section 7.06, a Manager may
not be removed prior to expiration of his or her term as Manager.

                 Section 7.07.  Vacancies.  A vacancy shall be declared in any
seat on the Board upon (a) the death, resignation or removal of the occupant
thereof or (b) any increase in the number of Managers in accordance with this
Agreement.  Any vacancy occurring in the Board which results from the death,
resignation or removal of a BP Representative may only be filled by BP and any
vacancy occurring the Board which results from the death, resignation or
removal of a Sterling Representative may only be filled by Sterling.  Any
Manager so elected shall serve for the remaining portion of the term of the
Manager whose death, resignation or removal resulted in such vacancy and until
his or her successor shall have been duly elected and qualified or until his or
her earlier death, resignation or removal.  In the event that the number of
Managers constituting the Board is increased, the vacancy resulting from such
increase may only be filled by a majority of the Managers then in office and
any Manager so appointed shall serve until his or her successor shall have been
duly elected and qualified or until his or her earlier death, resignation or
removal.

                 Section 7.08.  Regular Meetings.  The annual meeting of the
Board shall be held on such date and at such time and place as the Board shall
from time to time determine. At each annual meeting of the Board, the Board
shall (a) subject to Section 8.01, elect officers of the Company to succeed any
officers whose terms of office are scheduled to expire and (b) transact such
other business as may lawfully come before the meeting.  The annual meeting of
the Board shall be deemed to be a regular meeting.  Additional regular meetings
of the Board shall be held on such dates and at such times and places as the
Board shall from time to time determine; provided, however, that (i) the Board
shall have at least four regular meetings during each calendar year and (ii) at
least two of such meetings shall be held in person (i.e., without any
participation by members of the Board by means of conference telephone or
similar communications equipment).  At each additional regular meeting of the
Board, the Board shall transact such business as may lawfully come before such
meeting.  The Secretary of the Company shall give at least 30 days' advance
notice of the time, place and date of each regular meeting to each Manager,
which notice shall include the agenda for the meeting.  Any Member may, with at
least one business day's advance notice, add items to the agenda for the
meeting; provided, however, that if the item of business is approval of any
matter described in Section 7.02 above, the other Managers must receive at
least 30 days' advance notice that such item will be considered at the meeting.
Unless otherwise agreed by a majority of the Whole Board, the only matters
which will be considered at a regular meeting of the Board shall be those items
set forth in the agenda provided with the notice of the meeting and any items
added to such agenda by a Member in accordance with the notice provisions of
this Section 7.08.  Each Manager shall be solely responsible for the payment of
any and all costs and expenses incurred in connection with the participation by
such Manager in or at any regular meeting of the Board.





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<PAGE>   65
                 Section 7.09.  Special Meetings.  Special meetings of the
Board shall be held whenever called by the Secretary of the Company upon the
request of the Chairman of the Board or the President of the Company or upon
the request of at least one of the BP Representatives and at least one of the
Sterling Representatives.  The Secretary of the Company shall give at least 48
hours' advance notice of the date, time, place and purpose of each such special
meeting to each Manager.  Business transacted at any special meeting of the
Board shall be limited to the purposes stated in the notice or any waivers of
notice of such meeting.  Each Manager shall be solely responsible for the
payment of any and all costs and expenses incurred in connection with the
participation by such Manager in or at any special meeting of the Board.

                 Section 7.10.  Discussions Among Members and Representatives.
Each of the Members acknowledges and agrees that it will not, and will cause
its Representatives to not, disclose to or discuss with any other Member or any
Representatives of any other Member, information regarding such Member's
operations and related to any of the following matters:

         (a)     prices, pricing formulas, discounts, credit terms or any other
Contract terms or conditions of sale with respect to the sale of any product,
co-product or by-product in the United States, Canada or Mexico;

         (b)     markets, customers or marketing strategies for the sale of
products, co-products or by-products in the United States, Canada or Mexico,
including any refusal to deal with any customer or potential customer;

         (c)     sales results for products, co-products or by-products in the
United States, Mexico or Canada;

         (d)     imports of products, co-products or by-products into the
United States, Mexico or Canada;

         (e)     profits projections or analyses in the United States, Canada
or Mexico;

         (f)     confidential, individual statistical data or competitive plans
or forecasts for the United States, Mexico or Canada; or

         (g)     bids or an intent to bid or not bid for any Contract,
standardization of bidding or any other kind of communication with respect to
bidding or not bidding for Contracts in the United States, Mexico or Canada;

provided, however, that the foregoing restriction shall not apply to the
disclosure or discussion of any information to the extent that such information
is in the public domain and such disclosure or discussion is limited to
purposes which are reasonably necessary for the exporting activities of the
Company.  In addition, each of the Members acknowledges and agrees that it will
not, and will cause its Representatives to not, discuss any business of the
Company through informal meetings or other





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interactions with any other Member or any Representatives of any other Member,
it being the intention of the Members that all such discussions shall take
place at meetings of the Board.

                 Section 7.11.  Quorum and Voting.  The presence of a majority
of the Whole Board, in person or by proxy, shall be necessary and sufficient to
constitute a quorum for the transaction of business at all meetings of the
Board.  The vote of a majority of the Whole Board at any such meeting at which
there is a quorum shall decide any matter properly submitted to such meeting
unless the matter is one upon which the vote of a greater number of the
Managers is required by applicable law or by express provision of the
Certificate of Formation or this Agreement, in which event the vote of such
greater number shall govern and control the decision of such matter.   If at
any meeting of the Board there shall be less than a quorum present, a majority
of the Managers present may adjourn the meeting from time to time until a
quorum is obtained.  A meeting of the Board at which a quorum is initially
present may continue to transact business notwithstanding the withdrawal of
Managers; provided, however, that no action of the remaining Managers shall
constitute the act of the Board unless the action is approved by at least a
majority of the Whole Board or such greater number of Managers as shall be
required by applicable Law or by express provision of the Certificate of
Formation or this Agreement.  Attendance by a Manager at a meeting shall
constitute a waiver of notice of such meeting except where such Manager attends
a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the grounds that the meeting is
not lawfully called or convened.

                 Section 7.12.  Proxies.  (a)  Each Manager may, by a proxy
executed in writing by such Manager or by his or her duly authorized
attorney-in-fact, authorize another person or persons to act for him or her, to
vote at any meeting of the Board or to express consent or dissent to any action
of the Company without a meeting.  Each such proxy shall be filed with the
Secretary of the Company at or before the beginning of any meeting at which
such proxy is to be voted.  Unless otherwise provided therein, no proxy shall
be valid after the term of the Manager issuing such proxy has expired or, in
any event, after three years from the date of its execution.  Each proxy shall
be revocable unless expressly provided therein to be irrevocable and coupled
with an interest sufficient in law to support an irrevocable power or unless
otherwise made irrevocable by applicable Law.

                 (b)      A proxy shall be deemed signed if the Manager's name
is placed on the proxy (whether by manual signature, electronic transmission or
otherwise) by the Manager or his or her attorney-in-fact.  In the event any
proxy shall designate two or more persons to act as proxies, a majority of such
persons present at the meeting (or, if only one shall be present, then that
one) shall have and may exercise all the powers conferred by the proxy upon all
the persons so designated unless the proxy shall otherwise provide.

                 (c)      Except as otherwise provided by applicable Law, the
Certificate of Formation or his Agreement, the Board may, in advance of any
meeting of the Managers, prescribe additional regulations concerning the manner
of execution and filing of proxies (and the validation of same) which may be
voted at such meeting.





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                 Section 7.13. Action by Written Consent.  Any action required
or permitted to be taken at a meeting of the Board may be taken without a
meeting if a consent in writing, setting forth the action to be taken, shall be
signed by all members of the Board and such consent shall have the same force
and effect as a unanimous vote at a meeting.  All such written consents shall
be filed with the minutes of proceedings of the Board.

                 Section 7.14.  Telephonic Meetings. Unless otherwise
restricted by the Certificate of Formation or this Agreement, members of the
Board may participate in a meeting of the Board by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at such meeting.

                 Section 7.15.  Interests in Other Entities.  Any action
required or permitted to be taken by the Company in its capacity as a member,
stockholder or holder of any other equity interest in any other entity may only
be taken upon the affirmative vote of a majority of the Whole Board.

                 Section 7.16.  Indemnification of Managers, Officers and
Others.  (a) The Company (i) shall, to the maximum extent permitted from time
to time under the Laws of the State of Delaware, indemnify every person who is
or was a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Company), by reason of the fact that such person is or was a Manager or officer
of the Company or is or was serving at the request of the Company as a manager,
director, officer or fiduciary of another Person (each such person, a "Company
Fiduciary"), and (ii) may, to the maximum extent permitted from time to time
under the Laws of the State of Delaware, indemnify every person who is or was a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Company), by
reason of the fact that such person is or was an employee or agent of the
Company or any of its direct or indirect subsidiaries or is or was serving at
the request of the Company or any of its direct or indirect subsidiaries as an
employee or agent of another Person, against expenses (including counsel fees),
judgments, fines and amounts paid or owed in settlement actually and reasonably
incurred by such person or rendered or levied against such person in connection
with such action, suit or proceeding; provided, however, that no
indemnification shall be made to any person under this Section 7.16(a) unless
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Company and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.  The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent shall not, in itself, create a presumption that the person did
not act in good faith and in a manner which such person reasonably believed to
be in or not opposed to the best interests of the Company or, with respect to
any criminal action or proceeding, that the person had reasonable cause to
believe that his or her conduct was unlawful.  Any person seeking
indemnification under this Section 7.16(a) shall be deemed to have met the
standard of conduct required for such indemnification unless the contrary is
established.





                                      -35-
<PAGE>   68
                 (b)      The Company (i) shall, to the maximum extent
permitted from time to time under the laws of the State of Delaware, indemnify
every person who is or was a party or who is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
Company to procure a judgment in its favor by reason of the fact that such
person is or was a Company Fiduciary, and (ii) may, to the maximum extent
permitted from time to time under the laws of the State of Delaware, indemnify
every person who is or was a party or who is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
Company to procure a judgment in its favor by reason of the fact that such
person is or was an employee or agent of the Company or any of its direct or
indirect subsidiaries or is or was serving at the request of the Company or any
of its direct or indirect subsidiaries as an employee or agent of another
Person against expenses (including counsel fees) actually and reasonably
incurred by such person in connection with the defense or settlement or such
action or suit if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Company; provided, however, that no indemnification shall be made to any person
under this Section 7.16(b) with respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Company unless
and only to the extent that, despite the adjudication of liability but in view
of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnification.

                 (c)      Unless otherwise determined by the affirmative vote
of a majority of the Whole Board, no indemnification shall be made to any
person under Section 7.16(a) or Section 7.16(b):

         (i)     for amounts actually paid to such person pursuant to one or
more policies of managers, directors and officers liability insurance
maintained by the Company or pursuant to a trust fund, letter of credit or
other security or funding arrangement provided by the Company; provided,
however, that if it should subsequently be determined that such person is not
entitled to retain any such amount, this clause (i) shall no longer apply to
such amount;

         (ii)    in respect of remuneration paid to such person if it shall be
determined by a final judgment or other final adjudication that payment of such
remuneration was in violation of applicable Law;

         (iii)   on account of such person's conduct which is finally adjudged
to constitute willful misconduct or to have been knowingly fraudulent,
deliberately dishonest or from which such person derives an improper personal
benefit; or

         (iv)    on account of any suit in which final judgment is rendered
against such person for an accounting of profits made from the sale or purchase
by such person of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended.

                 (d)      Expenses, including counsel fees and court costs,
actually and reasonably incurred by a Company Fiduciary in defending a civil or
criminal action, suit or proceeding shall be





                                      -36-
<PAGE>   69
paid by the Company in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such Company
Fiduciary to repay such amount if it shall ultimately be determined that he or
she is not entitled to be indemnified by the Company as authorized in this
Section 7.16.  Such expenses incurred by other employees and agents of the
Company and other persons eligible for indemnification under this Section 7.16
may be paid upon such terms and conditions, if any, as the Board deems
appropriate.

                 (e)      The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 7.16 shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any provision of Law, the
Certificate of Formation, the certificate of incorporation or bylaws or other
governing documents of any direct or indirect subsidiary of the Company, under
any agreement, vote of Members or disinterested Managers or under any policy or
policies of insurance maintained by the Company on behalf of any person or
otherwise, both as to action in his or her official capacity and as to action
in another capacity while holding any of the positions or having any of the
relationships referred to in this Section 7.16.

                 (f)      The provisions of this Section 7.16 (i) are for the
benefit of, and may be enforced directly by, each Company Fiduciary, the same
as if set forth in their entirety in a written instrument executed and
delivered by the Company and such Company Fiduciary, and (ii) constitute a
continuing offer to all present and future Company Fiduciaries.  The Members,
on behalf of the Company, (A) acknowledge and agree that each present and
future Company Fiduciary has relied upon and will continue to rely upon the
provisions of this Section 7.16 in becoming, and serving as, a Company
Fiduciary, (B) waive reliance upon, and all notices of acceptance of, such
provisions by such Company Fiduciaries and (C) acknowledge and agree that no
present or future Company Fiduciary shall be prejudiced in his or her right to
enforce directly the provisions of this Section 7.16 in accordance with their
terms by any act or failure to act on the part of the Company.

                 (g)      The provisions of this Section 7.16 shall continue as
to any person who has ceased to be a Company Fiduciary and shall inure to the
benefit of the estate, executors, administrators, heirs, legatees and devisees
of any person entitled to indemnification under this Section 7.16.

                 (h)      No amendment, modification or repeal of this Section
7.16 or any provision hereof shall in any manner terminate, reduce or impair
the right of any past, present or future Company Fiduciary to be indemnified by
the Company, nor the obligation of the Company to indemnify any such Company
Fiduciary, under and in accordance with the provisions of this Section 7.16 as
in effect immediately prior to such amendment, modification or repeal with
respect to claims arising, in whole or in part, from a state of facts extant on
the date of, or relating to matters occurring prior to, such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.





                                      -37-
<PAGE>   70
                 (i)      For purposes of this Section 7.16, references to the
Company shall be deemed to include any predecessor Person and any constituent
Person absorbed in a merger, consolidation or other reorganization of or by the
Company which, if its separate existence had continued, would have had power
and authority to indemnify its managers, directors, officers, employees, agents
and fiduciaries so that any person who was a manager, director, officer,
employee, agent or fiduciary of such predecessor or constituent Person, or
served at the request of such predecessor or constituent Person as a manager,
director, officer, employee, agent or fiduciary of another Person, shall stand
in the same position under the provisions of this Section 7.16 with respect to
the Company as such person would have with respect to such predecessor or
constituent Person if its separate existence had continued.

                                  ARTICLE VIII

                                    Officers

                 Section 8.01.  Number, Election, Qualification and Term of
Office.  (a) The officers of the Company shall be a Chairman of the Board, a
President, one or more Vice Presidents, a Secretary, a Treasurer and such other
officers as may be determined by the Board from time to time.  At each annual
meeting of the Board at which a quorum shall be present, a Majority of the
Whole Board shall elect officers of the Company to succeed any officers whose
terms of office are scheduled to expire; provided, however, that the sole right
to appoint the Chairman of the Board shall alternate between Sterling and BP
for the periods between the annual meetings of the Board, with Sterling having
the sole right to appoint, remove and replace the Chairman of the Board during
the period commencing on the formation of the Company and continuing thereafter
until, but not including, the first annual meeting of the Board.  Any two or
more offices may be held by the same person, except that the offices of
President and Secretary may not be held by the same person.  No officer (other
than the Chairman of the Board) needs to be a Manager.  No officer needs to be
a Member or a resident of the State of Delaware.

                 (b)      Each officer of the Company shall serve a term of
office commencing on the effective date of his or her election until the first
annual meeting of the Board held after the effective date of his or her
election and until his or her successor shall have been duly elected and
qualified or until his or her earlier death, resignation or removal.  Any
officer whose term of office is scheduled to expire may be elected or appointed
to succeed himself or herself.  Unless otherwise unanimously agreed by the
Members, the President of the Company must be an employee of BP or one or more
of its Affiliates.

                 Section 8.02.  Resignation.  Any officer shall have the right
to resign at any time upon written notice thereof to the Board or the President
of the Company.  Unless otherwise specified in the notice, any such resignation
shall take effect upon receipt thereof, and the acceptance of such resignation
shall not be necessary to make it effective.





                                      -38-
<PAGE>   71
                 Section 8.03.  Removal.  The Chairman of the Board may be
removed at any time, with or without cause, by the Member that appointed the
Chairman of the Board.  The President of the Company may be removed at any
time, with or without cause, (i) upon the affirmative vote of two of the
Managers and the delivery of written notice to the President by such Managers
at least three months prior to the effective date of such removal, or (ii) upon
the affirmative vote of a majority of the Whole Board.  Each of the other
officers of the Company may be removed at any time by the affirmative vote of a
majority of the Whole Board, with or without cause.  The removal of any officer
of the Company shall be without prejudice to the rights, if any, of such
officer under any employment agreement or other Contract between such officer
and the Company which is in effect at the time of the removal of such officer.
Election of an officer shall not of itself create contract rights. Except as
otherwise provided in this Section 8.03, an officer of the Company may not be
removed prior to expiration of his or her term.

                 Section 8.04.  Vacancies.  Whenever a vacancy shall occur in
the office of the Chairman of the Board, such vacancy may only be filled by the
Member entitled to appoint the Chairman of the Board pursuant to Section
8.01(a) at the time of such vacancy by the appointment of a new Chairman of the
Board.  Whenever a vacancy shall occur in any other office of the Company, such
vacancy may only be filled by a majority of the Whole Board.  Any officer
appointed or elected to fill a vacancy in any office of the Company pursuant to
this section 8.04 shall hold such office until the date of the next annual
meeting of the Board held after the date of his or her appointment or election
and until his or her successor shall have been duly appointed or elected and
qualified or until his or her earlier death, resignation or removal.

                 Section 8.05.  Attendance at Meetings of the Board.  The
Chairman of the Board shall call all meetings of the Board to order, and shall
act as chairman of such meetings, but in the absence of the Chairman of the
Board, a majority of the Whole Board may appoint any Manager present to act as
chairman of the meeting.  The Secretary of the Company shall act as secretary
of all meetings of the Board, but in the absence of the Secretary, the chairman
of the meeting may appoint any person present to act as secretary of the
meeting.

                 Section 8.06.  Chairman of the Board.  The Chairman of the
Board, if present, shall preside at all meetings of the Board, shall be the
principal officer of the Company and shall perform such other duties as may be
assigned to him or her by the Board.  The Chairman of the Board shall have the
power to sign all certificates, Contracts and other instruments of the Company
which may be authorized by the Board.

                 Section 8.07.  President.  The President shall be the Chief
Executive Officer of the Company and, subject to the control of the Board,
shall have general charge and supervision of the administration of the
activities and affairs of the Company.  The President shall see that all orders
and resolutions of the Board are carried into effect.  The President may sign
and execute all legal documents and instruments in the name of the Company when
authorized to do so by the Board, shall prepare an Annual Business Plan and an
annual budget showing expected receipts and expenditures for consideration by
the Board, and shall perform such other duties as may be





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prescribed from time to time by the Board.  The Annual Business Plan shall be
consistent with the provisions of this Agreement, the Certificate of Formation
and the Joint Venture Agreement.  The President shall also have the power to
appoint and remove subordinate employees (other than officers of the Company)
and to determine the terms and conditions of their employment; provided,
however, that any employee of the Company who is a secondee of a Member shall
receive benefits, at the expense of the Company, which are in the aggregate
substantially equivalent to the benefits provided by such Member to its other
employees.  The President shall submit to the Board plans and suggestions for
the activities of the Company, shall direct its general correspondence and
shall present recommendations in each case to the Board for decision.  The
President shall also submit a report of the activities and affairs of the
Company at each annual meeting of the Board and at other times when called upon
to do so by the Board.

                 Section 8.08.  Vice President(s).  Each Vice President shall
have such powers and perform such duties as may from time to time be assigned
to him or her by the President.

                 Section 8.09.  Secretary.  The Secretary shall have charge of
the records and correspondence of the Company under the direction of the
President, and shall be the custodian of the seal of the Company, if any.  The
Secretary shall give notice of and attend all meetings of the Board.  The
Secretary shall take and keep true minutes of all meetings of the Board of
which, ex officio (but without a vote), the Secretary shall be the secretary.
The Secretary shall discharge such other duties as shall be prescribed from
time to time by the President or the Board.

                 Section 8.10.  Assistant Secretaries.  Each Assistant
Secretary shall have such powers and duties as may be assigned to him or her by
the Board, the President or the Secretary.  In case of the absence or
disability of the Secretary, the Assistant Secretary designated by the
President (or, in the absence of such designation, the Secretary) shall perform
the duties and exercise the powers of the Secretary during the period of such
absence or disability.  In no event shall any third party having dealings with
the Company be bound to inquire as to any facts required by the terms of this
Section 8.10 for the exercise by any Assistant Secretary of the powers of the
Secretary.

                 Section 8.11.  Treasurer.  The Treasurer shall keep account of
all moneys, credits and Assets of the Company which shall come into the
Treasurer's hands and keep an accurate account of all moneys received and
discharged.  Except as otherwise ordered by the Board, the Treasurer shall have
the custody of all the funds and securities of the Company and shall deposit
the same in such banks or depositories as the Board shall designate.  The
Treasurer shall keep proper books of account and other books showing at all
times the amount of the funds and other Assets belonging to the Company, all of
which books shall be open at all times to the inspection of the Board.  The
Treasurer shall also submit a report of the accounts and financial condition of
the Company at each annual meeting of the Board.  The Treasurer shall, under
the direction of the Board, disburse all moneys and sign all checks and other
instruments drawn on or payable out of the funds of the Company, which checks,
however, may also be required by the Board to be signed by the President or one
of the Vice Presidents, or in the case of their absence or disability, by such
member of the Board as the Board shall designate.  The Treasurer shall also
make such transfers and alterations in





                                      -40-
<PAGE>   73
the securities of the Company as may be ordered by the Board.  In general, the
Treasurer shall perform all duties which are incident to the office of
Treasurer, subject to the supervision and control of the Board, and shall
perform such additional duties as may be prescribed from time to time by the
Board.  The Treasurer shall give bond only if required by the Board.

                 Section 8.12.  Assistant Treasurers.  Each Assistant Treasurer
shall have such powers and duties as may be assigned to him or her by the
Board, the President or the Treasurer.  In case of the absence or disability of
the Treasurer, the Assistant Treasurer designated by the President (or, in the
absence of such designation, the Treasurer) shall perform the duties and
exercise the powers of the Treasurer during the period of such absence or
disability.  In no event shall any third party having dealings with the Company
be bound to inquire as to any facts required by the terms of this Section 8.12
for the exercise by any Assistant Treasurer of the powers of the Treasurer.

                 Section 8.13.  Indemnification.  Officers of the Company shall
be entitled to be indemnified by the Company to the extent set forth in Section
7.16.





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                                   ARTICLE IX

                           Accounting and Tax Matters

                 Section 9.01.  Books and Records; Right to Audit.  The Company
shall keep, at the principal office of the Company or at such other places as
the Company shall inform the Members, true and accurate books of account and
other records of the Company and shall make all reports in accordance with
sound accounting practices and principles employing standards and procedures,
and in a form, in conformity with GAAP.  If, in the reasonable opinion of any
Member, such practices do not readily provide for the preparation of quarterly
financial reports in a form that it is accustomed to using in its own
operations, then the detailed substance for the preparation of all necessary
financial reports and all relevant cost reports shall be supplied to such
Member by the Company at the Company's expense.  In addition to any other
rights they may have under the Laws of the State of Delaware as Members of the
Company, each of the Members shall have the right to verify any information
pertinent to this Agreement.  Upon written request of any of the Members, from
time to time, the Company shall provide to an independent third party
accountant selected by the Member making the request, at reasonable times
during normal business hours, subject to the receipt by the Company of an
appropriate confidentiality agreement signed by such accountant, access to the
Company's books, records and accounts relating to this Agreement, except as
such access may be prohibited by Law or presently existing Third Party
confidentiality agreements.  Such independent accountant shall thereupon have
the right to make copies of and abstracts from such books, records and
accounts, at the expense of the requesting Member, which copies may be removed
from the premises of the Company and retained by such accountant, subject to
the terms of the confidentiality agreement signed by such accountant.  Such
account may report to the requesting Member only its conclusions resulting from
such accountant's review of the Company's data and nothing else.  All disputes
arising from an audit shall be resolved in accordance with the provisions of
Section 12.11.  Any expense incurred by a Member or its accountant in
connection with an inspection of the Company's books or records or in
connection with auditing such books and records shall be borne by such Member
or agent and not the Company.

                 Section 9.02.  Accrual Basis.  The books and records of the
Company shall be maintained for federal income tax purposes in accordance with
the accrual method of accounting.

                 Section 9.03.  Preparation of Tax Returns.  The Tax Matters
Member shall have the responsibility to arrange for the preparation and timely
filing of all returns of the Company income, gains, deductions, losses and
other items required of the Company for federal and state income tax purposes.
The Company's federal income tax information return shall be filed on or before
August 15th of each year (assuming timely and proper filings have been made for
an extension to such date, and if not, on or before the required filing date).
The Members agree to furnish to the Tax Matters Member on or before June 1st of
each year all information necessary for the preparation and filing of such
returns.  The Tax Matters Member shall provide to the Members a draft of the
federal income tax information return for the Company annually on or before
July 15th of the year following the year for which such return is prepared.
Each Member shall review the draft and provide written





                                      -42-
<PAGE>   75
comments thereon within 30 days after receipt of the draft.  If comments are
not provided within such 30-day period, the draft return shall be deemed
approved by the Members.

                 Section 9.04.  Tax Elections.  (a)  The following elections
shall be made on behalf of the Company for federal income tax purposes:

         (i)     to adopt the calendar year as the fiscal year of the Company;

         (ii)    to adopt the accrual method of accounting;

         (iii)   to use the maximum allowable accelerated tax method and the
shortest permissible life for depreciation;

         (iv)    to account for dispositions of depreciable Assets under the
general asset method to the extent permitted under Section 168(i)(4) of the
Code;

         (v)     to amortize the organizational and startup expenses ratably
over a period of 60 months;

         (vi)    to be treated as a partnership for federal income tax purposes
under Treasury Regulation Section 301.7701-3 and timely file Form 8832, Entity
Classification Election;


         (vii)   to adopt the dollar value LIFO method of inventory accounting;
and

         (viii)  the election described in Section 6231(a)(1)(B)(ii) of the
Code to have Chapter 63, Subchapter C of the Code apply to the Company.

                 (b)      The Company shall make the election under Section 754
of the Code (i) upon the request of a Transferee of a Membership Interest or
(ii) upon the request of a Member upon a distribution of Assets of the Company
to such Member.  The Board, upon notice to and consent by the Members, shall
seek to revoke any such election upon the Board's determination that such
revocation is in the best interests of the Members.  No election shall be made
by the Company, or on behalf of the Company, to have the Company be treated as
other than a partnership for tax purposes, and the Company shall make any
election required of it to be treated as a partnership for tax purposes.

                 Section 9.05.  Tax Controversies.  BP is hereby designated the
"Tax Matters Member" to act on behalf of the Company as "Tax Matters Partner"
pursuant to Section 6231 of the Code.  The Tax Matters Member and each Member
shall use commercially reasonable efforts to comply with the responsibilities
outlined in this Section 9.05 and Code Section 6222 through Section 6233 and
Section 6050K (and the Treasury Regulations thereunder) and in doing so shall
not incur any Liability to any other Member.  Notwithstanding the Tax Matters
Member's obligation to use commercially reasonable





                                      -43-
<PAGE>   76
efforts in the fulfillment of its responsibilities, the Tax Matters Member
shall not be required to incur any expenses for the preparation for, or
pursuance of, administrative or judicial proceedings, unless the Members agree
on a method for sharing such expenses.

                 Section 9.06.  Information Request by Tax Matters Member.
Each Member shall furnish the Tax Matters Member, within two weeks from the
receipt of a request therefor, any information (including information specified
in Code Section 6230(e) on partner identification and Section 6050K for
transfers of Membership Interests) which the Tax Matters Member may reasonably
request in order to comply with the requirements of furnishing information to
the Internal Revenue Service.

                 Section 9.07.  Statute of Limitations; Tax and Settlement
Agreements.  The Tax Matters Member shall not agree to any extension of the
statute of limitations for making assessments on behalf of the Company without
first obtaining the written consent of the Members.  The Tax Matters Member
shall not bind any Member to a settlement agreement in tax audits without
obtaining the written concurrence of such Member.  Any other Member who enters
into a settlement agreement with the Secretary of the Treasury with respect to
any Company items, as defined in Code Section 6231(a)(3), shall notify the
other Members of the terms of such settlement within 90 days from the date of
such settlement.





                                      -44-
<PAGE>   77
                 Section 9.08.  Request for Administrative Adjustment.  No
Member shall file pursuant to Code Section 6227 a request for an administrative
adjustment of Company items without first notifying the other Members.  If the
other Members agree with the requested adjustment, the Tax Matters Member shall
file the request on behalf of the Company.  If unanimous consent is not
obtained within 30 days from such notice, or within the period required to
timely file the request, if shorter, any Member, including the Tax Matters
Member, may file a request for administrative adjustment on its own behalf.

                 Section 9.09.  Judicial Proceedings.  Any Member intending to
file a petition under Code Section 6226 or Section 6228 or any other Code
section with respect to any Company item, or other tax matters involving the
Company, shall notify the other Members prior to such filing of the nature of
the contemplated proceeding.  In the case where the Tax Matters Member is the
Member intending to file such petition, such notice shall be given within a
reasonable time to allow the other Members to participate in the choice of the
forum for such petition, and the Members shall mutually agree on an appropriate
forum.  If a Member intends to seek review of any court decision rendered as a
result of such proceeding, such Member shall notify the other Members prior to
seeking such review.

                 Section 9.10.  Company Bank Account.  All proceeds and cash
receipts and other funds of the Company shall be deposited in one or more
Company accounts in a bank approved by the Board.  Such funds shall not be
commingled with the funds of any Member or any other Person.  All expenditures
on behalf of the Company shall be made with funds withdrawn from the Company
bank accounts.

                                   ARTICLE X

                        Transfer of Membership Interests

                 Section 10.01.  Restrictions on Transfer of a Membership
Interest.  Except as otherwise provided in this Article X, no Member may
Transfer all or any portion of its Membership Interest to any Person without
the consent of the other Members; provided, however, that without obtaining the
consent of the Members, any Member may (a) Transfer all or any part of its
Membership Interest to an Affiliate of such Member, (b) Transfer all of its
Membership Interest to a successor in interest of all or substantially all of
the assets or business of such Member to which this Agreement relates (unless
such successor in interest is, at the time of the proposed Transfer, a
competitor of any other Member or is otherwise objectionable to any other
Member for legitimate business reasons, and such objection is asserted in good
faith and not waived by the Member asserting such objection) or (c) pledge,
assign for security purposes or otherwise grant a Lien in all or any part of
such Member's Membership Interest (each, a "Permitted Transfer").  As part of
any Permitted Transfer pursuant to clause (a) or (b) above, the Member making
the Transfer shall require the Transferee to deliver the document required by
Section 10.03 and the Member making such Transfer shall remain liable for the
performance by such Transferee of the obligations of such Member under this
Agreement unless the other Members agree otherwise in writing





                                      -45-
<PAGE>   78
                 Section 10.02.  Right of Transferee to be Admitted to the
Company.  Subject to the provisions of this Article X, any Member may grant a
Transferee of all or any part of its Membership Interest the right to be
admitted to the Company as a Member, with such Percentage Interest as the
Member and Transferee may agree; provided, however, that (a) in the event of a
Transfer other than a Permitted Transfer, such Member obtains the consent of
the other Members prior to the Transfer, which consent shall not be
unreasonably withheld, delayed or conditioned, and (ii) the respective
Membership Interests of the Member and Transferee shall in the aggregate equal
the Percentage Interest of the Member making the Transfer prior to such
Transfer.

                 Section 10.03.  Transfer Documents.  No Transfer (other than a
Permitted Transfer under Section 10.01(c)) shall be recognized by the Company
for any purpose until the Company has received a document which:

         (a)     is executed by the Member making the Transfer, or such
Member's representative, and the Transferee;

         (b)     includes the address and numbers of the Transferee to be
admitted to the Company as a Member for notification purposes and the
Transferee's agreement to be bound by (i) this Agreement in respect of the
Membership Interest or part thereof acquired and (ii) if the Member making the
Transfer is a party to the Joint Venture Agreement, the Joint Venture
Agreement;

         (c)     sets forth the respective Percentage Interests of the Member
making the Transfer and the Transferee immediately subsequent to the Transfer;

         (d)     contains a representation and warranty that the Transfer was
made in accordance with this Agreement, the Joint Venture Agreement (if
applicable) and all applicable Laws; and

         (e)     if the Transferee is to be admitted to the Company as a
Member, such representations and warranties of the Transferee as the Company or
any Member may reasonably require.

Each Transfer and, if applicable, admission to the Company shall be effective
as of the first day of the calendar month immediately succeeding the month in
which the all of requirements of this Section 10.03 have been met.

                 Section 10.04.  Compliance with Securities Laws.  Prior to the
effectiveness of any Transfer or, if applicable, admission of the Transferee to
the Company as a Member, the Membership Interest or part thereof subject to the
Transfer and/or the admission of the Transferee to the Company must be either
(a) registered under the Securities Act of 1933, as amended, and any applicable
state securities Laws or (b) exempt from any such registration.  In addition,
if requested by the Company or any Member, the Member making such Transfer must
deliver to the Company a favorable opinion of legal counsel reasonably
acceptable to the Company to the effect that (i) if such Transfer is not
registered under the Securities Act of 1933, as amended, and all applicable
state securities Laws, such Transfer is exempt from any such registration, and
(ii) such Transfer and/or





                                      -46-
<PAGE>   79
admission, when added to the total of all other sales, assignments or other
Transfers made within the preceding 12 months, would not result in the Company
being considered to have terminated within the meaning of the Code.

                 Section 10.05.  Reimbursement of Costs.  The Member making a
Transfer and any Transferee admitted to the Company in connection with such
Transfer shall pay, or reimburse the Company for, all costs incurred by the
Company in connection with the Transfer and/or admission, including reasonable
attorneys' fees, on or before the 30th day after receipt of the Company's
invoice for the amount due.  If payment is not made by the date due, the Member
or Transferee owing such amount shall pay interest on the unpaid amount from
the date that such payment is due until paid at a rate equal to the lesser of
10% and the maximum non-usurious rate permissible under applicable Law.

                 Section 10.06.  Application to Transferees.  All Transferees
of all or any portion of a Member's Membership Interest shall be bound by,
comply with and take such Membership Interest subject to the terms and
conditions of this Agreement.  Each Transferee shall be required to become a
party to this Agreement by executing an adoption agreement in form and
substance reasonably satisfactory to the Company and the other Members,
whereupon such Person shall become a "Member" and shall have all of the rights
and obligations of a "Member" under this Agreement, and such Membership
Interest shall continue to be subject to the provisions of this Agreement.

                 Section 10.07.  Transfer in Violation of the Agreement.
Notwithstanding anything contained in this Agreement to the contrary, no
Transfer of any Membership Interest may be made by a Member or shall be
effective if the Transfer is not in strict compliance with this Agreement;
provided, however, that all or any portion of this Agreement may be waived with
the written consent of the Company and the other Members.  Any attempted or
purported Transfer of any Membership Interest in violation of this Agreement
shall be null and void and of no force and effect.  Any Member making a
Transfer of its Membership Interest in violation of any of the terms of this
Agreement will retain beneficial ownership of such Membership Interest,
including the right to vote such Membership Interest and to receive all
distributions with respect to such Membership Interest.  The Company shall have
the right and the obligation to treat any Transfer in violation of any of the
terms of this Agreement as void and, in enforcing such right and obligation,
the Company may, in addition and without prejudice to any and all other rights
which may be available to the Company, hold and refuse to Transfer any
Membership Interest or any certificate therefor presented to it for Transfer.
If the Company receives notice of any attempted Transfer which would be in
violation of the terms of this Agreement, it shall notify the other Members.





                                      -47-
<PAGE>   80
                                   ARTICLE XI

                           Winding Up and Liquidation

                 Section 11.01.  Liquidation of Assets of the Company and
Disposition of Proceeds.  Except as otherwise provided in this Article XI, as
soon as practicable following the occurrence of a Dissolution Event the
business of the Company shall be wound up and the Company shall be dissolved
and liquidated; provided, however, that this Agreement shall not terminate
until the liquidation of the Company is complete in accordance with the
provisions of this Article XI.  The Board (or such Person as may be designated
by the Board) shall act as the liquidator (the "Liquidator") and shall
immediately proceed to wind up and terminate the Company affairs with full
power and authority to do all acts necessary and in accordance with the terms
of this Article XI.  All actions taken by the Board, if it acts directly as
Liquidator, significantly affecting the liquidation distributions of the
Members must first receive approval of a majority of the Whole Board.  The
Liquidator shall:

         (a)     as soon as possible after dissolution, and again after final
liquidation, cause a proper accounting to be made of the Assets and Liabilities
of the Company through the last day of the calendar month in which the
dissolution occurs or the final liquidation is completed, as applicable, by an
independent certified accountant;

         (b)     pay from Company funds all of the Liabilities of the Company
(including all expenses incurred in the liquidation and any loans from Members)
or otherwise make adequate provision therefor (including the establishment of a
cash escrow fund for any contingent Liabilities in such amount and for such
term as the Liquidator may reasonably determine);

         (c)     establish any reserves which the Liquidator deems necessary or
advisable to provide for any contingent or unforeseen Liabilities of the
Company or of the Liquidator arising out of or in connection with the Company;
provided, however, that after the expiration of such period of time as the
Liquidator deems advisable, the balance of such reserves remaining after
payment of such contingencies shall be distributed in the manner hereinafter
set forth in this Section 11.01; and

         (d)     subject to the terms of the Joint Venture Agreement,
distribute and allocate the remaining Assets of the Company among the Members,
pro rata, in accordance with the balances in their respective Capital Accounts
(after adjustment to reflect the allocations under Article VI).

All distributions made to the Member pursuant to clause (d) above shall be made
either (i) within 90 days after the date of such liquidation or (ii) by the end
of the fiscal year of the Company during which such liquidation occurs,
whichever period shall expire later in time; provided, however, that the
Company may withhold reserves established under Section 11.01(c) and
receivables of the Company for the purpose of collecting any amounts due
thereunder.  Any amounts so withheld (or the proceeds of the collection of
receivables so withheld) shall be distributed as soon as practicable to, and
allocated among, the Members in the ratio of their respective Capital Accounts.





                                      -48-
<PAGE>   81
                 Section 11.02.  Partial Liquidation of Assets.
Notwithstanding anything contained in this Article XI to the contrary, if the
Liquidator determines that a complete liquidation of all of the Assets of the
Company would involve substantial Losses or be impractical or ill advised under
the circumstances, or be undesirable for any reason, the Liquidator shall
liquidate the portion of the Assets of the Company necessary to pay the
expenses of liquidation and the Liabilities of the Company (excluding the
Liabilities of the Company to the extent they are adequately secured by Liens
on the Assets of the Company), and the remaining Assets of the Company shall be
distributed to the Members (i) as tenants-in-common, (ii) partitioned in
accordance with applicable Laws or (iii) distributed in such other reasonable
manner as shall be determined by the Liquidator.  The distribution of such
remaining Assets of the Company to the Members shall be made subject to any
Liens covering such Assets.

                 Section 11.03.  Appointment of Liquidator.  If the Board is
unable or unwilling to act as the Liquidator, or if the Members elect to
appoint a Liquidator other than the Board, the Members shall appoint a
Liquidator to wind up the affairs and liquidate the Assets of the Company.  Any
such Liquidator shall have all of the powers necessary to perform all acts
contemplated to be performed by the Liquidator under this Article XI and shall
be compensated as agreed upon by the Liquidator and such Members.

                 Section 11.04.  Certificate of Cancellation.  On completion of
the distribution of the Assets of the Company as contemplated by Section 11.05,
the Board (or such other Person or Persons as the Act may require or permit)
shall file a Certificate of Cancellation with the Secretary of State, cancel
any filings made pursuant to Section 2.04 and take such other actions as may be
necessary to terminate the existence of the Company.  Upon the effectiveness of
the Certificate of Cancellation, the existence of the Company shall cease,
except as may be otherwise provided by the Act or other applicable Law.

                 Section 11.05.  Indemnification of the Liquidator.  The
Company shall indemnify, defend and hold harmless any Liquidator from and
against all Claims, Liabilities and Losses which may be imposed on, incurred by
or asserted against the Liquidator, arising out of or resulting from, directly
or indirectly, the Liquidator taking any action authorized under this Article
XI; provided, however, that the Company shall not be liable for any portion of
any Claims, Liabilities or Losses resulting from (a) a matter entirely
unrelated to the Liquidator's authority under this Agreement, (b) a material
breach by the Liquidator of its obligations under this Agreement or (c) from
the Liquidator's gross negligence, fraud or willful misconduct.  The
indemnification rights contained herein shall be cumulative of, and in addition
to, any and all other rights, remedies and recourse to which the Liquidator
shall be entitled at law or in equity.

                 Section 11.06.  Indemnification for Dissolution.  Each Member
shall indemnify, defend and hold harmless the Company and the other Members and
their respective present and former directors, officers, stockholders,
employees and agents and their respective heirs, executors, personal
representatives, administrators, successors and assigns (the "Indemnified
Persons") from and against any and all Claims, Liabilities and Losses which may
be imposed on, incurred by or





                                      -49-
<PAGE>   82
asserted against any Indemnified Person, arising out of or resulting from,
directly or indirectly, a dissolution of the Company arising out of a violation
by any Member of the covenants set forth in Section 2.05 or Section 4.03.

                 Section 11.07.  Capital Contributions to Restore Capital
Accounts.  Except as otherwise agreed by the Members in writing, in the event
that the Capital Accounts of less than all of the Members have negative
balances upon liquidation of the Company, or the Capital Account of any Member
has a negative balance upon liquidation of such Member's Membership Interest,
after giving effect to the allocations under Article VI, each such Member whose
Capital Account has such a negative balance shall be obligated to make an
additional Capital Contribution to the Company by the end of the fiscal year in
which such liquidation occurs in an amount sufficient to eliminate the negative
balance in its Capital Account; provided, however, that the additional Capital
Contributions described in this Section 11.07 shall not be required where such
requirement would destroy or infringe on the limited liability characteristic
of a Member's Membership Interest.  For purposes of this Section 11.07, the
Company shall be deemed to liquidate on the date on which the Company ceases to
be a going concern (even though it may continue in existence for the purpose of
winding up its affairs, paying its Liabilities and distributing any proceeds of
the collection of its receivables to the Members).

                                  ARTICLE XII

                               General Provisions

                 Section 12.01. Notices.  Any and all notices, requests or
other communications hereunder shall be given in writing and delivered by (a)
regular, overnight or registered or certified mail (return receipt requested),
with first class postage prepaid, (b) hand delivery, (c) facsimile or
electronic transmission or (d) overnight courier service, to the Company at its
principal office and to the Members at the addresses or numbers set forth on
Exhibit B or at such other address or number as shall be designated by the
Company or a Member in a notice to the Company and the Members given in
accordance with this Section 12.01.  Except as otherwise provided in this
Agreement, all such communications shall be deemed to have been duly given, (i)
in the case of a notice sent by regular mail, on the date actually received by
the addressee, (ii) in the case of a notice sent by registered or certified
mail, on the date receipted for (or refused) on the return receipt, (iv) in the
case of a notice delivered by hand, when personally delivered, (iv) in the case
of a notice sent by facsimile or electronic transmission, upon transmission
subject to telephone confirmation of receipt, and (v) in the case of a notice
sent by overnight mail or overnight courier service, the date delivered at the
designated address, in each case given or addressed as aforesaid.

                 Section 12.02.  Counterparts.  This Agreement may be executed
by the Members in any number of counterparts, each of which shall be deemed an
original instrument, but all of which together shall constitute but one and the
same agreement.  No Member shall become bound by this Agreement or any other
document or instrument executed by counterpart until all Members have affixed
their respective signatures hereto.





                                      -50-
<PAGE>   83
                 Section 12.03.  Benefit and Burden.  (a) This Agreement shall
inure to the benefit of, and shall be binding upon, the Company and the Members
and their respective successors and permitted assigns.

                 (b)      Anything herein or elsewhere to the contrary
notwithstanding, in no event shall any director, officer, stockholder,
employee, agent, advisor or other representative of any of the Members (past,
present or future) have any personal liability (whether at law or in equity)
under this Agreement or on account of any actions taken or omitted in
connection therewith, it being specifically understood and agreed that only the
Members and their respective successors and permitted assigns shall be subject
to any such personal liability.

                 Section 12.04.  No Third Party Rights.  Except as otherwise
provided in Sections 11.06 and 12.03, nothing in this Agreement shall be deemed
to create any right in any creditor or other Person not a party hereto (other
than the Liquidator) and this Agreement shall not be construed in any respect
to be a Contract in whole or in part for the benefit of any other third party.

                 Section 12.05.  Amendments and Waiver.  No amendment,
modification, restatement or supplement of this Agreement shall be valid unless
the same is in writing and signed by the Members.  No waiver of any provision
of this Agreement shall be valid unless in writing and signed by the Member
against whom that waiver is sought to be enforced.  No failure or delay on the
part of any Member in exercising any right, power or privilege hereunder, and
no course of dealing between or among the Members, shall operate as a waiver of
any right, power or privilege hereunder.  No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder.  No notice to or demand on any Member in any case shall entitle such
Member to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of any Member to any other
or further action in any circumstances without notice or demand.

                 Section 12.06.  Assignments.  Except in connection with an
assignment of all or any portion of a Member's Membership Interest in
compliance with Section 4.05(b) or Article X, neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any Member without
the prior written consent of the other Members and any attempt to do so shall
be null and void; provided, however, that no assignment, Transfer or other
conveyance by any Member of any of its rights, interests or obligations
hereunder shall relieve such Member of its obligations under this Agreement
unless the other Members expressly agree otherwise in writing.

                 Section 12.07.  Severability.  Should any clause, sentence,
paragraph, subsection, Section or Article of this Agreement be judicially
declared to be invalid, unenforceable or void, such decision will not have the
effect of invalidating or voiding the remainder of this Agreement, and the
Members agree that the part or parts of this Agreement so held to be invalid,
unenforceable or void will be deemed to have been stricken herefrom as if such
stricken part or parts had never been included herein.





                                      -51-
<PAGE>   84
                 Section 12.08.  Remedies.  The Members agree that the
covenants and obligations contained in this Agreement relate to special, unique
and extraordinary matters and that a violation of any of the terms hereof would
cause irreparable injury in an amount which would be very difficult to estimate
or determine and for which any remedy at law would be inadequate.  As such, the
Members agree that if any Member fails or refuses to fulfill any of its
obligations under this Agreement or to make any payment or deliver any
instrument required hereunder, then the other Members shall have the remedy of
specific performance, which remedy shall be cumulative and nonexclusive and
shall be in addition to any other rights and remedies otherwise available under
any other Contract or at law or in equity and to which such Member might be
entitled.

                 Section 12.09.  Applicable Law.  THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE COMPANY AND THE MEMBERS HEREUNDER SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

                 Section 12.10.  Expenses.  Except as otherwise expressly
provided in this Agreement, each of the Members shall pay its own expenses
incident to this Agreement, including all legal and accounting fees and
disbursements.

                 Section 12.11.  Dispute Resolution.  (a) In the event that the
Members, using commercially reasonable efforts, fail to resolve any dispute
arising out of:

         (i)     the interpretation of this Agreement;

         (ii)    the entering into or amendment or termination of any Contact
between the Company and any other Person which (A) is not a part of the Annual
Business Plan for the fiscal year of the Company in which such action is taken
and (B) is reasonably expected under then current market prices and conditions
to involve more than $1,000,000 in the aggregate; or

         (iii)   any change in the price at which acrylonitrile is purchased or
sold by the Company which is not a part of the Annual Business Plan for the
fiscal year of the Company in which such change is to take effect, within 30
days after the date on which such dispute arises, such dispute or matter shall
be resolved in accordance with this Section 12.11.

                 (b)      Each of the Members which is a party to such dispute
shall promptly, but in any event within ten days after the expiration of such
30-day period, advise their respective CEOs of such dispute and submit such
dispute to their respective CEOs for resolution.  In the event that the CEOs of
such Members fail to resolve such dispute within 30 days after such dispute has
been submitted to them for resolution, such dispute shall be settled by binding
arbitration pursuant to Section 12.11(c).

                 (c)      In the event that the CEOs of the Members which are a
party to a dispute fail to resolve such dispute under Section 12.11(b), each of
such Members shall set forth their respective





                                      -52-
<PAGE>   85
positions with regard to the issue in dispute in writing and resolution of the
issue shall be determined by arbitration, with one arbitrator appointed by each
of the Members which is a party to such dispute and an additional arbitrator
appointed by the arbitrators appointed by such Members.  If such arbitrators
cannot agree on the appointment of the additional arbitrator, then such
arbitrator shall be a partner in one of the "Big Six" accounting firms (which
is not employed by any of the Members or any of their respective Affiliates)
appointed by the Midwest Regional Director of the American Arbitration
Association.  The arbitration shall be conducted in Chicago, Illinois pursuant
to the Commercial Arbitration Rules of the American Arbitration Association.
The Members agree that the determination of the arbitrators will be final and
binding.  Judgment upon the arbitrators' award may be entered in any court
having jurisdiction thereof.  Each of the Members shall bear the costs of their
respective arbitrators and their related expenses, and the costs of the
additional arbitrator and his or her related expenses, as well as all other
costs of the arbitration, shall be paid equally by the Members or as the
arbitrators may otherwise determine.  During the arbitration, the Members shall
continue to perform their obligations under this Agreement with the exception
of those under arbitration.

                 Section 12.12.  Agreement to Perform Actions Under Joint
Venture Agreement.  Each of the Members, by its execution of this Agreement,
acknowledges and agrees that the Company shall be bound by and perform all
covenants and actions contemplated to be performed by the Company under the
Joint Venture Agreement.

                 Section 12.13.  Entire Agreement.  This Agreement, ***, the
Joint Venture Agreement and the Production Agreement set forth all of the
promises, agreements, conditions, understandings, warranties and
representations between or among the Members with respect to the matters
contemplated hereby and thereby, and supersede all prior agreements,
arrangements and understandings between or among any of the Members, whether
written, oral or otherwise.  In the event of any conflict between any provision
of this Agreement and any provision of the Joint Venture Agreement, the
provisions of the Joint Venture Agreement shall control.  There are no
promises, agreements, conditions, understandings, warranties or
representations, oral or written, express or implied, between or among any of
the Members concerning the subject matter hereof or thereof except as set forth
herein or therein.





                                      -53-
<PAGE>   86
                 EXECUTED to be effective as of the date and year first above
written.


         STERLING CHEMICALS, INC.



         By:
             Frank P. Diassi, Chairman of the Board


         BP CHEMICALS INC.



         By:
             Gary C. Greve, President





                                      -54-
<PAGE>   87
                                   EXHIBIT A

                     Countries Excluded From the Territory

                                      ***

                 





                                      -1-
<PAGE>   88
                                   EXHIBIT B

                       Members and Capital Contributions

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
           MEMBER                        ADDRESS                PERCENTAGE        CAPITAL CONTRIBUTION          AGREED
                                                                 INTEREST                                       VALUE
--------------------------------------------------------------------------------------------------------------------------
  <S>                         <C>                                  <C>        <C>
  Sterling Chemicals, Inc.    1200 Smith, Suite 1900               ***        The Assigned Assets (as
                              Houston, Texas  77002                           defined in that certain
                              Attention: Paul Rostek                          Assignment and Assumption
                              Facsimile: (713) 654-9591                       Agreement dated effective as
                              Telephone: (713) 654-9551                       of midnight on March 31, 1998
                              E-Mail: PRostek@                                between the Company and
                                                                              Sterling) and the rights
                              Sterlingchemicals.com                           granted to the Company by
                                                                              Sterling pursuant to that
                                                                              certain Joint Venture
                                                                              Agreement dated as of March
                                                                              31, 1998 between Sterling and
                                                                              BP.
--------------------------------------------------------------------------------------------------------------------------
  BP Chemicals Inc.           4440 Warrensville Road               ***        The Assigned Assets (as
                              Cleveland, Ohio  44128-2837                     defined in that certain
                              Attention: Vice President                       Assignment and Assumption
                                                Marketing                     Agreement dated effective as
                              Facsimile: (216) 586-3838                       of midnight on March 31, 1998
                              Telephone: (216) _________                      between the Company and BP)
                              E-Mail: smithdb@bp.com                          and the rights granted to the
                                                                              Company by BP pursuant to
                                                                              that certain Joint Venture
                                                                              Agreement dated as of March
                                                                              31, 1998 between Sterling and
                                                                              BP.
--------------------------------------------------------------------------------------------------------------------------
</TABLE>





                                      -1-
<PAGE>   89
                                   EXHIBIT C

                           Certificate of Formation



                                  (Attached)





                                      -1-
<PAGE>   90
                                   EXHIBIT D
                        PRICE AND VOLUME RECONCILIATION

                                      ***



                                      -1-
<PAGE>   91
                                   EXHIBIT E

                           SUPPORT SERVICE AGREEMENT

                                      ***





                                      -1-
<PAGE>   92
                           SUPPORT SERVICE SCHEDULE

<TABLE>
<CAPTION>
1998 PLAN      EXPORT SHARE      BP DIRECT     OTHER      ANEXCO     STERLING        BP
               VOLUME BASE        EFFORT       COSTS       COST       SHARE         SHARE
<S>            <C>               <C>           <C>        <C>        <C>            <C>



</TABLE>

                                      ***





                                      -2-