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                                                                     EXHIBIT 4.6

                        CURRENT ASSETS SECURITY AGREEMENT

         THIS CURRENT ASSETS SECURITY AGREEMENT (as amended, supplemented,
amended and restated or otherwise modified from time to time, this "Agreement"),
dated as of July 23, 1999, is among STERLING CHEMICALS, INC., a Delaware
corporation, STERLING CANADA, INC., a Delaware corporation, STERLING PULP
CHEMICALS US, INC., a Delaware corporation, STERLING PULP CHEMICALS, INC., a
Georgia corporation, STERLING FIBERS, INC., a Delaware corporation, STERLING
CHEMICALS ENERGY, INC., a Delaware corporation, and STERLING CHEMICALS
INTERNATIONAL, INC., a Delaware corporation (each individually a "Borrower" and
collectively the "Borrowers"), and each other Person (such capitalized term and
all other capitalized terms not otherwise defined herein shall have the meanings
provided for or incorporated by reference in Article I below) that may, from
time to time become, pursuant to the terms of the Credit Agreement, a party to
this Agreement (individually referred to as a "Grantor", and collectively
referred to as the "Grantors"), and THE CIT GROUP/BUSINESS CREDIT, INC. ("CIT"),
as the Administrative Agent for each of the Current Assets Secured Parties.


                              W I T N E S S E T H :

         WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July 23,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among the Borrowers, the various
financial institutions as are, or may from time to time become, parties thereto
(the "Lenders"), DLJ Capital Funding, Inc., as the Syndication Agent, Credit
Suisse First Boston, as the Documentation Agent, and CIT, as the Administrative
Agent, the Lenders and the Issuer have extended Commitments to make Credit
Extensions to the Borrowers;

         WHEREAS, as a condition precedent to the making of each Credit
Extension (including the initial Credit Extension) under the Credit Agreement,
each Grantor is required to execute and deliver this Agreement;

         WHEREAS, each Grantor has duly authorized the execution, delivery and
performance of this Agreement; and

         WHEREAS, it is in the best interests of each Grantor to execute this
Agreement inasmuch as such Grantor will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrowers by
the Lenders and the Issuer pursuant to

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the Credit Agreement and the execution and delivery of Rate Protection
Agreements between the Borrowers and certain Current Assets Secured Parties;

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Current Assets Lenders, the Swing Line Lender and the Issuer to make Current
Assets Loans and Swing Line Loans and issue Letters of Credit to the Borrowers
pursuant to the Credit Agreement and (ii) the Current Assets Secured Parties to
enter into Rate Protection Agreement(s), each Grantor jointly and severally
agrees, for the benefit of each Current Assets Secured Party, as follows:


                                    ARTICLE I
                                   DEFINITIONS

         SECTION I.1. Certain Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):

         "Administrative Agent" is defined in the preamble.

         "Agreement" is defined in the preamble.

         "Borrower" and "Borrowers" are defined in the preamble.

         "CIT" is defined in the preamble.

         "Collateral" is defined in Section 2.1.

         "Collateral Account" is defined in clause (c) of Section 4.3.

         "Computer Hardware and Software Collateral" means:

                  (a) all computer and other electronic data processing
         hardware, integrated computer systems, central processing units, memory
         units, display terminals, printers, features, computer elements, card
         readers, tape drives, hard and soft disk drives, cables, electrical
         supply hardware, generators, power equalizers, accessories and all
         peripheral devices and other related computer hardware;

                  (b) all software programs (including both source code, object
         code and all related applications and data files), whether now owned,
         licensed or leased or hereafter acquired by any Grantor, designed for
         use on the computers and electronic data processing hardware described
         in clause (a) above;


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                  (c) all firmware associated therewith;

                  (d) all documentation (including flow charts, logic diagrams,
         manuals, guides and specifications) with respect to such hardware,
         software and firmware described in the preceding clauses (a) through
         (c); and

                  (e) all rights with respect to all of the foregoing, including
         any and all copyrights, licenses, options, warranties, service
         contracts, program services, test rights, maintenance rights, support
         rights, improvement rights, renewal rights and indemnifications and any
         substitutions, replacements, additions or model conversions of any of
         the foregoing.

         "Copyright Collateral" means all copyrights of each Grantor, whether
statutory or common law, registered or unregistered, now or hereafter in force
in the United States including all of such Grantor's right, title and interest
in and to all copyrights registered in the United States Copyright Office and
also including the copyrights referred to in Item A of Schedule IV attached
hereto, and all applications for registration thereof, whether pending or in
preparation, all copyright licenses in the United States, including each
copyright license referred to in Item B of Schedule IV attached hereto, the
right to sue for past, present and future infringements of any thereof, all
rights corresponding thereto, all extensions and renewals of any thereof and all
proceeds of the foregoing, including licenses, royalties, income, payments,
claims, damages and proceeds of suit.

         "Credit Agreement" is defined in the first recital.

         "Current Assets Termination Date" means the date on which all Current
Assets Obligations have been paid in full in cash, all Letters of Credit have
been terminated, expired or Cash Collateralized, all Rate Protection Agreements
have been terminated and all Current Assets Commitments have been permanently
terminated.

         "Grantor" and "Grantors" are defined in the preamble.

         "Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral.

         "Intercompany Note" means, with respect to any Grantor, as the payee
thereunder, a promissory note substantially in the form of Exhibit D hereto
(with such modifications as the Administrative Agent may consent to, such
consent not to be unreasonably withheld), which promissory note shall evidence
all intercompany loans which may be made from time to time by the such Grantor
to any of its Foreign Restricted Subsidiaries as the maker of such promissory
note, as amended, modified or supplemented from time to time, in accordance with
Section 4.7,


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together with any promissory note of such Grantor taken in extension or renewal
thereof or substitution therefor.

         "Inventory" is defined in clause (a) of Section 2.1

         "Lenders" is defined in the first recital.

         "Material Contracts" is defined in clause (c) of Section 2.1

         "Patent Collateral" means:

                  (a) all letters patent and applications for letters patent in
         the United States, including all patent applications in preparation for
         filing in the United States and including each patent and patent
         application referred to in Item A of Schedule II attached hereto;

                  (b) all reissues, divisions, continuations,
         continuations-in-part, extensions, renewals and reexaminations of any
         of the items described in clause (a);

                  (c) all patent licenses in the United States, including each
         patent license referred to in Item B of Schedule II attached hereto;
         and

                  (d) all proceeds of, and rights associated with, the foregoing
         (including license royalties and proceeds of infringement suits), the
         right to sue third parties for past, present or future infringements of
         any patent or patent application, referred to in clauses (a) or (b)
         above, and for breach or enforcement of any patent license referred to
         in clause (c) above.

         "Receivables" is defined in clause (b) of Section 2.1.

         "Related Contracts" is defined in clause (b) of Section 2.1.

         "Trademark Collateral" means:

                  (a) all trademarks, trade names, corporate names, company
         names, business names, fictitious business names, trade styles, service
         marks, certification marks, collective marks, logos, other source of
         business identifiers, prints and labels on which any of the foregoing
         have appeared or appear, designs and general intangibles of a like
         nature (all of the foregoing items in this clause (a) being
         collectively called a "Trademark"), now existing anywhere in the United
         States or hereafter adopted or acquired in the United States, whether
         currently in use or not, all registrations and recordings thereof and
         all applications in connection therewith, whether pending or in
         preparation for filing, including registrations, recordings and
         applications in the United States Patent and Trademark Office or in any
         office or agency of the United States of


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         America or any State, including those referred to in Item A of Schedule
         III attached hereto;

                  (b) all Trademark licenses in the United States, including
         each Trademark license referred to in Item B of Schedule III attached
         hereto;

                  (c) all reissues, extensions or renewals of any of the items
         described in clause (a) and (b);

                  (d) all of the goodwill of the business connected with the use
         of, and symbolized by the items described in, clauses (a) and (b); and

                  (e) all proceeds of, and rights associated with, the
         foregoing, including any claim by any Grantor against third parties for
         past, present or future infringement or dilution of any Trademark,
         Trademark registration or Trademark license, including any Trademark,
         Trademark registration or Trademark license referred to in clauses (a)
         through (c) above, or for any injury to the goodwill associated with
         the use of any such Trademark or for breach or enforcement of such
         Trademark license.

         "Trade Secrets Collateral" means all common law and statutory trade
secrets and all other confidential or proprietary or useful information and all
know-how obtained by or used in or contemplated at any time for use in the
business of any Grantor (all of the foregoing being collectively called a "Trade
Secret"), whether or not such Trade Secret has been reduced to a writing or
other tangible form, including all documents and things embodying, incorporating
or referring in any way to such Trade Secret, all Trade Secret licenses,
including each Trade Secret license referred to in Schedule V attached hereto,
and including the right to sue for and to enjoin and to collect damages for the
actual or threatened misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license.

         SECTION I.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.

         SECTION I.3. U.C.C. Definitions. Unless otherwise defined herein or in
the Credit Agreement or the context otherwise requires, terms for which meanings
are provided in the U.C.C. are used in this Agreement, including its preamble
and recitals, with such meanings.


                                   ARTICLE II
                                SECURITY INTEREST

         SECTION II.1. Grant of Security. Each Grantor hereby assigns, pledges,
hypothecates, charges, delivers and transfers to the Administrative Agent, for
its benefit and the ratable benefit of each of the Current Assets Secured
Parties, and hereby grants to the Administrative Agent, for


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its benefit and the ratable benefit of each of the Current Assets Secured
Parties, a continuing security interest in all of the following, whether now or
hereafter existing or acquired by such Grantor (the "Collateral"):

                  (a) all inventory in all of its forms of such Grantor,
         wherever located, including

                           (i) all raw materials and work in process therefor,
                  finished goods thereof and materials used or consumed in the
                  manufacture or production thereof,

                           (ii) all goods in which such Grantor has an interest
                  in mass or a joint or other interest or right of any kind
                  (including goods in which such Grantor has an interest or
                  right as consignee), and

                           (iii) all goods which are returned to or repossessed
                  by such Grantor,

         and all accessions thereto, products thereof and documents therefor
         (any and all such inventory, materials, goods, accessions, products and
         documents being the "Inventory");

                  (b) all accounts, contracts (including, but not limited to,
         all service contracts, supply contracts and marketing agreements (all
         such service contracts, supply contracts and marketing agreements,
         collectively, the "Material Contracts")), contract rights, chattel
         paper, documents, instruments, general intangibles, including Tax
         refunds, of such Grantor, whether or not arising out of or in
         connection with the sale or lease of goods or the rendering of
         services, and all rights of such Grantor now or hereafter existing in
         and to all security agreements, guaranties, leases and other contracts
         securing or otherwise relating to any such accounts, contracts,
         contract rights, chattel paper, documents, instruments and general
         intangibles (any and all such accounts, contracts, contract rights,
         chattel paper, documents, instruments, warehouse receipts, bills of
         lading, Material Contracts and general intangibles being the
         "Receivables", and any and all such security agreements, guaranties,
         leases and other contracts being the "Related Contracts");

                  (c) in furtherance of, and not in limitation of, clause (b),
         all Material Contracts, together with (i) all rights of such Grantor to
         receive monies due and to become due under or pursuant to each Material
         Contract, (ii) all rights of such Grantor to receive proceeds of any
         insurance, indemnity, warranty, guaranty or collateral security with
         respect to each Material Contract, (iii) all claims of such Grantor for
         damages arising out of or for breach or default under each Material
         Contract, (iv) all rights of such Grantor to terminate a Material
         Contract, to perform thereunder and to compel performance and otherwise
         exercise all remedies thereunder and (v) to the extent not included in
         the foregoing, all proceeds of any and all of the foregoing;

                  (d) all Intellectual Property Collateral of such Grantor;


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                  (e) the Collateral Account and each Lockbox (including all
         deposits and investments therein and all earnings thereon);

                  (f) all books, records, writings, data bases, information and
         other property relating to, used or useful in connection with,
         evidencing, embodying, incorporating or referring to, any of the
         foregoing in this Section 2.1;

                  (g) all Intercompany Notes in which such Grantor has an
         interest (including each Intercompany Note described in Schedule V
         hereto);

                  (h) all interest and other payments and rights with respect to
         each Intercompany Note in which such Grantor has an interest;

                  (i) all of such Grantor's other property and rights of every
         kind and description and interests therein; and

                  (j) all products, offspring, rents, issues, profits, returns,
         income and proceeds of and from any and all of the foregoing Collateral
         (including proceeds which constitute property of the types described in
         clauses (a) through (i), and, to the extent not otherwise included, all
         payments under insurance (whether or not the Administrative Agent is
         the loss payee thereof) or any indemnity, warranty or guaranty, payable
         by reason of loss or damage to or otherwise with respect to any of the
         foregoing Collateral).

Notwithstanding the foregoing, "Collateral" shall not include (a) any equipment,
machinery, furnishings, furniture, real property, fixtures or any other Fixed
Assets in all of their forms of such Grantor, wherever located, including all
parts thereof and all accessions, additions, attachments, improvements,
substitutions and replacements thereto and therefor and all accessories and
general intangibles related thereto, or (b) any general intangibles or other
rights arising under any contracts, instruments, licenses or other documents as
to which the grant of a security interest would constitute a violation of a
valid and enforceable restriction in favor of a third party on such grant,
unless and until any required consents shall have been obtained. Each Grantor
agrees to use its best efforts to obtain any such required consent with respect
to any material item of such Collateral.

         SECTION II.2. Security for Current Assets Obligations. This Agreement
secures the payment in cash in full of all Current Assets Obligations.

         SECTION II.3. Delivery of Intercompany Notes. All Collateral comprised
of Intercompany Notes shall be delivered to and held by or on behalf of (and
endorsed to the order of) the Administrative Agent pursuant hereto, in suitable
form for transfer by delivery.

         SECTION II.4. Payments on Intercompany Notes. In the event that any
payment of principal or interest is to be made on any Intercompany Note at a
time when no Default of the nature referred to in Section 8.1.9 of the Credit
Agreement or Event of Default has occurred and


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is continuing or would result therefrom, such payment may be paid directly to
the applicable Grantor. If any such Default or Event of Default has occurred and
is continuing, then any such payment shall be paid directly to the
Administrative Agent.

         SECTION II.5. Continuing Security Interest; Transfer of Notes. This
Agreement shall create a continuing security interest in the Collateral and
shall:

                  (a) remain in full force and effect until the Current Assets
         Termination Date;

                  (b) be binding upon each Grantor, its successors, transferees
         and assigns; and

                  (c) inure, together with the rights and remedies of the
         Administrative Agent hereunder, to the benefit of the Administrative
         Agent and each other Current Assets Secured Party.

Without limiting the generality of the foregoing clause (c), any Current Assets
Secured Party may assign or otherwise transfer (in whole or in part) any Current
Assets Loan Commitment or Swing Line Loan Commitment or Current Assets Loan held
by it to any other Person, and such other Person shall thereupon become vested
with all the rights and benefits in respect thereof granted to such Current
Assets Secured Party under any Loan Document (including this Agreement) or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 10.11 of the Credit Agreement. Upon
(i) the sale, transfer or other disposition of Collateral in accordance with the
Credit Agreement or (ii) the Current Assets Termination Date, the security
interests granted herein shall automatically terminate and all rights to the
applicable Collateral shall revert to the applicable Grantor with respect to (A)
such Collateral (in the case of clause (i)) or (B) all Collateral (in the case
of clause (ii)). Upon any such sale, transfer, disposition or termination, the
Administrative Agent will, at such Grantor's sole expense, execute and deliver
to such Grantor, without any representations, warranties or recourse, such
documents (including applicable Intercompany Notes) as such Grantor shall
reasonably request to evidence such termination or release.

         SECTION II.6. Grantor Remains Liable. Anything herein to the contrary
notwithstanding:

                  (a) each Grantor will remain liable under the contracts and
         agreements included in the Collateral to the extent set forth therein,
         and will perform all of its duties and obligations under such contracts
         and agreements to the same extent as if this Agreement had not been
         executed;

                  (b) the exercise by the Administrative Agent of any of its
         rights hereunder will not release any Grantor from any of its duties or
         obligations under any such contracts or agreements included in the
         Collateral; and


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                  (c) neither the Administrative Agent nor any other Current
         Assets Secured Party will have any obligation or liability under any
         such contracts or agreements included in the Collateral by reason of
         this Agreement, nor will the Administrative Agent or any other Current
         Assets Secured Party be obligated to perform any of the obligations or
         duties of any Grantor thereunder or to take any action to collect or
         enforce any claim for payment assigned hereunder.

         SECTION II.7. Security Interest Absolute. All rights of the
Administrative Agent and the security interests granted to the Administrative
Agent hereunder, and all obligations of each Grantor hereunder, shall be
absolute and unconditional, irrespective of:

                  (a) any lack of validity or enforceability of any Loan
         Document;

                  (b) the failure of any Current Assets Secured Party

                           (i) to assert any claim or demand or to enforce any
                  right or remedy against the Borrowers, any other Obligor or
                  any other Person under the provisions of any Loan Document or
                  otherwise or

                           (ii) to exercise any right or remedy against any
                  guarantor of, or collateral securing, any Current Assets
                  Obligations;

                  (c) any change in the time, manner or place of payment of, or
         in any other term of, all or any of the Current Assets Obligations or
         any other extension, compromise or renewal of any Current Assets
         Obligations;

                  (d) any reduction, limitation, impairment or termination of
         any Current Assets Obligations for any reason (other than the repayment
         in full and in cash of all Current Assets Obligations), including any
         claim of waiver, release, surrender, alteration or compromise, and
         shall not be subject to (and each Grantor hereby waives any right to or
         claim of) any defense or set-off, counterclaim, recoupment or
         termination whatsoever by reason of the invalidity, illegality,
         nongenuineness, irregularity, compromise or unenforceability of, or any
         other event or occurrence affecting, any Current Assets Obligations or
         otherwise;

                  (e) any amendment to, rescission, waiver or other modification
         of, or any consent to departure from, any of the terms of any Loan
         Document;

                  (f) any addition, exchange, release, surrender or
         non-perfection of any collateral (including the Collateral) or any
         amendment to or waiver or release of or addition to or consent to
         departure from any guaranty for any of the Current Assets Obligations;
         or


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                  (g) any other circumstances which might otherwise constitute a
         defense available to, or a legal or equitable discharge of, any
         Borrower, any other Obligor, any surety or any guarantor.

         SECTION II.8. Postponement of Subrogation, etc. Each Grantor hereby
agrees that it will not exercise any rights which it may acquire by reason of
any payment made hereunder, whether by way of subrogation, reimbursement or
otherwise, until the Current Assets Termination Date. Any amount paid to any
Grantor on account of any payment made hereunder prior to the Current Assets
Termination Date shall be held in trust for the benefit of the Current Assets
Secured Parties and shall immediately be paid to the Administrative Agent for
the ratable benefit of the Current Assets Secured Parties and credited and
applied against the Current Assets Obligations, whether matured or unmatured, in
accordance with the terms of the Credit Agreement; provided, however, that if:

                  (a) such Grantor has made payment to the Administrative Agent
         for the ratable benefit of the Current Assets Secured Parties of all or
         any part of the Current Assets Obligations; and

                  (b) the Current Assets Termination Date has occurred,

each Current Assets Secured Party agrees that, at the requesting Grantor's
request, the Administrative Agent, on behalf of the Current Assets Secured
Parties, will execute and deliver to such Grantor appropriate documents (without
recourse and without representation or warranty) necessary to evidence the
transfer by subrogation to such Grantor of an interest in the Current Assets
Obligations resulting from such payment by such Grantor. In furtherance of the
foregoing, prior to the Current Assets Termination Date, each Grantor shall
refrain from taking any action or commencing any proceeding against any Borrower
or any other Obligor (or its successors or assigns, whether in connection with a
bankruptcy proceeding or otherwise) to recover any amounts in respect of
payments made under this Agreement to the Administrative Agent or any other
Current Assets Secured Party.


                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         SECTION III.1. Representations and Warranties. Each Grantor represents
and warrants to each Current Assets Secured Party as set forth in this Article
III.

         SECTION III.2. Location of Collateral, etc. All of the Inventory and
Lockboxes of such Grantor are respectively located at the places specified in
Item 3 of the Perfection Certificate. None of the Inventory has, within the four
months preceding the date of this Agreement if then owned by such Grantor, been
located at any place other than the places specified in Item 3 of the Perfection
Certificate. The place of business and chief executive office of such Grantor
and the


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office where such Grantor keeps its records concerning the Receivables, and all
originals of all chattel paper which evidence Receivables, are located at the
address set forth in Item 3 of the Perfection Certificate. Such Grantor has no
trade names other than those specified in Item 1 of the Perfection Certificate.
During the four months preceding the date hereof, such Grantor has not been
known by any legal name nor has it had a federal taxpayer identification number
different from the one set forth on Item 2 of the Perfection Certificate, nor
has such Grantor been the subject of any merger or other corporate
reorganization, except as set forth in Item 1 of the Perfection Certificate. If
the Collateral includes any Inventory located in the State of California, such
Grantor is not a "retail merchant" within the meaning of Section 9102 of the
California U.C.C. All Receivables evidenced by a promissory note or other
instrument, negotiable document or chattel paper have been duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance reasonably satisfactory to the Administrative Agent and delivered
and pledged to the Administrative Agent pursuant to Section 4.6. Such Grantor is
not a party to any Federal, State or local government contract except as set
forth in Item 13 of the Perfection Certificate.

         SECTION III.3. Ownership, No Liens, etc. Such Grantor owns its
Collateral free and clear of any Lien, except for the security interest created
by this Agreement, the Lien in favor of the Fixed Assets Secured Parties and
Permitted Liens. No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Administrative Agent
relating to this Agreement or as have been filed in connection with Permitted
Liens.

         SECTION III.4. Possession and Control. Each Grantor has exclusive
possession and control of its Inventory except where the absence of possession
and control results from actions of such Grantor in the ordinary course of
business.

         SECTION III.5. Negotiable Documents, Instruments and Chattel Paper.
Such Grantor has, contemporaneously herewith, delivered to the Administrative
Agent possession of all originals of all negotiable documents, instruments and
chattel paper currently owned or held by such Grantor (duly endorsed in blank,
if requested by the Administrative Agent).

         SECTION III.6. Intellectual Property Collateral. With respect to any
Intellectual Property Collateral owned by such Grantor the loss, impairment or
infringement of which might have a Material Adverse Effect:

                  (a) such Intellectual Property Collateral is subsisting and
         has not been adjudged invalid or unenforceable, in whole or in part;

                  (b) such Intellectual Property Collateral is valid and
         enforceable;

                  (c) such Grantor has made all necessary filings and
         recordations to protect its interest in such Intellectual Property
         Collateral, including (if permissible) recordations of


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<PAGE>   12

         all of its interests in the Patent Collateral and Trademark Collateral
         in the United States Patent and Trademark Office and its claims to the
         Copyright Collateral in the United States Copyright Office;

                  (d) such Grantor is the exclusive owner of the entire and
         unencumbered right, title and interest in and to such Intellectual
         Property Collateral and no claim has been made that the use of such
         Intellectual Property Collateral does or may violate the asserted
         rights of any third party which could reasonably be expected to have a
         Material Adverse Effect (except for (i) Liens created under the Loan
         Documents, and (ii) Permitted Liens and except for rights of licensees
         under licenses of such Intellectual Property Collateral in the ordinary
         course of business); and

                  (e) with respect to any Intellectual Property Collateral that
         has been registered, such Grantor has performed and will continue to
         perform all acts and has paid and will continue to pay all required
         fees and Taxes to maintain each and every such item of Intellectual
         Property Collateral in full force and effect in the United States.

Such Grantor owns directly or is entitled to use by license or otherwise, all
patents, Trademarks, Trade Secrets, copyrights, licenses, technology, know-how,
processes and rights with respect to any of the foregoing necessary for or of
importance to the conduct of such Grantor's business as currently conducted.

         SECTION III.7. Validity, etc. This Agreement creates a valid
first-priority security interest in the Collateral securing the payment of the
Current Assets Obligations, and

                  (a) in the case of Collateral comprised of negotiable
         documents, instruments and chattel paper, upon the delivery of such
         Collateral to the Administrative Agent, such security interest will be
         a valid first-priority, perfected security interest; and

                  (b) in the case of all other Collateral, upon the filing of
         the U.C.C. financing statements (Form U.C.C.-1) delivered by such
         Grantor to the Administrative Agent with respect to such Collateral,
         such security interest will be a valid first-priority, perfected
         security interest.

Each Grantor has filed all U.C.C. financing statements (Form U.C.C.-1) referred
to above in the appropriate offices therefor (or has provided the Administrative
Agent with copies thereof suitable for filing in such offices) and has taken all
of the other actions referred to above necessary to create perfected and
first-priority security interests in the applicable Collateral.

         SECTION III.8. Authorization, Approval, etc. Except as have been
obtained or made and are in full force and effect, no material authorization,
material approval or other action by, and no material notice to or material
filing with, any Governmental Authority or regulatory body is required either
(a) for the grant by such Grantor of the security interest granted hereby, the
pledge by such Grantor of any Collateral pursuant hereto or for the execution,
delivery and


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<PAGE>   13

performance of this Agreement by such Grantor or (b) for the perfection of or
the exercise by the Administrative Agent of its rights and remedies hereunder.

         SECTION III.9. Compliance with Laws. Such Grantor is in compliance with
the requirements of all applicable laws (including the provisions of the Fair
Labor Standards Act), rules, regulations and orders of every Governmental
Authority, the non-compliance with which could reasonably be expected to have a
Material Adverse Effect or which could reasonably be expected to materially
adversely affect the value of the Collateral.

         SECTION III.10. As to Intercompany Notes. In the case of each
Intercompany Note, all of such Intercompany Notes have been duly authorized,
executed, endorsed, issued and delivered, and are the legal, valid and binding
obligation of the issuers thereof, and are not in default.


                                   ARTICLE IV
                                    COVENANTS

         SECTION IV.1. Certain Covenants. Each Grantor covenants and agrees
that, at all times prior to the Current Assets Termination Date, such Grantor
will, unless the Required Lenders shall otherwise consent in writing, perform,
comply with and be bound by the obligations set forth in this Article IV.

         SECTION IV.2. As to Inventory. Such Grantor hereby agrees that it will:

                  (a) keep all the Inventory (other than Inventory sold in the
         ordinary course of business) at the places therefor specified in
         Section 3.2 or, upon 30 days' prior written notice to the
         Administrative Agent, at such other places in a jurisdiction where all
         representations and warranties set forth in Article III shall be true
         and correct in all material respects, and all action required pursuant
         to the first sentence of Section 4.6 shall have been taken with respect
         to the Inventory; and

                  (b) pay promptly when due all property and other Taxes,
         assessments and governmental charges or levies imposed upon, and all
         claims (including claims for labor, materials and supplies) against,
         the Inventory, except to the extent the validity thereof is being
         contested in good faith by appropriate proceedings and for which
         adequate reserves in accordance with GAAP have been set aside.

         SECTION IV.3. As to Receivables. (a) Such Grantor will keep its chief
executive office and the office(s) where it keeps its records concerning the
Receivables, and all originals of all chattel paper which evidences Receivables,
located at the address(es) set forth in Section 3.2 and shall keep its other
places of business at the addresses set forth in Item 1 of the Perfection


                                      -13-
<PAGE>   14

Certificate, or, upon 30 days' prior written notice to the Administrative Agent,
at such other locations in a jurisdiction where all actions required by the
first sentence of Section 4.6 shall have been taken with respect to the
Receivables and such other Collateral; not change its name or federal taxpayer
identification number except upon 30 days' prior written notice to the
Administrative Agent; hold and preserve such records; and permit representatives
of the Administrative Agent at any time during normal business hours to inspect
and make abstracts from such records.

         (b) Such Grantor shall have the right to collect, demand, receive,
receipt for, sue for, compound and give acquittances for any and all amounts due
or to become due on Receivables and settle and adjust disputes and claims with
its customers and account debtors, handle returns and recoveries and grant
discounts, credits and allowances with respect to Receivables in the ordinary
course of business so long as no Default of the nature set forth in Section
8.1.9 of the Credit Agreement nor any Event of Default shall have occurred and
be continuing.

         (c) All proceeds of Collateral received by such Grantor shall be
deposited into a deposit account of such Grantor, unless, during the occurrence
and continuance of a Default of the nature set forth in Section 8.1.9 of the
Credit Agreement or an Event of Default, such Grantor is otherwise notified in
writing by the Administrative Agent. Following any such notice by the
Administrative Agent to such Grantor pursuant to this Section, all proceeds of
Collateral received by such Grantor shall be delivered in kind for deposit to an
account or accounts specified by the Administrative Agent (collectively, the
"Collateral Account"). Such proceeds of Collateral received by such Grantor
shall, prior to deposit in the Collateral Account, be held separate and apart
from, and not commingled with, any other property and in express trust for the
benefit of the Administrative Agent until delivery thereof is made to the
Collateral Account.

         (d) During any time that an Event of Default shall have occurred and be
continuing, the Administrative Agent shall have the right to apply any amount in
the Collateral Account to the payment of any Current Assets Obligations which
are due and payable, including any Current Assets Obligations that have been
declared due and payable pursuant to Section 8.3 of the Credit Agreement.

         (e) With respect to the Collateral Account, it is hereby confirmed and
agreed that (i) deposits in each Collateral Account are subject to a security
interest as contemplated hereby, (ii) each such Collateral Account shall be
under the sole dominion and control of the Administrative Agent and (iii) the
Administrative Agent shall have the sole right of withdrawal over such
Collateral.

         SECTION IV.4. As to Collateral. (a) Until the occurrence and
continuance of a Default of the nature set forth in Section 8.1.9 of the Credit
Agreement or an Event of Default, and such time as the Administrative Agent
shall notify such Grantor of the revocation of such power and authority, such
Grantor (i) may in the ordinary course of its business (except to the extent
prohibited under any Loan Document) at its own expense, refine, process, store,
transport, sell,


                                      -14-
<PAGE>   15

lease or furnish under the contracts of service any of the Inventory normally
held by such Grantor for such purpose, and use and consume, in the ordinary
course of its business (except to the extent prohibited under the Credit
Agreement or any other Loan Document), any raw materials, including work in
process or materials normally held by such Grantor for such purpose, (ii) will,
at its own expense, endeavor to collect, as and when due, all amounts due with
respect to any Collateral, including the taking of such action with respect to
such collection as the Administrative Agent may reasonably request upon the
occurrence and during the continuance of a Default of the nature set forth in
Section 8.1.9 of the Credit Agreement or an Event of Default or, in the absence
of such request, as such Grantor may deem advisable, and (iii) may grant, in the
ordinary course of business (except to the extent prohibited under any Loan
Document), to any party obligated on any of the Collateral, any rebate, refund
or allowance to which such party may be lawfully entitled, and may accept, in
connection therewith, the return of goods, the sale or lease of which shall have
given rise to such Collateral. The Administrative Agent, however, may, at any
time upon the occurrence and during the continuance of a Default of the nature
set forth in Section 8.1.9 of the Credit Agreement or an Event of Default,
notify any parties obligated on any of the Collateral to make payment to the
Administrative Agent of any amounts due or to become due thereunder and enforce
collection of any of the Collateral by suit or otherwise and surrender, release
or exchange all or any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any indebtedness
thereunder or evidenced thereby. Upon request of the Administrative Agent, upon
the occurrence and during the continuance of a Default of the nature set forth
in Section 8.1.9 of the Credit Agreement or an Event of Default, such Grantor
will, at its own expense, notify any parties obligated on any of the Collateral
to make payment to the Administrative Agent of any amounts due or to become due
thereunder.

         (b) Upon the occurrence and during the continuance of a Default of the
nature set forth in Section 8.1.9 of the Credit Agreement or an Event of
Default, the Administrative Agent is authorized to endorse, in the name of such
Grantor, any item, howsoever received by the Administrative Agent, representing
any payment on or other proceeds of any of the Collateral.

         SECTION IV.5. As to Intellectual Property Collateral. Each Grantor
covenants and agrees to comply with the following provisions as such provisions
relate to any Intellectual Property Collateral of such Grantor:

                  (a) such Grantor will not (i) do any act, or omit to do any
         act, whereby any of the Patent Collateral may lapse or become abandoned
         or dedicated to the public or unenforceable, (ii) permit any of its
         licensees to, (A) fail to continue to use any of the Trademark
         Collateral in order to maintain all of the Trademark Collateral in full
         force free from any claim of abandonment for non-use, (B) fail to
         maintain as in the past the quality of products and services offered
         under all of the Trademark Collateral, (C) fail to employ all of the
         Trademark Collateral registered with any Federal or State authority
         with an appropriate notice of such registration, (D) adopt or use any
         other Trademark which is confusingly similar or a colorable imitation
         of any of the Trademark Collateral, (E) use


                                      -15-
<PAGE>   16

         any of the Trademark Collateral registered with any Federal or State
         authority except for the uses for which registration or application for
         registration of all of the Trademark Collateral has been made, or (F)
         do or permit any act or knowingly omit to do any act whereby any of the
         Trademark Collateral may lapse or become invalid or unenforceable or
         (iii) do or permit any act or knowingly omit to do any act whereby any
         of the Copyright Collateral or any of the Trade Secrets Collateral may
         lapse or become invalid or unenforceable or placed in the public domain
         except upon expiration of the end of an unrenewable term of a
         registration thereof,

unless such Grantor shall either (x) reasonably and in good faith determine
(and notice of such determination shall have been delivered to the
Administrative Agent) that any of the Intellectual Property Collateral is not of
material economic value to such Grantor, or (y) in the exercise of its
reasonable business judgment determines to do otherwise;

                  (b) such Grantor shall notify the Administrative Agent
         promptly if it knows, or has reason to know, that any application or
         registration relating to any material item of the Intellectual Property
         Collateral may become abandoned or dedicated to the public or placed in
         the public domain or invalid or unenforceable, or of any adverse
         determination or development (including the institution of, or any such
         determination or development in, any proceeding in the United States
         Patent and Trademark Office, the United States Copyright Office or any
         U.S. court) regarding such Grantor's ownership of any material item of
         the Intellectual Property Collateral, its right to register the same or
         to keep and maintain and enforce the same;

                  (c) in no event will such Grantor or any of its agents,
         employees, designees or licensees file an application for the
         registration of any Intellectual Property Collateral with the United
         States Patent and Trademark Office or the United States Copyright
         Office, unless it promptly informs the Administrative Agent, and upon
         request of the Administrative Agent, executes and delivers any and all
         agreements, instruments, documents and papers as the Administrative
         Agent may reasonably request to evidence the Administrative Agent's
         security interest in such Intellectual Property Collateral and the
         goodwill and general intangibles of such Grantor relating thereto or
         represented thereby;

                  (d) unless such Grantor shall otherwise determine in the
         exercise of its reasonable business judgment, such Grantor will take
         all necessary steps, including in any proceeding before the United
         States Patent and Trademark Office or the United States Copyright
         Office, to maintain and pursue any application (and to obtain the
         relevant registration) filed with respect to, and to maintain any
         registration of, any material item of the Intellectual Property
         Collateral, including the filing of applications for renewal,
         affidavits of use, affidavits of incontestability and opposition,
         interference and cancellation proceedings and the payment of fees and
         Taxes (except to the extent that


                                      -16-
<PAGE>   17
         dedication, abandonment or invalidation is permitted under the
         foregoing clauses (a), (b) and (c)); and

                  (e) such Grantor will, contemporaneously herewith, execute and
         deliver to the Administrative Agent a Patent Security Agreement,
         Trademark Security Agreement and Copyright Security Agreement in the
         forms of Exhibit A, Exhibit B and Exhibit C hereto, and shall execute
         and deliver to the Administrative Agent any other document required to
         acknowledge or register or perfect the Administrative Agent's interest
         in any material item of the Intellectual Property Collateral.

         SECTION IV.6. Further Assurances, etc. Such Grantor agrees that, from
time to time at its own expense, it will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Administrative Agent may reasonably request,
in order to perfect, preserve and protect any security interest granted or
purported to be granted hereby or to enable the Administrative Agent to exercise
and enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, such Grantor will:

                  (a) if any Receivable shall be evidenced by a promissory note
         or other instrument, negotiable document or chattel paper, deliver and
         pledge to the Administrative Agent hereunder such promissory note,
         instrument, negotiable document or chattel paper duly endorsed and
         accompanied by duly executed instruments of transfer or assignment, all
         in form and substance satisfactory to the Administrative Agent;

                  (b) execute and file such financing or continuation
         statements, or amendments thereto, and such other instruments or
         notices (including any assignment of claim form under or pursuant to
         the federal assignment of claims statute, 31 U.S.C. Section 3726, any
         successor or amended version thereof or any regulation promulgated
         under or pursuant to any version thereof), as may be necessary or
         desirable, or as the Administrative Agent may request, in order to
         perfect and preserve the security interests and other rights granted or
         purported to be granted to the Administrative Agent hereby; and

                  (c) furnish to the Administrative Agent, from time to time at
         the Administrative Agent's request, statements and schedules further
         identifying and describing the Collateral and such other reports in
         connection with the Collateral as the Administrative Agent may
         reasonably request, all in reasonable detail.

With respect to the foregoing and the grant of the security interest hereunder,
such Grantor hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of such Grantor where permitted
by law. A carbon, photographic or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.


                                      -17-
<PAGE>   18

         SECTION IV.7. As to Intercompany Notes. Each Grantor will, at all
times, keep pledged to the Administrative Agent pursuant hereto on a
first-priority, perfected basis all Intercompany Notes and all interest,
principal and other proceeds received by the Administrative Agent with respect
to the Intercompany Notes. Each Grantor agrees after any Default of the nature
referred to in Section 8.1.9 of the Credit Agreement or any Event of Default
shall have occurred and be continuing, promptly upon receipt of notice thereof
by such Grantor and without any request therefor by the Administrative Agent, to
deliver (properly endorsed where required hereby or requested by the
Administrative Agent) to the Administrative Agent all interest, all principal,
all other cash payments and all proceeds of the Intercompany Notes. Each Grantor
will not amend, supplement or otherwise modify, or permit, consent or suffer to
occur any amendment, supplement or modification of any terms or provisions
contained in, or applicable to, any Intercompany Notes included in the
Collateral if the effect thereof is to impair, or is in any manner adverse to,
the rights or interests of the Administrative Agent or any other Current Assets
Secured Party hereunder or under any Loan Document, without the prior written
consent of the Administrative Agent.


                                    ARTICLE V
                            THE ADMINISTRATIVE AGENT

         SECTION V.1. Administrative Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints the Administrative Agent as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time in the
Administrative Agent's discretion, upon the occurrence and during the
continuance of a Default of the nature set forth in Section 8.1.9 of the Credit
Agreement or an Event of Default, to take any action and to execute any
instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including:

                  (a) to ask, demand, collect, sue for, recover, compromise and
         receive and give acquittance and receipts for moneys due and to become
         due under or in respect of any of the Collateral;

                  (b) to receive, endorse and collect any drafts or other
         instruments, documents and chattel paper, in connection with clause (a)
         above;

                  (c) to file any claims or take any action or institute any
         proceedings which the Administrative Agent may deem necessary or
         desirable for the collection of any of the Collateral or otherwise to
         enforce the rights of the Administrative Agent with respect to any of
         the Collateral; and

                  (d) to perform the affirmative obligations of such Grantor
         hereunder (including all obligations of such Grantor pursuant to
         Section 4.6).


                                      -18-
<PAGE>   19

Such Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.

         SECTION V.2. Administrative Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by such
Grantor pursuant to Section 6.3.

         SECTION V.3. Administrative Agent Has No Duty. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest (on behalf
of the Current Assets Secured Parties) in the Collateral and shall not impose
any duty on it to exercise any such powers. Except for reasonable care of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Administrative Agent shall have no duty as to any Collateral
or responsibility for:

                  (a) ascertaining or taking action with respect to calls,
         conversions, exchanges, maturities, tenders or other matters relative
         to any investment property, whether or not the Administrative Agent has
         or is deemed to have knowledge of such matters; or

                  (b) taking any necessary steps to preserve rights against
         prior parties or any other rights pertaining to any Collateral.

         SECTION V.4. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, that the Administrative Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of any of the Collateral, if it takes such action for that purpose
as any Grantor reasonably requests in writing from time to time, but failure of
the Administrative Agent to comply with any such request at any time shall not
in itself be deemed a failure to exercise reasonable care. If an Event of
Default has occurred and is continuing, the Administrative Agent shall not be
required to comply with any request of the Grantor with respect to the matters
described in this Section.


                                   ARTICLE VI
                                    REMEDIES

         SECTION VI.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:

                  (a) The Administrative Agent may exercise in respect of the
         Collateral, in addition to other rights and remedies provided for
         herein or otherwise available to it, all the rights and remedies of a
         secured party on default under the U.C.C. (whether or not the U.C.C.
         applies to the affected Collateral) and also may


                                      -19-
<PAGE>   20


                           (i) require each Grantor to, and such Grantor hereby
                  agrees that it will, at its expense and upon request of the
                  Administrative Agent forthwith, assemble all or part of the
                  Collateral as directed by the Administrative Agent and make it
                  available to the Administrative Agent at a place to be
                  designated by the Administrative Agent which is reasonably
                  convenient to both parties, and

                           (ii) without notice except as specified below, sell
                  the Collateral or any part thereof in one or more parcels at
                  public or private sale, at any of the Administrative Agent's
                  offices or elsewhere, for cash, on credit or for future
                  delivery, and upon such other terms as the Administrative
                  Agent may deem commercially reasonable. Each Grantor agrees
                  that, to the extent notice of sale shall be required by law,
                  at least ten days prior notice to such Grantor of the time and
                  place of any public sale or the time after which any private
                  sale is to be made shall constitute reasonable notification.
                  The Administrative Agent shall not be obligated to make any
                  sale of such Collateral regardless of notice of sale having
                  been given. The Administrative Agent may adjourn any public or
                  private sale from time to time by announcement at the time and
                  place fixed therefor, and such sale may, without further
                  notice, be made at the time and place to which it was so
                  adjourned.

                  (b) All cash proceeds received by the Administrative Agent in
         respect of any sale of, collection from or other realization upon all
         or any part of the Collateral shall be applied by the Administrative
         Agent against all or any part of the Current Assets Obligations as
         follows:

                           (i) first, to the payment of any amounts payable to
                  the Administrative Agent pursuant to Section 10.3 of the
                  Credit Agreement and Section 6.3;

                           (ii) second, to the equal and ratable payment of
                  Current Assets Obligations, in accordance with each Current
                  Assets Secured Party's Current Assets Obligations owing to it
                  under or pursuant to the Credit Agreement or any other Loan
                  Document, or under or pursuant to any Rate Protection
                  Agreement included in the Current Assets Obligations, as to
                  each Current Assets Secured Party, applied

                                    (A) first to fees and expense reimbursements
                           then due to such Current Assets Secured Party,

                                    (B) then to interest due to such Current
                           Assets Secured Party,

                                    (C) then to pay or prepay principal of the
                           Current Assets Loans and Swing Line Loans owing to,
                           or to reduce the "credit exposure" of,


                                      -20-
<PAGE>   21

                           such Current Assets Secured Party under any Rate
                           Protection Agreement, as the case may be, and

                                    (D) then to pay the remaining outstanding
                           Current Assets Obligations and Cash Collateralize all
                           Letter of Credit Outstandings;

                           (iii) third, without duplication of any amounts paid
                  pursuant to clause (b)(ii) above, to the Indemnified Parties
                  to the extent of any amounts owing pursuant to Section 10.4 of
                  the Credit Agreement; and

                           (iv) fourth, to be held as additional collateral
                  security until the Current Assets Termination Date, after
                  which such remaining cash proceeds shall be paid over to the
                  applicable Grantor (or the Fixed Assets Secured Parties, if
                  applicable) or to whomsoever may be lawfully entitled to
                  receive such surplus.

         For purposes of this Agreement, the "credit exposure" at any time of
         any Current Assets Secured Party with respect to a Rate Protection
         Agreement to which such Current Assets Secured Party is a party shall
         be determined at such time in accordance with the customary methods of
         calculating credit exposure under similar arrangements by the
         counterparty to such arrangements, taking into account potential
         interest rate movements and the respective termination provisions and
         notional principal amount and term of such Rate Protection Agreement.

         (c)  The Administrative Agent may

                           (i) transfer all or any part of the Collateral into
                  the name of the Administrative Agent or its nominee, with or
                  without disclosing that such Collateral is subject to the lien
                  and security interest hereunder,

                           (ii) notify the parties obligated on any of the
                  Collateral to make payment to the Administrative Agent of any
                  amount due or to become due thereunder,

                           (iii) enforce collection of any of the Collateral by
                  suit or otherwise, and surrender, release or exchange all or
                  any part thereof, or compromise or extend or renew for any
                  period (whether or not longer than the original period) any
                  obligations of any nature of any party with respect thereto,

                           (iv) endorse any checks, drafts or other writings in
                  such Grantor's name to allow collection of the Collateral,

                           (v) take control of any proceeds of the Collateral
                  and


                                      -21-
<PAGE>   22

                           (vi) execute (in the name, place and stead of such
                  Grantor) endorsements, assignments, stock powers and other
                  instruments of conveyance or transfer with respect to all or
                  any of the Collateral.

         SECTION VI.2. Compliance with Restrictions. Each Grantor agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Administrative Agent is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may
be advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications and restrict such prospective bidders and
purchasers to Persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Collateral) or in order to obtain any required approval of the
sale or of the purchaser by any Governmental Authority or official, and such
Grantor further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall the Administrative Agent be liable nor accountable to such Grantor for
any discount allowed by the reason of the fact that such Collateral is sold in
compliance with any such limitation or restriction.

         SECTION VI.3. Indemnity and Expenses. Each Grantor hereby jointly and
severally indemnifies and holds harmless the Administrative Agent from and
against any and all claims, losses and liabilities arising out of or resulting
from this Agreement (including enforcement of this Agreement), except claims,
losses, or liabilities resulting from the Administrative Agent's gross
negligence or wilful misconduct and, each Grantor will, upon demand pay to the
Administrative Agent the amount of any and all reasonable expenses, including
the reasonable fees and disbursements of its counsel and of any experts and
agents, which the Administrative Agent may incur, in each case, in connection
with:

                  (a) the administration of this Agreement;

                  (b) the custody, preservation, use or operation of, or the
         sale of, collection from or other realization upon, any of the
         Collateral;

                  (c) the exercise or enforcement of any of the rights of the
         Administrative Agent hereunder; or

                  (d) the failure by any Grantor to perform or observe any of
         the provisions hereof.


                                      -22-
<PAGE>   23

                                   ARTICLE VII
                            MISCELLANEOUS PROVISIONS

         SECTION VII.1. Loan Document. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.

         SECTION VII.2. Amendments; etc. No amendment to or waiver of any
provision of this Agreement nor consent to any departure by any Grantor herefrom
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent (on behalf of the Lenders or the Required Lenders,
as the case may be) and each Grantor and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

         SECTION VII.3. Protection of Collateral. The Administrative Agent may
from time to time, at its option, perform any act which each Grantor agrees
hereunder to perform and which such Grantor shall fail to perform after being
requested in writing so to perform (it being understood that no such request
need be given after the occurrence and during the continuance of an Event of
Default) and the Administrative Agent may from time to time take any other
action which the Administrative Agent reasonably deems necessary for the
maintenance, preservation or protection of any of the Collateral or of its
security interest therein.

         SECTION VII.4. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and addressed,
delivered or transmitted, if to any Grantor, at the address or facsimile number
of the Company provided for in the Credit Agreement, and, if to the
Administrative Agent, at the address or facsimile number provided for in the
Credit Agreement, or as to any such party at such other address or facsimile
number as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section. Any notice, (a)
if mailed and properly addressed with postage prepaid or if properly addressed
and sent by pre-paid courier service, shall be deemed given when received, or
(b) if transmitted by facsimile, shall be deemed given when transmitted (and
telephonic confirmation of receipt thereof has been received).

         SECTION VII.5. Headings. The various headings of this Agreement are
inserted for convenience only, and shall not affect the meaning or
interpretation of this Agreement or any provisions thereof.

         SECTION VII.6. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.

         SECTION VII.7. Counterparts; Effectiveness. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original (whether such counterpart is originally executed or an
electronic copy of an original) and all of which shall


                                      -23-
<PAGE>   24

constitute together but one and the same agreement. This Agreement shall become
effective as of the date first above written and be binding upon a Grantor when
a counterpart hereof executed on behalf of such Grantor shall have been received
by the Administrative Agent.

         SECTION VII.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK,
EXCLUDING THE LAW OF CONFLICTS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK.

         SECTION VII.9. Additional Grantors. Upon the execution and delivery by
any other Person of an instrument in the form of Annex I hereto, together with
each Schedule thereto, such Person shall become a "Grantor" hereunder with the
same force and effect as if originally named as a Grantor herein. The execution
and delivery of any such instrument shall not require the consent of any other
Grantor hereunder. The rights and obligations of each Grantor hereunder shall
remain in full force and effect notwithstanding the addition of any new Grantor
as a party to this Agreement.

         SECTION VII.10. Agreement Subject to Revolver Intercreditor Agreement.
Notwithstanding anything to the contrary contained herein, it is expressly
understood and agreed by the parties hereto that this Agreement shall be subject
to the terms of the Revolver Intercreditor Agreement.


                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                      -24-
<PAGE>   25

         IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.


                                      STERLING CHEMICALS, INC.


                                      By
                                         --------------------------------------
                                         Title:


                                      STERLING CANADA, INC.


                                      By
                                         --------------------------------------
                                         Title:


                                      STERLING PULP CHEMICALS US, INC.


                                      By
                                         --------------------------------------
                                         Title:


                                      STERLING PULP CHEMICALS, INC.


                                      By
                                         --------------------------------------
                                         Title:


                                      STERLING FIBERS, INC.


                                      By
                                         --------------------------------------
                                         Title:


<PAGE>   26

                                      STERLING CHEMICALS ENERGY, INC.


                                      By
                                         --------------------------------------
                                         Title:


                                      STERLING CHEMICALS INTERNATIONAL, INC.


                                      By
                                         -------------------------------
                                         Title:


                                      THE CIT GROUP/BUSINESS CREDIT, INC.
                                       as Administrative Agent, on behalf
                                        of the Current Assets Secured Parties

                                      By
                                         --------------------------------------
                                         Title:


<PAGE>   27

                                                                     SCHEDULE I
                                                          to Security Agreement
                                                            ([NAME OF GRANTOR])

Perfection Certificate


                      See Exhibit M to the Credit Agreement


<PAGE>   28

                                                                    SCHEDULE II
                                                          to Security Agreement
                                                            ([NAME OF GRANTOR])


Item A.  Patents



                                 Issued Patents
                                 --------------

Patent No.        Issue Date      Inventor(s)                      Title
----------        ----------      -----------                      ------


                           Pending Patent Applications
                           ---------------------------


Serial No.        Filing Date     Inventor(s)                      Title
----------        -----------     -----------                      -----


                       Patent Applications in Preparation
                       ----------------------------------


                                   Expected
Docket No.        Filing Date     Inventor(s)                      Title
----------        -----------     -----------                      ------


Item B.  Patent Licenses



                                   Effective      Expiration    Subject
Licensor          Licensee           Date             Date       Matter
--------          --------         ---------      ----------    -------


<PAGE>   29


                                                                    SCHEDULE III
                                                           to Security Agreement
                                                             ([NAME OF GRANTOR])

Item A.  Trademarks


                              Registered Trademarks
                              ---------------------

Trademark       Registration No.       Registration Date
---------       ----------------       -----------------


                         Pending Trademark Applications
                         ------------------------------

Trademark         Serial No.           Filing Date
---------         ----------           -----------


                      Trademark Applications in Preparation
                      -------------------------------------

                                 Expected      Products/
Trademark       Docket No.       Filing Date    Services
---------       ----------       -----------    --------



Item B.  Trademark Licenses

                                                  Effective        Expiration
Trademark         Licensor        Licensee          Date              Date
---------         --------        --------        ---------        ----------


<PAGE>   30


                                                                    SCHEDULE IV
                                                          to Security Agreement
                                                            ([NAME OF GRANTOR])

Item A.  Copyrights


                              Registered Copyrights
                              ---------------------

Registration No.       Registration Date            Author(s)           Title
----------------       -----------------            ---------           -----


                   Copyright Pending Registration Applications
                   -------------------------------------------

Serial No.                 Filing Date               Author(s)          Title
----------                 -----------               ---------          -----


               Copyright Registration Applications in Preparation
               ---------------------------------------------------

                                                     Expected
Docket No.                 Filing Date               Author(s)          Title
----------                 -----------               ---------          -----


Item B.  Copyright Licenses



                                   Effective      Expiration    Subject
Licensor          Licensee           Date             Date       Matter
--------          --------         ---------      ----------    -------



<PAGE>   31


                                                                     SCHEDULE V
                                                          to Security Agreement
                                                            ([NAME OF GRANTOR])


                        Trade Secret or Know-How Licenses
                        ---------------------------------


                                   Effective      Expiration    Subject
Licensor          Licensee           Date            Date        Matter
--------          --------         ---------      ----------    -------


<PAGE>   32


                                                                    SCHEDULE VI
                                               to Pledge and Security Agreement
                                                             ([NAME OF GRANTOR])

Intercompany Notes
------------------

                                Maximum Amount of
                               Intercompany Loans
Maker                           Evidenced Thereby                 Date
-----                           -----------------                 ----


<PAGE>   33

                                                                      EXHIBIT A
                                                          to Security Agreement


                            PATENT SECURITY AGREEMENT

         This PATENT SECURITY AGREEMENT (this "Agreement"), dated as of
__________ __, ____, is made between ___________________, a ____________________
(the "Grantor"), and THE CIT GROUP/BUSINESS CREDIT, INC., as administrative
agent (together with any successor(s) thereto in such capacity, the
"Administrative Agent") for each of the Current Assets Secured Parties.


                              W I T N E S S E T H :

         WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation (the "Company"), Sterling Canada, Inc., a Delaware
corporation, Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling
Pulp Chemicals, Inc., a Georgia corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Chemicals Energy, Inc., a Delaware corporation, and
Sterling Chemicals International, Inc., a Delaware corporation (collectively,
the "Borrowers"), the various financial institutions as are, or may from time to
time become, parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Credit Suisse First Boston, as the Documentation Agent, and
the Administrative Agent, the Lenders and the Issuer have extended Commitments
to make Credit Extensions to the Borrowers;

         WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered a Current Assets Security Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Security Agreement");

         WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extension) under the Credit Agreement
and pursuant to clause (e) of Section 4.5 of the Security Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Patent
Collateral (as defined below) to secure all Current Assets Obligations;

         WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement; and


<PAGE>   34


         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Current Assets Lenders, the Swing Line Lender and the Issuer to make Current
Assets Loans and Swing Line Loans and issue Letters of Credit to the Borrowers
pursuant to the Credit Agreement and (ii) the Current Assets Secured Parties to
enter into Rate Protection Agreements, the Grantor agrees, for the benefit of
each Current Assets Secured Party, as follows:

         SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided (or incorporated by reference) in the
Security Agreement.

         SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Current Assets Obligations, the Grantor does hereby pledge and
hypothecate to the Administrative Agent, and grant to the Administrative Agent a
security interest in, for its benefit and the benefit of each Current Assets
Secured Party, all of the following property (the "Patent Collateral"), whether
now owned or hereafter acquired or existing by it:

                  (a) all letters patent and applications for letters patent in
         the United States, including all patent applications in preparation for
         filing in the United States and including each patent and patent
         application referred to in Item A of Schedule I attached hereto;

                  (b) all reissues, divisions, continuations,
         continuations-in-part, extensions, renewals and reexaminations of any
         of the items described in clause (a);

                  (c) all patent licenses in the United States, including each
         patent license referred to in Item B of Schedule I attached hereto; and

                  (d) all proceeds of, and rights associated with, the foregoing
         (including license royalties and proceeds of infringement suits), the
         right to sue third parties for past, present or future infringements of
         any patent or patent application, referred to in clauses (a) or (b)
         above, and for breach or enforcement of any patent license referred to
         in clause (c) above.

         SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Patent Collateral with the United States Patent
and Trademark Office. The security interest granted hereby has been granted as a
supplement to, and not in limitation of, the security interest granted to the
Administrative Agent for its benefit and the benefit of each Current Assets
Secured Party under the Security Agreement. The Security Agreement (and all
rights and remedies of the Administrative Agent and each Current Assets Secured
Party thereunder) shall remain in full force and effect in accordance with its
terms.


                                   Exhibit A
                                      -2-
<PAGE>   35

         SECTION 4. Release of Security Interest. Upon (i) the sale, transfer or
other disposition of any Patent Collateral in accordance with the Credit
Agreement or (ii) the Current Assets Termination Date, the Administrative Agent
shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Patent Collateral which has been granted
hereunder.

         SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge
and affirm that the rights and remedies of the Administrative Agent with respect
to the security interest in the Patent Collateral granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.

         SECTION 6. Loan Document, etc. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.

         SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
(whether such counterpart is originally executed or an electronic copy of an
original) and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective and binding as of the date
first above written when a counterpart hereof executed on behalf of the Grantor
shall have been received by the Administrative Agent.

         SECTION 8. Agreement Subject to Revolver Intercreditor Agreement.
Notwithstanding anything to the contrary contained herein, it is expressly
understood and agreed by the parties hereto that this Agreement shall be subject
to the terms of the Revolver Intercreditor Agreement.


                                   Exhibit A
                                      -3-
<PAGE>   36

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

                                           [NAME OF GRANTOR]


                                           By
                                             ----------------------------------
                                             Title:



                                           THE CIT GROUP/BUSINESS CREDIT, INC.
                                           as Administrative Agent, on behalf
                                           of the Current Assets Secured Parties


                                           By
                                             ----------------------------------
                                             Title:


                                   Exhibit A
                                      -4-
<PAGE>   37


                                                                     SCHEDULE I
                                                   to Patent Security Agreement


Item A.  Patents

                                 Issued Patents

Patent No.           Issue Date           Inventor(s)                Title
----------           ----------           ----------                 -----


                           Pending Patent Applications
                           ---------------------------

Serial No.           Filing Date          Inventor(s)                Title
----------           -----------          -----------                -----


                       Patent Applications in Preparation
                       ----------------------------------

                                           Expected
Docket No.           Filing Date           Inventor(s)               Title
----------           -----------           -----------               ------


Item B.  Patent Licenses

                                Effective       Expiration           Subject
Licensor        Licensee          Date             Date               Matter
--------        --------        ---------       ----------           -------


<PAGE>   38

                                                                      EXHIBIT B
                                                          to Security Agreement


                          TRADEMARK SECURITY AGREEMENT

         This TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as of
__________ __, ____, is made between ___________________, a ____________________
(the "Grantor"), and THE CIT GROUP/BUSINESS CREDIT, INC., as administrative
agent (together with any successor(s) thereto in such capacity, the
"Administrative Agent") for each of the Current Assets Secured Parties.


                              W I T N E S S E T H :

         WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation (the "Company"), Sterling Canada, Inc., a Delaware
corporation, Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling
Pulp Chemicals, Inc., a Georgia corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Chemicals Energy, Inc., a Delaware corporation, and
Sterling Chemicals International, Inc., a Delaware corporation (collectively,
the "Borrowers"), the various financial institutions as are, or may from time to
time become, parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Credit Suisse First Boston, as the Documentation Agent, and
the Administrative Agent, the Lenders and the Issuer have extended Commitments
to make Credit Extensions to the Borrowers;

         WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered a Current Assets Security Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Security Agreement");

         WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extension) under the Credit Agreement
and pursuant to clause (e) of Section 4.5 of the Security Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Trademark
Collateral (as defined below) to secure all Current Assets Obligations;

         WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement; and


<PAGE>   39

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Current Assets Lenders, the Swing Line Lender and the Issuer to make Current
Assets Loans and Swing Line Loans and issue Letters of Credit to the Borrowers
pursuant to the Credit Agreement, and (ii) the Current Assets Secured Parties to
enter into Rate Protection Agreements, the Grantor agrees, for the benefit of
each Current Assets Secured Party, as follows:

         SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided (or incorporated by reference) in the
Security Agreement.

         SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Current Assets Obligations, the Grantor does hereby pledge and
hypothecate to the Administrative Agent, and grant to the Administrative Agent a
security interest in, for its benefit and the benefit of each Current Assets
Secured Party, all of the following property (the "Trademark Collateral"),
whether now owned or hereafter acquired or existing by it:

                  (a) all trademarks, trade names, corporate names, company
         names, business names, fictitious business names, trade styles, service
         marks, certification marks, collective marks, logos, other source of
         business identifiers, prints and labels on which any of the foregoing
         have appeared or appear, designs and general intangibles of a like
         nature (all of the foregoing items in this clause (a) being
         collectively called a "Trademark"), now existing anywhere in the United
         States or hereafter adopted or acquired in the United States, whether
         currently in use or not, all registrations and recordings thereof and
         all applications in connection therewith, whether pending or in
         preparation for filing, including registrations, recordings and
         applications in the United States Patent and Trademark Office or in any
         office or agency of the United States of America or any State,
         including those referred to in Item A of Schedule I attached hereto;

                  (b) all Trademark licenses in the United States, including
         each Trademark license referred to in Item B of Schedule I attached
         hereto;

                  (c) all reissues, extensions or renewals of any of the items
         described in clause (a) and (b);

                  (d) all of the goodwill of the business connected with the use
         of, and symbolized by the items described in, clauses (a) and (b); and

                  (e) all proceeds of, and rights associated with, the
         foregoing, including any claim by the Grantor against third parties for
         past, present or future infringement or dilution of any Trademark,
         Trademark registration or Trademark license referred to in clauses (a)


                                   Exhibit B
                                      -2-
<PAGE>   40

         through (c) above, or for any injury to the goodwill associated with
         the use of any such Trademark or for breach or enforcement of any such
         Trademark license.

         SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Trademark Collateral with the United States
Patent and Trademark Office. The security interest granted hereby has been
granted as a supplement to, and not in limitation of, the security interest
granted to the Administrative Agent for its benefit and the benefit of each
Current Assets Secured Party under the Security Agreement. The Security
Agreement (and all rights and remedies of the Administrative Agent and each
Current Assets Secured Party thereunder) shall remain in full force and effect
in accordance with its terms.

         SECTION 4. Release of Security Interest. Upon (i) the sale, transfer or
other disposition of any Trademark Collateral in accordance with the Credit
Agreement or (ii) the Current Assets Termination Date, the Administrative Agent
shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Trademark Collateral which has been granted
hereunder.

         SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge
and affirm that the rights and remedies of the Administrative Agent with respect
to the security interest in the Trademark Collateral granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.

         SECTION 6. Loan Document, etc. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.

         SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
(whether such counterpart is originally executed or an electronic copy of an
original) and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective and binding as of the date
first above written when a counterpart hereof executed on behalf of the Grantor
shall have been received by the Administrative Agent.

         SECTION 8. Agreement Subject to Revolver Intercreditor Agreement.
Notwithstanding anything to the contrary contained herein, it is expressly
understood and agreed by the parties hereto that this Agreement shall be subject
to the terms of the Revolver Intercreditor Agreement.

                                   Exhibit B
                                      -3-
<PAGE>   41


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


                                         [NAME OF GRANTOR]

                                         By
                                           -------------------------------------
                                            Title:



                                         THE CIT GROUP/BUSINESS CREDIT, INC. as
                                         Administrative Agent, on behalf of
                                         the Current Assets Secured Parties

                                         By
                                           -------------------------------------
                                            Title:


                                   Exhibit B
                                      -4-
<PAGE>   42


                                                                     SCHEDULE I
                                                to Trademark Security Agreement


Item A.  Trademarks


                              Registered Trademarks
                              ---------------------

Trademark     Registration No.       Registration Date
---------     ----------------       ------------------


                         Pending Trademark Applications
                         ------------------------------

Trademark        Serial No.             Filing Date
---------        ----------             -----------


                      Trademark Applications in Preparation
                      -------------------------------------

                                  Expected     Products/
Trademark       Docket No.       Filing Date   Services
---------       ---------        -----------   ---------


Item B.  Trademark Licenses


                                                    Effective    Expiration
Trademark          Licensor          Licensee          Date         Date
---------          --------          --------       ---------    ----------


<PAGE>   43

                                                                      EXHIBIT C
                                                         to  Security Agreement


                          COPYRIGHT SECURITY AGREEMENT

         This COPYRIGHT SECURITY AGREEMENT (this "Agreement"), dated as of
__________ __, ____, is made between ___________________, a ____________________
(the "Grantor"), and THE CIT GROUP/BUSINESS CREDIT, INC., as administrative
agent (together with any successor(s) thereto in such capacity, the
"Administrative Agent") for each of the Current Assets Secured Parties.


                              W I T N E S S E T H :

         WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation (the "Company"), Sterling Canada, Inc., a Delaware
corporation, Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling
Pulp Chemicals, Inc., a Georgia corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Chemicals Energy, Inc., a Delaware corporation, and
Sterling Chemicals International, Inc., a Delaware corporation (collectively,
the "Borrowers"), the various financial institutions as are, or may from time to
time become, parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Credit Suisse First Boston, as the Documentation Agent, and
the Administrative Agent, the Lenders and the Issuer have extended Commitments
to make Credit Extensions to the Borrowers;

         WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered a Current Assets Security Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Security Agreement");

         WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extension) under the Credit Agreement
and pursuant to clause (e) of Section 4.5 of the Security Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Copyright
Collateral (as defined below) to secure all Current Assets Obligations;

         WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement; and


<PAGE>   44

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Current Assets Lenders, the Swing Line Lender and the Issuer to make Current
Assets Loans and Swing Line Loans and issue Letters of Credit to the Borrowers
pursuant to the Credit Agreement, and (ii) the Current Assets Secured Parties to
enter into Rate Protection Agreements, the Grantor agrees, for the benefit of
each Current Assets Secured Party, as follows:

         SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided (or incorporated by reference) in the
Security Agreement.

         SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Current Assets Obligations, the Grantor does hereby pledge and
hypothecate to the Administrative Agent, and grant to the Administrative Agent a
security interest in, for its benefit and the benefit of each Current Assets
Secured Party, all of the following property (the "Copyright Collateral"),
whether now owned or hereafter acquired or existing by it, being all copyrights
of the Grantor, whether statutory or common law, registered or unregistered, now
or hereafter in force in the United States including all of the Grantor's right,
title and interest in and to all copyrights registered in the United States
Copyright Office and also including the copyrights referred to in Item A of
Schedule I attached hereto, and all applications for registration thereof,
whether pending or in preparation, all copyright licenses in the United States,
including each copyright license referred to in Item B of Schedule I attached
hereto, the right to sue for past, present and future infringements of any
thereof, all rights corresponding thereto in the United States, all extensions
and renewals of any thereof and all proceeds of the foregoing, including
licenses, royalties, income, payments, claims, damages and proceeds of suit.

         SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Copyright Collateral with the United States
Copyright Office. The security interest granted hereby has been granted as a
supplement to, and not in limitation of, the security interest granted to the
Administrative Agent for its benefit and the benefit of each Current Assets
Secured Party under the Security Agreement. The Security Agreement (and all
rights and remedies of the Administrative Agent and each Current Assets Secured
Party thereunder) shall remain in full force and effect in accordance with its
terms.

         SECTION 4. Release of Security Interest. Upon (i) the sale, transfer or
other disposition of any Copyright Collateral in accordance with the Credit
Agreement or (ii) the Current Assets Termination Date, the Administrative Agent
shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Copyright Collateral which has been granted
hereunder.


                                    Exhibit C
                                       -2-
<PAGE>   45

         SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge
and affirm that the rights and remedies of the Administrative Agent with respect
to the security interest in the Copyright Collateral granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.

         SECTION 6. Loan Document, etc. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.

         SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
(whether such counterpart is originally executed or an electronic copy of an
original) and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective and binding as of the date
first above written when a counterpart hereof executed on behalf of the Grantor
shall have been received by the Administrative Agent.

         SECTION 8. Agreement Subject to Revolver Intercreditor Agreement.
Notwithstanding anything to the contrary contained herein, it is expressly
understood and agreed by the parties hereto that this Agreement shall be subject
to the terms of the Revolver Intercreditor Agreement.


                                    Exhibit C
                                       -3-

<PAGE>   46

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

                                         [NAME OF GRANTOR]

                                         By
                                            -----------------------------------
                                             Title:



                                         THE CIT GROUP/BUSINESS CREDIT, INC. as
                                         Administrative Agent, on behalf of
                                         the Current Assets Secured Parties

                                         By
                                            -----------------------------------
                                             Title:


                                   Exhibit C
                                      -4-
<PAGE>   47


                                                                     SCHEDULE I
                                                to Copyright Security Agreement


Item A.  Copyrights


                              Registered Copyrights
                              ---------------------

Registration No.       Registration Date         Author(s)             Title
----------------       -----------------         ---------             -----


                   Copyright Pending Registration Applications
                   -------------------------------------------

Serial No.               Filing Date              Author(s)            Title
----------               -----------              ---------            -----


               Copyright Registration Applications in Preparation
               --------------------------------------------------

                                                   Expected
Docket No.               Filing Date               Author(s)            Title
----------               -----------               ---------            -----


Item B.  Copyright Licenses


                                   Effective         Expiration        Subject
Licensor          Licensee           Date              Date            Matter
--------          ---------        ---------         -----------       -------


<PAGE>   48

                                                                      EXHIBIT D
                                                          to Security Agreement


                                 PROMISSORY NOTE


$2,000,000                                                        July __, 1999


         FOR VALUE RECEIVED, the undersigned, [FOREIGN RESTRICTED SUBSIDIARY], a
_______________ corporation (the "Maker"), promises to pay to the order of
______________, a _______________ corporation (the "Payee"), on demand, TWO
MILLION DOLLARS ($2,000,000) or, if less, the aggregate unpaid principal amount
of all intercompany loans made by the Payee to the Maker. Terms not otherwise
defined herein are defined in the Revolving Credit Agreement, dated as of July
__, 1999 (together with all amendments, supplements and other modifications, if
any, from time to time hereafter made thereto, the "Credit Agreement"), among
the Payee, each other Borrower party thereto, the various financial institutions
as are, or may from time to time become, parties thereto (the "Lenders"), DLJ
Capital Funding, Inc., as the Syndication Agent, Credit Suisse First Boston, as
the Documentation Agent, and The CIT Group/Business Credit, Inc., as the
Administrative Agent.

         The unpaid principal amount of this promissory note (this "Note") from
time to time outstanding shall bear interest at a rate of interest equal to such
rate per annum as shall be agreed upon from time to time by the Payee and the
Maker payable at such times as shall be agreed upon by the Payee and the Maker,
and all payments of principal of and interest on this Note shall be payable in
lawful currency of the United States of America. All such payments and may be
recorded on the books and records of the Maker and the Payee and may be recorded
on the grid attached hereto by the holder hereof (including recordations made by
the Administrative Agent as pledgee). Upon notice from the Administrative Agent
that a Default of the nature referred to in Section 8.1.9 of the Credit
Agreement or an Event of Default has occurred and is continuing under the Credit
Agreement, the Maker shall make such payments, in same day funds, to such other
account as the Administrative Agent shall direct in such notice.

         This Note is one of the Pledged Notes referred to in the Security
Agreement, and evidences Indebtedness permitted under the Credit Agreement. Upon
the occurrence and during the continuance of an Event of Default under the
Credit Agreement, and notice thereof having been delivered by the Administrative
Agent to the Maker, the Administrative Agent shall have all rights of the Payee
to collect and make demand, and enforce all rights with respect to, the
Indebtedness evidenced by this Note.


<PAGE>   49

         Payee agrees that this Note is subordinate in right of payment to all
Obligations of Maker and all obligations of Maker in respect of Indebtedness
outstanding under the Senior Secured Note Documents.

         Reference is made to the Credit Agreement for a description of the
Security Agreements pursuant to which this Note has been pledged to the
Administrative Agent as security for the Obligations outstanding from time to
time under the Credit Agreement and each other Loan Document.

         In addition to, but not in limitation of, the foregoing, the Maker
further agrees to pay all expenses, including reasonable attorneys' fees and
legal expenses, incurred by the holder (including the Administrative Agent as
pledgee) of this Note endeavoring to collect any amounts payable hereunder which
are not paid when due, whether by acceleration or otherwise.

         THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCLUDING THE LAW OF CONFLICTS BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

         THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS
NOTE. THE MAKER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.

                                          [NAME OF MAKER]


                                          By:
                                              ---------------------------------
                                              Title:
                                                    ---------------------------

                                          Pay to the order of:

                                          -------------------------------------


                                          [NAME OF PAYEE]

                                          By:
                                              ---------------------------------
                                              Title:
                                                    ---------------------------

<PAGE>   50


                                      GRID

         Intercompany Loans made by _______ to _______ and payments of principal
of such Loans.


<TABLE>
<CAPTION>
===============================================================================
                  Amount of        Amount of       Outstanding
                Intercompany       Principal        Principal       Notation
    Date            Loan            Payment          Balance         Made By
------------    -------------    -------------    -------------   -------------
<S>             <C>              <C>              <C>              <C>
------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------

------------    -------------    -------------    -------------   -------------
===============================================================================
</TABLE>


<PAGE>   51

                                                                        ANNEX I
                                                          to Security Agreement


                        SUPPLEMENT TO SECURITY AGREEMENT

         THIS SUPPLEMENT NO. ___, dated as of ________ __, ____ (this
"Supplement"), to the Current Assets Security Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Security Agreement"), among the initial signatories thereto
and each other Person which from time to time thereafter became a party thereto
pursuant to Section 7.9 thereof (each, individually, a "Grantor", and,
collectively, the "Grantors"), and THE CIT GROUP/BUSINESS CREDIT, INC., as
Administrative Agent for each of the Current Assets Secured Parties (such
capitalized term and all other capitalized terms being used herein with the
meanings provided, or incorporated by reference, in the Security Agreement), is
made by the undersigned.


                              W I T N E S S E T H:

         WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation (the "Company"), Sterling Canada, Inc., a Delaware
corporation, Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling
Pulp Chemicals, Inc., a Georgia corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Chemicals Energy, Inc., a Delaware corporation, and
Sterling Chemicals International, Inc., a Delaware corporation (collectively,
the "Borrowers"), the various financial institutions as are, or may from time to
time become, parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Credit Suisse First Boston, as the Documentation Agent, and
the Administrative Agent, the Lenders and the Issuer have extended Commitments
to make Credit Extensions to the Borrowers;


         WHEREAS, as a condition precedent to the making and maintenance of the
Credit Extensions under the Credit Agreement, the undersigned is required to
execute and deliver this Supplement;

         WHEREAS, the undersigned has duly authorized the execution, delivery
and performance of this Supplement and the Security Agreement;

         WHEREAS, the Security Agreement provides that additional parties may
become Grantors under the Security Agreement by execution and delivery of an
instrument in the form of this Supplement;


<PAGE>   52

         WHEREAS, pursuant to the provisions of Section 7.9 of the Security
Agreement, the undersigned is becoming a Grantor under the Security Agreement;
and

         WHEREAS, the undersigned desires to become a Grantor under the Security
Agreement in order to induce the Current Assets Secured Parties to continue to
make and maintain Current Assets Loans and Swing Line Loans and issue and
maintain Letters of Credit under the Credit Agreement as consideration therefor;

         NOW, THEREFORE, the undersigned agrees, for the benefit of each Current
Assets Secured Party, as follows:

         SECTION 1. In accordance with the Security Agreement, the undersigned
by its signature below becomes a Grantor under the Security Agreement with the
same force and effect as if it were an original signatory thereto as a Grantor.
In furtherance of the foregoing, each reference to a "Grantor" in the Security
Agreement shall be deemed to include the undersigned and the Schedules hereto
shall be deemed to be Schedules thereto.

         SECTION 2. The undersigned hereby represents and warrants that this
Supplement has been duly authorized, executed and delivered by the undersigned
and constitutes a legal, valid and binding obligation of the undersigned,
enforceable against it in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and general equitable
principles.

         SECTION 3. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect in accordance with its terms.

         SECTION 4. Any provision of this Supplement which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Supplement or affecting the validity or enforceability of such provision in any
other jurisdiction.

         SECTION 5. Without limiting the provisions of the Credit Agreement (or
any other Loan Document, including the Security Agreement), the undersigned
agrees to reimburse the Administrative Agent for its reasonable out-of-pocket
expenses in connection with this Supplement, including reasonable attorneys'
fees and expenses of the Administrative Agent.

         SECTION 6. THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCLUDING THE LAW OF
CONFLICTS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS, EXCEPT
TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST


                                     Annex I
                                       -2-
<PAGE>   53

HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

         SECTION 7. This Supplement hereby incorporates by reference the
provisions of the Security Agreement, which provisions are deemed to be a part
hereof, and this Supplement shall be deemed to be a part of the Security
Agreement.

         SECTION 8. This Supplement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original (whether
such counterpart is originally executed or an electronic copy of an original)
and all of which shall constitute together but one and the same agreement. This
Supplement shall become effective and binding as of the date first above written
when a counterpart hereof executed on behalf of the Grantor shall have been
received by the Administrative Agent.


         IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.

                                               [NAME OF ADDITIONAL GRANTOR]


                                               By
                                                  ------------------------------
                                                   Title:

ACKNOWLEDGED AND ACCEPTED BY:

THE CIT GROUP/BUSINESS CREDIT, INC.
as Administrative Agent, on behalf of the
Current Assets Secured Parties


By
  --------------------------------
   Title:


                                     Annex I
                                       -3-
<PAGE>   54

                                                                     SCHEDULE I
                                                           to Supplement No. __
                                                          to Security Agreement
                                                 ([NAME OF ADDITIONAL GRANTOR])

Perfection Certificate

                      See Exhibit M to the Credit Agreement


<PAGE>   55


                                                                    SCHEDULE II
                                                          to Supplement No. ___
                                                          to Security Agreement
                                                 ([NAME OF ADDITIONAL GRANTOR])


Item A.  Patents

                                 Issued Patents
                                 --------------

Patent No.        Issue Date         Inventor(s)                Title
----------        ----------         -----------                -----


                           Pending Patent Applications
                           ---------------------------

Serial No.        Filing Date        Inventor(s)                Title
----------        -----------        -----------                -----


                       Patent Applications in Preparation
                       ----------------------------------

                                      Expected
Docket No.        Filing Date        Inventor(s)                Title
----------        -----------        -----------                -----



Item B.  Patent Licenses

                                   Effective      Expiration       Subject
Licensor          Licensee           Date            Date          Matter
--------          --------         ---------      ----------       -------


<PAGE>   56


                                                                   SCHEDULE III
                                                          to Supplement No. ___
                                                          to Security Agreement
                                                 ([NAME OF ADDITIONAL GRANTOR])


Item A.  Trademarks


                              Registered Trademarks
                              ---------------------

Trademark       Registration No.       Registration Date
---------       ----------------       -----------------


                         Pending Trademark Applications
                         -------------------------------

Trademark          Serial No.          Filing Date
---------          ----------          -----------


                      Trademark Applications in Preparation
                      -------------------------------------

                                   Expected      Products/
Trademark       Docket No.       Filing Date     Services
---------       ----------       -----------     ---------


Item B.  Trademark Licenses


                                                   Effective      Expiration
Trademark         Licensor           Licensee         Date            Date
---------         --------           --------      ---------      ----------


<PAGE>   57


                                                                    SCHEDULE IV
                                                          to Supplement No. ___
                                                          to Security Agreement
                                                 ([NAME OF ADDITIONAL GRANTOR])


Item A.  Copyrights


                              Registered Copyrights
                              ---------------------

Registration No.        Registration Date         Author(s)            Title
----------------        -----------------         ---------            -----


                   Copyright Pending Registration Applications
                   -------------------------------------------

Serial No.                Filing Date             Author(s)            Title
----------                -----------             ---------            ------


               Copyright Registration Applications in Preparation
               --------------------------------------------------

                                                   Expected
Docket No.                Filing Date              Author(s)           Title
---------                 -----------              ---------           -----


Item B.  Copyright Licenses

                                  Effective        Expiration         Subject
Licensor         Licensee           Date             Date             Matter
--------         --------         ---------        ----------         -------


<PAGE>   58


                                                                     SCHEDULE V
                                                          to Supplement No. ___
                                                          to Security Agreement
                                                 ([NAME OF ADDITIONAL GRANTOR])


                        Trade Secret or Know-How Licenses
                        ---------------------------------


                                 Effective       Expiration         Subject
Licensor        Licensee           Date             Date            Matter
--------        --------         ---------       ----------         -------