Exhibit 10.12**Sterling Chemicals, Inc.****Bonus Plan**     Our Bonus Plan is comprised of two programs that provide eligible employees withopportunities to receive cash compensation in addition to their salaries. One of these programspays bonuses based, in part, on our attainment of specified levels of EBITDA (the “*CorporatePerformance Bonus Program*”), while the second program pays bonuses based on individualperformance, irrespective of the amount of EBITDA we earn during the year (the “*IndividualPerformance Bonus Program*”).*Eligibility**.*     All of our salaried personnel, both exempt and non-exempt, may be paid bonuses under ourCorporate Performance Bonus Program and our Individual Performance Bonus Program. In order to bepaid a bonus, an employee must be employed by us at the time bonuses are paid, unless the employeehas retired, died or become disabled, in which event a *pro rata*bonus payment will be made based onfull months of service for the relevant year.*Corporate Performance Bonus Program**.*     Our Compensation Committee has set three separate corporate EBITDA hurdles under the CorporatePerformance Bonus Program; a Threshold Amount ($35 million), a Target Amount ($70 million) and aMaximum Payment Amount ($140 million). In order for any bonus to be paid under our CorporatePerformance Bonus Program, we must attain at least the Threshold Amount of EBITDA. If we earn atleast the Threshold Amount of EBITDA for any year, the maximum bonus that can be earned by anemployee for that year under our Corporate Performance Bonus Program is determined by the actualamount of EBITDA earned, the employee’s base salary for that year and the employee’s “Bonus Target”(which is assigned in March of each year and is expressed as a percentage of the employee’s basesalary), on the following basis:   EBITDA Earned Maximum Bonus Payment$35 million (Threshold) Base Salary X Bonus Target X 50%   $70 million (Target) Base Salary X Bonus Target X 100%   $140 million (Maximum) Base Salary X Bonus Target X 200%
 

 
If our EBITDA is between the Threshold Amount and the Target Amount, or between the Target Amountand the Maximum Payment Amount, the maximum bonus that can be paid to an employee for that year ispro-rated between the two levels on a straight-line basis.     Once the maximum amount of bonus for an employee is set, the actual bonus earned by thatemployee is determined based on his or her performance. The actual amount of bonus paid to ourChief Executive Officer and each of our Senior Vice Presidents is determined by our CompensationCommittee. For each of our other eligible employees, if the employee’s rating for the year forwhich the bonus is being paid is SE, OE or FS, that employee will receive a bonus of between 51%and 100% of the maximum bonus that could have been paid to that employee for that year under ourCorporate Performance Bonus Program, with the exact percentage to be determined by the employee’sranking within his or her employee group. Any employee whose rating for the year for which thebonus is being paid is GM will be paid a bonus equal to 50% of the maximum bonus that could havebeen paid to that employee for that year under our Corporate Performance Bonus Program. However,if the amount of bonus to be paid to any employee whose rating is SE, OE, FS or GM is less than theamount paid to each hourly employee under our Gainsharing Program, then the amount of thatemployee’s bonus will be increased to match the amount paid under our Gainsharing Program. Anyemployee whose rating for the year for which the bonus is being paid is DM will not be paid a bonusfor that year, irrespective of the amount of EBITDA we earned for the year.*Individual Performance Bonus Program**.*     In any year when we do not attain the Threshold Amount of EBITDA, each of our salariedemployees has the ability to earn a bonus under our Individual Performance Bonus Program of up to50% of his or base salary for that year *times*his or her Bonus Target. In any year when do earn atleast the Threshold Amount of EBITDA under our Corporate Performance Bonus Program, no bonus ispaid under our Individual Performance Bonus Program. The actual bonus earned by each employeeunder our Individual Performance Bonus Program is based on his or her performance. Any employeewhose rating for the year for which the bonus is being paid is SE, OE or FS will receive a bonus ofbetween 40% and 100% of the maximum bonus that could have been paid to that employee for that yearunder our Individual Performance Bonus Program, the exact percentage to be determined by theemployee’s ranking within his or her employee group. Any employee whose rating for the year forwhich the bonus is being paid is GM or DM will not be paid a bonus for that year under ourIndividual Performance Bonus Program. Our Chief Executive Officer and each of our Senior VicePresidents are not eligible for bonuses under the Individual Performance Bonus Program. Whether abonus will be paid to our Chief Executive Officer or any of our Senior Vice Presidents for any yearwhen we do not attain the Threshold Amount of EBITDA, and if so, the amount to be paid, will bedetermined on an annual basis by our Compensation Committee.*Payment**.*     At the end of each year, our financial statements are audited and presented to our AuditCommittee for approval. The results of the audit will determine whether we have earned
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the Threshold Amount of EBITDA and, consequently, whether bonuses will be paid under our CorporatePerformance Bonus Program or our Individual Performance Bonus Program. Once our Audit Committeehas approved the audit for the year, bonus amounts for each employee for that year will bedetermined, and the bonus payments will be made in any event on or before March 14. Bonuses arepaid in a single lump sum after all taxes have been withheld. The payment of a bonus does not,however, affect the employee’s base pay in any manner and has no impact on the amount or level ofbenefits under any of our other benefit plans.*Payment Reductions**.*     The amount of bonus paid to an employee under our Corporate Performance Bonus Program or ourIndividual Performance Bonus Program assumes continued employment with us in active statusthroughout the year. For purposes of our Bonus Plan, active status is made up of regular hoursworked, vacation time, jury duty, service as a witness under court subpoena, funeral leave andmilitary leave. Non-active status includes all other absences from work for any reason, includingillness, injury, personal business, doctor’s appointment, excused absence, family illness, leave ofabsences and personal leave, *etc*. Once the amount of bonus to be paid to each employee isdetermined, an employee’s bonus may be reduced if the employee has accumulated absences totaling atleast 44 working days (352 hours for shift workers) during the year for which the bonus is beingpaid. The amount of reduction will be 16.67% for the first 44 working days (352 hours for shiftworkers) of non-active status *plus*an additional 8.33% reduction for each additional 22 workingdays (176 hours for shift workers) of non-active status during the year for which the bonus isbeing paid.     The amount of bonus paid to any employee who was hired after July 1 of the year for which thebonus is being paid will be pro rated based on the number of full months of service during thatyear. The amount of bonus paid to any employee who became eligible under our Bonus Plan in themiddle of a year due to a promotion or change in job classification will not be pro rated due tosuch promotion or job classification (*i.e.*, all months of service with us during that year will betreated as if they were performed in the employee’s most recent position).
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